Commnets on Karen Maley “Primed to pop in the US”, 30/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/Primed-to-pop-in-America-pd20101230-CLT7U?OpenDocument&src=sph&src=rot
Ben Bernanke's idea of creating an asset effect is a good one, though it requires a concerted effort by all relevant US authorities to put the best effort for it to work. The condition can be very difficult to be met.
Should the Fed's single minded effort not work, then the consequences would be more serious than without such effort.
But when the economy is in a crisis situation, and there is no other conventional means to get it out of that predicament, then one is attempted to do something novel.
Another way to achieve that goal is for the authorities to purchase foreclosed houses with a predetermined rule that can stimulate the house market by putting a floor under.
It may be difficult to implement it, but should be more effective.
There might be a middle way to combine QE and house purchasing to stimulate both equity and house markets.
In this sense, the different authorities must work together cooperatively while still not to undermine the independence of the Fed or monetary authority in terms of monetary policy.
They are all possible new macroeconomic ways to deal with the balance sheet recession or possibly more serious depression. The US is now in a similar situation to Japan's in the 1990s.
This crisis or more enduring economic recession requires new policy prescriptions. Bernanke has been trying to do that from the monetary policy point of view.
I wish him good luck on his innovative endeavour.
Showing posts with label recession. Show all posts
Showing posts with label recession. Show all posts
2010-12-30
2010-06-27
Wastes in public programs, statistics and GDP in Australia
Comments on Christopher Pearson “Panic in the ranks over whiff of mortality”, 26/06/2010, http://www.theaustralian.com.au/news/opinion/panic-in-the-ranks-over-whiff-of-mortality/story-e6frg6zo-1225884462916
While some credit should be given to the Rudd government in terms of having steered Australia away from a recession, the costs of achieving it are often neglected by many.
We don't really know in totality the triumph of avoiding a recession has outweighed its costs.
Even the wastes of some of the Rudd government's programs, while being counted in the GDP number to form the statistics of no recession, were large enough to change the headline of the story of a recession or no recession.
The values of some of the BER, for example, were inflated by some factors. In real terms, removing their effects could have tipped the statistics the other way.
Even the economics of Australia's having avoided a recession is murky.
In that light and the wastes in the stimulus packages, what roles were Treasury and Henry played in that process?
The past two and half years represents an excellent and rare case of public policy failures, from politicians to some top bureaucrats. It should be wonderful materials for case studies of public policies in Australia for students for the coming decades.
While some credit should be given to the Rudd government in terms of having steered Australia away from a recession, the costs of achieving it are often neglected by many.
We don't really know in totality the triumph of avoiding a recession has outweighed its costs.
Even the wastes of some of the Rudd government's programs, while being counted in the GDP number to form the statistics of no recession, were large enough to change the headline of the story of a recession or no recession.
The values of some of the BER, for example, were inflated by some factors. In real terms, removing their effects could have tipped the statistics the other way.
Even the economics of Australia's having avoided a recession is murky.
In that light and the wastes in the stimulus packages, what roles were Treasury and Henry played in that process?
The past two and half years represents an excellent and rare case of public policy failures, from politicians to some top bureaucrats. It should be wonderful materials for case studies of public policies in Australia for students for the coming decades.
2009-09-14
Read GDP statistics
Comments on Steven Kates “Read the data: it was a recession”, 14/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26067805-7583,00.html
It would be interesting to see how much government technically propped up the GDP figures by its own direct spendings and the effects of its cash handouts on consumption spendings (not really income producing, or maybe a little in retailing earnings).
Some reports were saying the government spent $160,000 to save one job - a pretty hefty price for jobs just to make the government look good and sound good by saying that it has been doing whatever it could/can to save jobs.
While there needs to be consistency in GDP statistics, the ABS would do a better service in explaining better how likely the Australian economy was in a technical recession, given the differences in the three GDP measures used in the average headline GDP figure.
As Steven Kates demonstrates, the economy was in recession from the other two measures. The ABS has been silent on this and that is not the best the nation’s statistical agency could offer to the public.
It would be interesting to see how much government technically propped up the GDP figures by its own direct spendings and the effects of its cash handouts on consumption spendings (not really income producing, or maybe a little in retailing earnings).
Some reports were saying the government spent $160,000 to save one job - a pretty hefty price for jobs just to make the government look good and sound good by saying that it has been doing whatever it could/can to save jobs.
While there needs to be consistency in GDP statistics, the ABS would do a better service in explaining better how likely the Australian economy was in a technical recession, given the differences in the three GDP measures used in the average headline GDP figure.
As Steven Kates demonstrates, the economy was in recession from the other two measures. The ABS has been silent on this and that is not the best the nation’s statistical agency could offer to the public.
2009-08-27
US is not out of recession yet
Comments on news report “US 'already out of recession', says expert”, 27/08/2009, http://www.theaustralian.news.com.au/business/story/0,28124,25986462-643,00.html
The report starts with the following:
RENOWNED Wall Street analyst Abby Joseph Cohen says the US economy is already out of recession, downplays the risk of a double dip and reckons the rebounding sharemarket "has got it right".
Now head of Goldman Sachs' Global Markets Institute, Ms Cohen yesterday used her Australian visit to echo Wall Street's support for President Barack Obama's reappointment of US Federal Reserve board chairman Ben Bernanke.
"He is the one who stood in the quicksand and kept everyone's head above the level," she said in an exclusive interview with The Australian in Sydney.
And she suggested the US economy would post 3 per cent annualised growth in the second half of this year in the early exit from recovery before easing to a modest 2 per cent expansion next year.
That's ahead of the quickly improving consensus outlook and represents a solid rebound from the US economy's initial sharp slump following the financial crisis that hit nearly a year ago.
Ms Cohen suggested that, while the US recovery would be impeded by weak consumer spending and housing, it would be initially propelled by a rebuilding of business inventories and the rest of the Obama administration's budget stimulus.
Ms Cohen has been good at analyzing equity market from time to time. However, that does not necessarily mean she is equally good at predicting the economy, especially in the wake of the Great Recession since the great depression in the 1930s.
There are many issues in the US economy that need not only very careful, but also very creative policy responses. There is a long road ahead to victory in beating the recession in the US.
The policy makers so far have avoided a total collapse of the banking and finance system and that was creative and should be commended. While everyone is hoping the policy makers will continue their success, but there is no guarantee that the success in avoiding a disaster will automatically translate into an equally success in pull the US economy out of its abyss while the economy is undergoing simultaneously big adjustments like increasing in savings, rising unemployment and reduced asset values. Further, there will be stronger international competition, if the US drops its protection measures introduced in the wake of the recession.
There is no room for complacency. Let’s wait for now and declare a victory until is secured and achieved.
The report starts with the following:
RENOWNED Wall Street analyst Abby Joseph Cohen says the US economy is already out of recession, downplays the risk of a double dip and reckons the rebounding sharemarket "has got it right".
Now head of Goldman Sachs' Global Markets Institute, Ms Cohen yesterday used her Australian visit to echo Wall Street's support for President Barack Obama's reappointment of US Federal Reserve board chairman Ben Bernanke.
"He is the one who stood in the quicksand and kept everyone's head above the level," she said in an exclusive interview with The Australian in Sydney.
And she suggested the US economy would post 3 per cent annualised growth in the second half of this year in the early exit from recovery before easing to a modest 2 per cent expansion next year.
That's ahead of the quickly improving consensus outlook and represents a solid rebound from the US economy's initial sharp slump following the financial crisis that hit nearly a year ago.
Ms Cohen suggested that, while the US recovery would be impeded by weak consumer spending and housing, it would be initially propelled by a rebuilding of business inventories and the rest of the Obama administration's budget stimulus.
Ms Cohen has been good at analyzing equity market from time to time. However, that does not necessarily mean she is equally good at predicting the economy, especially in the wake of the Great Recession since the great depression in the 1930s.
There are many issues in the US economy that need not only very careful, but also very creative policy responses. There is a long road ahead to victory in beating the recession in the US.
The policy makers so far have avoided a total collapse of the banking and finance system and that was creative and should be commended. While everyone is hoping the policy makers will continue their success, but there is no guarantee that the success in avoiding a disaster will automatically translate into an equally success in pull the US economy out of its abyss while the economy is undergoing simultaneously big adjustments like increasing in savings, rising unemployment and reduced asset values. Further, there will be stronger international competition, if the US drops its protection measures introduced in the wake of the recession.
There is no room for complacency. Let’s wait for now and declare a victory until is secured and achieved.
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