Random Thoughts from the High Desert
Written by Sig Silber
Global Economic Intersection has many regular contributors with extensive knowledge of China and Asia in general. I thought I would try to integrate recent articles published by John West, Michael Pettis and Frank Li to see if looking at their three perspectives together provided additional insight.
by Graham Summers, Daily Reckoning
In the 1960s every new $1 in debt bought nearly $1 in GDP growth. In the 70s it began to fall as the debt climbed. By the time we hit the '80s and '90s, each new $1 in debt bought only $0.30-$0.50 in GDP growth. And today, each new $1 in debt buys only $0.10 in GDP growth at best.
Put another way, the growth of the last three decades, but especially of the last 5-10 years, has been driven by a greater and greater amount of debt. This is why the Fed has been so concerned about interest rates.
by Dirk Ehnts, Econoblog101
We are into 2014 and many commentators have drawn parallels between 1914 and 2014. I think that this is not a good idea. The economic situation before WW I was not like the one we're in now. The world economy 2014 is much more like the world economy in 1931. Economic theory based on the market guiding us towards equilibrium is standing in the way of economic policy; economic and social hardships are imposed on wide parts of the population in the name of some abstract ideas.
by John West, Asian Century Institute
In the year 2014, too many Asian countries will experience regional tensions, domestic political frictions and relative economic weakness.
The cocktail of economic development and emerging middle classes does not mix well with weak institutions plus immature and authoritarian politics.
By recently declaring an "air defense identification zone" over the East China Sea, China has changed the terms of its engagement with Japan and Korea. Previously, it would launch "calculated overreactions" to any perceived bad behavior by Japan. Now it is taking a more pre-emptive path.
January 11th, 2014
in Op Ed
by Michael Lombardi, Profit Confidential
Will the gains that the U.S. housing market made in 2012 and 2013 continue into 2014? As you'll read below, the biggest threat to the housing market is moving in the opposite direction-against housing.
Sure, the Case-Shiller S&P Home Price Index, which tracks prices in the U.S. housing market, shows an overall increase of 13.6% in home prices in the first 10 months of 2013 (see the chart below).