Global Macro Channel: Latest Posts
-
Finance & Markets
Fix the Credit Problem, Not its Symptoms
Two weeks ago Monday, markets traded down 300 points at the open. The sell-off seemed to be in anticipation of what was widely considered to be a poorly thought-out bailout plan. As it became clear that the $700 billion package was not going to be approved by the House, the Dow Jones Industrial Average plummeted [...]
-
Emerging Markets
Global asset re-pricing
It’s about 7:45 AM ET as I write this and the overseas stock markets are getting hammered. I can’t say I don’t fear what is going to happen today because I do. We are witnessing a meltdown of unimaginable proportions that is not just limited to one asset class or one sector of the economy [...]
-
Finance & Markets
Status report on the financial crisis: we’re at a critical point in time
Summary: Here is a brief report with conclusions only. The situation is moving too rapidly and become too complex for explanations. This post describes the natural evolution of the trends I have written about for the past year, which are now reaching a climax. Not yet, but soon we will be able to see the shape of [...]
-
Europe
Another Iceland?
European savers are shocked by the way in which their money has been frozen in Iceland. In the Netherlands, TV-reporters showed how Icesave has absonded with the money, leaving empty call centres in their Amsterdam offices. Next came the uncertainty about whether the Icelandic authorities would honour the deposit guarantee. An exceptional situation, but not [...]
-
Emerging Markets
House Prices: Corrections and Consequences
Housing prices[1] have begun falling this year in several advanced economies, a sharp contrast from the increase in prices seen during 2007 in almost all countries save the United States where a housing correction has been underway since late 2005. In real terms, and on a seasonally-adjusted basis, house prices fell in the first half [...]
-
Global Macro
Why Federal Reserve Policy Is Failing
The Federal Reserve and U.S. Treasury continue to fail in their attempts to stabilize the U.S. financial system. That is due to failure to grasp the nature of the problem, which concerns the parallel banking system. Rescue policy remains stuck in the past, focused on the traditional banking system while ignoring the parallel unregulated system [...]
-
Dan Alpert's Two Cents
Dense Smoke on the Horizon
Let’s take a step back. We are all becoming so focused on the individual policy “trees” of the continuing crisis that its time to take a broader look at the forest. The forest, regretably, is burning – and localized, helicopter-ed water drops aren’t sufficient and are taking too long to get to the source of [...]
-
Global Macro
The Meltdown (Part II)
The easy answer to why the bailout hasn’t worked is it hasn’t been implemented yet. But its purpose was largely psychological – to boost confidence that the government is doing something big to clear out bad debts that have been clogging the system. That psychological boost should have happened as soon as the bailout was [...]
-
Finance & Markets
Back to the Great Depression Debates
Or…Salt Water/Fresh Water Redux!
Figure 1: Log GDP (1996$), 1900-1967 (blue line), and linear trend (red line). Source: S.B. Carter, S.S. Gartner, M.R. Haines, A.L. Olmstead, R. Sutch, G. Wright, Historical Statistics of the United States, Millenial Edition (CUP, 2006).
-
Finance & Markets
The “Bernson Plan”
The country of Bubblia has a problem. It’s a fairly large country, and there are 100 million cars in operation. The cars are essential to this economy, and if the cars don’t work, the country will experience economic disaster. For the last 30 years, Edsel, Inc. and all the other car makers in the country [...]
