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HomeAshoka Mody: “Global Economy’s Groundhog Day”
Posted by Larry Doyle on August 8th, 2014 6:24 AM |
While all too many market prognosticators, political pundits, central bankers, and Wall Street economists work overtime at creating and promoting a narrative to fit an improving global growth story, I have not seen the underlying fundamentals here at home or abroad to support that case.
So while I will quickly peruse the views and opinions of the aforementioned lackeys spinning their yarns, I prefer to look elsewhere to find those pursuing the truth.
This morning, I welcome reading the global perspective provided by Ashoka Mody, “visiting Professor of International Economic Policy at the Woodrow Wilson School of Public and International Affairs at Princeton University and a visiting fellow at Bruegel, the Brussels-based economic think tank. He is a former mission chief for Germany and Ireland at the International Monetary Fund.”
Mody pens a fabulous commentary at Project Syndicate as to what I believe is really transpiring along our global economic landscape. Let’s navigate.
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Global Financial System: Dangerous and Dysfunctional
Posted by Larry Doyle on September 20th, 2013 8:55 AM |
I truly appreciate reading the work and gaining the wisdom of those with informed insights and opinions.
Where do I always find people of this ilk? At one of my favorite stops while navigating the economic landscape: Project Syndicate.
While various and sundry lapdogs from both sides of the political aisle and others well-schooled in the inner workings of the Wall Street-Washington incestuous thoroughfare are touting how our financial system has been reformed, let’s go down a less traveled path and see what a noted observer has to say on this topic. (more…)
Traveling Into Uncharted Waters Looking for Ben
Posted by Larry Doyle on November 29th, 2011 6:51 PM |
What lies ahead on our global economic landscape?
While market analysts and economists are paid to provide opinions, you know what they say about opinions.
Our global economy and markets have been supported by such unprecedented levels of government intervention with accompanying massive unintended consequences that trying to navigate our economic landscape can only be equated to “traveling in uncharted waters.” (more…)
David Rosenberg’s Sense on Cents
Posted by Larry Doyle on May 4th, 2011 5:39 AM |
David Rosenberg is a Sense on Cents All-Star. While many do not agree with Rosenberg’s overall assessments of the economy and the markets, I have untold appreciation and respect for his thoughtful and astute analysis. He recently spoke at an investment conference. Robert Huebscher of Advisor Perspectives captured Rosenberg’s thoughts in his piece, My Breakfast with Dave.
For those with even a passing interest in the economy and markets, I strongly recommend even a cursory review of Rosenberg’s remarks as he offers keen insights on a variety of angles and impacts embedded in the ongoing inflation vs deflation debate. What does Dave see for commodities, housing, interest rates? Read on….a wealth of ‘sense on cents’ awaits you. (more…)
Chinese Inflation Does Not Mean Global Inflation
Posted by Larry Doyle on March 11th, 2010 8:10 AM |
News this morning that China’s inflation rate has hit a 16-month high is garnering significant attention.
China’s economy is only one-fifth the size of the U.S. economy while China’s population is more than four times that of the United States. In fact, China’s population is approximately one-fifth of the entire world’s population. Clearly, the People’s Republic of China represents a huge growth opportunity in this century.
Bloomberg highlights this inflation news this morning in writing, China Inflation Quickens as Industrial Output Climbs:
China’s inflation reached a 16- month high, industrial output climbed and new loans exceeded forecasts, adding to the case for the government to pare back stimulus measures. (more…)
Global Confidence Rollercoaster Hits Downdraft
Posted by Larry Doyle on February 10th, 2010 8:28 AM |
Rollercoaster…..!!!
I used the analogy of this amusement ride yesterday to describe our global economy and markets. A day at Six Flags seems far more appealing than the continued twists and turns of our global economy. Today, the riders on our global economic rollercoaster indicate they see further downward motion with hard twists and turns ahead. Bloomberg surveyed close to 2,500 ‘riders’ the first week in February and reports, Global Confidence Ebbs on Concern Budget Gaps Will Hurt Rebound:
Confidence in the world economy dropped in February on concern worsening government finances in some European nations will derail the global recovery, according to a Bloomberg survey of users on six continents.
The Bloomberg Professional Global Confidence Index dropped to 54.9 from 66.6 in January, when the reading was at the highest level since the series began two years ago.
What drove the 20% decline in this reading? In one man’s opinion: (more…)
When Will Our Economy Return to Normal?
Posted by Larry Doyle on February 8th, 2010 8:18 AM |
The question most asked in economic circles is, “How and when will our economy return to normal?” My response is always, “What is normal?”
I find it most impactful to explain to people looking to gain a greater understanding of our economy and our markets that the normal economy of the late ’90s through 2007 was driven by the shadow banking system. This shadow banking system provided upwards of 40-45% of the total credit employed by our economy.
The shadow banking system incorporated the credit origination, securitization, and distribution businesses of Wall Street investment banks as opposed to the traditional lines of credit provided by commercial banking activities.
The crisis on Wall Street 2008 brought this shadow banking system to a virtual standstill. While it has begun to resuscitate itself, it remains a mere shadow (no pun intended) of its former self. What is the result? (more…)
December 19, 2009: Month to Date Market Review
Posted by Larry Doyle on December 19th, 2009 11:26 AM |
Our economic landscape is anything but normal. The fits and starts, ups and downs, hills and valleys remain challenging and all assertions to the contrary are not about to change anytime soon. Those in Washington continue to try to put a happy face on our economy. Those on Wall Street revel in the easy money and try to project a populist image. But those on Main Street are paying the price in terms of navigating the real challenges of our economy. On that note, welcome to Sense on Cents. Let’s move on to our weekly review.
With most eyes fixated on problems here at home, the real issues in the global markets occurred in the Euro-zone. Is Greece close to a sovereign default? Would that create a chain reaction? The Euro continued to give ground this week and our greenback benefited in the process. Given the negative correlation between our greenback and many sectors of the equity, commodity, and bond markets, volatility remains a concern and risks remain high as we go into year end.
We continued to see a semblance of this phenomena play out again this week. Will it continue? Watch the U.S. Dollar Index and expect that it will continue to be negatively correlated with the markets.
Let’s navigate. Prior to reviewing the month to date market returns, I’ll address economic data released this week. (more…)
Let’s Get Some Chinese: A Review of Economic Activity in China
Posted by Larry Doyle on May 13th, 2009 11:59 AM |
China’s stock market closed today at the highest level since August ’08. Is that an indication that China is ready to resume its economic expansion and can literally pull the global economy right along with it? Well, let’s check out a number of items on the menu:
1. The Baltic Dry Index has rebounded over the last few weeks. The BDI is extremely volatile. It plummeted approximately 95% from its high in early 2008, rebounded strongly earlier this year only to suffer a setback in March as our equity market started to regain its legs. The recent rebound in the BDI is again credited to increased shipping activity of commodities into China. Prices of commodities (copper, oil, iron ore) have been very highly correlated with the BDI as a result.
So far, so good . . . let’s try some more items on the menu.
2. How about Chinese lending activity? Is the well directed Chinese stimulus precipitating an increase in activity by non-governmental borrowers? The FT reports, China Cuts Lending Amid Asset Bubble Fears.
I will give those in charge of China’s fiscal stimulus and government programs credit. As this article highlights, these authorities have real concerns about inflation and irresponsible lending practices.
The FT reports:
Chinese bank lending slowed dramatically in April because of fears that loan growth in the first quarter had been excessive and could pave the way for loans of deteriorating quality, so possibly creating a new round of asset bubbles.
That led to fears among regulators that money was being funnelled illegally into the stock market and handed out to state-sponsored stimulus projects of dubious commercial value that could become non-performing assets.
Some regulators also worried about the potential for rampant inflation. Those fears were somewhat eased by price measurements released on Monday showing China remained in deflationary territory in April for the third consecutive month.
Wow! Can you imagine if a regulator in our country had the integrity to voice concerns about government funds being utilized illegally or fraudulently?
This item did not taste so good in regard to leading the global economy to greener pastures, but I commend the Chinese for addressing potential pitfalls in their programs.
3. Away from the government stimulus, the Chinese economy remains largely dependent on exports. Let’s take a taste! Again, our friends at the FT provide some spice, Slide In Chinese Exports Will Hit Growth Strategy:
The FT reports,
Chinese exports fell steeply in April for a sixth month in succession, suggesting that the worst might not be over for the world’s third largest economy.
The total value of Chinese exports fell 22.6 per cent to $91.9bn (£60.2bn) last month compared with the same month a year earlier – a faster rate of decline than the 17.1 per cent year-on-year drop in March.
Why are Chinese exports falling? Well, please review our first post this morning which highlighted that domestic retail sales here fell by .4% after a decline of over 1% last month. If American consumers aren’t buying, Chinese producers aren’t exporting.
4. LD, it is only a matter of time, though, before the American consumer returns to his old ways of spending and the Chinese exporters will be happy, right? Let’s go for the fortune cookie and see what it says: U.S. Lawmakers In Threat To Raise Tariffs On China.
Congress is raising this threat given rising unemployment here at home and concerns that China manipulates its currency. Will this tariff fly? Perhaps.
The FT reports:
a group of lawmakers from manufacturing-dominated states are determined to give it another try and some analysts think the US recession could help build support this time. The charge in the Senate will be led by Debbie Stabenow, a Democrat from Michigan, and Jim Bunning, a Republican from Kentucky. In the House, it will be pushed by Tim Ryan, a Democrat from Ohio, and Tim Murphy, a Republican from Pennsylvania.
Whether these tariffs are the right maneuver or not, increased protectionsist measures are not one way streets. If we are looking to grow our own economy without being dependent on the American consumer, we will need global trade lines to be open.
So, what did you think of our sampler?
To me it was more sour than sweet. In my opinion, our future/fortune remains decidedly mixed at best.
LD
For more in depth BDI analysis, check out Baltic Dry Index and Commodity Graphs
