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Economy
The theory of social costs: Why markets cannot discipline financial institutions
The continuing attempts to rescue the financial sector (especially in the United States) have laid bare the tremendous social costs created by the way finance dominates the economy. If anything, the various bailouts have actually…
Full text: Moody’s downgrades Canadian banks
Moody's Investor Service released the following note in conjunction with a ratings action it took on Canadian banks today.
The Fed changing private portfolio preferences through Quantitative Easing
QE is an asset swap. No new net financial assets are introduced into the private sector in contrast to when the government deficit spends and does add new net financial assets. So for it to have all of those seriously beneficial effects…
US initial jobless claims are consistent with GDP growth
I don't write about jobless claims that much any more because I don't see the claims number as an interesting data point unless there are large shifts to the upside or downside. But since I am now looking for signs of recession, it behoves…
On the importance of supply side problems
Raghuram Rajan has an interesting post now up on Project Syndicate. The overall tone of it has an Austrian feel as it stresses the failure of stimulus to allow developed economies to attain higher GDP growth a full five years after a…
Where to look for signs of recession
The last post predicted a recession in the United States for Q2 as a result of the fiscal standoff in the United States. However, as I have been largely upbeat about the underlying fundamentals in the United States, this call is predicated…
China: Recognizing the need for economic adjustment
In China, I have argued many times, high growth is no longer compatible with a strengthening balance sheet. If China is growing at a rate that approaches or exceeds five or six percent, it is probably a safe bet that debt is rising faster…
Larger US Trade Deficit to Weigh on Q4 GDP Estimates
The November US trade deficit widened sharply and this will likely prompt economists to cut estimates of Q4 GDP. The first estimate is to be released at the end of the month. The pace of growth had appeared to be about half the pace of…
Chart of the Day: Japan’s Sectoral Balances
Let's talk about deficits for a second. The term deficit has some pretty serious negative connotations. So when we use that word, usually the implication is that the deficit is bad. Here's the thing though; as I have written here a number…
Helicopter Ben alert: The Fed really is printing money
I got the following spam email yesterday. It was sent from an email address with the sender name BEN BERNANKE