- by New Deal democrat
I'm vacationing this weekend, but will get this up sometime before Sunday night. In the meantime, enjoy yourselves over hot dogs, hamburgers, and the libations of your choice!
How technology redefines norms
1 hour ago
India’s economy has been slowing for more than a year as corruption scandals involving senior members of the Congress-led coalition government have paralysed parliament and blocked key reforms to boost investment.
India’s macroeconomic landscape has deteriorated further since the start of the year. New Delhi’s fiscal and trade deficit have ballooned to 5.8 per cent and 9.9 per cent of GDP respectively, while inflation has shot back into double digits.
The Indian rupee also weakened to a record low against the dollar this week, which is likely to fuel inflation further in coming months.
Meanwhile, industrial output contracted 3.5 per cent in March 2012 and exports have been declining consistently, as demand in Europe for cheap Indian goods has dropped.
There's a great myth that goes around the Internet: the US doesn't make things anymore. If that were true, then we would have exported $1.8 trillion dollars of goods in 2008. And in 2008, we exported $108 billion of foods and beverages, $388 billion of industrial supplies, $457 billion of capital goods, $121 of automotive products and $161 billion of consumer goods. In other words, exports account for about 13% of GDP. And they may become far more important to US growth:This has occurred over the last 3 years, as US exports have been a bright spot in the expansion.
In the process of gorging on overseas goods and services, the US by happenstance fired up emerging economies such as China, Korea, Taiwan, India, Brazil and Mexico to build their productive capacities and spawn their own middle classes and consumer cultures. Paulsen has long called this trend the US's "emerging-market Marshall Plan."As US consumer spending slows we will import less, thereby lowering the total amount of imports in the trade deficit formula. At the same time, Emerging economies have seen a growing middle class which will want to buy more goods and services. And some of those will come from the US.
For the crowd who are still clinging to the RE recovery meme, have a gander at these charts. Note that there are more new permits than starts, and more new starts than completionsNow, let me say that Barry has been a friend of this blog and has cross-published Bonddad or myself a number of times, so there is no ill will whatsoever, but we do have a disagreement about whether housing prices are making a bottom. Further, like Bill McBride, I really think we're past the point where it can be argued that housing sales aren't recovering (i.e., going up, even if the raw numbers are still very very low).
The speed with which MONEY whizzes around the economy, or, put another way, the number of times it changes hands. Technically, it is measured as GNP divided by the MONEY SUPPLY (pick your own definition). It is an important ingredient of the QUANTITY THEORY OF MONEY.Put in less formal terms, lower velocity means more people are hoarding money. So, when they get paid, they spend less. While some of this is good as it indicates that people are saving more, it also means that people are scared -- hence the continued low confidence reading. Remember that an economy needs motion -- people buying things. And that is the central problem we face right now.