After a series of posts examining the fiscal woes of the United States (see here, here and here for example), I have refrained from posting on the issue for the past couple of months, mainly because I have little to add that I have not already said. In short, yes, the US has a longer-term
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Will the US economy bounce?
There is a wealth of debate surrounding the US economy at the moment. The basic tenets of the debate can be summarised as bulls arguing that the current slowdown is the result of high oil prices whacking consumers and the Japanese tsunami whacking production. Bears are arguing there is a structural problem that these shocks
US depression returns
The past week has provided a steady stream of dismal news on the US economy. Let’s start with the housing market, which, after a brief rebound, now appears to be double dipping, with the major indices hitting new post-bubble lows. In the words of S&P, which is not exactly given to hyperbole, “home prices continue
Osama, Obama and the 2012 Presidential election
It has been some time since I’ve posted on this blog. And what a strange couple of months it has been in US politics. The ongoing fiasco that is the US budget, ludicrous debates about President Obama’s birth certificate, and most recently, the death of Osama bin Laden. What, if anything, does all this mean
US triple-dipping
Last week’s GDP figures in the US confirmed the momentum in the US economy’s recovery is slowing as the impetus from stimulus packages and government largesse fades and the true pulse of the economy becomes evident. This trend appears set to continue if last night’s report on the non-manufacturing sector from the Institute of Supply
Seventies with a bullet
Ben Bernanke fronted the press following the FOMC meeting earlier this week and told us that QE2 would proeceed as planned and once completed the Fed would “continue to reinvest maturing securities, both Treasuries and MBS, so that the amount that we hold will remain” meaning that “the amount of monetary policy easing should remain
The great, steaming debt pile
Standard and Poors last night placed the outlook for the US’s AAA rating on negative watch for a potential downgrade citing not just this recent budgetary impasse but also the trajectory of the United States Governments debt position. The charts below show just why S&P is worried. It’s common these days to think of
Where will all the jobs come from?
I have argued before that while there is no problem with the US running fiscal deficits while its economy regains its feet, in the longer term, reviving non-financial business investment and growing exports faster than imports is the only sustainable way out of the ongoing economic slump. However, this is going to be easier said
Paul Krugman versus the world
Paul Krugman has set off a storm of debate in the US blogosphere this week, with a post in the New York Times that raised the possibility of hyperinflation in the US. Right now, deficits don’t matter — a point borne out by all the evidence. But there’s a school of thought — the modern
The US economy: hurtling towards another crisis
In a recent post, “Should the US balance its budget“, I argued that it would be a folly for the US to try to balance its budget in the near term, as this would seriously impede the economy’s recovery from the recent deep recession. But this leaves us with some obvious questions. Is the economy
Questioning the wisdom of austerity
I have written a series of posts on this blog questioning the wisdom of fiscal austerity in the United States today. Inevitably when I make such an argument, I get comments along the lines of “what about Zimbabwe!”, “it’ll lead to hyperinflation!” and “they’re even worse off than Greece!” But these worries are all based
Should the US balance its budget?
Deficit hysteria is alive and well in the United States as calls grow to slash spending and return the budget to a “sustainable” position. Today I am going to ask what may seem like a very obvious question: should the US quickly balance its budget or even return it to surplus? Of course it should,
Greenspan takes a trip to Fantasy Land
Alan Greenspan has come in for some pretty harsh criticism in the past couple of years about the role he played in inflating the bubble that led to the global financial crisis of 2008. There are two serious charges against Greenspan. The first is the claim that the Fed ran an excessively loose monetary policy
The Pentagon on the GFC: “the terrorists done it”
Was it irresponsible lending by the banks? Insufficient regulation? Excessively loose monetary policy by the Fed? There are many theories for what caused the global financial crisis of 2008. But now there’s a new and very novel thesis to add to this list. In a truly bizarre report written in 2009 and released this week,
Is Bernanke blowing another bubble?
Fed Chairman Ben Bernanke mounted a spirited defense of quantitative easing on Tuesday in his semiannual monetary policy report to Congress, arguing that it’s effects were little different to conventional monetary policy: Large-scale purchases of longer-term securities are a less familiar means of providing monetary policy stimulus than reducing the federal funds rate, but the