Abenomics: A Failed Growth Strategy?

My contention has been that the first two arrows of Abenomics gave the Japanese economy a short window to bring the Japanese labour market back to full employment, re-ignite wage gains, and institute structural reforms. In my view, Abe has not used this window effectively and the stock market and economic gains of the beginning […]

The Move to Safe Havens May Have Begun

While the emerging markets are getting a bit of a reprieve today, it bears noting that the move to so-called safe haven assets and currencies has begun. This suggests to me that George Magnus’ warning about this emerging markets crisis must be heeded. I believe a key component to the selloff’s ending will be better economic […]

Some thoughts on easy money and fiscal withdrawal

In the links today, I had a number of good posts that focused on the issue of fiscal policy versus monetary policy. There are a number of ways to look at the issue, economically and politically. However, I think the overriding takeaway politically is that fiscal policy will remain constrained irrespective of growth. Monetary policy will […]

Why the Fed Tapered Asset Purchases

Yesterday, the FOMC decided to reduce the pace of its large scale asset purchase program from $85 billion per month to $75 billion per month. The Fed has long wanted to taper its LSAP program and move to forward guidance to normalize policy but the data weren’t strong enough. Ben Bernanke pulled off this transition in masterful […]

The US government shutdown, currency sovereignty and sovereign default

Summary: As the US government shutdown continues, the risk of default grows. Below are some thoughts on why this has played out as it has and what the outcome may be. I have not written a lot about the government shutdown because it veers into the political and outcomes are more uncertain in highly politicized […]

Has House Price Deflation Begun in Canada?

Yesterday, the Teranet-National Bank National Composite House Price Index for Canada was released. It showed that 12-month home price inflation in Canada was down to 2.0%, the lowest level since November 2009. And given the huge amount of talk in Canada about a potential housing bubble, there is a worry that this is the beginning of a housing bust. You […]

How Bond Market Vigilantes Force Rates Higher

I see that Paul Krugman has shifted his rhetoric in a recent post on British government economic policy. Let me explain how in this post so that I can make a point as to how bond market vigilantes actually work. In his post, Krugman points out is that the British government still wrongly believes in the […]

Slovenia Cut to Junk by Moody’s; Outlook Negative

Editor’s note: Moody’s Investors Service released the following statement in conjunction with a ratings action it took today on Slovenian sovereign debt. New York, April 30, 2013 — Moody’s Investors Service has today downgraded Slovenia’s government bond rating to Ba1 from Baa2. The outlook remains negative. The decision to downgrade Slovenia’s sovereign rating was driven […]

Chart of the Day: What British GDP Growth Since 2007 Says About Austerity and Reinhart-Rogoff

The chart above shows GDP growth by quarter in the United Kingdom over the past five years. According to preliminary estimates released by the ONS yesterday, Britain eked out a 0.3% increase in GDP, avoiding the over-hyped triple dip. British Chancellor of the Exchequer George Osborne had this to say about the results: “Today’s figures are an encouraging sign […]

On Japan’s Widowmaker Trade and Reinhart and Rogoff

I was on the Daily Ticker with Lauren Lyster talking about Japan yesterday. My view is that there is no material negative change in Japan’s sovereign debt outlook nor will there be in the medium term because of Abenomics. The video is at the bottom of this post. Before you watch it let me say a little bit […]

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