Thomas Palley has a new op-ed in the Financial Times. Palley overviews some facts which give credibility to those economists predicting a double dip recession. If recession goes on long enough, it can be classified as a depression. A recession can be classified as a depression if it lasts more than 3 years.
There is a simple logic to why the economy will experience a second dip. That logic rests on the economics of deleveraging which inevitably produces a two-step correction. The first step has been worked through, and it triggered a financial crisis that caused the worst recession since the Great Depression. The second step has only just begun.
Shivers and shrivels, the IMF is saying Iceland will have -8% GDP, +1.7% CPI this year. Note, their stock market has imploded.
A year after the banking crisis brought Iceland to the brink of bankruptcy, the island nation is mired in the deepest recession among advanced economies. The stock market has lost 97 percent of its value, and more than 780 companies have buckled under the weight of foreign currency loans as the krona plunged. Consumers refuse to borrow at Europe’s highest interest rates, and international banks reject requests for new financing.
Now here is what is interesting. Look at Iceland's disaster, yet their unemployment rate is 8.6%, which is less than the U.S.. Only Spain has a 18.2% unemployment rate.
The world's central banks are starting to get serious about diversification, and it all started when the Federal Reserve started monetizing debt.
(Bloomberg) -- Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.
Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.
Hundreds of years ago the Incas would sacrifice virgins to appease their Volcano God.
The Gods and methods of sacrifice may have changed, but the tradition remains.
Like the Incas of old, we find ourselves helpless against forces we do not understand. The foundations of our economy shake and falter in terrifying ways.
In our desperation for answers we turn to High Priests of Economics who tell us these evils have befallen us because of our sins. We must sacrifice the innocent to the Volcano God or it will destroy us all.
The High Priests of Economics never explain exactly how these sacrifices will fix the economy, nor do they mention that the sins in question might be their own. Yet we still rush to offer up our children's futures through unpayable debts while never considering that there might be better alternatives.
The news in the UK reporting that 10 Downing Street is planning on selling "non-core" government assets to make up for a budget shortfall. Currently, the Brown government is running a budget deficit and is struggling to find ways to meet that difference between revenues and outlays. The sale also was to meet the rising demand to deal with their debt. One way, the government proposed today, was the sale of assets ranging from stakes in businesses to looking at it's real estate portfolio that was valued at £220 billion .
This also comes into play with a concerted effort to reduce government spending. I cannot help but think that what we're seeing in the United Kingdom is a future mirror of what will happen here.
The plan is to sell a "portfolio of non-financial assets" held by Whitehall and local authorities over the next two years.
A very nasty small business job creation graph by the Atlanta Fed caught my eye. Below are the number of jobs lost by small businesses. The blue is small businesses less than 50 employees. Now look at the job creation and destruction for this recession, 45%.
The BLS JOLTS report for August 2009 was released earlier this week and it's just damning on job creation in the United States.
The hires level was little changed at 4.0 million in August but has declined by 1.6 million, or 28 percent, since the most recent peak in July 2006. The hires rate was low in August at 3.1 percent and little changed from July. The hires rate was little changed in August in all industries.
Brought to you by the Mythical Jobs Saved by the Stimulus - So what we spent $800 billion dollars to have 10% unemployment. Our press releases look good!
Good Morning! Rise and Shine! Get that Cup O' Joe...
break out the O.J....hang out with the pooch...time to check out the Funnies!
Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.
California has a $1.1 Billion drop in taxes, with a state official unemployment rate of 12.2% and one of the worst property devaluations in the country.
Manfrommiddletown already warned decreasing tax revenues will cause state budget crises in California's screwed.
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
New America Foundation, Policy Director of the Economic Growth Program, Michael Lind is on a roll. He's pulling in a host of economists and policy formulators who really are speaking truth, interviewing them an' putting 'em on the Internets. You're going to love these interviews with Thomas Palley, Ralph Gomory, Pat Choate and Peter Morici.
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
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