A Government Shutdown from an Economist’s Viewpoint
Submitted by Alan Beaulieu on Mon, 09/30/2013 - 14:41
The US government appears to be headed to a shutdown, and the White House has assured us that this is bad for the economy and that prior shutdowns have disrupted the economy. That got me to wondering, so I went and took a look. The last shut downs were in November 14 to 19, 1995 and December 16, 1995 to January 06, 1996. Bill Clinton was in office and presiding over a growing economy. The Republicans controlled Congress.
Submitted by Alan Beaulieu on Tue, 09/24/2013 - 16:21
Americans were told in 2009 that the proposed health care reform would cost around $900 billion over 10 years. The Congressional Budget Office has done a new analysis now that we are on the cusp of implementation. Their new estimate is that the cost to taxpayers (my distinction and very different from Americans) will be double what we were told. Taxpayers will be shelling out $1.8 trillion over 10 years.
Submitted by Alan Beaulieu on Thu, 09/19/2013 - 13:48
The fact that the stock market surged on the news that the Federal Reserve Board (FRB) will not be tapering back on quantitative easing should finish the discussion as to whether the stock market has been, at least partially, inflated by the ongoing Fed action.
The Fed’s actions, known as QE3, have been bolstering the US stock market, presumably in the hopes that this would create more jobs. The rate of job growth would suggest that they have been unsuccessful in this regard.
Submitted by Alan Beaulieu on Tue, 09/17/2013 - 16:59
Former Vice President Al Gore predicted in 2007 that the North Pole would be ice free by 2013. It did not happen and it is not happening. Our global rush to alternative forms of energy has at least in part been driven by fears of climate change. The climate change models have not proven to be accurate. What we do know is that alternative forms of energy are more expensive than oil and natural gas. In fact, they are much more expensive.
Submitted by Alan Beaulieu on Thu, 09/12/2013 - 14:58
The EU Parliament is putting forth a proposal to limit the biofuel content in gasoline (think corn-based ethanol as an example). They are concerned that diverting food crops to energy use could potentially drive up food prices.
Biofuels are also expensive and drive up the cost of energy for businesses and consumers. That is sound thinking coming out of Brussels, and Washington should consider doing the same. Let’s phase out expensive and inefficient ethanol in favor of US oil or, even better, a switch to natural gas powered vehicles.
The Financial Crisis, Part Two? Some Global Thoughts
Submitted by Alan Beaulieu on Tue, 09/10/2013 - 15:34
The US credit boom that preceded the Great Recession saw credit zoom from 143% of GDP to 177% in 2008. A similar event occurred in Japan which was followed by two lost decades. China’s corporate and household debt has risen dramatically, from about 120% of GDP in 2008 to 170% today. This type of increase is normally followed by a crisis of some sort, and it appears China is on the path to its own crisis.
The question is what form will the crisis take? Given the lessons the Chinese leadership learned by watching the US response, and given tha
Submitted by Alan Beaulieu on Thu, 09/05/2013 - 12:09
Target, Wal-Mart and Macy’s are reporting disappointing second-quarter sales results. Target’s same store sales rose 1.2%, less than the growth rate in overall retail sales. The consumer is getting pinched by higher payroll taxes and mild wage gains.
Americans’ after-payroll-tax income rose 0.8% year-over-year. Pre-tax wages went up a steeper 1.9% year-over-year. The difference in growth rates is likely the result of higher payroll taxes. Higher taxes are not leaving much of a boost in workers’ take home pay.
Submitted by Alan Beaulieu on Mon, 08/26/2013 - 11:19
On the surface, data coming out of the housing market paints a very positive picture. Annual Existing Home Sales grew to their highest level in five years in July, and similarly, annual Housing Starts are at levels not seen since late 2008 – both trends fueled by stronger overall economic growth.
Submitted by Alan Beaulieu on Tue, 08/20/2013 - 17:15
Brazil interest rate swaps have been steadily rising for the past six months, with 180-day and 360-day rates averaging 8.7% and 9.3%, respectively. While the rate increases are more obvious in long-term maturities, short-term maturities are also seeing rate increases. Both 30- and 60-day rates have climbed by 91 and 102 basis points since March 2013, respectively.
What do the rising rates mean? Rising swap rates are indicative of market expectations that interest rates will move higher in the future. Higher interest rates, in turn, are a reflection of the cen
Submitted by Alan Beaulieu on Tue, 08/13/2013 - 12:05
Washington does not seem to understand that businesses, both large and small, can now look at global opportunities. Take taxes as an example. The US has the highest corporate tax rate, a full sixteen percentage points higher than the global average. American businesses can relocate their headquarters to other parts of the world and take advantage of significantly lower tax rates. Hundreds of millions of dollars in tax revenue are at stake. Washington would do well to consider business as a partner, and not as a cash cow.