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Wynne Godley: Interest rates, growth and the primary balance
Godley shows that under all scenarios, debt/gdp stabilises at some combination of interest rate, growth rate and primary deficit/surplus - provided there is full employment. So debt/gdp does not "spiral out of control" if government…
The unintended consequences of Abenomics on consumers
The danger of Japan's current policy (Abenomics) is that the outcome could turn out to be the exact opposite of what was originally intended. With wages stagnant, these import-driven price increases are hitting the Japanese consumer quite…
France and the Netherlands moving in opposite directions
Europe’s recovery is still uneven. Recent data in France and the Netherlands show one nation with contracting GDP and the other with expanding GDP. When will the recovery begin in earnest?
Growth rates in consumer income and spending have diverged
Consumer spending in the US accelerated in November, boosting projections for the GDP growth in the fourth quarter. While incomes grew as well, the rate of increases from the same period last year has slowed. With confidence improving,…
More Thoughts on the European Endgame
My view remains that Europe is in an incipient but unstable recovery vulnerable to exogenous shocks. However, I do not believe this recovery means that crisis is over. Rather, this is a lull before continued stagnation forces Europe to make…
The Stock Market
For the fourth quarter of 2013, 103 companies in the S&P 500 have announced negative earnings revisions. Only nine have disclosed positive profit assessments. The ratio of negative-to-positive, 11.4:1, exceeds the previous high…
The big yield curve steepener unwind
Since the Fed announced the reduction in securities purchases ("small taper"), the treasury curve has undergone some strange adjustments. Why would the 5-year note sell off the most while the long bond rallied?