Despite the title, this is not a mono-themed post but more of a highlight of recent news and data and their importance in interpreting the direction of the economy and potential effect on markets. I do want to concentrate on European and US data but I also have some data points from elsewhere. Full commentary at Credit Writedowns Pro
This is an abbreviated post from our subscription series at Credit Writedowns Pro. I am back from my summer holiday. There has been a lot of news in the time since I last posted. And the news flow is coming from a lot of different places. So, let me start up again with a post highlighting what I think are […]
By Sober Look The yield spread between US treasuries and German government bonds hit a new high last week (see chart). Was this divergence in rates simply a response to the ECB action last month (see post) in combination with stronger jobs data in the US or is there more to it? Part of the answer has been softer than […]
The Greek bond deal that in February I predicted would come to market was deemed a rousing success by the market. Initially Greece had planned a 2 billion euro offering for 5-year money. But there was heavy interest and Greece’s underwriters got bids for 20 billion euros, allowing Greece to increase the deal size to 3 billion. The deal came […]
This is a loaded topic. This entry, however, is not intended to be political. Very few things in economics are good or bad in themselves, but rather can be good under certain conditions or bad under others. I want to try to tease out as logically as I can the conditions under which rising income inequality can be good or bad for the economy.
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 […]
Recent economic and geopolitical events should be seen through a longer-term strategic lens. During the Cold War, we lived in a bipolar world dominated by the US and its Allies on one side and the Soviets and their vassal states on the other. Ever since the Soviet Union and the east bloc collapsed, there has been a lot of talk […]
My contention has been that the first two arrows of Abenomics gave the Japanese economy a short window to bring the Japanese labour market back to full employment, re-ignite wage gains, and institute structural reforms. In my view, Abe has not used this window effectively and the stock market and economic gains of the beginning of 2013 are going to recede. Last month I predicted Abenomics would ‘fail’ as Japanese GDP growth slips below 0.5%. We are well on that path.
The effectiveness of US sanctions against Russia are almost toothless if they are unilateral. The conditions that the IMF will likely require to put Ukraine on more sustainable fiscal footing will mean economic hardship and may do more to push Ukraine away from the West than nearly anything Russia could do.
Today’s links carry a widely-diverging set of opinions about the moral issues surrounding the situation in Ukraine. But since this is a finance site, I want to discuss the economic issues. I continue to believe the Ukrainian situation will have only a modest impact on the global economy unless war breaks out. Moreover, Europe’s trade linkages to Russia make sanctions a trickier subject for Europe than the US. Expect to see diverging views within NATO and no meaningful economic penalty as a result.
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.
The Russian economy is barely growing. The Russian central bank has no intention of supporting the ruble. We are also seeing some spillover from the Ukrainian mess.