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Mauldin estimates that a 1% hike in Japanese interest rates would eat up a full 10% of the nation’s tax revenue. Compounding the problem is that any additional small changes in the nation’s savings, growth or inflation rates could easily increase the cost of servicing its debt to a point of no return.
JP Morgan Finds Obama, And US Central Planning, Has Broken The Economic "Virtuous Cycle" – ZH
The new pattern of productivity growth—no longer cyclical with respect to output and countercyclical with respect to employment—has several important implications. For one, we may continue to see the unemployment rate drop more than Okun’s Law implies. Another implication is that the labor share is no longer countercyclical. This also means that profits will be less correlated with improvements in the labor market.
Adam Davidson's 'Why Some Countries Go Bust' Needs a Rewrite – Minyanville
Aaron Brown: The inset consists of snippets, 30 words or so, to explain and refute the lifetime work of sophisticated thinkers. So I can’t complain about oversimplification or missed subtleties. I can, however, complain when Davidson gets things altogether wrong, even backward in some cases.
Leverage and the Business Cycle – Conversable Economist
The claim isn't that leverage cycles explain all recessions, but rather that they can help explain why some recessions--often those that also include a financial crash--can turn out to be so severe…At least a couple of years before the financial crisis first hit in late 2007, it would have been possible for the central bank and financial regulators to take various steps to slow the credit boom.
The economy as machine – MacroBusiness
Dalio talks of credit creation and long and short term cycles. But there is no mention of the explosion of meta money over the last 15 years. You know, things like hedge funds. The $700 trillion of derivatives that continue to accumulate. The high frequency trading that is taking over many markets.
Permanent or Temporary? – Economist’s View
Very nice look at historical recessions around the globe and how and when the economies returned to trend growth line.
What is the Fed telling markets? – Free exchange / The Economist
There is a real cost to extreme inflation aversion. Central bankers have done a pretty woeful job explaining the benefits of this policy, and they should be roundly criticised for this failure.
Nice article and interviews on the most popular data service.
Self-sustaining stimulus – The Economist
When he was at the Treasury nearly 20 years ago Larry Summers would counsel President Bill Clinton on the merits of “stimulative austerity”: cut deficits, and interest rates will fall by enough to produce stronger economic growth.
The (Many) Things Macroeconomists Don't Know – HBR
Interesting look at the developments in macroeconomic thinking – free registration required
Interesting look at the developments in macroeconomic thinking – free registration required
Does the Current Account Still Matter? – Berkeley (pdf)
Very long paper – if the topic interests you
Financial Globalization, Inequality, and the Raising of Public Debt – Phil FED (pdf)
…governments choose higher levels of public debt when financial markets become internationally integrated and inequality increases.
Towards an explanation of cross-country asymmetries in monetary transmission – Bundesbank (pdf)
Regulation, credit risk transfer with CDS, and bank lending – Bundesbank (pdf)
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Hedge Fund Market Wizards – Amazon
Jack D. Schwager, the author of the classic Market Wizards-books, is coming out with a new book, other books by Schwager here. The book is out in May, preorder now.