Economy - June 7
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Eating the Seed Corn? Consumption in the American Economy Since 1929
Steve Roth, Angry Bear
Following up on some work I did a while back (Kuznets Revisited: Investment in the American Economy Since 1929), I got curious about what consumption has looked like in America over the last 80 years.
I’ll give you the results first, as a proportion of output, or GDP, followed by explanation and discussion.
This all requires some explanation. First off, when I use the word “real” herein, it doesn’t mean “inflation-adjusted.” It means real-world, nonfinancial. In national-account-speak, all consumption and investment spending is about purchases of real goods and services — things that are produced and consumed. Financial “goods” or “assets” — which aren’t/can’t be consumed by humans — aren’t even part of the accounting. (We’re “inside” the NIPAs.)...
(4 June 2012)
The Pernicious Dynamics of Debt, Deleveraging, and Deflation
Chris Martenson, chrismartenson.com
At this moment, the news media is constantly clamoring about the "Three Ds" that are buffeting the markets: debt, deleveraging, and deflation. We intuitively sense that they're linked -- but how, exactly?
Understanding this linking is critical; as debt has fueled the global expansion, it will also dominate its contraction.
Debt and Deleveraging
To illustrate the forces of debt and deleveraging, let’s consider a home mortgage.
Suppose a buyer of a $100,000 home qualifies for a mortgage that requires only a 3% down payment in cash. The buyer ponies up $3,000 in cash and obtains a $97,000 mortgage. The cash collateral is thus leveraged about 33-to-1: Each $1 in cash has been leveraged into $33 of borrowed money...
(5 June 2012)
Aggregate factors in the price of oil
James Hamilton, Econbrowser
It seems that no matter what financial series you look at, there's a similar pattern of ups and downs over the last few years. I was curious to get a quick quantitative impression of how much of a contribution aggregate factors have been making to recent movements in the price of oil.
I commented on Sunday on recent big swings in stock prices, which rose in the fall of 2010, declined sharply over sovereign debt worries last summer and fall, rebounded early this year, and over the last month have moved back down. The same basic patterns are seen in the dollar price of oil.
How much of the recent moves in oil prices can be explained by changing perceptions of global economic activity? One way I thought to get an impression of this was to look at the extent to which recent oil price movements are mirrored in other commodities...
(6 June 2012)
The post is followed by comments from Jeffrey Brown and Steven Kopits
Keiser Report: Paper Money Collapse
Max Keiser, Keiser Report
In this episode, Max Keiser and co-host, Stacy Herbert, discuss all hell breaking loose as an electronics chain store stockpiles security shutters, capital flees Greece (and Spain) and Max proposes a love market. In the second half of the show Max talks to Detlev Schlichter, author of Paper Money Collapse, about the euro, the drachma, the dollar and gold [this part starts at 13:00].
(5 June 2012)