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Tag >> economy
Feb 23
2010

Yet another look at the Fed's rate hike

Posted by Ron F in monetary policyFederal ReserveeconomyCashcareer/management

Ron F

My piece from last Friday on the Fed's hike in the discount rate really requires a mea culpa.

But I really wasn't sure how to correct it, simply because so much else out there seemed equally off the mark, if in a different way.

Feb 19
2010

The real purpose of the Fed rate hike

Posted by Ron F in inflationfinancial crisisFederal ReserveeconomyCashBanksBankingbank failures

Ron F

What to make of the Fed's "surprise" 25-basis point hike in the discount rate from o.50 percent to o.75 percent?

It could mean any of several things, though the most important is likely to have a lot less to do with sending a "message" to the stock market than Erin Burnett and the rest of the CNBC crew would have everyone believe.

Feb 19
2010

Mistaking foreign-produced EPS for U.S. GDP

Posted by Ron F in Riskrecoveryrecessioneuropeeconomy, earnings, dollardemandcompanies

Ron F

There's an obvious distinction to be made between exports and corporate earnings when gauging the impact of the dollar's value in relation to other currencies, but this report fails miserably to make that clear.

Yes, a rising dollar will hurt both exports and the ability of U.S.-based multinational corporations that don't hedge currency risk to meet their earnings targets. But those are two entirely different things.

Feb 17
2010

Why service exports won't resurrect the economy

Posted by Ron F in recoveryrecessionObama Administration, Obama, Federal Reserveeconomycost cuttingconsumer spendingChinaCFOCEOsCareers/ManagementBankingAIG

Ron F

I find this op-ed today on exports more than confusing. Essentially, the author, a business professor and former chief economist at the Dallas Fed named W. Michael Cox, says that President Obama's call for the U.S. to compete more effectively on that basis should not focus on boosting manufactured goods.

But it seems to me that our so-called comparative advantage in services that Cox says is a sufficient source of GDP growth has in fact put us at a disadvantage to countries such as China and Germany.

Feb 12
2010

Media shares blame for financial crisis

Posted by Ron F in RiskRegulationreformrecoveryrecessionjoblessnessinformationHouse of Cardsfinancial crisiseconomyChina

Ron F

This is as good a summation of our collective problem as I've seen anywhere recently.

And I'm afraid I've not much to add except that it encapsulates about half of what I've been ranting about since even before we started this site last July.

Feb 12
2010

Confused about Keynes

Posted by Ron F in TaxStephen SchwarzmanrecoveryrecessionjobsjoblessnessemploymenteconomycompensationCash

Ron F

I've been scratching my head over some of the debates going on about the application of Keynesian economics to our situation.

On the one hand, many if not most Republicans argue that Keynesian demand-side stimulus is ineffective, but then embrace its thrust (not to mention the goverment funds) when they push for tax cuts.

Feb 11
2010

History shows tax cuts produce lower capital investment

Posted by Ron F in unemployment, TaxrecoveryrecessionjoblessnessFederal ReserveeconomyCashcapital expenditurescapex

Ron F

This Bloomberg article on the dearth of corporate capital spending reports some important data, but ends up allowing a Bush era economist to spew hogwash about what will get companies to invest once again.

The amount of cash sitting on the balance sheets of the S&P 500 has soared by 78 percent from a year earlier, to $1.2 trillion, as capex has dwindled. And the article goes on to note that this is hurting an economic recovery by inhibiting employment growth, and with it, increased demand, which companies need to see before they start spending again. It's a chicken-or-egg situation, as Matt Quinn pointed out the other day.

Feb 11
2010

Why the federal deficit is indeed sustainable

Posted by Ron F in RiskrecoveryrecessionObama Administration, Obama, inflationeconomydollardebtcareer/management

Ron F

At long last, an economist takes head-on the anti-Keynesian nonsense we've been hearing from both the right and center (or at least from President Obama himself in his State of the Union address) that says the government should treat its budget the same way families do, by tightening its belt during hard times.

Randall Wray of the University of Missouri spells things out pretty clearly here, but let me hit the high points for you.

Feb 10
2010

It's the global economy, stupid

Posted by Ron F in recoveryrecessionObama Administration, Obama, europeeconomyCongressCareers/Managementcapital expenditurescapexbailouts

Ron F

Lost in the hubbub over the financial condition of Greece and other weak E.U. members is the fact that the U.S.'s member states are in terrible shape as well, and those such as California and New York have bigger economies. Except that Barry Ritholtz has some data on this.

While Greece's economy is only the 34th largest in the world, California's is the 8th largest, equal to that of France.

Feb 09
2010

Enough with the credit to small business proposals

Posted by MQuinn in small business, Obama, loanseconomyCreditcomplianceCash

MQuinn

We've got a major "chicken or egg" conundrum going on in the economy. And nowhere is it more apparent than with small business.

The issue is that businesses won't hire unless there is customer demand and there won't be greater demand until people have jobs.

Despite all the attention they're now getting from the Obama administration, small businesses aren't feeling all that good. Even though the National Federation of Independent Business's January optimism index released Tuesday gained 1.3 points from prior month, reaching 89.3, the reading remained hasn't breached 90 since September 2008.

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