by John Mauldin, Thoughts from the Frontline
The evils of this deluge of paper money are not to be removed until our citizens are generally and radically instructed in their cause and consequences, and silence by their authority the interested clamors and sophistry of speculating, shaving, and banking institutions. Till then we must be content to return, quo ad hoc, to the savage state, to recur to barter in the exchange of our property, for want of a stable, common measure of value, that now in use being less fixed than the beads and wampum of the Indian, and to deliver up our citizens, their property and their labor, passive victims to the swindling tricks of bankers and mountebankers. ≈ Thomas Jefferson, in a letter to John Adams, 21 March 1819 Continue reading
Posted in Economics, Government, Japan, Trade Data, macroeconomics, money, money and banking, stock markets
Tagged consumer confidence, Economy, exports, GDP, industrial production, inflation, Japan, John Mauldin, recovery, trade balance
The Ideology to End Ideologies – A Response to Corey Robin on Nietzsche, Hayek, Mises, and Marginalism
by Philip Pilkington
This article was first published by Naked Capitalism (May 13, 2013)
Editor’s Note: Econintersect considers this a fundamentally important discussion of the philosophical underpinnings of 20th and 21st century economic thinking. It is contentious, to the point of being “in your face”, and is a far more complex subject than many would try to address in an essay of this length. However, the author has succeeded illustriously in his effort. The reader is encouraged to take the time to read this carefully and critically. We think it is well worth the effort.
The political philosopher Corey Robin recently published an interesting essay on what he thinks to be the connection between the late German philosopher Friedrich Nietzsche and the economic theory of marginalism which Robin associates with the Austrian school (but which, of course, is also a mainstay of mainstream neoclassical economics). I should start by saying that I respect Robin’s work a great deal; I respect it to the extent that I did an interview with him for this very site when his last book appeared. However, his latest piece is grossly misguided and reflective of the fact that, when it comes to theoretical economics, academic critics on the left simply do not know their enemy at all. Continue reading
by Lee Adler, Wall Street Examiner
The media exhibited much consternation today as economists’ consensus guess on first time unemployment claims turned out to be way too optimistic this week. That raised two questions in my mind. Was the number really that bad, and even if it was, does it matter?
The Labor Department reported that the seasonally adjusted (SA) representation of first time claims for unemployment rose by 32,000 to 360,000 from a revised 328,000 (was 323,000) in the advance report for the week ended May 11, 2013. The consensus estimate of economists of 330,000 for the SA headline number was too optimistic after 3 weeks of guesses that were too pessimistic. Call it “evening things up.” They were wrong one way 3 times in a row, so they overcompensated the other way this week. It’s a ridiculous game, but everybody plays anyway. Forecasters are virtually always wrong, not just because economic forecasting is quackery, but also because the seasonally adjusted number, being made-up, is impossible to consistently guess (see endnote). Continue reading
Tanju Yorulmazer, Federal Reserve Bank of New York
One of the most interesting phenomena marking the recent financial crisis was the disruptions in the interbank market, where banks borrow and lend reserves to each other. This post draws upon my paper with Douglas Gale, “Liquidity Hoarding,” to discuss this practice by banks during times of increased uncertainty about future liquidity needs and its consequences for the efficient transfer of liquidity in the interbank market.
by Reda Cherif and Fuad Hasanov, Voxeu.org
This article was originally published by Voxeu.org (May 3, 2013)
Europe’s austerity-first approach has triggered research-based efforts to evaluate the effectiveness of debt-reduction strategies. This column, based on a US empirical study, suggests that an ‘austerity shock’ in a weak economy may be self-defeating. Public-debt reduction historically occurs gradually amid improved growth. If policymakers, firms and households respond as in the past, we should expect lower deficits amid higher growth and, eventually, decreasing debt ratios.
In many advanced countries, in the wake of the 2008 global financial crisis, deficits skyrocketed and public debt ballooned (see Figure 1). In fact, fiscal stimulus accounted for only a small fraction of the increase in debt, whereas collapsing revenues and higher unemployment and social benefits contributed the largest share (IMF 2011). Continue reading
Posted in Economics, International Economic data, macroeconomics
Tagged austerity, consumer confidence, Economy, Federal Reserve, Fuad Hasanov, GDP, inflation, recession, recovery, Reda Cherif
by Doug Short, Advisor Perspectives/dshort.com
Note from dshort: I’ve updated this commentary to include the latest labor force data in May’s release of the April employment report.
Every Thursday I post an update on weekly unemployment claims shortly after the BLS report is made available. My focus is the four-week moving average of this rather volatile indicator. The financial press takes a fairly simplistic view of the latest weekly number, and the market often reacts, for a few minutes or a few hours, to the initial estimate, which is always revised the following week.
One of my featured charts in the update shows the four-week moving average from the inception of this series in January 1967. Continue reading
by Lee Adler, Wall Street Examiner
Retail sales grew modestly and on trend in April. There was no evidence of either a slowing economy or one that is overheating and about to cause conventional inflation measures to move higher. At the same time, as usual, economists got the outlook wrong, underestimating the growth rate.
According to the Commerce Department’s Advance Retail Sales Report, retail sales rose by 0.1% in April (month to month) and were up 3.7% annually, which was an acceleration from the annual rate of +2.8% in March. These are seasonally adjusted estimates which will be revised several times before they are finalized. Neither figure is adjusted for inflation. The median forecast of economists in mainstream media surveys was for sales to be down -0.3% to -0.6% month to month. The economists’ consensus was too low (what else is new?), with the problem being partly with the seasonal adjustment, and partly just the fact that economic forecasting is quackery. These big forecasting misses happen almost every month lately. Continue reading
Posted in Economics, Retail & Business Sales, macroeconomics
Tagged consumer confidence, CPI, Economy, Federal Reserve, gasoline, GDP, Lee Adler, retail sales, trade balance