July 2010

Must Read Posts for July 31, 2010

On The Economic Populist you might have noticed the right column. We try to list other sites and blogs who have exceptional insight and writing on what is happening in the U.S. economy.

Sometimes though, one cannot say it better but miss those who did.

Must Read Post #1

Ethics is coming to D.C. Maxine Waters seemingly got some TARP money for a bank her husband and earlier herself, had stock in. Charlie Rangel didn't pay his taxes, while writing legislation to modify the U.S. tax code.

Friday Movie Night - Economic Impacts of Immigration

hot buttered popcorn 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!

 

The rhetoric on immigration is coming out in full force, most of it divorced from labor economics realities. Below are two lectures by George Borjas, considered the top Labor Economist in the U.S.

 

Costs of Immigration

 

IMF releases China Report

You might recall how China killed the release of the IMF report. Notice how China can get a report repressed, unlike most countries, or do they even try. The biggest news is how China is on track to be the world's largest economy.

Well, finally the IMF released the report.

What's frightening is how the IMF shows China's stimulus worked and then some. The difference between them and the United States? China has the jobs, they now have the world's manufacturing base.

Indeed, all of Asia (minus Japan) is experiencing a V Shaped Recovery:

ADB has upgraded its 2010 growth forecast for the 14 economies of emerging East Asia to an aggregate 8.1% from the 7.7% projected in ADB’s Asian Development Outlook 2010 published in April. The forecast for the region’s economic growth in 2011 remains at 7.2%.

The IMF is back to telling China to significantly revalue their currency. This is the elephant in the room China does not want mentioned.

Staff believe that the renminbi remains substantially below the level that is consistent with medium-term fundamentals.

Interestingly, the IMF has put China's objections in the text, instead of their own specifics. Still currency manipulation is a key finding from the IMF report.

Initial weekly unemployment claims for July 24, 2010

Initial weekly unemployment claims is a volatile number, subject to revisions. Regardless the below graph shows a disturbing trend in weekly initial unemployment claims, they simply are not going down to pre-recession levels. The 4-week average on initial unemployment claims is as high as April 2010.

 

 

Hung Over on Debt

American business appears to be hung over on a massive debt fest from before the financial crisis. Debt Overhang to be more specific. It's so bad, it's causing real investment which in turn generates real jobs for the real economy which generates real growth... to be muted. One problem, the declining values of assets, specifically commercial real estate.

Federal Reserve Bank of Cleveland researcher Filippo Occhino delves deep, complete with crayons, on how debt overhang is negatively impacting business investment.

The below video explains debt overhang in simple terms, real simple, must watch simple.

 

 

Turning to adult versions of crayons, here is Occhino's graph of assets to business debt. Notice the asset to debt ratio historic high. (To read las matemáticas version of the research, pdf here).

 

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