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Tag Archives: fiscal stimulus

Germany’s real business cycle

Germany’s large manufacturing sector has done poorly during 2019. As a result, many are calling for fiscal stimulus: Germany is the economic engine of Europe — and it’s running on fumes. After a decade of near-constant expansion, the economy is flirting with recession. Germany’s export-dependent companies are deeply exposed to fallout from rumbling trade disputes, and the critical auto industry is struggling with the shift to electric cars. That means pressure is...

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How not to save for college

Twenty years ago, my wife and I faced the question of how to save for my daughter’s college education. (BTW, why did I have to pay for both my college education and my daughter’s?) Suppose I had suggested the following plan to my wife: We’ll invest $10,000/year in collectables. We can buy some Song dynasty porcelain, ancient Greek coins, 17th century French furniture and etchings by Durer, Goya and Rembrandt. Then we’ll sell them after 18 years to pay for her...

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The dog that isn’t barking

The most revealing comments are often those that seem obviously appropriate, but no one ever makes. In this post, I’ll discuss one such example, the economic profession’s strange reluctance to come to grips with the failure of Bush’s 2008 stimulus package. It’s not that people don’t recognize that the stimulus failed, rather that they are unable or unwilling to admit to the reason why it failed. Readers of the blog know that I have an extremely low opinion of modern...

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Japan’s Broken Economy—–25 Years Of Failed “Stimulus”

So thoroughly destroyed is Japan’s economy that some of the numbers it produces are beyond comprehension, just staggering in any meaningful context. For example, Japan’s real GDP (SAAR) for Q1 2016 was ¥530 trillion (chained 2005). That compared to ¥447 trillion in Q1 1994. Over two decades and two additional years the Japanese economy has grown by a grand total of 18.5%. On straight arithmetic alone it doesn’t work out to 1% per year let alone on a compounded basis. Since the first quarter...

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The PMI’s Are Noise Meters——The Economic Weakness Is Really Different Now

If there is any wonder why PMI’s deserve scorn, this morning’s twin bill delivered solid reasoning. Both the ISM Manufacturing Index and the Markit Manufacturing PMI declined, and both remained above 50. However, there was no real consensus about what any of it meant. Depending on the media outlet determining commentary about either, there was both positive and negative spin on each. Further, the internals of each survey showed quite divergent views in important subcomponents. Starting with...

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Red Ponzi Breaking—-China’s October Loan Growth Plunges To One-Half Of Forecast

By Bloomberg China’s broadest measure of new credit slumped to the lowest in 15 months in October, adding to evidence six central bank interest-rate cuts in a year have yet to spur a sustained pick up in borrowing. Aggregate financing fell to 476.7 billion yuan ($75 billion), according to a report from the People’s Bank of China on Thursday. That was lower than all 25 economists’ projections and less than half the median forecast 1.05 trillion yuan. The data rounds out a week of mixed...

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Policies must be based on more than market moves

Sir,In making his case for a co-ordinated round of fiscal policy stimulus, Larry Summers attaches considerable weight to market signals (“The Big Read“, October 8). He urges policymakers to pay heed to the fact that the markets are now telling us with increasing force that we are in a very different world that urgently needs a strong policy response.Yet, with practically the same breath, Prof Summers reminds us that history tells us that markets are inefficient and are often wrong...

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