Lots of interesting and thought-provoking reactions to our post yesterday on how the gains in U.S. productivity are shared. One aspect of the debate that is often over-looked is the concentration of financial asset holdings in the U.S. economy. Who owns financial assets such as stocks and bonds in corporations tells us who has a direct claim …
The FOMC meets this week, and most expect them to continue to taper their purchases of longer term MBS and Treasuries at a slow pace. Of course, there could be a surprise around the corner. If there is a surprise, what assets are likely to be affected? And why? The second question is challenging–it has …
The FOMC meets this week, and most expect them to continue to taper their purchases of longer term MBS and Treasuries at a slow pace. Of course, there could be a surprise around the corner. If there is a surprise, what assets are likely to be affected? And why? The second question is challenging–it has …
In November 1930, before anyone knew how Great the Depression would be, Charles Persons published an article in the Quarterly Journal of Economics called “Credit Expansion, 1920 to 1929, and Its Lessons.” His thesis was stated forcefully in the first paragraph: “The thesis of this paper is that the existing depression was due essentially to …
Bill McBride at calculatedriskblog.com (a must read in the economics blogosphere) has been doing some fantastic posts on the abrupt pull-back by investors in the U.S. housing market. They were very aggressively buying homes in depressed markets from 2010 to 2012 thanks to their relative wealth and ability to achieve good credit, but the excitement is now …
Investors Pulling Back — What Happens to Housing Now? Read More »
News this morning shows that industrial output growth in China reached a 5-year low. What lies ahead for the Chinese economy? China’s economic growth over the last 15 years has been spectacular. But there is one aspect of Chinese growth more recently that merits concern: its increasing reliance on debt. Consider the graph below that plots …
Retail spending by households in January 2014 was a major disappointment, coming in well below expectations. January 2014 was also one of the coldest months in memory in many parts of the country. Was the extreme cold weather to blame for weak retail spending? Or is the economy weakening? Perhaps households were trying to save …
Hyun Song Shin (@HyunSongShin) of Princeton University (Atif’s colleague at the Bendheim Center for Finance) has been doing some terrific work on a potential emerging market crisis. His big worry is the rise in non-financial corporate debt in emerging markets, and the important role that bond managers have played in buying up this debt. One …
February retail sales are out Thursday. The debate has been raging on whether weak spending this winter can be blamed on the brutal weather. We may have some thoughts on this precise question in a post later this week. But for now, given that one of us lives in Chiberia, we thought we would show …
Our initial blog post on Friday made the argument that the housing market rebound was driven primarily by investors buying up foreclosed properties. As a result, we should not expect it to fuel household spending as we saw before. Two articles out today make arguments that are closely related: home building is shifting toward rental apartments and …
