Making sense of economic fluctuations can be a daunting task. The economy comprises a gigantic set of interrelated assets, inputs, processes, transactions, and outputs, and its dimensions can be and have been measured in countless ways. If we are to speak sensibly about the economy as a whole—recognizing that almost anything we say about...
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In a post entitled “Regime Uncertainty on Display – Gun Version,” George Johns at Sleepless in Midland argues that the White House’s rhetoric on gun control has been good (so far) for the firearms industry: Gun and ammo manufacturers and sellers are thriving like never before. And the reason is fear of Barack Obama’s...
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Speaking of regime uncertainty, even distinguished mainstream economists get it. Here’s Nobel Laureate Paul Krugman: I think that the main thing keeping long-term interest rates low right now is cognitive dissonance. Even though the business community is starting to get scared — the ultra-establishment Committee for Economic Development now warns that ”a fiscal crisis...
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In Federalist 62, published in the Independent Journal, February 27, 1788, James Madison writes as follows: It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be...
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For decades, American families espoused the not-quite-Cartesian ontology: I go into debt; therefore I am. Household debt climbed ever higher through good times and bad. Since the onset of the current recession, however, household debt has contracted substantially for the first time in more than half a century. After reaching a peak at $13.82...
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In today’s issue of the Wall Street Journal, economics editor David Wessel has a useful column about policy uncertainty—worries about government spending, the expiration of provisions in the tax code, inflationary expectations, and the like—and its role in hampering economic growth by discouraging private investment. (The piece is available online to WSJ subscribers here.)...
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Real private fixed investment—the main driver of genuine economic growth—has recovered less than half of its loss between 2006 and 2010. As of the second quarter of this year, the amount of real private fixed (i.e., not including inventory) investment had barely recovered enough to exceed the low point it hit during the dot.com...
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Following on my recent post citing corporate CEOs’ complaint that continuing “Regime Uncertainty” forestalls their companies’ investing and hiring, corporate CFOs are today following suit, as reported by DeLoitte’s “CFO Signals“: CFOs’ expectations for sales and earnings growth both dropped precipitously this quarter, and their expectations for capital investment and hiring followed suit. The...
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Well, no, the IMF chief is a moderate Keynesian, like all her Establishment colleagues, and praises the world’s central banks for flooding the globe with cheap money. But she does recognize the critical role of regime uncertainty in hindering recovery: Lagarde said a number of factors are eroding growth. “At the center of them...
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As a young woman, I took over a business that was bankrupt: its liabilities exceeded its assets by a considerable amount, and the wolf was well and truly at the door. Lots of people thought I was foolish not to “erase” its debts through filing bankruptcy and be given a “clean slate” by the...
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