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Large scale economic recessions are a particularly vulnerable time for global free trade.  Just look at how a flurry of protectionism escalated the effects of the Great Depression.  I was probably not the only person to look back at the year in review and applaud the efforts made by countries around the world to resist protectionism in the face of the worst global recession since the Great Depression.  However, the laurels may have been unwarranted given the trade disputes that have escalated between China and the US in the past few days.

We’ve been following a clear trend over the past few years toward ever greater politicization of markets.  Two recent examples highlight this trend:

1) In case you missed it over the holiday weekend, housing lenders Freddie Mac and Fannie Mae received a blank check from the U.S. Treasury.  Taxpayers are now on the hook for any and all losses these organizations rack up through 2012.

While some may laude the fact that no binding climate change agreements were settled in Copenhagen and international differences won out, the disadvantages from last week’s lack of consensus are striking for American businesses.  The reality is that a price will be placed on carbon in the US somehow and at sometime.  What all US businesses need, especially those in the energy or energy intense sectors, are two things: a fair playing field and long-term binding policy.

Over the years the Institute has provided a particularly popular service to companies called ETA.  Well… now this service has a new name: Trendcast^™.  With the new name, the Trendcast will continue to provide businesses insight into their position in the business cycle and what leading indicators to follow so they can act profitably.  Read more information on Trendcast by visiting our Products and Services page. 

New research this week confirms some of the suspicions we expressed a year ago regarding the use of fiscal stimulus.

China’s four trillion yuan stimulus package and ballooning money supply are widely credited regarding mitigating the effects of the U.S. and global recession on China’s economy.

Sales of existing homes increased at a record pace in October.  The 6.1 million units sold (annual basis) is a 10.1% increase over September and the highest number reported since March 2007.  These numbers cannot be solely attributed to a recovering housing market.  Many homebuyers entered into the market early in October to take advantage of the $8,000 tax credit that was set to expire in November.