Category: Economy

Economy

US households have borrowed an entire year’s worth of the production of the entire economy

Colin Henderson

The video and the pdf record the discussion moderated by McKinsey.  This quote summarises for me and the longstanding position of this blog that Government is wrong to speak about recovery.  While the debate is US centric, the characteristics broadly apply to US, Canada, UK, and Euro countries such as Spain.  Brian is the General Counsel of the SEC.  The Future of Capitalism, Credit and Leverage | McKinsey Brian Cartwright: When you look at the leveraged nature of, let’s say, the consumer, it’s about 70 percent of the economy. So, if we’re going to have an economic recovery—and I would … Continue reading US households have borrowed an entire year’s worth of the production of the entire economy

Economy, EU, US

Signs of trouble in the western economies remain for banks

Colin Henderson

Whether its Greece, Portugal and the EU financial issues, or the ongoing housing saga in the US, we are clearly not yet out of the woods relative to the 2008 banking crisis. U.S. Plans to Expand Aid to Troubled Homeowners | NYT The Obama administration will announce on Friday a broad new initiative to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments. Technorati Tags: economy,banks,Greece,Portugal,US housing,economic crisis,banking crisis Continue reading Signs of trouble in the western economies remain for banks

Economy

To exit or not to exit; that is the question

Colin Henderson

There is a fascinating debate raging amongst some of the best known economists.  The debate is specific to the UK economy but when you note the number of Americans involved you can rest assured this is equally applicable to US. The debate began with the case for belt tightening from 20 economists: UK economy cries out for credible rescue plan | The Times IT IS now clear that the UK economy entered the recession with a large structural budget deficit. As a result the UK’s budget deficit is now the largest in our peacetime history and among the largest in … Continue reading To exit or not to exit; that is the question

Economy

Two views of Canadian economy – the external view is flawed

Colin Henderson

Consider these headlines about Canada, both published this week. First the world view of Canada, reaffirmed at Davos. What Toronto can teach New York and London | ft.com That’s where Canada comes in. It is a real-world, real-time example of a banking system in a medium-sized, advanced capitalist economy that worked. Understanding why the Canadian system survived could be a key to making the rest of the west equally robust. Next a Canadian view, that says Canada is a bubble waiting to burst, that is not widely shared other than by yours truly. Awash in a sea of Debt | … Continue reading Two views of Canadian economy – the external view is flawed

Canada, Economy

The impact of global fiscal stimulus is good for Canada | Bank of Canada

Colin Henderson

Canada has been receiving kudos for a job well done throughout the crisis of the lest 2 years.  This analysis from Bank of Canada has a telling paragraph (highlighted) that suggests there are good classic economic reasons for Canada being where it is, and over-confidence would be a bad idea. The Power of Many:  Assessing the impact of Global Fiscal Stimulus | Bank of Canada Table 4 shows that, on a regional basis, the United States, as a large and relatively less open region, benefits the least from a global stimulus. Moreover, the impact of different measures depends on its … Continue reading The impact of global fiscal stimulus is good for Canada | Bank of Canada

Economy

Thoughts on ‘The End Game’ and ‘This Time is Different’

Colin Henderson

My weekly newsletter from John Maudlin, cross posted here on The Business Insider is valuable to me in setting context for the longer view in the economy for North America, Europe and Japan.  This week is no exception.  Having spent 2009 reviewing inflation, and deflation prospects, he has now turned to thinking about what the economy will look like in the mid term future – The End Game. Over the next several months, we are going to start to explore various aspects of the end game. Whither Japan? Are they actually, as I think, a bug in search of a … Continue reading Thoughts on ‘The End Game’ and ‘This Time is Different’

Economy, Japan

JAL imminent bankruptcy is yet another indication of a changing world economic landscape

Colin Henderson

I continue to be of the view that we are in the early stages of a revolutionary period and that the companys which survive will not be the ones that composed the DOW/ FTSE/ Nikkei indexes of the last 30 years. There is a shift occurring and the economic crisis is only a symptom, as global balances shift and move in ways we cannot even comprehend today. Anyhow, in related news, yet another bastion of the old economy is in dire straits. JAL (Japan Air Lines) began in 1951, first flew to San Francisco in 1954, and in 1987 became … Continue reading JAL imminent bankruptcy is yet another indication of a changing world economic landscape

Economy

Bank of Canada joins other Central Banks is calling for caution

Colin Henderson

In the regular Monetary Policy Report the Bank of Canada keeps their focus on a low interest rate environment right through 2010. On inflation the view is mixed … The main upside risks to inflation relate to the possibility of a stronger-than anticipated recovery in the global economy. A stronger global recovery would be transmitted to Canada via trade, financial, confidence, and commodity price channels. There is also the risk that Canadian domestic demand could be more robust and have a more sustained momentum than projected. On the downside, a stronger-than-assumed Canadian dollar, driven by global portfolio movements out of … Continue reading Bank of Canada joins other Central Banks is calling for caution

Economy

The Real Cause of the Financial Crisis | Global Labour Supply Shifts

Colin Henderson

Over at Econbrowser Menzie highlights this new paper from two Profs, and someone from the NY Fed (no title). It closes the loop for me on something thats been bothering me about economists and the financial crisis. The debate about the cause of the crisis vacillates between Greenspan and loose credit, versus, global imbalances and Chinese who save too much. Neither of these resonate much, appear as reactions to a situation, and are therefore more symptomatic than causal. From the abstract to Why are we in a recession? The Financial Crisis is the Symptom not the Disease!, by Ravi Jagannathan, … Continue reading The Real Cause of the Financial Crisis | Global Labour Supply Shifts

Economy

Trends that lead to lower growth, lower profits and lower volatility for banks than during the past few decades | Deutsche Bank

Colin Henderson

This paragraph from the report below, succinctly summarises the growth prospects for Banks, and the backdrop to planning. Again, a plan that looks like the plan for 2007 is destined to fail. This is the time for breakout product design, and a dramatic cost reduction through shift to reliance on internet and online banking for a far greater breadth of service delivery. Global banking trends after the crisis | Deutsche Bank Research Lean years lie ahead for US banks. Performance improvements during the last 15 years have often been due to strong lending growth and low credit losses. As private … Continue reading Trends that lead to lower growth, lower profits and lower volatility for banks than during the past few decades | Deutsche Bank