by Ajay Shah
Caption logo from Free Speech India/Facebook
by Elliott Morss
For more than a year, there has rarely been a day without a headline of a new Euro crisis. The basics of the situation are quite simple. I present them below, coupled with my view on where it will all lead.
by Rick Davis
(In a number of recent articles we have explored potential "unthinkable" solutions to both the U.S. sovereign debt problem and the fiscal consequences of a suddenly balanced U.S. Federal budget -- given that a balanced budget would suck about 14% out of the country's GDP, meeting the clinical definition of a depression. We discussed the historical backdrop to sovereign debt end-games, and solutions possible without major regime change, others requiring modest regime change, yet more that involve radical regime changes, one that uses regime change to de-securitize the mortgage industry, another that would selectively stimulate "Main Street" America, and most recently one that would stimulate the economy through genuine reform to the health care industry. As a point of reference we have used the report from the Simpson-Bowles commission as a sample framework for how to balance the budget, and have assumed that to prevent a Simpson-Bowles induced depression some form of non-fiscal stimulus would be needed that could provide excess growth to the U.S. economy on the order of 3% per annum over 5 or more years.)
by Michael Pettis
My central bank seminar at PKU had a fascinating discussion this week about the internationalization of the RMB in trade transactions. To summarize, although the amount of trade denominated in RMB is still small, it is growing at a very rapid pace. This is often given as very strong evidence that the RMB is on its way to becoming a major, if not the dominant, currency in international trade. My ever-skeptical students, however, were not wholly convinced.
by Guest Author Michael David White. Bio follows article.
Economist Paul Dales at Capital Economics calls the Great Depression fall in housing prices a loss of 31% (MarketWatch). How bad was it then? The post-depression turnaround to re-attain the bubble high took 19-years.
That means if we start today and our rebound mimics the Great Depression, we are good and back to normal in 2030. Which raises the obvious question: Will we be alive?
On the bright side: Dales says housing is currently undervalued by 24%.