loss socialization

Why does the federal government need to balance its books? Where does the money come from that the government spends? Whose income gets cut when spending gets cut? These are a few of the questions we should be asking when thinking about…

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…

Liberalizing interest rates means that those sectors of the economy who have benefitted from very low lending rates – SOEs, local and municipal governments, real estate developers, and other large borrowers – are likely to find many reasons…

The EZ rescue strategy adopted in May 2010 failed to restore debt sustainability, avoid contagion, or reduce moral hazard. This column argues that a volte face is needed. The debt of Greece, Portugal and Italy – and perhaps Ireland, Spain…

Perceptions have certainly changed a lot in the last few months. As recently as three years ago there were so few analysts who were skeptical about the sustainability of Chinese growth that we rarely disagreed among ourselves. Now, however,…

Michael Pettis predicts a hard landing in China. How much will growth slow? The World Bank report apparently doesn’t say, but the consensus has been slowly moving down towards 5-6% annual growth over the next few years. That’s better than…

Euroland is coming apart at the seams. Belgian/Bund spreads are now also over 200bps along with Italy and Spain. Belgium has just entered the periphery and France is not far behind.

Contagion in the sovereign debt crisis has already spread to Spain and Italy. David Blanchflower believes it may spread yet further to France. On Bloomberg, Blanchflower led off saying this would not be surprising, pointing to the dithering…

A comprehensive outline of the Irish situation and with a retrospective on the steps leading us to the brink.

Given S&P's decision to downgrade the U.S. credit rating to outlook negative, it bears remembering how we got here. I think the key word is deleveraging.