Relevant and even prescient commentary on news, politics and the economy.

Household leverage: US vs. UK

Households in the US and the UK are members of the “most levered club”. But put their balance sheets side-by-side, and the outlook for the US economy looks a little brighter than that for the UK. Why? Both are dropping debt burden, but a qualitative analysis suggests that the UK household leverage (probably) should be […]

Sit back and relax: the US and China, this is gonna take awhile

China exported its way to a $2 trillion dollar fortress of F/X reserves ($USD mostly), while the US borrowed its way into a hole deep enough to spark a vast global recession. Who’s to blame? Given the symbiotic relationship in the chart above, it’s hard to blame any one individual, group, or even country. But […]

Too efficient NOT to consolidate

Cross-posted at News N Economics blog, by Rebecca Here’s yet another historical record broken in 2009: “Only three insured institutions were chartered in the [third] quarter, the smallest quarterly total since World War II.” This fact is from the FDIC’s latest Quarterly Banking Profile. There are probably non-economic reasons for this, i.e., the application process […]

Are exporters in Asia real-ly losing their competitive edges?

by Rebecca Central banks across Asia are concerned and actively engaged in some kind of currency manipulation – direct intervention, quasi-capital controls, and/or public speech (I will refer to this later, but RGE published a great article to the fact) – as investors flock to global capital markets seeking the “risk-on” trade. Central banks are […]

LABOR’S SHARE

By Spencer (2009)   The issue of a jobless recovery is getting a lot of attention recently. I’ve found the best way to look at the issue is to compare the change in real growth and productivity over the long run. There have been three periods of different productivity trends in modern US economic history. […]

Big week for currency intervention measures

by Rebecca Policymakers across Latin America are announcing measures to stem currency appreciation against the $US. Since March 2009, the $US depreciated 25% against the Colombian peso, 28% against the Brazilian real, 14% against the Mexican peso, 12% against the Peruvian nuevo sol, and 11% against the Chilean peso. Much of the $US’s lost value […]

Foreign exchange reserves are hot hot hot

by Rebecca The G7 G20 Leader’s statement, number 20., regarding the IMF’s mission and governance (bold font by yours truly): The IMF should continue to strengthen its capacity to help its members cope with financial volatility, reducing the economic disruption from sudden swings in capital flows and the perceived need for excessive reserve accumulation. As […]

The Fed’s attempt to assuage inflation fears that don’t need assuaging

by Rebecca There is no shortage of speeches by US central bankers these days. The following is an excerpt from a NY Times article that highlights the debate among key Fed officials about the speed and method of stimulus withdrawal once the decision to exit has been made: Mr. Bernanke and other officials want to […]

The Fed called a mulligan

by Rebecca Ex post, it is obvious that the Fed was way too tight in the second half of 2008. To be sure, the FOMC was actively engaged in its standard easing policies; however, the Fed got the Treasury to aid in its sterilization efforts, and later the Fed fast-tracked the interest on reserves (IOR) […]

The Fed’s moving target: NAIRU

by Rebecca Neal Soss and Henry Mo at Credit Suisse published a very interesting article, “Where is full employment in a more volatile macroeconomy?”, where they argue that the natural (long run) rate of unemployment may be shifting (they do this by showing that the Beveridge curve, which plots the the job vacancy rate against […]