Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Saturday, May 03, 2008
US in Recession Despite Manipulated Employment and Inflation Statistics / Economics / Recession
By: John_Mauldin
Lies, Damn Lies, and Statistics - Who Is Inflating the Numbers?
- Honey, I Blew up the Employment Numbers
- A Black Swan in Food
- Housing Numbers Are Better Than I Wrote
"There are three kinds of lies: lies, damn lies, and statistics." – commonly attributed to Benjamin Disraeli
If we are to believe the government statistics, the GDP of the US grew by 0.6% in the first quarter of this year. And unemployment actually fell. And there were only 20,000 job losses. This week we do a quick review of why the statistics can be so misleading. We also look at why I was wrong about the housing number last week, and I highlight what could be a very serious Black Swan lurking in the agricultural bushes. It should make for an interesting letter. It's hard to know where to begin, there are just so many tempting targets; so let's take the statistical aberrations in the order they came out this week.
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Friday, May 02, 2008
Debt the Price for Economic Growth / Economics / US Economy
By: Andy_Sutton
Our call from last week is playing out exactly as we forecasted. The Fed cut interest rates, signaled a willingness to pause, and the Dollar has begun another dead cat bounce. Included below is a chart that shows other dead cat bounces that have occurred during the past year. Note the end result of each of the prior bounces: an ultimately lower Dollar. There is no reason to believe this time will be any different. We outlined the reasons for this assumption in last week's piece.Read full article... Read full article...
Friday, May 02, 2008
Inflation v. Unemployment / Economics / Inflation
By: Gerard_Jackson
It says much about the lousy state of economic debate that the 1993 study The Costs of Unemployment in Australia , produced by the Economic Planning and Advisory Council and co-authored by Raja Junankar and Cezary Kapuscinski, is still being touted as a piece of sound economics. At the heart of this study is the grave economic error a "fight inflation first" policy generally incurs more costs than benefits.Read full article... Read full article...
Wednesday, April 30, 2008
Sharp Fall in Consumer Spending / Economics / US Economy
By: Mick_Phoenix
Does the consumer truly believe?The past three Occasional Letters have been quite an in-depth discussion about the path taken by the Federal Reserve and recently by the Bank of England in their attempts to deal with the deflationary forces unleashed by the credit crash. Since those discussions we have seen evidence that supports my view as seen recently in the Weekly Reports.
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Wednesday, April 30, 2008
$536 Billion Worth of Household Assets Evaporated in February? / Economics / US Housing
By: Paul_L_Kasriel
It sure is a good thing that $150 billion of checks from the IRS are in the mail to U.S. households because these same households experienced an evaporation in paper wealth in February to the tune of about $544 billion according to my admittedly back-of-the-envelope arithmetic. It was reported today that the Case-Shiller house price index for 20 major metropolitan areas fell 2.66% month-to-month in February. Applying that percentage decline in house prices to the fourthquarter value of $20,154.7 billion for household residential real estate from the Fed’s flow-offunds data yields a decline of $536 billion. Now, this is a very rough approximation for at least two reasons.Read full article... Read full article...
Wednesday, April 30, 2008
US Federal Reserve Wants Inflation to Avoid Deflation / Economics / Inflation
By: Axel_Merk
We are now importing inflation. This does not only apply to the cost of commodities, such as oil, but also to consumer goods imported from Asia. This is a newer trend as, in our analysis, Asia had been exporting deflation until the summer of 2006; since then, we have seen increased pricing power by Asian exporters. Read full article... Read full article...
Monday, April 28, 2008
Borrowed Consumption: Opium of the Masses / Economics / Debt & Loans
By: Kurt_Kasun
My last commentary touched off a mini-debate between myself and Michael Pento, a proponent of Austrian Economics who gallantly defends his principles against the Keynesian economists and supply-side monetarists when he makes his appearances on CNBC's Kudlow & Company. I too attempt to follow the Austrian economic precepts laid out by Ludwig von Mises and I think that the bone of contention between us, in the "posted comment section" after my initial commentary, boils down to the following von Mises' quote: Read full article... Read full article...
Monday, April 28, 2008
Warnings of US Heading for Depression Plague US Economy / Economics / Economic Depression
By: Gerard_Jackson
The cause of the current economic problems is very simple: Bad economics. Instead of closely examining the monetary theory that got us into this mess economists have started playing the blame game. Alan Greenspan blamed Wall Street irrational for making irrational economic decisions the appear to have brought the US economy to the brink of disaster.
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Sunday, April 27, 2008
GOTTERDÄMMERUNG- The Twilight of Irredeemable Debt / Economics / US Debt
By: Professor_Emeritus
Wagner's opera Gotterdämmerung is about the twighlight of pagan gods. The most powerful of the latter-day pagan gods that has been guiding the destinies of humanity for the past two-score of years is Irredeemable Debt. Before August 14, 1971 , debts were obligations, and the word “bond” was to mean literally what it said: the opposite of freedom. The privilege of issuing debt had a countervailing responsibility: that of repayment. Read full article... Read full article...
Sunday, April 27, 2008
Alan Greenspan: The Age of Hubris (and the long road back) / Economics / Money Supply
By: Clif_Droke
Hubris is an amazing thing. It causes those infected by it to justify actions that would normally be indefensible.
Take Alan Greenspan, for instance. He recently penned an editorial in the Financial Times claiming that under his leadership, the Federal Reserve is blameless on the property bubble. No way could the Greenspan Fed have foreseen the devastation its money policy of 2001-2006 would inflict on the housing market and the larger economy. “It wasn't my fault. Don't blame me,” claims Alan.
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Saturday, April 26, 2008
How the Economy Really Works- Inflation, Money Supply and the Velocity of Money / Economics / Money Supply
By: John_Mauldin
The Velocity Of Money - Is the Money Supply Growing or Not?
- P=MV
- A Slowdown in Velocity
- If You Are in a Hole, Stop Digging
- And More Write-offs to Come
The late and great Milton Friedman told us that inflation is always and everywhere a monetary phenomenon. But there is an asterisk to his equation that we need to examine, namely, the velocity of money. Sometimes a fast-growing money supply is not as inflationary as you might think. Then we will take quick looks at why the banking sector is in for more and larger rounds of write-offs, as well as note that the housing industry is in a hole but is gamely digging itself deeper. This week's letter will require you to put your thinking cap on as we travel to a mythical island to get an understanding of how the economy really works. There are a lot of charts, so the letter may again print long, but the word length is normal. And with no "but first," we jump right in.
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Friday, April 25, 2008
Government Bailouts Weapons of Mass Inflation / Economics / Inflation
By: Adrian_Ash
"...Dark secrets known only to top-level officials; the public good trumping public disclosure; urgent action needed to avert disaster – haven't we been here before...?"
IN THE EMERGING economies of East Asia , governments face fresh rioting if food prices keep soaring.
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Friday, April 25, 2008
For the Real Forces Behind US Economic Growth Look at the Nasdaq / Economics / US Economy
By: Brian_Bloom
Think about this- One of the most interesting economists of the early 20 th Century was Joseph Schumpeter.Here is a quote from the Wikipedia article: “Schumpeter's theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals. The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism; it will be replaced by socialism in some form.
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Thursday, April 24, 2008
How Japan May Cause the Failure of Current Federal Reserve Policy / Economics / Deflation
By: Mick_Phoenix
Starve the Rich to Feed the Poor - Having written 2 in-depth articles about the rationale behind the Federal Reserve and US Govt plans to bail out the financial system some readers of the last couple of Occasional Letters may well have wondered if I was about to change my outlook. This article should put paid to any such thoughts. Read full article... Read full article...
Wednesday, April 23, 2008
Zen and the Art of Monetary Mayhem / Economics / Money Supply
By: Adrian_Ash
"...Just like the Bank of England , the US Fed seems to have Britney-sized 'issues' with its core stock-in-trade – money itself..."
PROFESSOR TIM BESLEY , one of the nine people chosen to set interest-rate policy at the Bank of England in London , gave a speech on Tuesday about "Inflation and the Global Economy".
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Tuesday, April 22, 2008
Tucson and the Great Depression- This Is Not Your Normal Economic Downturn / Economics / Economic Depression
By: Darryl_R_Schoon
…Goldman Sachs recently revised its forecast for the U.S. economy, predicting a recession in 2008 (Reuters)…Of course, not all recessions are created equal. Goldman doesn't predict a deep recession, but rather a mild turndown, with modest recovery in 2009. CFR.org, 1/18/08 , Lee Hudson Teslik, Assistant Editor and economics writer at CFR.org The Council on Foreign Relations. Mr. Teslik is 26 years old.Read full article... Read full article...
Tuesday, April 22, 2008
US Economic Quarterly Review and Outlook for 2008 / Economics / US Economy
By: John_Mauldin
This week's Outside the Box is from my friends at Hoisington Management. While somewhat technical, they make the case that a slowdown in consumer spending is inevitable. This is worth taking some time and thinking about. Quoting: "This means that consumer spending increases should be approximately zero for the next three years. Further exacerbating the problem is the personal saving rate which declined from 5.2% in the decade of the 1990s to average 1.3% in the last seven years, and now stands at 0.3%. Should declining wealth, rising unemployment and poor economic conditions cause consumers to begin to save and lift the rate back to the 1.3% average of the past seven years, real consumer spending would experience a multi-year contraction." Read full article... Read full article...
Tuesday, April 22, 2008
The US Needs a Good Dose of Supply-side Economics Instead of Interest Rate Cuts / Economics / US Economy
By: Gerard_Jackson
Since last September the Fed has slashed the fed funds rate by 300 basis points to 2.25 per cent. Will there be anymore cuts? Not if Martin Feldstein, former chairman of President Reagan's Council of Economic Advisors, has anything to do with it. Feldstein, now a Harvard economics professor, argues that further cuts would promote commodity prices and inflation without solving the economy's woes. What he didn't say is that what the US economy needs is more production — not more monetary manipulation — if genuine demand is to expand.Read full article... Read full article...
Monday, April 21, 2008
George Soros, Economic Illiteracy and Monetary Policy / Economics / Money Supply
By: Gerard_Jackson
Soros's main thrust against economics is that it is based on the theory that markets bring supply and demand into balance thus securing the best allocation of resources. He argues that this theory cannot apply to the real world because it is based on the model of perfect competition, on which he thinks modern economics depends.Read full article... Read full article...
Monday, April 21, 2008
Is China Driving the Australian Economy Out of Business? / Economics / Austrailia
By: Gerard_Jackson
I have written several articles drawing attention to the possibility that monetary policy may have reduced the ratio of manufacturing to GDP, only to have my concerns dismissed by the likes of Des Moore, a former Treasury official, as not being part of "the traditional explanation". But I was not saying anything new or radical. The possibility of an overvalued currency reducing the size of a country's manufacturing base is sometimes called the "Dutch disease" or the "dual economy".Read full article... Read full article...