Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.Thursday, February 12, 2015
Deflation, Interest Rates and Currency Wars / Economics / US Economy
Forecasting is a singularly difficult task and is more often than not fraught with failure. The Federal Reserve has some of the smartest economists in the world, and yet their forecasts are so wrong so often (as in, they almost never get it right) that some have pointed out that it’s almost statistically impossible to be as bad as the Fed. Yet they continue to issue such forecasts and to base economic and monetary policy on them. Go figure.
Their forecasts, like most economic predictions, are based on past performance. Intricate economic models look at history to try to determine the future relationships among economic determinants. I really shouldn’t pick on the Fed so much as point out that almost all of us in the forecasting business have dismal track records. The world has grown so complex that it is singularly difficult to understand the interrelationships of the million-odd factors that determine the outcome of an economy.
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Wednesday, February 11, 2015
Fourth Turning Shadow of Crisis of Debt, Civic Decay & Global Disorder / Economics / Global Debt Crisis 2015
In Part One of this article I laid the groundwork of the Fourth Turning generational theory. I refuted President Obama’s claim that the shadow of crisis has passed. The shadow grows ever larger and will engulf the world in darkness in the coming years. The Crisis will be fueled by the worsening debt, civic decay and global disorder. I will address these issues in this article.
Debt, Civic Decay & Global Disorder
The core elements propelling this Crisis – debt, civic decay, and global disorder – were obvious over a decade before the financial meltdown catalyst sparked this ongoing two decade long Crisis. With the following issues unresolved, the shadow of this crisis has only grown larger and more ominous:
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Tuesday, February 10, 2015
Fed's Powell Sees Slack in U.S. Economy, Inflation Too Low and Following Greece Events Carefully / Economics / US Economy
Federal Reserve Governor Jay Powell spoke with Bloomberg's Peter Cook following his speech at Catholic University today. Powell said that low inflation gives the central bank time to remain patient as it considers when to raise interest rates. He said, "There's plenty of slack out there in the economy" and that "wages do not suggest any tightness in the labor market."
PETER COOK, BLOOMBERG NEWS: I am joined by Governor Jay Powell. Thank you for the time, rare opportunity for us to have a chance to chat with you. I want to ask you first of all about your speech today. You made a pretty strong argument against audit the Fed, the push that we're seeing right now in Congress. The fact that you're making this speech at all tells me that you and your colleagues at the Fed see this as a real threat right now.
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Tuesday, February 10, 2015
The "Big Lie" About the U.S. Jobs Picture / Economics / Deflation
Some 30 million people are either out of work or severely underemployed
Editor's note: You'll find the text version of the story below the video.
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Monday, February 09, 2015
Yes, Minimum Wage Still Increases Unemployment / Economics / Wages
Andrew Syrios writes: Raising the minimum wage has become the cause célèbre for many on the progressive left. Most notably, Seattle has passed a $15 per hour minimum wage. In addition, California lawmakers are trying to pass a state-wide $13 per hour minimum wage and President Obama is supporting the increase of the federal minimum wage from $7.25 to $10.10.
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Monday, February 09, 2015
The Financialized Economy / Economics / US Economy
Does the US Economy and Stock Market Need Manufacturing?
The ISM PMI reports for December and January showed deceleration in line with our view that a persistently strong US dollar would begin to eat away at US manufacturing, exporters and other companies that depend on significant foreign business. But in an age where investors will bid up Twitter* (with its forward P/E of 141 and 30B market cap to 1.2B revenue) by 16% in a day, are we returning to the old days of ‘PE’s don’t matter’ with the hook or tout being ‘it’s all about ad revenue’?
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Monday, February 09, 2015
Yellen Looking For Inflation In All The Wrong Places / Economics / Inflation
In 1958, economist W.H. Phillips wrote a paper that argued an inverse relationship existed between wage inflation and unemployment. The crux of his theory was when unemployment is high wage growth is absent; but when the unemployment rate is low wages rise rapidly. Philips established his theory under the framework of a curve and it was aptly referred to as “The Phillips Curve”. However, many economists wrongly adopted the Phillips Curve by relating it to general price inflation, rather than to just wage inflation. Sadly for Phillips Curve enthusiasts, the high inflation and high employment rates of the 1970’s turned this metric on its head.
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Monday, February 09, 2015
Trade Data Show China’s Credit Bubble is Bursting, UK to See Deflationary Effects – Global Depression Ahead? / Economics / China Economy
- Chinese imports, primarily of raw materials, crashed 19.9% in January
- Exports fall 3.3% against expectations of 6.3% rise
- Total Chinese debt rose from $7.4 trillion in 2007 to $28.2 trillion in 2014
- Capital outflows last quarter were the highest on record
- China may devalue yuan to boost exports
- Currency depreciation by worlds biggest exporter may trigger global deflation and depression
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Saturday, February 07, 2015
How Economic Aggregation Hides the Problems of Interventionism / Economics / Government Intervention
Gary Galles writes: I was going through the textbook for my economics principles course recently, thinking about how I could better reconcile the fact that since only individuals choose, the logic of economics is about individual choices facing the fact of scarcity. Yet macroeconomics is generally presented directly in terms of aggregates and how to control them, as if aggregates were the relevant measures.
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Friday, February 06, 2015
Greece To Leave The Euro or Not to Leave The Euro, That is The Question / Economics / Eurozone Debt Crisis
As we watched the Prime Minister and the Finance Minister of Greece travel though Europe in a failed attempt to re-negotiate the terms of the "Bailout" it received, we find ourselves thinking quite differently to the mainstream commentators. Ours is not a jaundiced view but a realistic one. Pragmatism demands we do so. The prime underlying factors that will be brought into play are the interests of each side.
After all, countries don't have friends they have interests, even with fellow members of the Eurozone. These will dictate the result and likely the tactics on each side. We do not see these as friendly negotiations at all. For Greece the stakes are higher than they are for the E.U.
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Friday, February 06, 2015
“Forgive Us Our Debts” – Only Way To Prevent Economic Meltdown / Economics / Global Debt Crisis 2015
- Europe and western world is in a debt-fuelled deflation which is spiralling out of control
- Global debt has risen a massive $57 trillion or more than 25% in 7 years since the crisis of 2008
- Managed debt forgiveness is essential now to avoid chaos of defaults, mass unemployment depression and economic collapse
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Tuesday, February 03, 2015
Why the Government Hasn’t Yet Managed to Destroy the Economy / Economics / Economic Theory
John P. Cochran writes: Pierre Lemieux wrote an indispensible book (Somebody in Charge: A Solution to Recession) for anyone who wishes to understand the before, during, and immediate aftermath of the “Great Recession.”
The book’s importance is greater than just his analysis of the crisis. He thoroughly exposes the underlying weaknesses and fallacies of the whole Keynesian policy-activism agenda driven by the “animal spirits,” the irresistible urge to action of those who wrongly deem themselves in charge.
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Monday, February 02, 2015
Potential For Deflation Is Becoming A Big Threat For 2015 / Economics / Deflation
The fears after 2001 were that the Fed’s easy money policies to pull the economy out of the 2001 recession, followed by even more easing, including the near-zero Fed Funds rate instituted after the 2008 financial meltdown, would result in runaway inflation.
Spiraling inflation was so sure to show up that gold, the historical hedge against inflation, surged up in a powerful 10-year bull market, rising from $250 an ounce in 2001 to $1,900 an ounce in 2011.
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Friday, January 30, 2015
U.S. Asset Price Deflation Coming Up? Food Prices Drop? CPI Negative? Credit Deflation? / Economics / Deflation
When inflation alarmists want to convince everyone the dollar is about to become worthless, they post this chart of the CPI.
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Friday, January 30, 2015
7 Things about Saudi Arabia You Need to Know / Economics / Saudi Arabia
A week ago we learned that the king of Saudi Arabia, Abdullah bin Abdulaziz Al Saud, passed away at the age of 90. Following the announcement, crude oil immediately spiked 2.5 percent over uncertainty of how this might affect the Middle Eastern kingdom’s position on keeping oil production at current levels.
But the new leader, King Salman bin Abdulaziz Al Saud, has already tamped down this uncertainty, stating that Saudi Arabia will hold to the decision made at last November’s Organization of Petroleum Exporting Country (OPEC) meeting.
Tuesday, January 27, 2015
Austrians and the Mainstream Economists / Economics / Economic Theory
John Cochran writes: Mises Institute: You recently retired after a long time at Metropolitan State University of Denver, where you were both an economics professor and the dean of the Business School. How did you end up there, and end up as dean?
John Cochran: I had a good guardian angel who helped me come to Metro State. I’m not sure about that on becoming dean, though. I received my undergraduate degree in economics from Metro State. Gerald Stone, then chair of the econ department, and Ralph Byrns were two of my professors there. As I worked on my graduate degrees at University of Colorado-Boulder, I would occasionally stop by Metro just to touch base. In spring 1981, I was just completing teaching my first principles course at UC-Boulder and had just completed the requirements for an MA in economics. The first edition of the Byrns and Stone principles book would be available for fall 2001. Metro had an open visiting position and had offered the job to a recent CU PhD. He had told them he would take their job, but wouldn’t use their book. Ralph and Jerry were talking it over and Ralph said to Jerry, “We can’t hire him.” Jerry said, “We can’t not hire him just because he said he won’t use our book.” Ralph replied, “But he is telling us he will be a ‘lunch tax’.” Jerry said, “Yes, but who else can we get?” [A “lunch tax” is a high-maintenance employee. — Ed.]
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Monday, January 26, 2015
Why Private-Sector Services Seem to Be More Expensive / Economics / Economic Theory
Predrag Rajsic writes: Imagine you are a promising car mechanic who wants to open a new car repair shop. You would like to provide basic services to low-income citizens at affordable prices. You would charge a bare minimum for your labor, and you would buy used (but decent) replacement parts. This service would be great for people who just want to keep their cars running for a couple more years — nothing fancy, just bare functionality.
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Monday, January 26, 2015
Greece Votes for Syriza Hyperinflation - Threatening Euro-zone Collapse or Perpetual Free Lunch / Economics / Eurozone Debt Crisis
Greeks voted for Syriza as the largest party on 36.5% that puts the radical left party within a couple of seats of securing a majority of 151 seats in Greece's 300 seat parliament which includes automatically getting allotted an extra 50 seats. So Syriza rather than to seek to form another coalition government that tend to be the norm in Greece has a chance of going it alone. The people of Greece having had enough of near 5 years of economic austerity that had yet to fully succeed in correcting the preceding decade long partying spending and corrupt kickbacks binge at the euro-zones expense. Now the people of Greece have effectively done a deal with the devil that promises to return Greece to the good old party days of rampant debt printing (fake government debt statistics) and corrupt governance all without the consequences of accelerating double digit inflation as a consequence of being within the euro-zone.
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Sunday, January 25, 2015
The Private Equity Boom, Easy Money, and Crony Capitalism / Economics / Economic Theory
Brendan Brown writes: Amongst the big winners from the Obama Fed’s Great Monetary Experiment has been the private equity industry. Indeed this went through a near-death experience in the Great Panic (2008) before its savior — Fed quantitative easing — propelled it forward into new riches. There is no surprise therefore that its barons who join the political stage (think of the last Republican presidential candidate) have no interest in monetary reform. And the same attitude is common amongst leading politicians who hope private equity will provide them high-paid jobs when they quit Washington.
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Saturday, January 24, 2015
How Greek Debt Default May Still Unravel the EU / Economics / Eurozone Debt Crisis
Greece is back in the headlines. This should surprise no one. It was naïve to think that Greeks would accept being debt slaves forever.
Despite all the rumblings that Greece will be forced to leave the Euro, there is in reality no mechanism by which EU countries can force a Eurozone member to exit the currency union. It really is all a bluff. This is a standard scare tactic used by governments to induce people to give up freedom for a little security.
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