Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Sunday, September 22, 2013
Can Quantitative Easing Create Economic Growth? / Economics / Quantitative Easing
By: Frank_Shostak
Some commentators such as Mohamed El-Erian, the chief executive officer of Pacific Investment Management (PIMCO), are of the view that the Federal Reserve’s policy of massive asset purchases has added very little to economic growth. A study published by the Federal Reserve Bank of Kansas City explores various channels through which monetary pumping can grow the US economy. On this, the study indicates that the Fed’s purchases of mortgage backed securities (MBS) can have a strong beneficial effect. The study however suggests that with respect to the purchases of Treasury Bonds the effect on the economy is minimal.
Sunday, September 22, 2013
America's Unfunded State Pensions Crisis - Rich, Poor and Begger Cities / Economics / Pensions & Retirement
By: John_Mauldin
"The future is already here," intoned William Gibson, one of my favorite cyberpunk science fiction authors, "it's just not very evenly distributed." Paraphrasing Gibson, the pension crisis is already here; it's just not very evenly distributed. For the past two weeks we've been exploring the problems of state pension funds. This week we will conclude our look at pension plans for the nonce with a 30,000-foot overview of the states and then take a deeper dive into one city: mine. This will give you at least one version of how to do your own homework about your own hometown. But fair warning, depending on your locale, you may need medical help or significant quantities of an adult beverage after you finish your research. Then again you may be pleasantly surprised and congratulate yourself on choosing a particularly adept hometown. And be on notice that, no matter what your personal conclusion and how well-grounded your analysis is, there will be people who live in your neighborhood who think you are utterly full of, well, let's just say "nonsensical matter" and leave it at that. This is a family letter.
Wednesday, September 18, 2013
The Need for a New Economics / Economics / Economic Theory
By: John_Mauldin
In today's Outside the Box, my good friend George Gilder, the well-known techno-utopian, attempts with some success to turn economics on its ear. "The economy is not chiefly an incentive system," he asserts, "it is an information system." And information, truly understood, is about the introduction of novelty, or "surprise," into a system. In the case of the economy, it's about invention and entrepreneurship. The new information that is injected gets converted into knowledge; and thus, says George, it is accumulated knowledge, rather than money or material, that constitutes true wealth.
And thus the economy is driven not so much by powerful people and institutions wielding the levers of the economic machine as it is by the ever-increasing power of information and knowledge. Economists and the governments they work for often appear to prefer a deterministic, no-surprises (and too-big-to-fail) economy, but that way lies economic stagnation. If determinism worked, socialism would have thrived.
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Tuesday, September 17, 2013
Bitter Facts of the Jobs Recovery You Need to Know About / Economics / Employment
By: InvestmentContrarian
George Leong writes: The Federal Reserve and Obama administration have pushed trillions of dollars of stimulus into the economic veins of America. For that, the return on the investment has been dismal.
Just take a look at the retail sales reading for August; consumer spending clearly isn’t doing what the government wants it to do and that is to spend and drive gross domestic product (GDP) growth.
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Saturday, September 14, 2013
The Silent Assassin Of The U.S. Economy / Economics / Inflation
By: Clif_Droke
When most people think about the biggest threats to the U.S. economy they usually mention things like the budget deficit, the national debt or the trade gap. What rarely gets mentioned as a potential economy killer is something we all have to face every day yet mainstream economists refuse to acknowledge it.
The biggest problem in the economy isn't the excessive amount of public or private debt; it's the extremely high level of prices for basic commodities like food and fuel. Economists consistently underestimate how much of the middle class worker's paycheck goes to buying these two essential needs. For all of its successes, the Fed's QE program did nothing to alleviate high retail food and fuel prices. If anything, it may have actually increased them.
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Thursday, September 12, 2013
How Japan Pretends To Fight Debt And Deflation, But Doesn't / Economics / Japan Economy
By: Raul_I_Meijer
Let's see if I can keep this nice and short: in my view the article below from Reuters correspondents Yoshifumi Takemoto and Yuko Yoshikawa, while looking innocent enough at first glance, in fact borders on nonsensical disinformation.
Thursday, September 12, 2013
Seniors Are Stealing From Our Young, the Looming Entitlement Spending Catastrophe / Economics / Demographics
By: Bloomberg
Hedge fund icon and former Chairman, President and CIO of Duquesne Capital, Stan Druckenmiller joined Bloomberg Television's Stephanie Ruhle and Erik Schatzker on "Market Makers" for a full hour and said, the government must address entitlement spending "This is the first generation where a 30-year-old's net worth is less than his parents...If you look at the older people, there net worth has doubled." Druckenmiller also said it would be a big deal for financial markets if the Federal Reserve were to completely end its asset purchases over the next 12-months.
Druckenmiller said he sees no bear market as long as fed prints money, prices will respond to actual QE exit, he doesn't see many investing opportunities, he is very focused on who the next Fed Chairman is, and thinks there are too many hedge fund managers.
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Wednesday, September 11, 2013
The Rundown on Runaway Inflation / Economics / Deflation
By: EWI
Despite a dramatic increase in the Fed's balance sheet, the Producer and Consumer Price Indexes are subdued
Famed radio broadcaster Earl Nightingale, who was the voice of Sky King on the radio and later went on to become a motivational speaker, described what he believed to be the biggest sin a public speaker could commit.
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Wednesday, September 11, 2013
Economic Advantage America / Economics / US Economy
By: John_Mauldin
Today's Outside the Box, which comes to us from good friend Gary Shilling, is unusual because that old confirmed bear is waxing positively bullish about the future prospects of the US. In doing so he mirrors my own views. It is just a matter of time before I go from being bearish on the US because of the dysfunctional US government to being an irrational perma-bull, at least for the next few decades. There is just too much upside potential with this country of ours — if we can muster the political will to handle our serious fiscal issues.
Gary builds the positive case beyond the fiscal concerns, and a compelling case it is. In six crucial areas, he says — demographics, entrepreneurial activity, labor relations, domestic vs. foreign debt financing, currency strength, and energy independence — the US is better positioned than any of its major competitors.
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Sunday, September 08, 2013
Pension Funds Unrealistic Expectations, Nominal or Real Returns? / Economics / Pensions & Retirement
By: John_Mauldin
"In the short run, the market is like a voting machine, tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine, assessing the substance [intrinsic value] of a company." – Benjamin Graham
Way back in the Paleozoic era (as far as markets are concerned), circa 2003, I wrote in this letter and in Bull's Eye Investing that the pension liabilities of state and municipal plans would soon top $2 trillion. This was of course far above the stated actuarial claims at the time, and I was seen as such a pessimist. Everyone knew that the market would compound at 9%, so any problems were just a rounding error.
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Wednesday, September 04, 2013
Fear the Inflation / Economics / Inflation
By: Michael_Pento
While officials from the Federal Reserve gather recently in Jackson Hole Wyoming to bemoan that inflation isn’t yet high enough for their liking, the truth is that inflation is already ravaging the middle class.
To prove my point, the government’s official reading on core CPI inflation (one of the Fed’s preferred metrics that removes food and energy prices) increased just 1.7% from July 2012. So, in the mind of those who control the value of our currency, inflation is well below their target of 2%; and therefore needs to be increased.
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Wednesday, September 04, 2013
The Three Types of Economic Austerity / Economics / Economic Austerity
By: MISES
Frank Hollenbeck writes: Reading the financial press, one gets the impression there are only two sides to the austerity debate: pro-austerity and anti-austerity. In reality, we have three forms of austerity. There is the Keynesian-Krugman-Robert Reich form which promotes more government spending and higher taxes. There is the Angela Merkel form of less government spending and higher taxes, and there is the Austrian form of less spending and lower taxes. Of the three forms of austerity, only the third increases the size of the private sector relative to the public sector, frees up resources for private investment, and has actual evidence of success in boosting growth.
Wednesday, September 04, 2013
How Fed Policy Has Devastated Three Generations of Retirees / Economics / Demographics
By: John_Mauldin
Retirement can be an unpleasant prospect if you’re not ready for it. This week’s Outside the Box is in in-depth report on Americans' retirement prospects, which comes to us from Dennis Miller, a columnist for CBS Market Watch, and editor of Miller’s Money Forever. It's not just the Boomers who are trying (often in vain) to retire this decade; it's also Gen-Xers, who are the most indebted generation (and the one that saw their assets depreciate the most in the Great Recession). The Millennials haven't been spared, either; in fact, over time they may be the hardest-hit, since near-zero interest rates are keeping them from compounding their savings in the early years of their careers, when the power of compounding is greatest. In addition, the difficult post-college job market and sky-high levels of student loans have kept most Millennials out of the stock market, and they are far less likely than previous generations t o open a retirement savings account.
Tuesday, September 03, 2013
3 Ways Inflation Destroys an Economy / Economics / Inflation
By: Richard_Moyer
If Batman has the Joker, I have inflation. Inflation, my great and worthy opponent, has shown me yet another side of his wicked, wealth-destroying ways. Let's have a look.
Sunday, September 01, 2013
Savings Glut vs. Low Interest Rates / Economics / Economic Theory
By: David_Howden
Five years after the worst financial crisis since the Great Depression, economists are still starkly divided as to its causes. Perhaps this is not too surprising as we are now more than 80 years past the Great Depression with little end in sight to the debate surrounding the causes of that downturn.
Most economists fall into one of two camps when explaining where the imbalances originated that led up to the current crisis. Austrian School economists are in the unique position of being able to reconcile these two camps, even while favoring the first explanation to the second.
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Thursday, August 29, 2013
Asia Growth Illusion, Why China May Not Be The Odd One Out? / Economics / Asian Economies
By: DK_Matai
Which are the world's worst performing currencies over six months losing between 20+% to 8+% against the US dollar? 1. Indian Rupee; 2. Brazilian Real; 3. South African Rand; 4. Indonesian Rupiah; 5. Turkish Lira; and 6. Russian Rouble -- in that order. So whose left amongst the 'Emerging Market' majors including the BRIC nations save China? How long before the Chinese fortune cookie crumbles given a multi-trillion dollar black hole of local government debt which nobody really wants to talk about?
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Tuesday, August 27, 2013
Global Economy Suffers From Hypothermia / Economics / Global Economy
By: Raul_I_Meijer
We've used the analogy before, in particular to describe what happened to the Roman Empire during the latter days of its existence. Looking around various economies in the world today, the same analogy once again comes to mind. One might say that what we see these days is analogous to the more advanced stages of hypothermia.
Early hypothermia may show in nothing more than cold feet, in itself an amusing analogy perhaps. But a body that is exposed to extreme cold over longer periods of time will at some point start to exhibit symptoms such as frostbite, which are the result of the core of the body trying to save itself at the cost of the periphery, the extremities. Typically, a human body, for instance, will lose its toes first because the heart can no longer pump enough blood (heat) to them and at the same time keep the body's core above a minimum temperature.
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Tuesday, August 27, 2013
Greece Highlights Germany's EU Dilemma / Economics / Eurozone Debt Crisis
By: John_Browne
On August 11th, German media got hold of and published an internal Bundesbank report which maintained that Greece would likely need further relaxation of the terms of its rescue bailouts. The report contained revelations that could be deeply embarrassing to the government of Angela Merkel that has maintained forcefully that German taxpayers would face no further commitments. The revelations could potentially be a potent weapon for her political opposition in the upcoming election. More broadly, the revelations reveal a wide gap between economic reality and the sunny face of EU optimism.
Monday, August 26, 2013
Debt, Inflation and Economy - Trying To Stay Sane In An Insane World / Economics / Economic Theory
By: James_Quinn
In Part 1 of this article I documented the insane remedies prescribed by the mad banker scientists presiding over this preposterous fiat experiment since they blew up the lab in 2008. In Part 2 I tried to articulate why the country has allowed itself to be brought to the brink of catastrophe. There is no turning back time. The choices we've made and avoided making over the last one hundred years are going to come home to roost over the next fifteen years. We are in the midst of a great Crisis that will not be resolved until the mid-2020s. The propagandists supporting the vested interests continue to assure the voluntarily oblivious populace the economy is improving, jobs are plentiful, inflation is under control, and housing is recovering. Bernanke and his band of merry money manipulators, Obama and his gaggle of government apparatchiks, and their mendacious mainstream media mouthpieces have enacted radical measures in the last five years that reek of desperation in their effort to give the appearance of revival to a failing economic system. Stimulating the net worth of bankers and connected corporate cronies through engineered stock market gains has not trickled down to the peasants. Our owners try to convince us it's raining, but we know they're pissing down our backs. Our Crisis mood is congealing.
Sunday, August 25, 2013
Bankrupting France, On the Edge of Euro-zone Periphery / Economics / France
By: John_Mauldin
"The emotional side of me tends to imagine France, like the princess in the fairy stories or the Madonna in the frescoes, as dedicated to an exalted and exceptional destiny. Instinctively I have the feeling that Providence has created her either for complete successes or for exemplary misfortunes. Our country, as it is, surrounded by the others as they are, must aim high and hold itself straight, on pain of mortal danger. In short, to my mind, France cannot be France without greatness. – Charles de Gaulle, from his memoirs