Since the beginning of the global crisis in 2007-08 I have argued that the crisis was a consequence primarily of global trade imbalances generated by structural features that led to significant saving imbalances in China, the US, and within Europe. I describe this model in more detail in my recent book, The Great Rebalancing: Trade, Conflict, and … Read more
I just received a copy of the recent newsletter of the Health Services Employees, Local 768, District Council 37, AFSCME, AFL-CIO. It contains three articles by Michael Merrill, Dean of The Harry Van Arsdale Jr Center for Labor Studies, SUNY. Michael presents a good application of MMT to support his argument that our sovereign government can, and … Read more
There was an interesting nugget of data buried deep in yesterday’s GDP report from the Bureau of Economic Analysis: The rate of change of the deflator for personal consumption expenditures fell to an annual rate of -0.1 percent from the 0.0 percent rate reported earlier. An even broader measure of inflation, the GDP deflator, was … Read more
Tito Boeri and Pietro Garibaldi The Italian Senate voted last Friday the 2008 Budget Law and a package of fiscal measures effective already in the last quarter of 2007. For the first time since 1992, an Italian budget law worsen public finances with respect to the baseline scenario, at unchanged policies. The large revenue surplus … Read more
Negotiating treacherous financial markets now requires more knowledge of semiotics than economics. Twist and Shout Taper… US Federal Reserve Chairman Ben Bernanke has introduced the term ‘taper’ to the lexicon of central banking, follows on from his reinvention of the ‘twist’. European Central Bank President Mario Draghi’s stated strategy is “whatever it takes”. Economic Commissioner Olli Rehn … Read more
The Bureau of Economic Analysis released new data today showing that corporate profits reached an all-time nominal high in the second quarter of 2013. Profits before tax rose to 12.53 percent of GDP from 12.22 percent in the previous quarter, as the following chart shows. That was just fractionally short of the all-time high of … Read more
To paraphrase writer Robert Louis Stevenson, financial markets have “a grand memory for forgetting”. Multiple Latin debt crises and the 1997/1998 Asian emerging market crisis have been forgotten. Now, the risk of an emerging market crisis is very real. Real BRICs… Investors have been romancing emerging markets, exemplified by the dalliance with the BRIC economies … Read more
The ongoing political wrangling in Congress is the source of bewilderment for many, with even major media outlets getting the federal budget talks confused with the debt ceiling.Bloomberg is the latest victim, failing to distinguish the difference between the two issues. In essence, budget spending must be agreed by October 1st to avoid a government … Read more
We are in the midst of an extremely delicate and fragile historical nexus. The crisis is worse than ever and is hitting above all those companies that are less-prepared and the weaker strata of society. Young people find themselves in ever-greater difficulty (one out of three in Italy and one out of two in Spain … Read more
The following is a modified excerpt from my new book, “The Age of Oversupply: Overcoming the Greatest Challenge to the Global Economy,” which will be released for sale by the Penguin Portfolio division of Penguin Random House on September 26th. With the developed world economies still unable to escape from a condition of persistent economic … Read more