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Tag Archives: Economic fundamentals

Expectations Data Indicate the US Is Entering Recession About Now

Yves here. An old economists’ saying: “If you must forecast, forecast often.” So feel free to take this prognostication with a fistful of salt. Nevertheless, your humble blogger believe, and less gloom and doom oriented correspondents similarly intuit that if Biden doesn’t get a pretty big spending bill passed, the economy will start to sputter. The floundering around getting his ever-shrinking package passed is frazzling the Confidence Fairy. And what happens if the US suffers a winter Covid...

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Supply Chain Shortages and Inflation: How Bad Will the Disruption Become?

As William Gibson famously said, “The future is already here – it’s just not very evenly distributed.“ And that appears to go double for our current supply chain crisis. It’s hit key sectors, above all autos, hard, but others seems to oddly unaffected.1 However, these problems are likely to both become more severe and persist longer than they should due to the poor responses of our elites. Some of these disruptions are due to things outside US control, like chip makers being whipsawed by...

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Spike in Energy Prices Suggests That Sharp Changes Are Ahead

Yves here. Leroy R recommended the last Gail Tverberg piece, where she broadens out from her usual focus on energy to the issues of complexity and collapse. I decided to repost it because it’s meaty and thus likely to provoke a good discussion. That said, while I agree completely with her overview statement, that the trend towards complexity has gone too far, I have to beg to differ with her in making energy a central driver. What has made the increase in “complexity” destabilizing is that it...

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Jim Chanos: China’s “Leveraged Prosperity” Model is Doomed. And That’s Not the Worst

Yves here. We’ve pointed out from time to time with respect to China that no large economy has ever made the transition from being investment-led to consumption-led without suffering a financial crisis. Here, short-seller Jim Chanos, who has been too early with respect to China longer than Nouriel Roubini was with respect to the global financial crisis, argues that the Chinese real estate bubble has gotten so out of hand despite repeated efforts by the government to let air out of it that bad...

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The John Deere Strike: Organized Labor’s Turning Point?

There’s a lot of excitement, at least among those of the pro-worker persuasion, about employees rejecting poorly paid jobs and oppressive bosses via not taking up open positions or demanding change via strikes. A partial list: Volvo. Kellogg’s. Frito-Lay. Nabisco. Alabama coal miners. Health care staffers in New York and Massachusetts, along with bus drivers and telecom workers. Even though they are highly visible signs that the serfs are rebelling, these labor actions are still a strong of...

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The Supply Chain Crisis: How We Got Here

Advanced economies are in the throes of what can, without exaggeration, be called a global supply chain crisis. Car makers unable to meet demand and even in many cases produce full featured cars due to chip shortages. Shipping rates spiking then collapsing due to a lack of containers and truckers at ports. Petrol and food shortages in the UK. Warnings even in the US to buy Christmas gifts now because they might not be available later. And there are also increasing reports of shortfalls of...

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Mzukisi Qobo: The Old Mantra About Growth Has Reached Exhaustion

Yves here. This is a very informative discussion, both on how South Africa and its neighbors have responded to Covid, and even more important, how they are thinking about development in light of resource pressures and relocalization. I suspect you’ll find this talk with Mzukisi Qobo to be far more insightful and nuanced than what you encounter from the overwhelming majority of first world economists. By Folashadé Soulé, Advisor, Commission on Global Economic Transformation and Senior Research...

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The Neverending Brexit: Flailing Johnson Set to Try to Renege on Commitment to Respect Good Friday Agreement

Our Brexit brain trust (Clive, Colonel Smithers, David, PlutoniumKun and vlade) have had an extended and very informative discussion of an impending Brexit spat in the Telegraph, over the unresolved sore point of the Northern Ireland protocol, as in the irritant of the promise to respect the Good Friday Agreement. Even though they have important nuances in their views, they are largely on the same page and I hope to give a recap that doesn’t offend any of them. Note that this sighting may...

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Why America Needs a National Program of Paid Sick and Family Leave

Yves here. I haven’t seen much in the way of details as to how the proposed 12 week paid family leave program would work. Obviously this is subject to negotiation, but below are some main points from the initial draft, per Health Affairs: Biden’s American Families Plan proposes to phase in, over 10 years, 12 weeks of paid leave for: parents, including same-gender couples, caring for a newborn, adopted or foster child; workers addressing their own or a loved one’s serious illness; workers...

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Reallocation Effects of the Minimum Wage

Yves here. Classic studies by Andrew Card and Alan Krueger on the impact of minimum wage increases on the income and employment levels of fast food workers came to similar conclusions as this paper: increasing minimum wages does not in fact produce unemployment, and so winds up in a net increase in the income of low wage workers. From Vox after Krueger committed suicide: In introductory economics courses, students are typically taught that setting price floors — on milk, oil, or, perhaps most...

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