Larry's Blog
Concern #4: Will Massive Fiscal Deficit Spending Drive Price Inflation and Long-Term Interest Rates Skyward?
November 10, 2009
Of the four concerns that I’ve raised today, this one is creating the loudest din in the public discourse. First, government deficits have soared just about everywhere. Britain and the United States lead the pack with double-digit imbalances this year expressed as a percentage of GDP. The red ink in the cases of Japan, the […] More
Larry's Blog
Concern #3: Financial Institutions That Are Too Big to Fail
November 10, 2009
In the darkest days of the financial sector-led recession, deep regret was voiced over and over again that financial institutions must not be allowed to be too large too fail again in the future. However, the Congress and Obama Administration opted against the most radical suggested reforms like nationalization and separating commercial from investment banking. […] More
Larry's Blog
Concern #2: China's Predatory Currency Policy
November 10, 2009
Mercantilism is alive and well in China, now the world’s third largest economy although well down the leader board in per capita terms. Chinese monthly economic figures for exports, industrial production, and investment will be reported tomorrow. A massive three-dimensional policy stimulus from low interest rates, deficit fiscal spending and intervention to maintain a highly […] More
Larry's Blog
Concern #1: Low U.S. Savings Rate
November 10, 2009
The United States is overly indebted at all levels, but this concern focuses on households. Families think of savings as any change in wealth, including income that is not spent immediately but also capital appreciation of previously accumulated assets. An economist’s notion of savings is deferred income. Personal income not spent on consumption is saved. […] More
New Overnight Developments Abroad - Daily Update
New Overnight Developments Abroad: Fitch Warns About British Credit Rating
November 10, 2009
Sterling lost 0.4% against the dollar as the Fitch credit rating service claimed the U.K. is at greater risk than other triple A rated nations of losing that status. A huge government deficit was cited. The dollar otherwise is unchanged against the euro, Swiss franc and Canadian dollar, up 0.1% against the yen and 0.2% […] More
