No one has denied that China was overdue for a credit shakeout due to the Chinese government’s desire to stem excess credit growth as the economy rebalances. The question has always been about how much of a shakeout Chinese policy makers are willing to accept and how destabilizing the shakeout would get regarding economic growth and employment. We seem to be reaching another level in terms of jitters with bank runs and commodities sector bankruptcies. Some thoughts below
Sanctions because of the Crimean crisis have had less economic impact than private portfolio preference shifts. However, as Ukraine moves into the EU sphere, further actions against Ukraine could be more far-reaching. China has moved toward stimulus to avoid a hard landing Signs are abundant that risk assets are overpriced and that de-risking is in order Wage and job growth […]
Marc Faber appeared on Bloomberg Television yesterday to discuss the Chinese economy. While Faber generally seems to be a long-term bull on China, he had some disquieting things to say about the extent of malinvestment in China due to the recent round of government stimulus and infrastructure-oriented investment. Faber told Trish Regan and Matt Miller “I think that we had […]
Backloaded austerity is the defining paradigm at work in Europe right now. Italian Prime Minister Enrico Letta has called for this paradigm to be bolstered by fiscal stimulus incentives as a quid pro quo for structural reform. I believe he will get his wish.
There are perhaps more myths about QE than almost any other monetary policy instrument. Here are five of the most pernicious QE myths.
The Federal Reserve’s Open Market Committee met today. As expected, the Fed Funds rate stayed at zero percent. Most Fed watchers, however, wanted more clarity on the Fed’s quantitative easing timetable, which the Fed laid out clearly. But the market fell on the news and bond yields rose.
Mortgage backed securities (MBS) have sold off sharply over the past month as fixed income markets face the new reality of rising rates. But unlike most other fixed income securities, MBS duration tends to increase with yield.
Daily comments on finance, economic and market news for 6 Jun 2013
I have been trying to break up the links posts because I have so many. So I have been writing brief theme posts to go with the links as I used to do when I had more time. I want to make this one short here and I have two topics to highlight. The first topic is Italy and its […]
Italy’s new Prime Minister Enrico Letta is touted as a man who could change the politics of the EU. The Daily Telegraph in the UK even headlines his initial policy speech as “Italian PM Enrico Letta urges move from austerity to growth”. But is that really the case? I don’t think it is the case. And I will point to language in his speech for why as I develop a few background issues on Italy.
I am not going to say a whole lot here in this post because I have been writing non-stop about Europe of late. I just want to share the European links with you. I think what the links show is that the European paradigm is in transition from front-loaded austerity to back-loaded austerity. This is something I have remarked on at length in the past. What I would like to know is what impact this move is going to have on bond and stock prices.
Reinhart-Rogoff’s paper has more serious flaws than an excel error. And austerity hysteria will not go away after Herndon-Ash-Pollin’s review. This is my message to you.