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UPDATED We think that China is an indestructible economic juggernaut but its economy is very fragile and it is sitting on a property bubble which will burst. What China does in response has major implications for their economy and the rest of the world. This is the third part of a three-part series on this topic Inflation [...] We think that China is an indestructible economic juggernaut but its economy is very fragile and it is sitting on a property bubble which will burst. What China does in response has major implications for their economy and the rest of the world. This is the second part of a three-part series on this topic. China’s [...] We think that China is an indestructible economic juggernaut but its economy is very fragile and it is sitting on a property bubble which will burst. What China does in response has major implications for their economy and the rest of the world. This is the first part of a three-part series on this topic. We [...] My favorite party boy economist, Nouriel Roubini, just came out with his analysis for the second half and he notes that wemay be heading toward a double-dip recession. Too much negative news, he frets. I have been saying this for some time. The difference between me and Roubini is that he believes in the necessity [...] March 1 (Bloomberg) — The U.S. Transportation Department will lay off 2,000 employees today, halting construction projects, reimbursements to state governments and highway safety programs, according to a statement. Employees will be furloughed without pay because a funding measure stalled in Congress, the department said in a statement today. The affected workers are in the Federal [...] The core Consumer Price Index fell for the first time since 1982–0.1%–in January. Economists are lauding this deflation as a good thing on the theory that it gives the Fed more flexibility: in keeping interest rates low, as they have been doing, they don’t have to worry about inflation. I’m not sure what they mean [...] The employment numbers for January 2010 came out today and the headline was that unemployment dropped from 10% to 9.7%. This is a significant event because we all want to see employment grow. My conclusion from reading the report from the Bureau of Labor Statistics is that it’s very hard to tell if this increase [...] It all depends on how you wish to spin the numbers. Q4 2009 GDP increased 5.7% of which 3.4% was inventory reduction. Overall for 2009 GDP went down 2.4%. My guess is that the 5.7% number will be readjusted downward when the revised numbers come out in late March (26th). What does this mean? Inventory reduction is [...] I predicted that we would have a Q4 09 “bump.” But so did everyone else. I think we’ll have a positive Q1 10 also. The latest report from Goldman Sachs reveals that they have upped their Q4 estimate to 5.8%: We have boosted our estimate for fourth quarter growth to 5.8% from 4.0% (annual rate). However, [...] Comments on President Obama’s State of the Union Speech
I will say that President Obama is pretty good at this speech stuff. Remember last year when Professor Obama said that the adults are now in charge and we’re going to clean up the mess the kids made? This year had a much different tone. At [...] Even the Congressional Budget Office is conceding that things aren’t turning out as expected: The Congressional Budget Office hiked its forecast Tuesday for how much the stimulus bill will add to the nation’s deficit, raising its estimate by $75 billion to $862 billion. The American Recovery and Reinvestment Act, passed in February 2009, was initially believed to [...] More from Cato’s Dan Mitchell on Keynesian stimulus. It is an excellent recap of the promises and failures of the current economy. I disagree with his conclusion that we are almost certain to recover in 2010. I have previously written about the phenomenon that regardless of what the Obama Administration does, economies tend to repair themselves. Evidence [...] President Obama used his bully pulpit on Thursday to chastise banks and bankers while announcing a punitive tax on them to assuage an angry populace. Is his rage against the big paydays justified? Not for the reasons he [...] This has been a phenomenal year for the economy. There have been major, fundamental changes that will affect our lives for many years to come. I don’t see these changes as a good thing for the short or long term. These changes are generational in that they don’t occur often and they will radically impact the [...] By Jeff Harding. This video was sent to me by Dan Mitchell at Cato. Dan presents an excellent summary of why government spending is harmful to the economy and prosperity. Whether or not it results in deficits, the greater the spending by government as a percentage of GDP, the greater is the negative impact on the economy. One [...] By Jeff Harding.
I’ve been thinking a lot about gold lately. Especially now that Nouriel Roubini has come out and trashed the noble metal (see Tyler Durden’s article). Anyone who tells you they know what’s going to happen with gold is guessing. Roubini is guessing. Roubini also makes some fundamental errors in his analysis, and [...] By Jeff Harding. The new jobs bill negotiations are apparently getting under the skin of our politicians. As reported in the Wall Street Journal Wednesday, the Republicans and Democrats were rather testy with each other during a meeting with the President. Here’s part of their exchange: Republicans pushed Mr. Obama to freeze federal spending, a plea the [...] |
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