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Constantin Gurdgiev: True Economics

Constantin Gurdgiev, a Russian economist based in Dublin, is the creator of True Economics. His blog covers economic ideas and analysis on current news stories and global economic events. Given the level of detail, this blog is more suited for people familiar with intermediate macroeconomic concepts.

9/9/19: Ireland and OECD: Income Tax Rates Comparatives

Based on the OECD data for 2018, Ireland is the second worst OECD country to earn income from work at the upper margin of earnings (167% of the average annual gross wage earnings of adult, full-time manual and non manual workers in the industry), compared to lower earners (67% of the average wage earnings). And although this story is not new (we were in the same position back in 2014), the gap in effective marginal taxes charged on the higher earners relative to lower earners is getting...

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6/9/19: Small Cap Stocks EPS: racing to the bottom of the MAGA barrel

Everything is going just plain swimmingly in the Land of MAGA, where American companies are now expected to do their duty by President Trump's agenda for investment in the U.S. because, you know, this: As 'share' part of the EPS ratio has shrunk (thanks to buybacks and M&As tsunami of recent vintage), earnings per share should have gone up... and up... and up. Instead, small cap stocks' EPS has collapsed. To the lowest levels since the 2007-2008 crisis.But never mind, more money...

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2/9/19: Trump’s Tariffs of War…

Two charts summarizing the effects of the ongoing Trump Trade War on U.S. tariffs (overall, first chart) and on bilateral U.S.-China trade (second chart) Source: @Soberlook Source: https://www.piie.com/blogs/trade-investment-policy-watch/trump-trade-war-china-date-guide In the mean time, China's tariffs vis a vis the rest of the world are falling: Source: ibid. Someone is winning in this war (maybe...

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2/9/19: One view of Austerity

A picture is worth a thousand words, some say. So here is a picture of austerity we've had (allegedly) in recent decades: Source: @Soberlook  The things are savage: debt is up from ca 70% to over 110%. Cost of debt carry is down from just under 4% to under 1.75%. So where are all those fabled public investments? And who has benefited from this massive increase in debt? Virtually all - financialized (a nice euphemism for being absorbed into financial assets valuations). Austerity, after...

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1/9/19: U.S. Non-Financial Corporate Sector: Stagnation in Net Value Added

Value added by the U.S. non-financial corporates has been languishing well below the cyclical peak for some months now: In fact, since Q3 2016, net value added by the non-financial corporations has been running below long run trend, and has been basically flat. This suggests substantial pressures build up in the economy, consistent with all previous early indicators of a recession. Interestingly, there is zero evidence of any improvement in the non-financial economy in the U.S. since...

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1/9/19: Priming the Bubble Pump: Extreme Credit Accommodation in the U.S.

Using Chicago Fed National Financial Conditions Credit Subindex (weekly, not seasonally adjusted data), I have plotted credit conditions measurements for expansionary cycles from 1971 through late August 2019. Positive values of the index indicate tightening of credit conditions in the economy, while negative values denote loosening of credit conditions. Since the start of the 1982 expansionary cycle, every consecutive cycle was associated with sustained, long term loosening of credit...

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26/8/19: ifo Survey Shows Increasing Business Concerns in Germany

Ifo Institute's Business Climate indicator for Germany is falling off the cliff: In simple terms, current business situation assessment has now fallen to its lowest reading since March 2015, forward business expectations are the lowest since June 2009, and overall Business Climate index is at its lowest reading since November 2012.August 2019 marks fifth consecutive month of decline in the overall Business Climate index, current Business Situation index, and Business Expectations...

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22/8/19: Irish Economy is Now Fully Captured by the Multinationals

Just as in the years prior, 2018 was another year of massive dominance of the foreign-owned multinational corporations in Irish official economic growth statistics. Per latest data from CSO (see the link below), in 2018, MNEs-dominated sectors of the Irish economy have contributed 5.6 percentage points to the overall growth in Gross Value Added in Ireland, against domestic sectors contribution of 2.3 percentage points. This marks an increase on 2017 growth contribution by MNEs (4...

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