Econophile's blog

We think that China is an indestructible economic juggernaut but its economy is very fragile and it is sitting on a property bubble which will burst. What China does in response has major implications for their economy and the rest of the world. This is the second part of a three-part series on this topic.

We think that China is an indestructible economic juggernaut but its economy is very fragile and it is sitting on a property bubble which will burst. What China does in response has major implications for their economy and the rest of the world. This is the first part of a three-part series on this topic.

My favorite party boy economist, Nouriel Roubini, just came out with his analysis for the second half and he notes that we may be heading toward a double-dip recession. Too much negative news, he frets. I have been saying this for some time.

A lot of conflicting data came in last week. There is a lot of positive news, but does it all add up to a recovery or is the cyclical recovery headed for a stall? Nothing has changed the underlying conditions that would relieve the credit freeze. And without credit, the economy will stall.

Here are two horror stories about UK and Canadian health care systems that exemplify what is wrong with government-run health care systems. The dirty secret is that these systems are deteriorating as they run out of money. The result is death to thousands of patients. Our foot-in-the-door health care "reforms" are just the beginning of the end of what is left of the world's best health care system.

Why is it that the data of the current economic reports coming out are "unexpected" by most economists? Today new unemployment claims and durable goods orders came out and were termed "unexpected." There is a reason. You should learn to ignore (most) economists.

Team Obama wants us consumers to spend, spend, spend. Somehow Comptroller of the Currency John Dugan didn't get the message since he supports 'America Saves Week' and wants us to save and feel financially secure. I like this guy.

The Case Shiller housing report, the Conference Board's Consumer Confidence Index, and the FDIC Q4 bank report came out Tuesday with mostly negative results. Things like the biggest loan contraction since 1942 ought to grab your attention. These are significant numbers.

President Obama's Proposal on health care "reform" is a far reaching plan that will cause financial havoc to the health care system specifically and to the economy in general. It, along with the plans passed by the Senate and the House, are so invasive that we will be forever mired in bureaucratic control of this most important segment of our lives. Think of the movie "Brazil."

We are told we are in recovery. We are told we are not having deflation. We are told a lot of things but the facts seem to keep working against Messrs. Bernanke, Summers, and Geithner. The latest core CPI belie their Keynesian beliefs.

Ben Bernanke knows that the Fed's exit strategy is flawed, so he keeps thinking up new schemes to sop up "excess reserves" from the banking system. The latest is to allow money market funds by Treasuries directly from the Fed. Will this idea work? Will it positively impact the dollar? Will the Fed start draining the pond soon?

Why gridlock is good for investors. The government claims that because Washington D.C. was practically shut down by Snowmageddon we taxpayers were losing $100 million per day from lost productivity of federal employees. Then Evan Bayh announced he will not run for re-election as senator from Indiana because the lack of bipartisanship between Democrats and Republicans resulted in legislative gridlock ("the peoples' work is not getting done").

As promised, I have posted my State of the Economy article as one downloadable PDF. Here is the link.

Here is a recent conversation (argument) that I, the not-famous Econophile, had with the famous Martin Wolf, the much lauded and highly awarded dean of economics writers and chief economics correspondent for the Financial Times. This time I take him on for what I thought was a pointless article about Germany and the Greeks. Win, lose, or draw?

The final part (III) of Econophile's analysis of the economy in 2010. Today, "The Consequences" -- deleveraging, inflation/deflation, recovery, and what to expect in 2010.