"The US and Europe economic surprise indices have diverged dramatically recently. After the weakness in new orders during the summer, economists have lowered expectations for the US, but were since consistently surprised to the upside. In Europe the falling sovereign borrowing costs made some forecasters more sanguine about prospects for a recovery, which did not materialize. Instead the Eurozone saw consistent deterioration in the "core" economies." Source: Sober Look
Keywords: US Economy, European Economy, Economic Indices, Economic Surprise Index
Things go into the right direction:
Labour costs have to adjust if you take a look at productivity differences among EU countries:
Keywords: EU Labour Costs, EU Productivity
..."The key reason jobs will almost certainly grow at at least a tepid rate is monetary policy. Ellis Tallman and Saeed Zaman have shown in research for the Cleveland Federal Reserve bank that the kind of objective economic conditions that existed in 2009 would have justified a federal funds rate of minus 5 percent—if such a thing were possible. But it’s not possible for the Fed to set nominal interest rates below zero, and the Fed hasn’t been willing to try to raise its inflation target to reduce real interest rates. Consequently, with interest rates stuck at zero, we got exactly what you would expect in a country where the central bank sets rates five percentage points too high—soaring unemployment and a sluggish recovery."
Kewords: US Economy, Economic Growth, Monetary Policy
Countercyclical monetary policy.. proof of concept has to follow.
Philippe Aghion CERGE-EI Lecture "Monetary Policy, Liquidity and Growth" 11 June 2012
Manufacturing in the US grew in October at its slowest pace in more than three years and appears likely to act as a drag on overall growth in the final months of 2012. Markit said its U.S. Manufacturing Purchasing Managers Index fell to 51.0 this month, below a preliminary estimate of 51.3 and September’s reading of 51.1. Today’s graphic shows how key economies performed in October based on Manufacturing PMI. see graph
Keywords: Global Manufacturing Activity, Manufacturing in World Regions
Keywords: US Budget, Fiscal Cliff
Axel Merk and Nick Reece of Merk funds have some good thoughts in their latest newsletter:
"American consumers (and Chinese exporters) have been subsidized by the artificially weak Chinese currency, to the detriment of Chinese consumers who have faced stunted purchasing power. However, we believe this dynamic will continue to change and suggest that a stronger RMB is very likely not only on Bernanke, Obama, and Romney’s wish list, but increasingly in China’s own interest. That would mean the tables getting turned on the American consumer." Source: Merk Funds
Read the Newsletter here:
Keywords: Currencies, Exchange Rates, Renminbi, RMB, US Dollar
You find below selected feeds of think tanks, institutes and institutions which support the idea of liberty and free markets.
You find here comprehensive lists of libertarian think tanks around the globe:
Podcast feed of the Cato Institute (United States)
The great economist about inflation and stimulus.
Keywords: Inflation, Quantity of Money
Reinhart and Rogoff, many times referred to on this platform, show in their latest article on Voxeu.org that the current recovery is not slower as those in previous financial crises.
The de-leveraging process is at the best in a beginning stage. We will see much more austerity and financial repression. A kind of bad prospects on a macro level... some "animal spirit" on a micro level can make life a bit sweeter .. at least for those who are looking for entrepreneurial challenges.
Keywords: Financial Crisis, Recovery after Financial Crisis
The slow recovery from the financial crisis and recession of 2007 – 2009 has become a centerpiece of the Presidential election. In last Tuesday’s debate, Mitt Romney, picking up on a theme that has been emphasized by John Taylor, contrasted the current slow recovery with the much faster recovery from the 1981 – 1982 recession. During the past two weeks, there has been an intense focus on a comparison of the current recovery with recoveries from other financial crises. On October 11, Taylor, using historical data from a paper by Michael Bordo and Joseph Haubrich, argued that the current recovery is much slower than the average of previous American recessions associated with financial crises. This was followed by an October 14 paper by Carmen Reinhart and Ken Rogoff who argue that the aftermath of the U.S. financial crisis has been typical of the recoveries from other severe financial crises, an October 15 reply by Taylor, an October 16 rejoinder by Reinhart and Rogoff, an October 17 piece by Paul Krugman, and an October 17 reply by Taylor. read more on Econbrowser
Keywords: Financial Crisis, Revovery after Financial Crisis
Full recovery in 2016 - after the crisis began in 2007? Quite frustrating prospect. Could more "animal spirit" speed up the process?..
We could read today in various newspapers that the IMF sees progress in the structural reforms in Southern European countries. The re-balancing of the wage levels to non-distorted conditions is a key process for long-term recovery. Following graph is amazing!
Keywords: European Crisis, Market Distortions, Re-Balancing
Keywords: Economic Development, Growth, Trust
Source: Merk Funds
Keywords: Central Banks, Monetary Policy, Central Bank Balance Sheet Expansion
Porta, Angelo, Unconventional Monetary Policies - Lessons from the Evolution of Balance Sheets of Four Central Banks (2007–2010) (March 2011). Paolo Baffi Centre Research Paper No. 2011-87. Available at SSRN: http://ssrn.com/abstract=1798444
Keywords:d Creativity, Innovation, Connected Mind
Fascinating interview. Creating value does not necessarily mean to take values out of companies but to create values in order to develop firms in the long-term. And much more about the subject..
"By historical standards, the current recovery from the recession that began in 2007 has been disappointing. As John Taylor of Stanford University's Hoover Institution and the Department of Economics argues in Part 1 of this discussion on the economy, GDP has not returned to trend, the percent of the population that is working is flat rather than rising, and growth rates are below their usual levels after such a deep slump.
In this episode, Taylor and Number's Game host Russ Roberts discuss possible explanations for the sluggish recovery: the ongoing slump in construction employment, the effect of housing prices on saving and spending decisions by households, and this recovery's having been preceded by a financial crisis. Taylor rejects these arguments, arguing instead that the sluggish recovery can be explained by poor economic policy decisions made by the Bush and the Obama administrations."
Keywords: US Economy, US Recovery
Good new paper by Buchheit, Gulati, exporing 5 options for the Eurozone:
The 5 Options:
Option 1: Jolly the markets
Option 2: Massage the yields
Option 3: Full bailout
Option 4: Reprofiling
Option 5: Full (Greek-style) restructuring
"The Eurozone debt crisis is entering its third year. The original objective of the official sector’s response to the crisis -- containment -- has failed. All of the countries of peripheral Europe are now in play; three of them (Greece, Ireland and Portugal) operate under full official sector bailout programs.
The prospect of the crisis engulfing the larger peripheral countries, Spain and Italy, has sparked a new round of official sector containment measures. These will involve active intervention by official sector players such as the European Central Bank in order to preserve market access for the affected countries.This paper surveys the options now facing the sovereign debtors and their official sector sponsors. It concludes that there are no painless or riskless options. In the end, the question may come down to this -- to what extent will the official sector sponsors of peripheral Europe be prepared to take on their own shoulders (and off of the shoulders of private sector lenders) a significant portion of the debt stocks of these countries during this period of fiscal adjustment?"
Keywords: Europe, European Union, European Crisis
Keywords: Money, Inflation
Major firms are considering relocation from politically unstable high tax EU jurisdictions to more stable countries such as Switzerland: Coca Cola leaves Greece heading for Switzerland, Oct. 12, 2012
In an environment with tax competition and competing political systems (a favorable state, as compared to more and more central planning!) politicians in respective problem countries will only have limited possibilities to increase taxes as output could decrease substantially. The relationship between tax increases, government income and economic output is shown in following graphs:
"Taken at face value, the results suggest that the capacity to create additional tax revenue does not appear to be the first binding constraint on using tax increases for fiscal consolidation, because not many countries are likely to be located on the downward sloping part of the Laffer curve. This is particularly true with regard to the consumption tax. On the other hand, the model misses important aspects of tax competition, such as portfolio and profit shifting across jurisdictions".. Lukas, Vogel, Tax avoidance and fiscal limits: Laffer curves in an economy with informal sector, Economic Papers 448, European Comission, January 2012
Kewords: Tax Revenue, Laffer Curve, Output and Taxes
Interview with influential Financial Thought Leader and financial historian. James Grant will discuss why the Federal Reserve’s policies of zero interest rates and massive purchases of U.S. Treasury and mortgage-backed bonds are dangerous to the economy and damaging to savers.
Keywords: US Economy, Global Economy, European Economy, Monetary Policy, Zero Interest Rates, ECB
Recommended search items and names(click on terms):
BIS Quarterly Review, Case Shiller Index, IFO Outlook, Institute for Supply Management, Michigan Consumer Sentiment Index, Philadelphia Fed Regional Index,
ECONOMIC INDICATORS AND OUTLOOKS (click on names):
George A. Akerlof, Bernanke, Olivier Blanchard, Alan S. Blinder, Buffett, Tyler Cowen, Niall Ferguson, Bruno S. Frey, Milton Friedman, Herb Greenberg, Greenspan, Michael Jensen, L.S. Karp, Charles Kindleberger, Krugman, Gregory Mankiw, Robert C. Merton, Nouriel Roubini, Kenneth Rogoff, Carmen Reinhart, David Rubenstein, Schumpeter, Anna Schwartz, Amartya Sen, Robert J. Shiller, Jeremy Siegel, Hans-Werner Sinn, George Soros, Joseph Stiglitz, Paul Volcker, Martin Wolf, Janet Yellen, Luigi Zingales, _________________________________________________________________________________ ________________________________________________________________________________________________________ _________________________________________________________________________________
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