Over the last month, a consensus seems to have emerged that (1) the Fed has the ability to depress long-term yields further, and (2) the Fed has the intention to implement such measures. That raises the possibility that recent market moves represent a bet already placed by market participants on the basis of the logical implications of (1) and (2).
Some thoughts on the IMF reform debate
Today, we’re fortunate to have Mark Copelovitch, Assistant Professor of Political Science and Public Affairs at the University of Wisconsin, as a Guest Contributor. He is also author of The International Monetary Fund in the Global Economy: Banks, Bonds, and Bailouts (Cambridge University Press, 2010).
Hangin’ in there
Recent economic indicators tell more of the same story– disappointingly weak growth.
The Incidence of Unemployment and Underemployment, by Income
As we ponder the plight of the over-$250K household income group (see the poignant story here), I think it worthwhile to examine the unemployment and underemployment rates for lower-income households. In researching statistics for our forthcoming book, Lost Decades, Jeff Frieden and I stumbled upon this study by Andrew Sum and Ishwar Khatiwada, with Sheila Palma, of Center for Labor Market Studies at Northeastern University. They characterized the mid-2010 employment situation as “A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent”.
Prospects for Growth And Rebalancing
From an article in the newest issue of GlobalAsia:
Only a few months ago, policymakers around the world were confronted with a series of challenges that, while substantial, seemed relatively well defined. International organizations such as the International Monetary Fund and the Organization for Economic Cooperation and Development highlighted the challenges of a two-speed recovery: emerging markets racing ahead, advanced economies plodding along. Global financial imbalances, particularly in current accounts, were a worry, but there were promising signs that growth and rebalancing in the United States and China would prove durable.
The prospects for a sustained global recovery now seem much less certain. …
QE2: estimates of the potential effects
As the conviction grows that the Federal Reserve will adopt a second round of quantitative easing (dubbed by some as “QE2”), I thought it might be helpful to survey some of the different estimates of what effect this might have on long-term interest rates.
Causes of the flash crash
Donald Marron calls our attention to the report of the CFTC and the SEC on the causes of bizarre prices at which some stocks traded last May.
IMF World Economic Outlook online
Or at least, WEO Chapters 3 and 4.
Chapter 3 is entitled “Will It Hurt? Macroeconomic Effects of Fiscal Consolidation”, and Chapter 4 is “Do Financial Crises Have Lasting Effects on Trade?”. Also online are Chapters 3 and 4 from the IMF Global Financial Stability Report.
Frank Warnock on Two Myths about the Dollar
Frank Warnock, an expert on US capital flows and stocks, has just written a piece for CFR entitled Two Myths About the U.S. Dollar. In it, he examines “two factors that could substantially alter the long-run value of the U.S. dollar: the dollar’s reserve status and the sustainability of U.S. international debt.”
When do recessions end?
Warren Buffett thinks the U.S. is still in a recession, declaring in a CNBC interview last week:
I think we’re in a recession until real per capita GDP gets back up to where it was before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any– on any common-sense definition, the average American is below where he was before, or his family, in terms of real income, GDP.
I don’t presume to be able to tell Warren Buffett what investment strategies work best. But I can provide some clarity on how economists use the term “recession,” and hopefully shed some light on the issue that Buffett and others have raised.