The Paradox of the Zero Bound – Hussman The first intelligent discussion of why the yield curve might not work predicting recession in a Zero Interest Rate Policy environment, using Japanese data and data from America in the 1930s, when the relationship broke down. I will revisit this issue in the next “animal spirits” update.
http://www.youtube.com/watch?v=pObxCXhf9-E&feature=channel What GM is doing in China with SAIC. Are you aware of the $60 billion China expo, themed “Better City, Better Life”? Check it out.
Beware those who think the worst is past Carmen Reinhart and Vincent Reinhar (h/t yves). These are the folks who have looked at what over-indebtedness does to economic growth across virtually all available data: growth slows down.
However, “recessions” or business slumps in the classic sense are characterized by a failure of confidence and negative skewness of the growth rate. The next failure of confidence does not appear to be imminent—not to say we can’t have a negative quarter of GDP growth here and there, as the forecast is for negligibly positive real growth into the next slump, which is going to be a doozy.
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