Many people look for an inverted yield curve to signal a recession. The track record is good. The yields on longer term maturities decline in relation to shorter term yields. Let me show a version of the inverted yield chart that I haven’t seen anyone do yet. I take the 3-year Treasury constant maturity rate […]

Here is a chart comparing the savings rates of the US and China… Thanks to a friend in Chile who sent me this chart from Fidelity International. On the x-axis is GDP per capita. So the more economically advanced countries are to the right. The chart on the left shows that China has low household […]

As I said the other day, Mr. Krugman was saying that the economy was awash in excess savings. His words implied that the US was awash in excess savings. Then I said yesterday that the truth was in fact that the world was awash in excess savings. Yesterday, Mr. Krugman clarified his point and said… […]

And some vigilant independent watchdogs are tracking the negotiations with sources they trust, including Dean Baker and Yves Smith, who join Moyers & Company this week. Both have written extensively about the TPP and tell Bill the pact actually has very little to do with free trade. Instead, says Dean Baker, co-director of the Center […]

Part 1, Part 2, Part3 Yesterday I criticized Mr. Krugman for saying that savings were in excess. I said that personal savings is down, and domestic savings are not enough to cover investment such that the US has to borrow from abroad. This post will explore the relationship between domestic savings, domestic demand and the […]

From the Financial Times (pay wall I believe): Investors warn moves to curb climate change will hit fuel demand October 24, 2013 By Ed Crooks Investors managing assets worth about $3tn have written to the world’s largest oil, gas and coal companies, calling on them to prepare for a possible decline in demand for fossil […]

Mr. Krugman said yesterday that the economy is “awash in excess savings with nowhere to go”. If we are awash in excess savings, why do we borrow from foreigners? Let’s look at this equation to determine net borrowing from foreigners… Current Account deficit (net borrowing from abroad) is… (M – X) = (G – T) […]

In part #1 of this series on international flows, Norway’s trade deficit of the 1960’s was associated with foreign investment coming into their country. So the net trade deficit of the Current Account was matched by the net foreign investment surplus of the Capital and Financial Account. There is a principle in international income accounting… […]

by Linda Beale Deficit Disorder Symptoms–via Naked Capitalism/New Economic Perspectives Yves Smith over at Naked Capitalism has an insightful re-post today on the way the right in particular–and most in the media and public–talk about deficits and misunderstand the relative importance of failures to invest in physical and capital infrastructure (roads, education…) versus the relative […]

Is the US trade deficit a problem? Are we somehow incapable of competing in the international market? Is there anything good about being such a debtor nation to China? Is the US really losing jobs to other countries? These issues are heated. People are passionate about their views. Yet, it seems most people don’t understand […]