Posts tagged…Stimulus
Tea leaves
Fri, Feb 26 2010A hiccup? Or a sign that imported deflation—via low-priced Chinese imports—will now start to slow?
"‘Labour availability is tight right now in Guangdong compared to other regions,’ said Paul Hussey, chief executive of Strix. The Isle of Man company, which dominates the global market for thermostatic controls on electric kettles, maintains most of its manufacturing operations in the provincial…
Read more…More transparency in the Federal budget
Fri, May 08 2009The budget to be introduced next Tuesday will be the first to fully implement the recommendations of the (former Senator Andrew) Murray Review on cutting gobbledygook and sloppiness out of budget estimates and on enforcing more rigorous reporting and audit of government use of our money.
All of this is a good thing. It is being managed by Lindsay Tanner's Ministry of Finance. But the program…
Bad plus bad equals worse
Fri, Apr 17 2009The key piece of bad news, today, from Chapter 3 of the IMF World Economic Outlook
Recessions that are associated with both financial crises and global downturns have been unusually severe and long-lasting. Since 1960, there have been only 6 recessions out of the 122 in the sample that fit this description… On average, these recessions lasted almost two years. Moreover, during these recessions…
Is it a V or an L-shaped recession?
Thu, Apr 09 2009The case for a "V":
"Aided by substantial policy stimulus, growth in the Chinese economy should begin to accelerate in the first half of 2009 and the US recession should bottom out around mid-year with recovery accelerating to about a 4 percent annual rate by the fourth quarter. Recoveries in other countries will likely lag a little behind those in China and the United States. But, aided by a…
Where’s the evidence?
Mon, Mar 30 2009"[Special Minister of State] John Faulkner promised full disclosure. In fact, disclosure has been pitifully inadequate. Access to the modelling underpinning FuelWatch: refused. Access to the model used to evaluate the ETS: refused. Access to the cost-benefit studies underpinning the NBN: refused. Access to the Building Australia Fund's project appraisals: refused. Access to the Treasury's…
Bailouts & crime as redistribution
Wed, Mar 18 2009"To get some perspective on what's going on, I looked up the total direct losses from property crimes in the US. This totalled $17.6 billion in 2006. Meanwhile, the cost to US taxpayers, for one firm alone (AIG) are around $170 billion (and quite possibly going to increase further). That's almost 10 times more than all property crimes." Extract from The Compulsive Theorist
Evidence-free stimulus
Sun, Mar 01 2009It was two years late to end the economic downturn, but the US Highway bill of 1956 brought worse in its wake:
"The bill, for all its expense, seemed a no-brainer, and legislators cast their votes without even a hint of a sense that they might not know what they were doing, or that sums of money big enough to do your country much good are also big enough to do it much harm."Extract from the Facing the facts (about banks) Thu, Feb 19 2009
"’It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring,’ [Allan Greenspan] said. ‘I understand that once in a hundred years this is what you do.’" Extract from Financial TimesThe most inconvenient fact is the questionable solvency of the banks, which has frozen credit markets.
Transparency as stimulus
Thu, Feb 19 2009
This is a great idea that the Rudd government should adopt.
"…The ‘American Recovery and Reinvestment Act,’ better known as our national Hail Mary stimulus bill, … also contains a measure promoting a less-noted type of economic infrastructure: government data. In the name of transparency, all the Fed’s stimulus-spending data will be posted at a new government site, Recovery.gov"Extract from Two theories of recession Thu, Feb 12 2009
David Warsh, possibly the best economic writer on the Web, explains with the help of a pre-NYT Paul Krugman article, that neo-Keynsians, including most of Obama’s technical advisers, have a very different understanding of the origins of recession than the more popular understanding that Krugman called the ‘hangover theory’.
The neo-Keynsians, including National Economic Adviser Lawrence…
The fiscal stimulus as ‘experiment’
Mon, Feb 09 2009
A few days ago, I suggested Gary Banks' perceptive reminder that "all policy is experiment" should guide plans for the proposed fiscal stimulus in Australia. The prudent rule is: take moderate steps, test the evidence of results, adjust direction, and move again. Given the relative strengths of the Australian economy we have the time (and the data) to do that.
Now economist Henry Ergas, writing…
Bailouts could stifle recovery
Wed, Jan 28 2009
The problem is well-expressed by Barry Ferguson writing in The Age (of all places):
"Now is the time when companies with unsustainable business models, with outdated product ranges, too much debt, inadequate boards and management, and poor corporate governance, will be exposed. It is a time when legendary economist Joseph Schumpeter's gales of creative destruction do their best work.
The primary…