A giant breaks his chains and again walks the earth: inflation

Inflation can reshape a nation, searing a memory into its collective consciousness that can take generations to fade. Once embedded in an economy, the government’s efforts to root out inflation can cause a severe recession. Inflation swept across the world in the 1970’s, contained only with great effort. Now it again appears, with results impossible […]

Thoughts in a pub

Like many of my compatriots, I spent Friday evening in a pub. In my case the pub was in the heart of France’s beautiful Chartreuse region, and it was full to the brim of French and Dutch football supporters, the latter increasingly rambunctious as the evening wore on. It was a good-natured and very European […]

A bit of sunshine

Consumers say they’re gloomy, but why are they still spending? A surprising report from the Commerce Department today, which indicated that seasonally adjusted nominal sales for retail trade and food services were 1% higher in May compared with April. The new estimates of March and April sales (in red in the figure below) were also […]

Why (Financial) History Repeats

Resident fellow Alex J. Pollock explores the parallels between the recent government bailout of the investment bank Bear Stearns and the government’s 1984 rescue of Continental Illinois, the largest commercial bank in Chicago. Both banks were determined to be too intertwined in the financial system to be allowed to fail; consequently, creditors were bailed out, […]

Is this a recession and do we care?

Could well be, and yes you should. There is no question that we’ve been experiencing an episode of economic stagnation in which key indicators of output and employment are not growing at their usual historical rates. Some analysts take the position that this is all that really matters, and whether it meets the formal definition […]

More on De-Globalization: Oil, Transport Costs and Inflation

Following up on this post from October 2006, when oil was only $58.88 (WTI,daily average) a barrel, consider this excerpt from today’s Thomas Net: The impact of rising transportation costs, driven significantly by high oil prices, is already being seen in capital-intensive manufacturing that carry a high ratio of freight costs to the final sale […]

Party TIPS

If you’ve run out of ideas for party pick-up lines, try this: “Hey precious… how much do you think prices will go up or down over the next 12 months?” In case you’re dying to ask, I did try it. And, trust me, you’re guaranteed to get at least a few stares! What you may […]

GDP on the Eve of Recession: Then and (Maybe) Now

There’s been relief in many circles that GDP in 2008Q1 was revised upward. I too take this as good news, to the extent that the economy seems to be growing more rapidly — and output more balanced — than previously thought. Figure 1 depicts the q/q SAAR growth rate, using the May 2008 preliminary release. […]

The world changed last week, with no headlines to mark the news

At least, in the American media. Mostly small stories in the back of our newpapers about this significant event, a milestone on the road to Peak Oil.“King Abdullah stresses the need to keep oil for future generations“, Saudi Press Agency (13 April 2008) — Excerpt: Custodian of the Two Holy Mosques King Abdullah yesterday emphasised […]