Covering the Global Economy, International Affairs, and Public Policy
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Globalized Banking Blunts Monetary Policy
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WSJ.com: Real Time Economics
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Jul 24, 2008
The increasingly international nature of banking today is blunting some of monetary policy’s potency, according to a Federal Reserve Bank of New York paper. Economists Nicola Cetorelli and Linda Goldberg argue that while banks that do business mostly within the U.S. remain highly affected by changes in rate policy, large institutions with a global presence can [...] Source of innovation
By Ken Jarboe
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The Intangible Economy
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Jul 24, 2008
The Information Technology and Innovation Foundation has published an important new report -- Where Do Innovations Come From? Transformations in the U.S. National Innovation System, 1970-2006 , written by Fred Block and Matthew Keller of UCal, Davis. The report describes the shift in technological innovation over the past few decades: Whereas the lion’s share of the R&D; 100 Award-winning U.S. innovations in the 1970s came from corporations acting on their own, most of the R&D; 100 Award-winning U.S. innovations in the last two decades have come from partnerships involving business and government, including federal labs and federally funded university research. [...] Data dump
By noreply@blogger.com (Macro Man)
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Macro Man
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Jul 24, 2008
Well, the RBNZ did the right thing last night (at least for Macro Man's portfolio!), cutting rates by 0.25% and suggesting that there's more easing in the pipeline....at least as there's no "excessive" exchange rate depreciation. Given that the last Monetary Policy Statement forecast a 10% or so decline in the TWI over the next couple of years, you'd have to posit that there should be a lot of room to the downside before NZD weakness gets "excessive." NZD/USD is butting up against decent support around 0.7385 or so, and it might be a bit of a tough ask to [...] Hot money and inflation risks are still being downplayed
By Michael Pettis
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China financial markets
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Jul 24, 2008
In the first half of 2008, according to a Ministry of Commerce release today, investment flows from Hong Kong to the mainland rose by 95% over the same period last year, to $23.4 billion. Interestingly enough, the number of projects declined by 8.2%, to 6,900. I suppose it is possible that the average size of each project has more than doubled, but given the large number of projects, I think this is extremely unlikely. So why the discrepancy? According to an article in today’s Xinhua: Given the close trade and economic ties between the Hong [...] A Social History of the Surge
By noreply@blogger.com (Juan Cole)
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Informed Comment
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Jul 24, 2008
I want to weigh in as a social historian of Iraq on the controversy over whether the "surge" "worked." The NYT notes: 'Mr. McCain bristled in an interview with the “CBS Evening News” on Tuesday when asked about Mr. Obama’s contention that while the added troops had helped reduce violence in Iraq, other factors had helped, including the Sunni Awakening movement, in which thousands of Sunnis were enlisted to patrol neighborhoods and fight the insurgency, and the Iraqi government’s crackdown on Shiite militias. “I don’t know how you respond to something that is such a false depiction of what actually [...] ""We interrupt regular programming to announce that the United States of America has defaulted …" Part 2"
By Yves Smith (noreply@blogger.com)
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naked capitalism
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Jul 24, 2008
We've cribbed the title of a provocative post by Satyajit Das at Eurointelligence. He argues that the US's days of continuing to borrow abroad with little worry as to the consequences may be nearing an end. A good companion piece is Menzie Chinn's Implications of adjustment to riskier dollar assets in a portfolio balance framework, illustrated in three steps . Great minds are working alike. The key issue with US debt, which not enough analysts have focused on (Brad Setser being a noteworthy exception) is that our creditors are not merely lending to us to fund their exports. They are [...] Implications of adjustment to riskier dollar assets in a portfolio balance framework, illustrated in three steps
By Menzie Chinn
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Econbrowser
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Jul 24, 2008
Consider a hypothetical world economy with assets denominated in dollars and euros. Define the exchange risk premium on dollar denominated assets as: rp = i US - i * - E(ds) where E(.) is the expectations operator, and ds is the change in the log exchange rate in the next period. (Note that this is not the default risk premium; it is the premium, in common currency terms, required to induce portfolio holders to hold the stock of dollar denominated assets outstanding). Let the share of dollar assets in the total world portfolio be called x and x is a [...] Tax Policy Center calls McCain campaign out for cheating.
By Robert (noreply@blogger.com)
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Angry Bear
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Jul 24, 2008
by Robert Brad DeLong has a hot tip from Jason Furman I quote a bit of Brad's quote of Furman Today, the Tax Policy Center released a new analysis of the McCain and Obama tax plans, which provides a comparison between what each of the candidates says on taxes (their actual plans) and what their campaign advisors claim. It finds that the true cost [over 10 years] of Senator McCain’s tax proposals is $2.8 trillion larger than what his advisors have acknowledged. And most of that $2.8 trillion is the cost of yet more tax cuts for corporations and the [...] WSJ: States Slammed by Tax Shortfalls
By Barry Ritholtz
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The Big Picture
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Jul 24, 2008
Nice interactive chart on the Beige Book accompanies this realistic article on the precarious conditions of State finances: "The stumbling U.S. economy is forcing states to slash spending and cut jobs in order to close a projected $40 billion shortfall in the current fiscal year. That gap -- identified Wednesday in a survey by the National Conference of State Legislatures -- is more than triple the size of the previous year's. It is the result of broad economic weakness at the state and local levels that could cause pain throughout this year and into 2010. Sales-tax collections, for example, have [...] You Know The Banking System Is Unsound When....
By Michael Shedlock (noreply@blogger.com)
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Mish's Global Economic Trend Analysis
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Jul 24, 2008
1. Paulson appears on Face The Nation and says "Our banking system is a safe and a sound one." If the banking system was safe and sound, everyone would know it (or at least think it). There would be no need to say it. 2. Paulson says the list of troubled banks "is a very manageable situation". The reality is there are 90 banks on the list of problem banks. Indymac was not one of them until a month before it collapsed. How many other banks will magically appear on the list a month before they collapse? 3. In a [...] Unleash the Chinese consumer
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The Economist: Free exchange
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Jul 24, 2008
China's turn to power the global economy IN LIGHT of the summer book club discussion of chapter four in Milton Friedman's Capitalism and Freedom, I've been putting together a few related thoughts on China and its management of foreign exchange. Before I could post anything, however, Brad Setser went and said most of what I was going to say, better than I would have said it. First, on the relationship betwen fixed (or pegged) exchange rates and creeping government intervention:At the same time, China is worried about ongoing hot money inflows, and the ongoing difficulty sterilizing extraordinary fast reserve growth. [...] James Bianco on Possible Role of SemGroup Bankruptcy in Oil Price Drop
By Yves Smith (noreply@blogger.com)
courtesy of
naked capitalism
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Jul 24, 2008
James Bianco, a respected fixed income analyst at Arbor Research , was so kind as to pass along his observations about the retreat in oil prices from his morning research note. "Is This Why Crude Oil Is Getting Slammed?": The Financial Times - Oil trading company files for bankruptcy Access SemGroup, the US physical oil trader, on Tuesday filed for bankruptcy as it acknowledged trading losses of more than $3.2bn in different energy markets after betting this year that crude oil prices would fall. Its collapse came as oil prices plunged to their lowest levels since early June. West Texas [...] |
China’s Rumble With Globalization – Part II