In a continuing effort to provide words of wisdom from beyond the walls of Zacks, here are a few things that I think people should find interesting. The views expressed in the articles are not always shared by either myself or Zacks, but I do find them thought provoking.
Christina Romer, Obama’s chief economist until a few months ago and a Professor at UC Berkley, argues that the main reason for high unemployment is cyclical, not structural. I fully agree, and think for the sake of the overall economy that more needs to be done to help the unemployed and to get them back to work. Instead, we are cutting support for the unemployed and the recent budget cuts are likely to make unemployment worse, not better.
Jobless Rate Is Not the New Normal
James Kwak, co-author of “13 Bankers” and the Baseline Scenario blog, discusses taxes and spending, with a particular focus on Social Security. It is a bit oversimplified by design, but makes some interesting points.
Taxes and Spending for Beginners
Veteran China watcher Michael Pettis argues that China is socializing the risk of the banking sector there, which is leading to significant misallocation of capital. This poses a substantial threat to the future growth of China. If the Chinese economy were to implode, it would probably take the rest of the world economy down with it.
Nobel Laureate and Columbia Economics Professor Joseph Stiglitz argues that the increase in economic inequality, and the resulting and reinforcing increase in political inequality, is the central problem with the U.S. economy. In effect the U.S. is starting to look more and more like a “Banana Republic”. That is probably overstating things, but it is the direction in which we are heading.
He is also the author of “Freefall”, a book that I highly recommend for those that want to understand what happened in the financial crisis.
Of the 1%, by the 1%, for the 1%
Bill McBride of Calculated Risk blog argues that a declining vacancy rate is likely to lead to a recovery in the housing market, most notably in housing starts. The high level of vacancies and the still high unemployment rate is likely to make the recovery in housing very sluggish. The tie between housing starts and unemployment runs in both directions, with high unemployment leading to fewer housing starts, and that in turn depresses employment in construction, a sector that has been particularly hard hit in the recession. Ignore McBride’s analysis of anything related to housing at your peril.
Housing Starts: Vacant Units and Unemployment Rate
Daniel Carroll, a researcher at the Federal Reserve of Cleveland, quantifies the effect of food and energy inflation on different income groups. Not surprisingly, the impact is felt much more by the poor and lower middle class than by the rich. While the focus here was within the U.S., the same argument can be made on an international basis. High food and energy prices are having a devastating effect on people in the third world.
The Cost of Food and Energy Across Consumers
While I published excerpts and commented on them here: Yellen About Inflation, the full speech that Fed Vice Chair Janet Yellen made to the Economic Club of New York today is worth reading. She is a very influential voice on the Federal Reserve Board, and her speech gives insights into the thinking of the Fed and the probable future path of monetary policy.
Be the first to comment