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Andrew Huszar, a former Federal Reserve employee who executed QE, has written a Wall Street Journal op-ed apologizing for the “unprecedented shopping spree.”
He tweeted these stories last night, and they get to the core economic challenge of the moment.
So here’s what’s happened since the monster rally and ensuing 20% correction: a whole lot of nothing. Less than nothing. Both the Nikkei 225 and the USD/JPY cross have been consolidating for over six months in a symmetrical triangle with well-defined converging trendlines. Here is what they look like (not a coincidence they’re mirror images):
But what makes American culture different from the countries immigrants are leaving?
History demonstrates that excessive private-sector borrowing plays a greater role than fiscal profligacy in generating financial instability. However, when the credit boom collapses, the government’s capacity to alleviate the downturn is limited by the prevailing level of public debt.
It was all looking so good for the euro zone for a while, with a return to economic growth and increasing manufacturing activity appearing to herald a recovery after a year and a half of recession. But now analysts warn that the euro zone could be returning to the bad old days.
When the CEO of the company suggests that investors shouldn’t run up his company’s share price so much, you might expect alarmed shareholders to dump some stock. But when the company is Netflix (NFLX), even the short sellers don’t really take you seriously.
But Gary Shilling, president of A. Gary Shilling & Co., a financial research and money portfolio management firm, will have none of that. He’s been a bond market bull for over 30 years and tells The Daily Ticker that Treasury yields are heading lower–to under 2% for the 10-year and under 3% for the 30-year.
With its shares tumbling 18% on the day of the release and ultimately closing out the week 21% lower, I think this is what’s called in polite circles as an “overreaction.”
While declining costs for everything from gasoline to coffee can be good news for consumers, disinflation makes it harder for borrowers to pay off debts and businesses to boost profits. The greater danger comes when disinflation turns into deflation, which leads households to delay purchases in anticipation of even lower prices and companies to postpone investment and hiring as demand for their products dries up.
Conventional batteries take so long to charge that they cannot efficiently store braking energy. But now graphene supercapacitors that store almost as much but charge in just 16 seconds could do the job instead.
Despite a weak job market for recent graduates, workers with a bachelor’s degree still earn almost twice as much as high school graduates. College might be more expensive than ever, but a degree is worth about $365,000 over a lifetime, after defraying all the direct and indirect costs of going to school. This is a higher payoff than in any other advanced nation
You buy a desk on Craigslist for $200. When you bring it home, it almost fits through your door, but not quite. So you begin to dismantle it a little, just to squeeze it in. Behind one of the drawers, you find a plastic bag. You hope it’s not cocaine, because that might take a touch of explaining. Instead, when you open it, you discover money. When you have finished counting the money, you have counted $98,000.
Shadow banking is arguably as much an endogenous response mechanism to an under-banked area of the economy as it is a silo for risk and instability. In fact, if risk and instability end up concentrating in the shadow banking area it’s only because more conventional forms of banking have left those areas behind.
A recurring theme in economics blogs, particularly those that tend to be disparaging of mainstream Keynesian theory, is that Keynesians like to be New Keynesian (NK) when talking about theory, but Old Keynesian (OK) when talking about policy.
Then it became necessary to unwind these imbalances, with much moralizing from the Germans to the effect that others should be able to do what they did. But Germany operated in a highly favorable external environment, with fairly high inflation in southern Europe allowing it to make big gains in competitiveness — in effect, internal devaluation — without needing deflation. Unfortunately, Spain isn’t being offered the same kind of chance.
Snapchat — a company with no revenues that currently targets young people — apparently got an offer from Facebook for $3 billion that does have a revenue stream but is worried about losing young people.
Displays featuring “backplanes” of IGZO transistors should make it possible for tablets and TVs to have much higher-resolution displays while consuming significantly less power.