7 September 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com
As we noted last week, there are several intriguing aspects to Germany’s current economic growth,
which is not fantastic in absolute terms – 2.2% in the second quarter –
but DOES considerably outshine its EU counterparts,
as well as notching the highest quarterly mark since unification in 1990.
In a bearish note to clients in late August, Morgan Stanley’s chief strategist, Gerard Minack, warned that
a housing bubble in Australia could be pricked if the banks tightened credit or middle-class landlords started losing money and decided to sell.
He believes owner-occupiers have too much debt, and that investors are riskily relying on capital gains to repay their loans and interest.
Compounding the problem was ill-advised policy such as the government’s first home-buyers grant,
Not surprisingly, it became known on a Friday – the day when companies always try to bury bad news – in late August,
when most Americans, at least, are sadly looking towards the looming end of summer vacations.
But sources revealed one of the two most notorious corporations – past / future employers of then-in-power Dick Cheney / George W Bush –
South Korea, which imports almost all of its oil, has increasingly felt threatened,
as countries with high energy demands, like China, snatch up oil reserves from around the world.
As a result, the government gave its state-run oil company – Korea National Oil Corp., or K.N.O.C. –
a $6.5 billion war chest this year to fund acquisitions and project developments.
Forget the calls by many Chinese patients for more honest, better-qualified doctors.
What Shenyang, China’s 27 public hospitals really needed, officials decided this summer , was police officers.
And not just at the entrance, but as deputy administrators.
The goal: to keep disgruntled patients and their relatives from attacking the doctors.
The decision was quickly reversed after Chinese health experts assailed it,
2 September 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com
In most countries, the traditional “workers’ holiday” is May 1, usually known as May Day.
In the eternal spirit of US “exceptionalism”, however, Labor Day is a three-day weekend, like almost all American holidays –
one of the few really intelligent things the US has done to make people’s lives better,
along with minimizing, let’s hope on the way to abolishing forever,
A string of developments has altered the sentiment within the central bank,
leading Fed policy makers to stop worrying for the moment about the increasingly remote prospect of inflation.
Instead, they are increasingly focused on the potential for the economy to slip into a deflationary spiral of declining demand, prices and wages.
Not since 2003 has the prospect of deflation been taken so seriously at the Fed,
Business productivity fell for the first time in 18 months in the second quarter and labor costs were flat,
according to government data released earlier this summer.
Productivity declined by an annual rate of 0.9 percent after rising at a revised 3.9 percent rate in the first quarter, a Labor Department report showed.
Falling output per worker implies the economy is operating less efficiently because overall production is below its potential.
The roots of the mortgage crisis are well known — overly aggressive lenders, overly optimistic borrowers and lax regulation of financial firms.
But as policymakers search for a resolution,
they need to recognize another critical aspect of the problem:
today’s mortgages are designed for yesterday’s borrowers.
Until recently, most Americans paid for their homes through 30-year self-amortizing mortgages,
31 August 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com
One of the most striking developments of the Eurozone crisis has been the emergence of what might be called a “tough” Germany.
As readers of this site know, the Germans were among the most militant in opposing the “rescue” of Greece from a potential default, which –
