Archive for September, 2013

HERE is a very common narrative about the American economy (or, for that matter, the Anglo-American or Atlantic economy):Our current episode of deleveraging will eventually end, which will shift the IS curve back to the right. But if we have effective financial regulation, as we should, it won’t shift all the way back to where it was before the crisis. Or to put it in plainer English, during the good old days demand was supported by an ever-growing burden of private debt, which we neither can nor should expect to resume; as a result, demand is going to be lower even once the crisis fades.That’s Paul Krugman, by the way. Before the crisis, he reckons, the only way to get enough demand to manage full employment was to induce ever more private-sector borrowing. If we then limit borrowing through financial regulation (as we should), we cannot help but suffer a permament demand shortfall: “secular stagnation”. What is more likely to occur is a return to high levels of indebtedness (which, many people suppose, is precisely what rich-world central banks are trying to achieve).I don’t get this. I don’t understand why we would assume that pre-crisis demand was supported by or in any way dependent on higher levels of indebtedness.I have a sense for what the story is (or one story is). Imagine (if you can) that America has experienced steady growth in income inequality, which has …

via Economic Crisis http://www.economist.com/blogs/freeexchange/2013/09/monetary-policy-2?fsrc=rss

UK Only Article: 
standard article

Issue: 

The new face of terror

Fly Title: 

Dutch politics

Rubric: 

The Party of Freedom benefits from Dutch austerity fatigue

Location: 

AMSTERDAM

Main image: 

The price of recession

The price of recession

GEERT WILDERS, a far-right populist politician, has been stirring up Dutch politics for nearly a decade, but he has never lured many people onto the streets. Unlike more mainstream Dutch parties, Mr Wilders’s Party for Freedom (PVV) has no dues-paying members and propagates its anti-Islamic, anti-immigrant, Eurosceptic message largely through the media. But on September 21st, the PVV adopted a new tactic, staging a rally in The Hague to demand a halt to the Dutch government’s latest austerity measures.
According to the police, only a thousand demonstrators turned up. But the low turnout belies Mr Wilders’s popularity. With the Dutch public turning against EU-imposed austerity, the coalition …

via Economic Crisis http://www.economist.com/news/europe/21586887-party-freedom-benefits-dutch-austerity-fatigue-not-so-calvinist-any-more?fsrc=rss

UK Only Article: 
standard article

Issue: 

The new face of terror

Fly Title: 

Current-account imbalances

Main image: 

20130928_FNC467.png

In the run-up to the financial crisis the world economy was marked by huge current-account imbalances. China’s surplus alone was 0.7% of global GDP in 2008; America had a deficit of over 1% of world GDP that year. Since then the world has rebalanced. The current-account balances of the world’s big surplus economies have totalled less than 2% of global GDP since 2009, thanks partly to the strength of the Chinese currency and lower oil prices. Weak growth has cut European demand for imports. An energy boom has helped reduce America’s trade deficit, as a percentage of global GDP, to a 16-year low.

Published: 

20130928

Source: 

The Economist Newspaper

Version: 

30

Historic ID: 

via Economic Crisis http://www.economist.com/news/finance-and-economics/21586838-less-skewed?fsrc=rss

UK Only Article: 
standard article

Issue: 

The new face of terror

Fly Title: 

Food stamps

Rubric: 

Republicans are trying to reduce food aid to the poor

Location: 

CHICAGO

BEFORE Fox News discovered Jason Greenslate, he was just another Californian beach slacker. But then he explained to conservative America that he had no interest in a regular job, yet received $200 a month in food assistance. Worse, he occasionally spent some of it on fresh seafood. Thus a new welfare bogeyman was born: Lobster Boy.
Lobster Boy is now Exhibit A in Republicans’ efforts to slash the cost of the food stamp programme, known as SNAP—federal food aid to the poor. On September 19th House Republicans passed a bill cutting $40 billion from SNAP over ten years.

The number of people claiming SNAP claimants has certainly grown. In July 2007, before the recession, 26.6m Americans received it. Four years later the figure had climbed to 45.3m. By June it was 47.8m. The cost this year is around $80 billion, more than twice as much …

via Economic Crisis http://www.economist.com/news/united-states/21586872-republicans-are-trying-reduce-food-aid-poor-pincer-movement?fsrc=rss

UK Only Article: 
standard article

Issue: 

The new face of terror

Fly Title: 

Bank of America’s trial

Rubric: 

A Manhattan trial should shine needed light on the pre-crisis mortgage market

Location: 

New York

Main image: 

Bank examiner

Bank examiner

IT IS hardly controversial to say that Countrywide Financial, Fannie Mae and Freddie Mac were at the very centre of the financial crisis—Countrywide because it was a leading originator of subprime-mortgage loans, and the two government-sponsored housing-finance giants because they bought vast amounts of these mortgages. All three imploded.
That always made it likely that one or more of the troika would end up as targets for prosecutors. The case that finally kicked off in a lower Manhattan federal court on September 24th had all the elements you would have expected: accusations of greed, fraud and an obsession with extracting profits and sticking others with losses. But in one big …

via Economic Crisis http://www.economist.com/news/finance-and-economics/21586836-manhattan-trial-should-shine-needed-light-pre-crisis-mortgage-market?fsrc=rss

UK Only Article: 
standard article

Issue: 

The new face of terror

Fly Title: 

Stimulus v austerity

Rubric: 

The fourth in our series of articles on the financial crisis looks at the surge in public debt it prompted, and the debate about how quickly governments should cut back

Main image: 

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ECONOMISTS are an argumentative bunch. Yet before the crisis most found common ground in the notion that fiscal stimulus was an obsolete relic. Monetary policy seemed wholly capable of taming the business cycle. Government efforts to increase spending or cut taxes to battle unemployment would only muck things up. When crisis struck in 2008, however, that consensus evaporated.
The frightening speed of the economic collapse spurred governments to action, in spite of economists’ doctrinal misgivings. In 2009 many countries rolled out big packages of tax cuts and extra spending in the hope of buoying growth. This stimulus amounted to 2% of GDP on average among the members of the G20 club of big …

via Economic Crisis http://www.economist.com/news/schools-brief/21586802-fourth-our-series-articles-financial-crisis-looks-surge-public?fsrc=rss

City officials are planning to remove a large homeless encampment on the outskirts of downtown. The California city, where 1 in 4 people live below the poverty line, has taken down three other large encampments in recent weeks. The moves have been controversial and displaced hundreds of people.

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via Economy http://www.npr.org/2013/09/26/226497851/fresno-officials-dismantle-homeless-encampments?ft=1&f=1017