News: 2013-12-05

By Edward Harrison On Dec 5, 2013

Today’s new links are as usual not endorsements but articles I think are important.

Economy

CITI’S BUITER: 2014 Will Be A ‘Revolutionary’ Year For The Global Economy | Business Insider

“Buiter sounds decidedly optimistic. In the past, he’s warned of the euro crisis escalating, even leading to the exit of Greece from the euro.

“[W]hat is revolutionary about 2014 is that the likelihood of severe downside tail events, which could paralyze the global economy, seems to have diminished significantly (though not disappeared),” he said. “Granted, the euro-area is still work in progress, China presents meaningful question marks, Congressional gridlock in the US could still throw sand in the federal fiscal wheels and geopolitics can always surprise. But, enough progress has been made that all of these issues seem less threatening today than 12 months ago.””

Economics

Monetary policy: Is QE deflationary? | The Economist

Noahpinion: When teaching econ, start with the parts that work

North America

Two Cities With Unemployment Rates North of 25% – Real Time Economics – WSJ

U.S. Grows at 3.6% Pace in 3rd Quarter – WSJ.com

MASSIVE upward revision the result of inventory builds. This also points out that the base level of growth in the US is higher than anticipated. Expect some giveback in Q4 on inventories.

U.S. car buyers borrow more as rates fall and standards loosen | Reuters

This is a disaster waiting to happen.

“The average loan-to-value on new cars rose to 110.6 percent, up by 1.17 percentage points. On used cars it rose to 133.2 percent, up by 2.18 percentage points.

the average loss on loans gone bad jumped to $7,770 in the third quarter from $7,026 a year earlier and repossessions increased sharply, particularly for subprime borrowers.”

Jon Cowan and Jim Kessler: Economic Populism Is a Dead End for Democrats – WSJ.com

The US Economy Can’t Take QE « naked capitalism

This is a good post but it doesn’t have anything to do with QE.

“The disparity between the manufacturing PMI and real GDP outcomes is difficult to justify without casting doubt over the index’s accuracy; to a lesser extent, the same can be said about the non-manufacturing ISM, with its 2013 burst to above-average levels out of kilter with the sub-trend domestic final demand growth of mid-2013.”

Europe

5 Takeaways From Mario Draghi’s ECB Presser – Five Things – WSJ

El crédito a las familias sufre una caída récord en octubre pese al rescate | Economía | EL PAÍS

Credit to households in Spain fell by a RECORD in October despite the bailout. The fall was 4.7%, putting credit at its lowest level since 2007. Credit to business also fell 10% and is at its lowest level since the crisis began. DELEVERAGING.

Sloweniens Banken brauchen fünf Milliarden – Banken – derStandard.at › Wirtschaft

Slovenian banks need 5 billion euros according to the European stress tests. That is a very large sum given the size of the economy.

The rise of West German wage inequality