Economy Archives - Page 116 of 133 - the patient investor

June 5, 2012

Richard Koo: Where do we go from here?

How austerity will prolong the recession.

Richard Koo, Chief Economist, Nomura Research Institute at the Closing Panel entitled “Overhangs, Uncertainty and Political Order: Where Do We Go From Here?” at the Institute for New Economic Thinking’s (INET) Paradigm Lost Conference in Berlin. April 14, 2012.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

June 5, 2012

Ron Paul v. Paul Krugman: Austrian v. Keynesian

Aired on Bloomberg TV 4-30-2012 Ron Paul vs Paul Krugman Debate

Paul Krugman is simply wrong about needing the government to set interest rates. The market would do a better job of managing demand and supply. Where government is needed is to regulate the banks and prevent excessive debt growth by the banks.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 5, 2012

Paul Krugman on austerity

It is not often I agree with Paul Krugman. This is one of the few.

….not that I am in favor of big government.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 3, 2012

US banks face squeeze

Rising short-term interest rates (represented by 3-month Treasury yields on the chart below) caused negative yield differentials in 2006/2007 which led me to warn of an economic down-turn. Yield differentials are calculated by subtracting short-term (3-month) yields from long-term (10-year) yields. Banks borrow mostly at short-term rates and lend at long-term rates, generating a profitable interest margin. But when the yield differential turns negative, bank interest margins are squeezed, forcing them to contract lending. A lending contraction shrinks consumption + investment and sends the economy into a tail-spin.

Ten-Year Treasury Yield and Differential with Three-Month Yields

Negative yield differentials (or yield curves) are normally caused by rising short-term rates as in 2006/2007, but now we are witnessing the opposite phenomenon. Short-term rates are near zero, but falling long-term rates are starting to squeeze the yield differential from the opposite end. The situation is not yet desperate but a further decline in long-term yields would shrink bank interest margins. Fed initiation of QE3, purchasing additional long-term Treasuries, is likely to drive long-term rates lower and exacerbate the problem. The resulting contraction in bank lending would cause another economic down-turn.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

May 31, 2012

Bair: Regulators Should Tighten Volcker Rule – WSJ.com

Jamila Trindle: Regulators should push derivatives out of federally backed banks and tighten the Volcker rule, former Federal Deposit Insurance Corp. Chairman Sheila Bair said Thursday.

“Don’t let insured deposits fund that activity,” Ms. Bair said at a roundtable on the Volcker rule held by staff of the Commodity Futures Trading Commission.

via Bair: Regulators Should Tighten Volcker Rule – WSJ.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

May 30, 2012

How Europe Can Save the EU: Work Harder, Spend Less

Andy Xie, an independent economist in China, said European countries without a competitive advantage must simply work harder or spend less. Alternatively, if they want to keep living it up, they will have to accept wrenching labor reforms and deregulation.

Xie saw no popular consent for either course of action. Nor did he detect that Europe was tightening its belt as urgently as Asia did after its 1997/98 financial crisis. “While eurozone economies have contracted a bit, people seem to be bent on enjoying life as usual,” Xie wrote in New Century weekly, a Chinese publication. “China cannot save Europe. No one can. Only Europeans can, through increasing work relative to leisure.”

via How Europe Can Save the EU: Work Harder, Spend Less.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

May 30, 2012

Conversations with Great Minds – Paul Krugman – End This Depression Now

Thom Hartmann is joined by Nobel Prize winning economist Dr. Paul Krugman, professor of economics and current affairs at Princeton University and columnist on the New York Times. His new book is titled: End This Depression Now. Europe is in crisis mode. The United States could be headed off a fiscal cliff at the end of the year.

Part 2:

Comment:~ Paul Krugman believes in big government and big unions and dismisses the alternative as “voodoo economics”. The issues are more complicated than this. John Maynard Keynes was right in some areas — austerity does not restore confidence in a shrinking economy — but over-simplistic in others. If governments do run deficits — I believe this is a necessary evil during a financial crisis — increasing government spending on welfare payments and non-productive assets simply carries the country to the next crisis — ballooning public debt. The only way to avoid this is to channel fiscal deficits into productive investment which will enhance GDP growth and help to repay the debt incurred.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

May 29, 2012

Spain's Economy Shows Fresh Strain – WSJ.com

Spain’s economy showed fresh strain as retail sales fell at a record pace in April, showing the government’s austerity program is strangling consumption and suggesting deepening recession. Data Tuesday from the National Statistics Institute, or INE, showed seasonally adjusted retail sales fell 9.8% on the year in April, compared with a 3.8% drop in March. The decline was the sharpest since INE started collecting the data in January 2004. Household spending is dropping as unemployment approaches 25% of the work force.

via Spain’s Economy Shows Fresh Strain – WSJ.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

May 23, 2012

Keen to be heard | BRW

Nick Gardner: In 2008, private debt in the US grew $4.1 trillion but in 2010 shrunk $2.85 trillion as banks decreased their lending as a result of the housing crash. When subtracted from GDP, this fall in debt equated to a 38 per cent reduction in aggregate demand, leading directly to the “great recession” and unemployment hitting its highest level in almost 30 years. “This is what people find so confusing,” says Keen. “When you look at GDP numbers in the US, they’re not bad. At the beginning of 2008, US GDP was $14.25 trillion and today it has GDP of $14.75 trillion. That’s stagnant growth but doesn’t explain the enormous depths of the US downturn. It only begins to makes sense when you look at the fall in aggregate demand.”

via Keen to be heard.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

May 20, 2012

Chinese economics: Is iron ore demand real?

Reuters video: Nicholas Zhu, ANZ Bank head of macro-economic data Asia, examines iron ore stockpiles at Qingdao port.

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Hat tip to Houses and Holes

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.