Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Saturday, March 22, 2014
China’s Minsky Moment? / Economics / China Economy
By: John_Mauldin
In speeches and presentations since the end of last year, I have been saying that I think the biggest macro problem in the world today is China. China has run up a huge debt, and the payments are coming due. They seem to be proactive, but will it be enough? How much risk do they pose for the global system?
This week as I travel to Cafayate I have asked my young associate Worth Wray to write up his research and our conversations on China. Worth has lived in China; and with his (and my) access to people with their fingers on the pulse of China, he has come up with some valuable insights. The hard part for him was to keep it in a single letter. China is a such a huge topic that writing about it can easily yield a tome.
Read full article... Read full article...
Friday, March 21, 2014
Rising Borrowing Costs Could Threaten US Economic Recovery and USD Rally / Economics / US Economy
By: MahiFX
There's an inconvenient truth, which is that many western countries are so heavily indebted that they cannot afford rising interest rates, yet that is exactly what is starting to happen in the US and long before the US Federal Reserve tighten official rates.
Steadily rising interest rates should be supportive for USD as the Fed normalises its monetary policy. Yet the very process of winding down quantitative easing could be sowing the seeds for the next US economic downturn and a weaker USD.
Read full article... Read full article...
Tuesday, March 18, 2014
Marc Faber Warns China's Credit Crisis Unwind 'Will Be a Disaster' / Economics / China Economy
By: Bloomberg
Marc Faber, publisher of the Gloom, Boom & Doom Report, appeared on Bloomberg Television today to discuss the state of the Chinese economy.
Faber told Trish Regan and Matt Miller "I think that we had a colossal credit bubble in China and that this credit bubble is now being gradually deflated....if I look at export figures from China, and they are very closely correlated to overall economic growth, then there is a huge discrepancy between what China reports and what China's trading partners are reporting."
Monday, March 17, 2014
Inflation Does Not Produce Economic Growth / Economics / Inflation
By: Frank_Shostak
After settling at 3.9 percent in July 2011 the yearly rate of growth of the consumer price index (CPI) fell to 1.6 percent by January this year. Also, the yearly rate of growth of the consumer price index less food and energy displays a visible downtrend falling from 2.3 percent in April 2012 to 1.6 percent in January.
On account of a visible decline in the growth momentum of the consumer price index (CPI) many economists have concluded that this provides scope for the US central bank to maintain its aggressive monetary stance.
Read full article... Read full article...
Monday, March 17, 2014
The Economic Recovery's New Clothes / Economics / Economic Recovery
By: Michael_Pento
I sometimes feel that the economy is living out the Hans Christian Andersen's fable called "The Emperor's New Clothes". He wrote the story back in 1837 about a vain emperor who hired a couple of charlatans that promise to make him the finest robes out of invisible thread. They convinced the Emperor that anyone not appreciating the sartorial splendor of the two swindlers should be deemed hopelessly stupid and unfit for their positions.
Sunday, March 16, 2014
Fiat Money and Business Cycles in Emerging Markets / Economics / Emerging Markets
By: MISES
Roger McKinney writes: After the stock market collapse of 2008 and a decline of 3.4 percent for U.S. GDP in 2009, investors rushed to stash funds in emerging markets (EM) where economies were growing at a 3.1 percent annual rate. But the US stock market fell in January of this year largely due to financial trouble in emerging markets. The economies of EM nations, such as, Brazil, Russia, India, Turkey, Thailand, and China, have deteriorated in part because of the withdrawal of US dollar investments from them. Here is a chart from the Institute for International Finance (IIF)[1] showing the capital flows to EM nations:
Sunday, March 16, 2014
Is China’s Economy About to Crash? / Economics / China Economy
By: Investment_U
Sean Brodrick writes: My newsfeed is buzzing with panicky stories on China's economy. Professional worrywarts are terrified that the country's first corporate bond default (by a little-known Chinese solar company ) is just a taste of an economic earthquake to come - one that could shake the global financial system to its foundations.
China's corporate bonds had always been backstopped by the government, so when Shanghai Chaori Solar Energy & Science Technology missed a $12.7 million interest payment on a bond, people panicked.
Read full article... Read full article...
Sunday, March 16, 2014
Why Government Cash Hand Outs Does Not Help Alleviate Poverty / Economics / Economic Theory
By: Sam_Chee_Kong
The current rise in the cost of living in Malaysia can be attributed to the past policies of our Government. It can be traced back to the Global Financial Crisis in 2008. During that time a lot countries are badly affected and Malaysia is not spared either. The prices of commodities plunged due to reduced demand in the global marketplace. Since Malaysia’s economy depended much on commodity exports especially palm oil and rubber, it is badly affected. Malaysia’s economy recorded a 7.5% GDP growth at the beginning of 2008 but has since deteriorated to negative growth of 6.2% in 2009. This can be shown by the following graph.
Friday, March 14, 2014
The Bursting of China’s Credit Bubble / Economics / China Economy
By: Alasdair_Macleod
According to Garet Garrett in his book “A Bubble that Broke the World” Cheops employed 100,000 men for twenty years to build his great pyramid, “and all he had for 600,000,000 days of human labour was a frozen asset.” Cheops’s distortion of the Nilotic economy was nothing compared with the economy warped by the Chinese government today, which has overseen the construction of empty cities, unused airports, carless highways and bridges to nowhere.
Read full article... Read full article...
Thursday, March 13, 2014
Inflating Assest Prices - Why the Wealth Effect Doesn’t Work / Economics / Economic Theory
By: MISES
Chris Casey writes: Higher equity prices will boost consumer wealth and help increase confidence, which can spur spending. — Ben Bernanke, 2010[1]
Across all financial media, between both political parties, and among most mainstream economists, the “wealth effect” is noted, promoted, and touted. The refrain is constant and the message seemingly simple: by increasing people wealth through rising stock and housing prices, the populace will increase their consumer spending which will spur economic growth. Its acceptance is as widespread as its justification is important, for it provides the rationale for the Federal Reserve’s unprecedented monetary expansion since 2008. While critics may dispute the wealth effect’s magnitude, few have challenged its conceptual soundness.[2] Such is the purpose of this article. The wealth effect is but a mantra without merit.
Read full article... Read full article...
Wednesday, March 12, 2014
Soros Warns Europe Faces 25 Years of Stagnation; Ukraine a Wake-Up Call - Video / Economics / European Union
By: Bloomberg
Billionaire investor George Soros discusses the crisis in Ukraine and Europe with Bloomberg Television's Francine Lacqua and said, Europe faces 25 years of Japanese-style stagnation unless politicians pursue further integration of the currency bloc and change policies that have discouraged banks from lending, "[Europe] may not survive 25 years of stagnation. You have to go further with the integration. You have to solve the banking problem, because Europe is lagging behind the rest of the world in sorting out its banks."
Sunday, March 09, 2014
Robert Johnson: New Perspectives For Economics / Economics / Economic Theory
By: Jesse
Some of Johnson's remarks are extraordinarily insightful.
I enjoyed his comments on the modern preoccupation with modeling. But I do think his looking back to the Thirty Years War for the trend towards abstract theory over the empirical method in general is a bit of a stretch. But it was kind of cool to think about it.
Read full article... Read full article...
Sunday, March 09, 2014
Economic Myth Busters – The Minimum Wage / Economics / Economic Theory
By: Andy_Sutton
It has been quite some time since we did a ‘Myth Busters’, even though there obviously remains quite a bit of mythology. So we’re going to chop away at it piece by piece and demonstrate once again that the media, government, and what I like to the call the ‘establishment’ (which is the concatenation of the aforementioned and the banksters) couldn’t give a rip about the truth. The establishment only cares about what is expedient and convenient for itself.
Saturday, March 08, 2014
Weakening U.S. Economy Weather or Not? / Economics / US Economy
By: Peter_Schiff
Everyone agrees that the winter just now winding down (hopefully) has been brutal for most Americans. And while it's easy to conclude that the Polar Vortex has been responsible for an excess of school shutdowns and ice related traffic snarls, it's much harder to conclude that the it's responsible for the economic vortex that appears to have swallowed the American economy over the past three months. But this hasn't stopped economists, Fed officials, and media analysts from making this unequivocal assertion. In reality the weather is not what's ailing us. It's just the latest straw being grasped at by those who believe that the phony recovery engineered by the Fed is real and lasting. The April thaw is not far off. Unfortunately the economy is likely to stay frozen for some time to come.Read full article... Read full article...
Friday, March 07, 2014
Long Term Change from Average Earnings Growth above RPI to AEI below RPI / Economics / Earnings
By: Jonathan_Davis
There are many reasons why the evidence is building that we, in the West, may be #TurningJapanese (it’s a Twitterese I coined). Japan experienced deflation for over 20 years, had a generational depression and stocks and property fell 80%, from 1989 to 2012.
Thursday, March 06, 2014
How Inflation Destroys the Wealth of Nations / Economics / Inflation
By: Joseph_T_Salerno
Brendan Brown is a rara avis — a practicing financial economist and shrewd observer of financial markets, players, and policies, whose prolific writings are informed by profound theoretical insight. Dr. Brown writes in plain English yet can also turn a phrase with the best. “Monetary terror” vividly and succinctly characterizes the policy of the Fed and the ECB (European Central Bank) to deliberately create inflationary expectations in markets for goods and services as a cure for economic contraction; the “virus attack” of asset price inflation well describes the unforeseeable suddenness, timing, and point of origin of asset price increases caused by central bank manipulation of long-term interest rates and the unpredictable and erratic path the inflation takes through the various asset markets both domestically and abroad.
Thursday, March 06, 2014
What Needs to Happen Before We See a Big Economic Recovery? / Economics / Economic Recovery
By: F_F_Wiley
In a Bloomberg article last May, Caroline Baum summed up the economy nicely in a single question:
Four-and-a-half years of an overnight rate near zero and aggressive securities purchases by the Fed have succeeded in raising asset prices. The question is whether higher asset prices will deliver jobs and economic growth before they become destabilizing.
In other words, will the real economy mend before excessive financial risk-taking kills the patient?
Read full article... Read full article...
Wednesday, March 05, 2014
Bastiat's Paradox, Broken Windows, Deficit Spending And War / Economics / Economic Theory
By: Andrew_McKillop
Frederic Bastiat's early 19th century paradox is easy to recycle today. If the West, we mean a certain small number of gung-ho steroid-fed European politicians and their lookalikes in the USA, decided to borrow and spend what it takes to “call a war” with Putin's Russia to defend the Crimea against the violation of Ukraine's territorial integrity, would the net economic result be win-win or lose-lose?
Tuesday, March 04, 2014
U.S. Real Disposable Income Per Capita Analysis / Economics / Economic Statistics
By: PhilStockWorld
Courtesy of Doug Short: This morning I posted my latest Big Four update, which included today’s release of the January data for Real Personal Income Less Transfer Payments. Now let’s take a closer look at a rather different calculation of incomes: “Real” Disposable Personal Income Per Capita.
The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator has been significantly disrupted by the bizarre but not unexpected oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013.
Read full article... Read full article...
Monday, March 03, 2014
Anti-Logic and the Keynesian Economic “Stimulus” / Economics / Economic Theory
By: William_Anderson
American political culture always seems to be “celebrating” the anniversary of something, be it JFK’s assassination (we just passed the 50th anniversary of that sad event) or the signing of some (mostly bad) legislation. The latest political activity to be enshrined with an anniversary is the so-called stimulus, the $800 billion monstrosity passed five years ago ostensibly to “put America back to work.”