Why Does It Feel Like a Recession?

The preliminary GDP release today provided a number of surprises. The first surprise was not that GDP was higher than the advance release (given the June trade figures reported earlier this month), but rather that at 3.3% it exceeded the 2.8% (SAAR) of the consensus [0]. The second surprise is that the reduction in imports […]

Why Do We Use Core Inflation?

There is a lot of confusion over the Fed’s use of core inflation as part of its policy making process. One reason for confusion is that we using a single measure to summarize three different definitions of the term “core inflation” based upon how it is used. First, core inflation is used to forecast future […]

China Considering Stimulus Package, Oh My!

If you had any doubt that China would remain unaffected by the global slowdown, that should be put to rest by various stories discussing that the Chinese government is mulling a stimulus package. Yes, you could argue that the economy might need a tap on the gas pedal to compensate for all the factory closings […]

Don’t just do something; stand there!

“No.” – Amy Carter (President Jimmy Carter’s daughter), when asked by a reporter if she had any message for the children of America. At some point over the last quarter century, politicians, administrators, regulators and bureaucrats appear to have uniformly succumbed to the simple-minded doctrine that people have become allergic to any form of loss. […]

Is the FDIC another troubled monoline?

Reading Reggie Middleton’s latest blog here on RGE (he looks much younger than I’d have guessed!) reminded me of a metric which is critical to assessing the velocity of a financial crisis as it affects a financial institution.  In looking at American Express, he highlights (among a lot of other useful data) the extent to […]

Where Is this U.S. Recession Already?

So, good news on the real GDP growth (3.3% in Q2 2008) front and U.S. stocks rally. But is it really good news? Let’s dig a bit deeper, maybe past the headlines… Personal consumption was revised slightly upward from 1.5% of the advanced release (adv) to 1.7%. Not a major change. Notwithstanding the stimulus package […]

Investors do not have to be Wiped Out in Fannie and Freddie’s Recapitalizations(but if they are taxpayers will probably be wiped out, too!)

The only reason there is any concern about which GSE investors get “wiped out” is because nobody wants to follow the time-tested strategy of recapitalizing private firms. Under that strategy, the government takes a senior stake with control rights and shuts down dividends on all other equity. But that dividend shut down is not permanent. […]

The Role of Monetary Policy under An Inflation Target Model: Brazil 2008

Brazil is being considered the new Bundesbank. In other words, many economists are saying all over the world that perhaps Brazil is the country which is following more strictly the inflation targeting rules and models, respecting the existence of only one true instrument of monetary policy – the nominal interest rate – and treating scientifically […]

The Investment World and Public Policy

Public policy is determined by elected governmental officials and appointees who are responsible to them. This is the nature of accountability and representative government. As citizens we are all free to criticize and vote for our favorite choices. One person, one vote. At “A Dash” we are disturbed by recent commentary that suggests that trading […]

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