Home » 2011 (Page 10)
Yearly Archives: 2011
State of Recovery
I am back from vacation in Bavaria and Switzerland…will keep up with posting again.
Carlos Yepez (my PhD mate at Brandeis) sent me an interesting graph that compares the current recovery to the past ones in terms of many important macro factors. The bottom line is the current recovery has been one of the worst. This is in part due to the great deleveraging – heavily indebted households, government, and big banks.
This is another graph in my category of “one graph speaks of thousand words”.
(graph courtesy of WSJ)
Catching up with China, in Africa
US companies are catching up with China in Africa for a market that they have neglected for decades…
According to the WSJ piece,
While most U.S. companies focused international expansions on Asia and Latin America, China was leapfrogging America in Africa. China's exports to Africa last year totaled about $54 billion, up from $5.6 billion a decade before, according to the IMF. U.S. exports to Africa totaled $21 billion last year, up from $7.6 billion in 2000.
…
Western European companies, many of which had lingering business interests in Africa from colonial days, also took their eye off the ball. Western Europe's share of overall trade—the sum of imports and exports—with sub-Saharan Africa dropped to 30% in 2009 from 52% in 1990, according to McKinsey. The share of China and other Asian countries in Africa trade more than doubled to 30% from 14% in the same period, while North America's share slipped to 13% from 16%.
Jim Rogers plays US and China
The usual plain-word no-nonsense Jim Rogers:
What is dragging economic recovery?
What impedes banks from lending more widely, and what prevents businesses from hiring? It could be the uncertainty in coming regulation rules, at least that’s what Jamie Dimon fears. It’s remarkable that Jamie Dimon went public with his frustrations.
An inside analysis:
The next convergence
Nobelist Michael Spence discusses with Charlie Rose on the next convergence, where China and India and other emerging economies potentially catch up with the industrialized world.
The convergence is in reference to the Great Divergence that sent Great Britain, France and other Western European countries into the leading world economies.
This transition, most likely, will not be smooth. I am writing a paper on what could stall fast developing economies, like China, into a middle-income trap, where income growth becomes stagnant and gets stuck in around $12-15K range.
Housing double dipping
The graphs speak of a thousand words.
Housing index:
annual change:
(graph courtesy of Northern Trust)
The Fed prevented a deep fall, but Bernanke's Fed has been helpless with the recovery. QE3?
What’s ahead of us?
Victor Sperandeo, George Soros’ former trader, commonly nicknamed as trader Vic, himself a wall street legend, shares his views on many interesting issues today: US economy, bond outlook, inflation, US dollar, gold and silver. A very insightful piece. I highly recommend it.
Stagflation v2, it is
Ronald McKinnon, economics professor at Stanford, thinks the US is already entering stagflation:
'Stagflation" is an ugly word for an ugly situation: persistent high inflation combined with high unemployment and stagnant demand in a country's economy. The term was coined by British politician Iain Mcleod in a speech to Parliament in 1965. We haven't experienced it here in the United States since the bad old days of the 1970s.
Yet with prices on the rise and unemployment still high, the U.S. economy again seems to be entering stagflation. April's producer price index for finished goods, which excludes services and falling home prices, rose 6.8%. The Bureau of Labor Statistics reports that intermediate goods prices for April were rising at a 9.4% annual clip. Meanwhile the official nationwide unemployment rate is mired close to 9%, without counting a large backlog of discouraged workers who are no longer officially in the labor force. So stagflation it is.
…
The stagflation of the 1970s was brought on by unduly easy U.S. monetary policy in conjunction with attempts to "talk" the dollar down, leading to massive outflows of hot money that destabilized the monetary systems of America's trading partners. Although today's stagflation is not identical, the similarities are striking.