Larry's Blog
U.S. Government Spending
March 4, 2010
President Obama has been criticized for overseeing a big additional rise of the government deficit. The recession, not discretionary policy change, is the primary factor behind the advancing fiscal shortfall. During economic downturns, tax revenues automatically shrink, and many expenditures such as unemployment insurance payments increase as the number of claimants climbs. Claims peaked near [...] More
Reflections About the Fed on a Snowy Day
February 25, 2010
A key message of Fed Chairman Bernanke’s testimony this week has been that while improved financial market functionality warrant the gradual unwinding of unconventional measures, the economy is not ready for outright monetary tightening. It may be an “extended period” before such a time arrives. The point is not that the recovery that saw GDP [...] More
Tea Parties
February 16, 2010
The Boston Tea Party was staged in December 1773, nearly nine years after the British Parliament passed the hated Stamp Act, 45 months after the Boston Massacre and just 16 months before the Battles of Lexington and Concord that began the American Revolution. The slippery slope to violent revolution had progressed far by the time [...] More
Stormy Weather and GDP
February 9, 2010
First-quarter U.S. GDP growth is not in danger because of the imminent arrival of a second monster snowstorm to hit the Eastern Seaboard in less than a week. At least that’s the conclusion one draws from an examination of historic quarters when storms or other natural disasters occurred. Here’s a quick sampling. August 25, 2005: Flooding [...] More
Bond Market Hysteria: A Japanese Case Study
February 4, 2010
Global financial moments are in the grip of an “enough already” psychology. Risk aversion has spiked because of fear that fiscal deficits have gone beyond the point of safe return and that much higher inflation is inevitable. European peripheral nations like Greece, Spain and Ireland have been the main object of the panic, but concern [...] More
President Obama’s Challenge
January 27, 2010
Political pundits have defined tonight’s State of the Union address as a critical moment in U.S. politics. Will voter support for what looks like a one-term presidency continue to get trimmed, or will the government be born again after an inspiring redefinition of its mission? One learns to never say either never or always in [...] More
All Bets Off on U.S. Recovery If Equities Plunge
January 21, 2010
A very wide dispersion persists among U.S. growth projections. Some analysts expect real GDP to expand more than 4.0% in the year between 3Q09 and 3Q10, and others have penciled in a return to recession. The pessimists tend to stress the temporary nature of factors behind the impressive rebound of activity, namely a favorable turn [...] More
U.S. and Canadian Consumer Price Inflation
January 20, 2010
Seasonally adjusted consumer prices dipped 0.1% in December but firmed 0.4% in the United States. The December-over-December CPI increases were respectively 1.8% in the U.S. and 1.3% in Canada. Canada enjoyed an even greater advantage in comparisons of whole 2009 inflation, where the readings were merely 0.1% in Canada but 2.7% on average in the [...] More
Observations on World Population
January 11, 2010
World population did not always advance as rapidly as it has been doing since the American and French revolutions. It took 1.5 millennia for the world population to expand by 200 million, or 67%, to roughly a half-billion around 1500 and a further 300 years to double to a billion people. The doubling interval more [...] More
Farewell to the Noughties
December 29, 2009
The decade from 2000 to 2009 was an age of irony and mis-framed missions. Within countries and between them, diplomatic relations became more fractious. As in the century left behind, ideological thinking and the corrupting force of power in various different manifestations hampered economic development. The period is ending with unfinished business on many fronts. [...] More
