Category: Economy

Analysis of the global economy

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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.

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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.

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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

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Alan Simpson: No Solution to Debt Without Crisis – WSJ Online

Former Senator Alan Simpson, Co-Chair of President Obama’s Fiscal Commission, doesn’t believe the national debt can be solved without a financial or political crisis. He speaks with WSJ’s Alan Murray at the latest Wall Street Journal Viewpoints panel.

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FedEx CEO on China's Effect on Global Market – WSJ Online

FedEx CEO Frederick W. Smith talks about how exports to China remain stagnant given China’s recent protectionist policies and its focus on “indigenous innovation.” He speaks with WSJ’s Alan Murray at Viewpoints West.

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FedEx CEO on How Tax Policy Weakens U.S. Economy – WSJ online

FedEx CEO Frederick W. Smith talks about how capital investment and lowering corporate tax rates are the main solutions to creating U.S. jobs. He speaks with WSJ’s Alan Murray at Viewpoints West.

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Dimon may be ‘stupid,’ but he’s right on banks – MarketWatch

David Weidner: A return to Glass-Steagall in the U.S. would effectively force the world to separate traditional banking from casino banking.

That system would be attractive to both sides. The banking system that holds our loans, our deposits, debts and assets would be separate from a Wild West free market unfettered by bank regulators and their constant worries about risk.

So why can’t the big financial institutions get behind this one? Simple. They want to gamble your money in the casino.

via Dimon may be ‘stupid,’ but he’s right on banks – David Weidner’s Writing on the Wall – MarketWatch.

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CNBC: Is the US headed for another recession?

Lakshman Achuthan of ECRI sticks to his forecast of a double-dip:

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The Real Reasons People Drop Out of the Workforce

“Labor force participation for unskilled men has dropped off the table the last few decades,” [Timothy Taylor, managing editor of the Journal of Economic Perspectives] said. “Wages for that group aren’t high enough to encourage them to work. For a lot of those men, going on disability may be a better option. Working off the books may be going on. The benefits of working at $10 or $11 an hour just isn’t enticing 50-year-old men into the labor force,” he said.

Another factor in play: there were an estimated 2.3 million people in U.S. prisons at the end of 2010, the highest rate of incarceration in the world. That’s quadruple the number imprisoned in 1980. The rate of imprisonment has gone from 100 per 100,000 people in the mid-1970s to 500 per 100,000 today.

via The Real Reasons People Drop Out of the Workforce.

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Dimon in the Rough: JP Morgan Loses $2B on Failed Trade

JPMorgan Chase & Co lost $2 billion on a failed hedge, an unexpected revelation that hit hard the bank that had been seen as the smartest and safest player through the credit crisis that began to erupt in 2007.

via Dimon in the Rough: JP Morgan Loses $2B on Failed Trade.

Comment: Writing good headlines is an art. Occasionally you find a gem like this. It wins my vote for headline of the week.

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