by Michael Lombardi, Profit Confidential
An economy is said to be technically in a recession when it experiences two consecutive quarters of negative gross domestic product (GDP) growth.
The biggest portion of the U.S. GDP calculation is consumer spending; then comes investments, government spending, and, finally, net of exports. By far, consumer spending is the biggest factor in calculating GDP. All you need is a slight decline in consumer spending for GDP to fall.
by Dirk Ehnts, Econoblog101
There is a nice comment by Warren Mosler on an FT article by Martin Wolf. You can see very clearly the differences in thinking. I side with Warren Mosler, who is correct to point out mainly that deficit spending by the public sector is an available way out for those countries that have a sovereign currency (not the euro zone).
May 2nd, 2014
in Op Ed
by Charles Hugh Smith, Of Two Minds
There is nothing fancy about these three solutions.
I have covered rising income/wealth inequality for many years in dozens of entries. Since Thomas Piketty's new book has catapulted the topic into the media spotlight, it's a good time to list solutions that go deeper than Piketty's proposed global wealth tax - a proposal he characterizes as utopian.
by Philip Pilkington
Piketty's Wikipedia page says that he's a Keynesian. Well, I don't see it at all. His book contains a section on the public debt in historical perspective and it is desperately misinformed.
A caveat first though: I actually like Piketty's book in a lot of ways. While not extremely well written, it is highly readable (if you are an historical data sort of person). And it is very nice to see what is effectively a work of economic history get so much play. Because economists should be far more interested in reality than in modelling and this book could spur that interest.
Penalties For Labor And Thrift; Windfalls For Speculation In Land And Financial Assets
by Lee Adler, Wall Street Examiner
There's no law that says the stock market can't have a major correction when central banks are pumping money into the system via the Primary Dealers. But in the 12 years since the Fed began publishing detailed data on its operations, and since I began observing those operations closely, the correlations between central bank liquidity flows and market movements have been undeniable. So I continue to feel that there will not be a major correction in stocks until the Fed and its cohorts are forced to change course.