“Governments are consumers, not investors.”
Research:
Ambition correlates with success, but not happiness, says study of 700 individuals ~ CNN
Unweighted bank capital adequacy, banks’ (narrow) liquidity ratios and lagged house price growth forecast bank crises ~ Barrell, Davis, Karim, Liadze (2010) (PDF)
Does the current account balance help to predict banking crises in OECD countries ~ Ideas (PDF)
- Widening current account imbalances have been common forerunners of banking crises in OECD countries ~ Reinhart and Rogoff (2009)
Lacy Hunt suggests that an unprecedented buildup of debt can lead to a drop in standard of living. ~ ZeroHedge
In 2007, the BIS warned of Great Depression dangers from the credit spree ~ forestpolicy
Another reason to keep up with BIS papers. And why again are is the Fed attempting to blow another credit bubble? Because it looks good on Bernanke’s models that forecast the next six months.
The Perils of Inflation Targeting ~ VOX
- “If the Fed was flooding the world with dollar-denominated liquidity (post 2001 – 2006), why was there no significant inflation?”
- “Part of the answer is that in the early-going, the Fed was fighting deflation in the wake of the ITC bust. But the more significant part of the answer lies in the determination of other central banks to prevent their currencies from appreciating against the dollar. With their exchange rates more or less fixed, the elasticity of their exports has kept American inflation in check. This short-circuits the feedback loop on which an adaptive inflation-targeting policy relies.”
- “An expansionary monetary policy produces no inflation will lead to asset price inflation and deterioration of credit.”
- “But it is not likely that the world will stay awash in liquidity forever. At some stage, central banks will have to mop it up or see inflation do it for them.”
U.S.
Eight out of ten businesses pay income taxes not corporate taxes; they are registered as LLCs or S-Corps ~ Paul Ryan
A tax hike the portion of this eighty percent that have earnings over 250k, and are therefore more likely to be the ones hiring, will be pretty good for jobs.
‘Budgetary Crystal Meth’ Risks U.S. Haven Status, Pimco’s Bill Gross Says ~ Bloomberg
World:
Vancouver sales activity 41.6% below the 10-year average; benchmark price index still $606,100 ~ Financial Post
Japanese forex interventions in 2003/04 lowered long-term interest rates in a wide range of countries ~ BIS
If Japan’s purchases of foreign bonds lower interest rates, not just in Japan, but in the U.S. and Europe, then they helped create bubbles. Last week, Japan spoke of purchasing foreign bonds
China:
The “Sinodependency Index” – 135 companies ranked by sales to China ~ The Economist
Poll: Does China Represent More of an Economic Threat or Opportunity ~ Twitter
The Asian Financial Crisis, 1997-98 ~ lecture from Yoshitomi-Ohno
As a reminder of how quickly and how far things can fall
Study of 100,000 Chinese firms: “evidence of overinvestment is found for all types of firms” HHS – chinaisagiantenron
China territory dispute hurting Japan tourism ~ CNN
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