Tuesday, September 1, 2015
I see that the latest release has Canada falling into a technical recession in the second quarter. Although a declaration of recession may have an effect on the rhetoric in the election, until there is some serious follow-through in construction, the effect of this weakness will probably be limited, under the assumption that the United States (Canada's major trading partner) avoids a recession. (Please note that it is very clear that this assumption can be questioned, but if we have a global recession, it seems like a safe forecast that Canada will have a deep recession.)
Thursday, August 27, 2015
The Oil Drum was the go-to site for peak oil analysis, and I am unaware of any comparable replacement. My diagnosis is that Peak Oil theory developed a public relations problem after the 2009 Financial Crisis - many believed that oil prices would keep going on up to $300/barrel (or whatever), and there was a shock when oil prices collapsed. My feeling is that many in the Peak Oil camp over-reacted to that event.
Tuesday, August 25, 2015
[UPDATE - 2015-08-27] Another reason to ignore the stock market (that I forgot to mention) is that it bounces up and down in a deranged fashion. A few days after the "end of the world" commentary by equity strategists, everything is apparently back to normal. Another advantage of following credit, and not equities, is that the credit market only tends to break down after a spate of defaults, which are not just transitory mark-to-market events.
Monday, August 24, 2015
Warren Mosler offers a good analysis of Paul Krugman's article "Debt is Good." I try to avoid writing "Paul Krugman does not get it" articles, as that is already a crowded field. However, since the article caught a lot of attention, and is right up my alley, I feel I should comment on it.
Sunday, August 23, 2015
Some Thoughts On Productivity And The Fed." He reflects on Fed Chair Yellen's July 10th speech. My view is that the fall in productivity is just a direct effect of the weak growth that has afflicted the United States, and is not telling us anything else. If policymakers tolerate weak demand growth, lousy productivity is what they should expect. This tells us little about inflation, as weak productivity growth could translate either into weak growth of real wages or real profits.
Monday, August 17, 2015
Since the underground economy consists of activity that is precisely aimed to avoid interference by government (laws, taxes), it has limited effect on government finance under most circumstances. This article contains an excerpt from my eReport Understanding Government Finance. It explains how currency interacts with the rest of the financial system, based on what I refer to as the Simplified Framework of Government Finance (discussed in an earlier article). The Simplified Framework is based on the Canadian system of government finance, with a few simplifications.