Post Tagged with: "government debt"

Russia: Economic Vulnerabilities

Russia: Economic Vulnerabilities

By Marc Chandler There is a common perception that Russia move on Crimea shows its strength. A closer examination suggests it is more complicated that it may seem. Like the bully at the school yard, the aggressiveness conceals weaknesses. Simply put, Russia felt threatened and for good reason. The democratic coup in the Ukraine threatened a potentially strategic loss for […]

Read more ›
The growing mess which will be left behind by the Abenomics experiment

The growing mess which will be left behind by the Abenomics experiment

Japan’s deflation problem is overdetermined – there are multiple causes at work, any one of which could account for the observed phenomenon. Those who have been following the debate can simply choose their favourite – balance sheet recession, liquidity trap, fertility trap – each one, taken alone, could be sufficient as a cause. But I would here like to use the term “overdetermination” in another, less technical, sense, since it seems to me Japan’s problem set is overdetermined in that we always seem to be facing at least one more problem than we have remedies at hand.

Read more ›
Argentina – From Bad to Worse

Argentina – From Bad to Worse

We appear to be on the cusp of a more serious crisis in Argentina, as things are moving from bad to worse. Spot ARS has dropped as much as 20% earlier today, while the implied “blue chip” FX rate has fallen nearly 10% over the past two days. The central bank does not appear to be intervening by selling dollars, […]

Read more ›
More Thoughts on the European Endgame

More Thoughts on the European Endgame

My view remains that Europe is in an incipient but unstable recovery vulnerable to exogenous shocks. However, I do not believe this recovery means that crisis is over. Rather, this is a lull before continued stagnation forces Europe to make hard policy choices about who actually remains in the euro over the long-term.

Read more ›
The legacy of government debt in Europe bodes ill for growth

The legacy of government debt in Europe bodes ill for growth

This column argues that the legacy of public debt resulting from the crisis in the Eurozone is a serious threat. Both the size of the problem and the options to address it make life much more difficult for policymakers than was the case in the late 1930s after the collapse of the gold standard. For some countries, a ‘subservient’ central bank might be preferable to the ECB.

Read more ›
The perils of private sector deleveraging in the Eurozone

The perils of private sector deleveraging in the Eurozone

Private and public debt in the Eurozone increased since the 2000s, and especially so in certain countries. This column presents evidence that high levels of private and public debt, together with deleveraging of all sectors, are especially harmful for economic growth. Private sector debt is more detrimental to growth than public sector debt. Therefore, policies aimed at reducing the private debt could yield important benefits.

Read more ›
Former Bank CEO and Treasury official: Issuing Treasurys isn’t government “borrowing”

Former Bank CEO and Treasury official: Issuing Treasurys isn’t government “borrowing”

Newman: “in my own book the explanation starts the cycle with government spending, thus adding to the money supply, and then issuing treasuries for roughly equivalent amount. The bond vigilantes really have it backwards.

Read more ›
Not all government deficits are created equal

Not all government deficits are created equal

“Not all government debt is created equal. We have bad deficits and good deficits. Good deficits are used to fund investments that will have a positive rate of return, properly determined. Those contribute to GDP.”

Read more ›
Becalmed Markets Conceal Rising Anxiety

Becalmed Markets Conceal Rising Anxiety

The US dollar is narrowly mixed against major and emerging market currencies. Comments by House Speaker Boehner that he will form a majority bloc to avoid a default by the Federal government is being understood two ways.

Read more ›
On the US government shutdown

On the US government shutdown

It isn’t yet clear how long the US government shutdown will last or what impact the shutdown will have. Nor is it clear that the US will escape a debt default down the road. Therefore, at this time all that reigns is uncertainty.

Read more ›
Why Europe is Moving to Backloading Austerity

Why Europe is Moving to Backloading Austerity

This is an article that originally ran early this month at VoxEU by the Chief Economist of the International Monetary Fund and one of his researchers that make the case now being used in Europe for the current policy mix.

Read more ›
China: Some thoughts on investment and consumption

China: Some thoughts on investment and consumption

I have been arguing for several years that once China begins the adjustment process, which I expect to characterize the ten-year period of the current administration, growth rates must slow significantly. My expectation for long-term growth is that it shouldn’t average much above 3-4% annually. This is what it will take for household consumption to rise to roughly 50% of GDP in a decade if consumption growth can be maintained at its historic rates of around 8%.

But I always warn that this is likely to be an upper limit, not a lower limit, to growth The key is whether or not it is possible to maintain current levels of consumption growth once investment growth is sharply reduced. A recent paper by the IMF on the topic is very interesting and not encouraging.

Read more ›