There is now an increasing probability that the global economy – not just the US – will experience a serious and protracted recession. Macro developments in the last few weeks suggest that now all of the G7 economies (the group of the major advanced economies including US, UK, Japan, Germany, France, Italy and Canada) are … Read more
A whole genre of films – such as American Beauty and Twin Peaks just to cite two cult classics – have unveiled the moral ambiguities – and at times the darkness – that lurk behind the bucolic and idyllic façade of American Suburbia. The pretty and prototypical image of such suburbian lifestyle is the seven-bedroom … Read more
Two years ago in July and August of 2006 this author first presented here his analysis of why the U.S. would experience its worst housing recession of the last 50 years, why home prices would fall at least 20%, why the collapse of mortgages would start with the “subprime” ones (a term that at that … Read more
Unfortunately, this seems to be unfolding according to script. The dramatic abandonment of gas guzzlers by American consumers continues, with last month’s sales of domestically manufactured light trucks (which includes the once almighty SUV category) down 28% from June 2007. Sales of imported SUVs, which had been holding up better, plunged even more dramatically. … Read more
Hard times for the world economy bring hard times for the economic profession too. As noticed by Axel Leijonhufvud at the ouset of the ongoing financial crisis, “Abundant compliments and congratulations have been exchanged among academic economists and central bankers over the apparent successes of inflation targeting in recent years. Are these well deserved? Or … Read more
If one may paraphrase Mark Twain, recent news about the death of the commodity super-cycle and of a “commodity bust” were somewhat exaggerated. It is true that the steady general rise of commodity prices of latter years seems to have crossed an inflection point last March, along the week that followed the rescue of Bear … Read more
The Financial Times has now published a video interview (taped earlier this month in Italy) where Jim O’Neill (head of global macro research at Goldman Sachs) and myself discussed the US and global economic outlook. Here is the link to this video: How Slow Will It Go? Economists Discuss the Global Slowdown There is now doubt … Read more
As I alluded to in previous entries (last August and October) on Latin American economies in the current context of global deceleration or recession, whatever happens to China’s growth will matter much for the region (and the world). Provided that the Chinese growth only slowdowns, its influence on prices and demand for commodities may provide … Read more
The United States has now effectively entered into a serious and painful recession. The debate is not anymore on whether the economy will experience a soft landing or a hard landing; it is rather on how hard the hard landing recession will be. The factors that make the recession inevitable include the nation’s worst-ever housing … Read more
It is always risky to call an equity market peak and the beginning of a bear market in equities; so I will not try to do that. But leaving aside equity valuations, it increasingly looks like we are at the peak of a credit/debt cycle, in the US and globally. Specifically, the crucial macro question … Read more