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

Reducing household financial leverage: the easy way and the hard way

In case you haven’t noticed, I have become slightly less “optimistic” about the prospects of a sustainable U.S. recovery. I used to think that the household deleveraging story was more of a decade-long project, and the economy would cycle throughout. But recent deficit hysteria has me worried; income growth might lapse. What differentiates this recovery […]

O.K., let’s just think about this budget thing for a while, Part I

To be sure, the U.S. government deficit is shocking; but it’s not anymore shocking than the recession through which we have all lived. Tax receipts plummeted (see the second chart from this post) and spending on cyclical social programs (like unemployment benefits) is surging. This adds up to an exponentially rising budget deficit, and thus […]

Get ready for a little EM inflation

Today I was thinking about tightening cycles in emerging markets; and more specifically, about that in China. Because let’s face it, China matters. China matters to the rest of Asia via competition for export income. China matters to Europe via competition for jobs. China matters to Brazil via domestic production via imports. China matters. The […]

It Takes Two to Tango: A Look at the Numerator AND Denominator

This is a guest contribution by Marshall Auerback, Braintruster at the New Deal 2.0 by Marshall Auerback A new book by Kenneth Rogoff and Carmen Reinhart, “This Time It’s Different: Eight Centuries of Financial Follies”, has occasioned much comment in the press and blogosphere (see here and here) The book purports to show that once […]

The endgame for Europe: wage cutting and the battle for exports

Yesterday I argued that Latvia’s cost-cutting efforts are evident compared to a cross-section of European Union countries. Latvia’s efforts, while commendable, were very much a function of the emergency IMF loan in December 2008 and the ensuing recession in 2009. After an email exchange with Marshall Auerback, and thinking more about the cross-section of Europe, […]

More Detail on Working the Refs

So there are several comments to my previous post. Ignoring the a good one from Dr. DeLong, several people are taking umbrage at my unsubtle suggestion that the effect on employment being suggested is, to be polite about it, rather creative. kharris begins, “So let me see if I have this right. If anybody tries […]

Politics vs. the Economy: Turkey edition

Turkey’s on my mind. Let me sum up my point – that the outlook for the Turkish economy hangs very much in the balance – from the following news excerpts. From the Hürriyet Daily News and Economic Review on February 8 : the Legislation for the [fiscal] rule, which will limit the size of the […]

Japan – GDP – exports – manufacturing – autos – Toyota

Forget the Eurozone for just a minute. Japan’s problems are big: Toyota is a major exporter/employer. Last year 48% of all new standard passenger vehicles sold in Japan were Toyota (or its Lexus brand). The WSJ article describes Toyota’s status in Japan as the following: In short, Toyota is to Japan what General Motors Corp., […]