Saturday, September 3, 2011
Transatlantic Cash Flow to US Banks
This article provides an analysis of the increased deposits into the US banking system. It looks like it is coming from banks in Europe.
Distorting Income Growth With Statistics
link here to article
Its common to hear one of the talking heads on TV news shows boasting about the growth of per capita GDP in the US in comparison to Europe's welfare states. This proves to them that the US economy, and its purported free market system, is superior to that of "old Europe". For example, per capita GDP growth in the US was 5% higher in the US than it was in France between 1975 and 2006. Its easy to distort reality with statistics, however, and the talking heads are very good at it. If we subtract income growth among the top 1% in the US from this analysis, the US and France show about the same growth in per capita GDP. Moreover, there is little difference in the French statistics with or without the inclusion of the top 1%. Income growth was more equally shared in France than it was in the US. Of course, the talking heads would not view greater income equality in France as an advantage of the French economic system.
Another common misuse of statistics is to use the average instead of the median as the measure of the central tendency. Average growth in per capita GDP in the US has been quite impressive. However, the growth in median per capita GDP has been dismal. That is because most of the growth in income went to the top 1% of households in the US.
The conclusion that one reaches from the data on income growth in the US is that the economy has been very good for the top 1%. The bottom 99% have missed out on most of the growth in income. Perhaps that is the major advantage of the US economic system. If you are lucky enough to be in the top 1%, the US has the best kind of economy for you. If you are in the bottom 99% you might be one of the "lucky duckies" who sends fewer income tax dollars to Washington. If you have less income, you will obviously have a lower absolute tax bill than the top 1% which has most of the income. Your effective tax RATE however will be very similar.
Friday, September 2, 2011
Rebuilding Macro at Berkeley
link here to article
College is back in session at Berkeley and Brad DeLong provides his analysis of the Great Moderation and the Great Recession. This is a big step in bringing Macroeconomics into the 21st century. This kind of analysis would not be found in most Macro text books.
College is back in session at Berkeley and Brad DeLong provides his analysis of the Great Moderation and the Great Recession. This is a big step in bringing Macroeconomics into the 21st century. This kind of analysis would not be found in most Macro text books.
Is There Reason To Be Concerned about Banking System Liquidity In Europe and the UK?
link here to article
This article looks at deposits in European banks by other banks and by households and businesses. In some countries, like Greece, withdrawals by households and businesses from Greek banks is not apparent by looking at total withdrawals. Deposits by other banks in Greece has compensated for household and business withdrawals as part of the rescue effort. In other countries household and business deposits continue to grow but there has been a reduction in deposits by international banks in Europe and in the UK. This raises a concern about a slow loss of liquidity in Europe and in the UK banking systems.
This article looks at deposits in European banks by other banks and by households and businesses. In some countries, like Greece, withdrawals by households and businesses from Greek banks is not apparent by looking at total withdrawals. Deposits by other banks in Greece has compensated for household and business withdrawals as part of the rescue effort. In other countries household and business deposits continue to grow but there has been a reduction in deposits by international banks in Europe and in the UK. This raises a concern about a slow loss of liquidity in Europe and in the UK banking systems.
The Real Cost of The Bush Presidency
link here to article
Joe Stiglitz calculates the real costs of the Bush presidency by calculating the direct and indirect financial costs, which were financed by debt instead of by taxes, as well as the social costs and the reduction in the moral position of the US in the rest of the world. He also argues that the wars in the Mid East led to higher oil prices which led to lower economic growth and which caused the Fed to lower interest rates in order to stimulate the housing boom that eventually led to the financial crisis.
Joe Stiglitz calculates the real costs of the Bush presidency by calculating the direct and indirect financial costs, which were financed by debt instead of by taxes, as well as the social costs and the reduction in the moral position of the US in the rest of the world. He also argues that the wars in the Mid East led to higher oil prices which led to lower economic growth and which caused the Fed to lower interest rates in order to stimulate the housing boom that eventually led to the financial crisis.
Economic Outlook in Europe Revised Downward
link here to article
The eurozone economy is holding steady on growth and inflation but unemployment is still high and the ECB has lowered its growth estimate and is now more worried about future unemployment than inflation. It is less likely to raise interest rates as a result.
The eurozone economy is holding steady on growth and inflation but unemployment is still high and the ECB has lowered its growth estimate and is now more worried about future unemployment than inflation. It is less likely to raise interest rates as a result.
Two Major US Solar Panel Companies File For Bankruptcy Protection
link here to article
Two US manufacturers who represent 20% of US solar panel production capacity filed for bankruptcy. This has raised questions about the ascendency of China in the renewable energy technology industry. The US manufacturers made a strategic error by betting on being the low cost producers of a product component that has fallen in cost by 80% due to expansion of the solar panel market. They are also a victim of the difference in the ways that the US and China subsidize the industry. The US provides a 30% price subsidy to consumers, while China subsidizes it manufacturers. Many of the solar panels purchased in the US, with consumer subsidies, are produced in China. China no longer depends upon cheap labor in this industry because it is not labor intensive. It is betting on developing the best product and manufacturing technologies and capturing the export market for its products. The US and Germany have seen their positions in this market erode against China.
Two US manufacturers who represent 20% of US solar panel production capacity filed for bankruptcy. This has raised questions about the ascendency of China in the renewable energy technology industry. The US manufacturers made a strategic error by betting on being the low cost producers of a product component that has fallen in cost by 80% due to expansion of the solar panel market. They are also a victim of the difference in the ways that the US and China subsidize the industry. The US provides a 30% price subsidy to consumers, while China subsidizes it manufacturers. Many of the solar panels purchased in the US, with consumer subsidies, are produced in China. China no longer depends upon cheap labor in this industry because it is not labor intensive. It is betting on developing the best product and manufacturing technologies and capturing the export market for its products. The US and Germany have seen their positions in this market erode against China.
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