Blog Entries tagged 'economy' Blog Entries tagged 'economy' Fri, 31 Dec 2010 15:37:18 +0100 FeedCreator 1.7.2 Small businesses gloomy as New Year approaches

As spending soared above even optimistic predictions this holiday season, small business owners are still far from optimistic about economic recovery as a whole, according to a survey by Discover Small Business Watch.

Discover's monthly index of small business confidence fell for the first time in three months in December, even as consumer spending soared. The index fell to 81.6 from 87.2 in November, a drop of 5.6 points.

Meantime, spending increased 5.5 percent in the 50 da [...] Tue, 28 Dec 2010 23:00:00 +0100 Risk economy Cash Small business weighs in on election, legislation, economy

Although the remarks of Carl Paladino, New York gubernatorial candidate, on gay people, along with the assertion from Rhode Island gubernatorial candidate, Frank Caprio, that President Obama could shove his endorsement, have made for some spicy headlines lately, small business leaders are taking a far more pragmatic view of the upcoming mid-term elections. Their focus is on the recent voting records of those stumping for office and the economy, according to a recent survey of more than 500 sm [...] Wed, 27 Oct 2010 23:00:00 +0100 election economy ARRA A better way to boost demand

Bear with me here. This is going to be one of those "out there" posts. But Steve Randy Waldman takes an interesting stab at a problem I've been wrestling with, at least in the furthest reaches of the financial corner of my brain, since the financial crisis began.

And that is how to stimulate the economy without creating another asset bubble. It sounds easy enough to the Keynesians, but as Waldman has pointed out before, rebooting aggregate demand through traditional g [...] Wed, 18 Aug 2010 23:00:00 +0100 Risk recovery recession financial market reform financial crisis Federal Reserve Fed economy career advancement bubbles Banks bank lending Keynes' biographer skewers deficit hawks

This piece published today by Project Syndicate is as insightful a critique as I've seen of the consensus that has emerged among policymakers that government deficits must be cut to restore economic growth.

Not that we haven't taken a stab at that ourselves.

But Skidelsky has authored a biography of Keynes, so he knows the economics here a whole lot better than we do and can put them into language that strikes much closer to home.

The writer, who also happens to be a [...] Tue, 17 Aug 2010 23:00:00 +0100 recovery recession Obama Administration government finance global economy Federal Reserve Fed economy ECB demand default career/management CPAs much more pessimistic about economy

Senior level CPAs have turned much more pessimistic about the economy. And somewhat surprisingly, they are partly concerned about deflation.

Just 21 percent of CPAs serving as C-suite executives said they are optimistic about the US economy, way down from 40 percent who were optimistic in May and the lowest level since April 2009, according to the American Institute of Certified Public Accountants and the University of North Carolina's Kenan-Flagler Business School's late [...] Thu, 12 Aug 2010 23:00:00 +0100 Risk inflation economy deflation CPAs Cash Careers/Management China’s closures will affect growth

China may be talking the talk of meeting energy reduction targets, but whether they will walk the walk long term remains to be seen.

And the impact of their energy reduction plan--to shut down 2,000 high-energy-use factories in heavy industries across the country--could have a big impact on the companies being targeted. Certainly a failure to comply will have a big effect.

The administ [...] Wed, 11 Aug 2010 23:00:00 +0100 growth energy intensity energy economy China Cash Why corporations may not care about the domestic economy

Paul Krugman today once again bemoans the lack of Keynesianism in what passes for economic policymaking discussions these days, and I share that complaint.

However, Krugman may be missing part of the problem here, which is that those who pooh-pooh the prospect of deflation may actually not much care if it materializes, though they would be mistaken to do so.

Yves Smith gets at this today in a post of her own in connection with a Robert Frank piece in the Wall Street Jou [...] Mon, 02 Aug 2010 23:00:00 +0100 recovery recession outsourcing offshore joblessness global economy employment growth employment emerging markets economy earnings demand cutting costs corporations Time to reread Keynes

I've avoided rehearsing the on-going debate over the bleak macroeconomic picture, because it quickly descends into endless political back and forth along with the usual name-calling, as my colleague Steve Taub and I have been discussing internally today.  But it's time to make an exception:

Is the private sector not hiring because it fears more aggressive action from the public sector, and so the public sector (read Obama administration) should leave the economy to itself [...] Mon, 26 Jul 2010 23:00:00 +0100 recovery recession Obama Administration jobs joblessness investment financial crisis environmental policy energy employment economy demand Congress Careers/Management Why companies aren't spending

There's a political debate heating up about companies' hesitancy to invest the cash they're sitting on.

Essentially, the Democrats--or at least those in favor of further government stimulus measures such as a jobs program or at least extended unemployment benefits--argue that companies are wary of spending because of the lack of aggregate consumer demand.

The GOP--or those in the party who oppose stimulus in favor of austerity or at least tax cuts--prefer to explain th [...] Wed, 07 Jul 2010 23:00:00 +0100 recovery recession Obama Administration Obama jobs joblessness employment economy earnings demand cash position cash management Cash capital expenditures capex Companies sitting on still more cash

A survey released today by the Association of Financial Professionals will do nothing to dampen the austerity versus stimulus debate.

To wit: Forty-three percent of US corporations had larger US cash and short-term investment holdings this May than they did six months earlier. Only 24 percent of respondents reported that their short-term holdings had shrunk during the past six months.

In a press release accompanying the findings, the AFP described finance executives  [...] Wed, 30 Jun 2010 23:00:00 +0100 Tax TARP recovery recession economy demand default consumer spending Congress cash management cash concerns Cash Carmen Reinhart Careers/Management capital expenditures capex Banks Why Keynes was only half right

At long last, one writer has seriously addressed the potential problems with more stimulus spending. (I sent Paul Krugman a question about this more than a week ago, via a comment on his blog, but from what I can see he has yet to address it. And Dean Baker too easily dismisses the issue, in my opinion.)

The problem is not the federal budget deficit, not at least in the short term, but the potential political fallout from bad decision making. That way, says Steve Randy Waldman, ind [...] Mon, 21 Jun 2010 23:00:00 +0100 unemployment Spending Risk recovery recession Obama jobs joblessness global economy Germany economy demand consumer spending climate change clean energy Careers/Management carbon emissions Capital cap and trade Barry Ritholtz alternative energy Why the recovery doesn't really feel like one

There's suddenly lots of talk about the possibility of a "double dip" recession, as if the economy had ever really emerged from the last downturn. 

Yves Smith over at Naked Capitalism does a good job of putting the talk in perspective today. In fact, the discussion is ultimately about semantics.

And another blogger, at Calculated Risk, points to the fundamental problem here while questioning whether St. Louis Fedster James Bullard is too optimistic about where [...] Mon, 14 Jun 2010 23:00:00 +0100 unemployment recovery recession jobs joblessness income Federal Reserve employment economy Careers/Management How bad a hit to GDP from financial reform?

A panel sponsored by the Securities Industry and Financial Markets Association on Monday on what banks can expect from financial reform warned that higher capital reserves and other limits Congress imposes on their profitability would hurt the economy as they curbed their ability to lend.

Several panelists, including Adam Gilbert, head of regulatory policy in the corporate risk management group of JP Morgan Chase, and Gary Mandelblatt, chief risk officer of Nomura, warned repeated [...] Sun, 13 Jun 2010 23:00:00 +0100 Sifma Risk Regulation recovery recession Morgan Stanley loans J.P. Morgan Chase financial reform financial crisis Federal Reserve Fed economy Congress compliance Banks banking reform Banking bank lending bank failures SMIDs to banks: lend me money

According to the Fed’s April 2010 survey on bank lending practices, almost all – 90-plus percent of – banks stayed the course when it came to lending to small and medium-sized firms. Just under six percent tightened standards, while about two percent eased up. 
As we wrote aft [...] Mon, 07 Jun 2010 23:00:00 +0100 small business small and medium-sized business lending Federal Reserve economy banking industry Strikes in China could mean lower US profits

Rising labor strife in China has potentially significant implications for US companies and financial markets. The irony is that what companies want isn't necessarily the same thing that markets do.

Yves Smith over at Naked Capitalism does a good job of explaining why.

Essentially, US and other foreign companies are producing there to take advantage of low labor costs. But with strikes and other forms of upward pressure on labor costs, the advantage for such manufacturers may n [...] Mon, 07 Jun 2010 23:00:00 +0100 workers outsourcing offshore Malaysia emerging markets economy earnings demand costs cost reduction cost cutting consumer spending China Careers/Management How meaningful is manufacturing's rebound?

For the tenth month in a row, economic activity in the manufacturing sector expanded, according to the May 2010 Manufacturing ISM Report on Business. In fact, 16 of 18 sectors within manufacturing reported growth, including paper and wood products, as well as electrical equipment and food, beverage and tobacco products.

Several factors fed into the increase. The new orders index was at 65.7, the same as April, but up from 61.5 in March. [...] Sun, 06 Jun 2010 23:00:00 +0100 jobs employment economy Glass half full, not half empty?

Talk about accentuating the positive. This Reuters report just about takes the cake. It's also a complete jumble of contradictory data.

So rather than pick it up, I've decided to "Fisk" it, which is Webspeak for inserting snarky comments into someone else's text and comes from the name of Iraq war critic and journalist Robert Fisk, whose brilliant work generated lots of such treatment on right-wing sites back in the day. We'll see if Reuters complains about my [...] Thu, 27 May 2010 23:00:00 +0100 recovery recession economy consumer spending career/management Another road to serfdom

As a follow-up to yesterday's rant, I see that investors are applauding the moves of European governments to reduce their budget deficits, as if the answer to deflation is more deflation.

Hasn't anyone ever heard of Keynes and the false dawn of 1937?

Rather than repeat myself, however, I would point to this dystopian projection by University of Missouri economist Randall Wray. It's a tragicomic description of where things are headed given the nearly world-wide re [...] Wed, 26 May 2010 23:00:00 +0100 Timothy Geithner Risk recovery recession Obama Administration jobs global economy financial crisis eurozone Euro area economy Careers/Management bubbles Banks bank failures bailouts alternative energy Global banks, global problems

Before I get to the news (which involves the problems of European banks), let me bury the lede and offer up a bit of perspective. Yes, that's totally bass ackwards, but indulge me for a few grafs. (Hey, this is the web.)

We've recently gotten grief from friends here and there about being too negative about the economy. So we've been doing our damndest of late to ensure a "balanced" approach, seeing the glass half full as often as empty, so to speak, or walking [...] Tue, 25 May 2010 23:00:00 +0100 unemployment Risk joblessness financial crisis Federal Reserve Fannie Mae europe economy demand debt climate change Careers/Management bubbles Banks Banking Why banks are still wary of financing trade

Republished from the Benche, a financial community for corporate treasurers.

The International Chamber of Commerce has released the findings of their survey titled "Rethinking Trade Finance 2010" that sheds some light on this issue.

In total 161 banks in 75 countries participated in the survey, which was commissioned by World Trade Organization's Expert Group on Trade Finance to track the developments in the industry.

The report reveals some interest [...] Wed, 12 May 2010 23:00:00 +0100 treasury trade finance trade recovery recession financing economy Cash Banks Banking