Econophile's blog

After repeated admonitions from Larry Summers, Tim Geithner, and even President Obama to engage in more Keynesian stimulus, Germany's Chancellor Angela Merkel firmly rejected those demands and had the gall to suggest that such policies weren't right for Germany. Now she has the last laugh as Germany is recovering and we slip back into recession.

A lot of economic reports have come out in the past several days but the data that caught my eye were industrial production, retail sales, and business inventories. There is evidence that retail sales have been improving but in light of a negative consumer sentiment, is that true?

Chicago Fed President Evans said that we are in a Keynesian "liquidity trap" which means monetary policy isn't working. As a result the Fed hasn't been able to stimulate the economy because you stupid consumers refuse to spend and are saving money. He thinks they can carry out the Fed's mandate of "full employment and stable prices" by creating inflation. That is, we need to debase the dollar with more fake money and things will be grand.

Ben Bernanke should be relieved of his post. I say this in response to Jon Hilsenrath's latest article in the Wall Street Journal on the Fed, "Fed Chief Gets Set to Apply Lessons of Japan's History." I would re-entitle the article, "Fed Chief Gets Set to Repeat Mistakes of Japan's History."

There are still huge headwinds facing the residential real estate market. Shadow Inventory is not getting better, and now we have the robo-signing scandal which will only further delay recovery. Since all real estate is "local", some markets are clearly starting to find a floor. But a "recovery" whereby prices stabilize is a couple years away.

The conservatives are trying to brand Obama as the devil. Dinesh D'Souza has concocted a silly theory about Obama's anti-colonialist rage. But it's a lot simpler than that. He, like his fellow leftist liberals, are just working off the progressive playbook. No big conspiracy needed because that's what a lot of kids are learning every day in mainstream academia.

The recovery of the economy depends on several important factors, but the recovery of the real estate market is near the top of the list, especially commercial real estate (CRE) because most of America's banks are loaded down with CRE debt. Here is a current assessment of the state of the CRE market.

DoctoRx and I have been watching the Consumer Metrics Institute's leading economic data for a while and were impressed by what we saw. Recently we had an opportunity to interview Dr. Rick Davis, a physicist, the founder of CMI, and came away as believers (with caveats) in his approach.

The Fed is very worried about the economy and deflation. You can tell by all the recent speeches from Fed chiefs about the need for quantitative easing. They will do it soon. And they get the inflation they want, but it won't be modest. This policy will make things much worse. It confirms my belief that they don't know what they are doing. This article explains why.

The recent data do not point to a recovery. Factory orders are declining and inventory is building up. This is not what Bernanke and the Team Obama expected to happen. The economy has been stagnating further and now we are just waiting for stagnation and inflation.

There have been a lot of articles about the coming hyperinflation in America. Many of the commentators with whom I agree most of the time say hyperinflation is inevitable here. The problem is that it is an easy thing to say but more difficult to prove. If one does a careful analysis of the hows and whys of hyperinflation, it is highly unlikely to happen here.

The only significance in the FOMC report for September is that there is no change and they are still clueless and scared. They do see a glass half empty. Here's a brief report.

On Monday the NBER reported officially that our Recession began in December, 2007 and ended in June, 2009. While that is nice to hear, in my opinion, when you get down on the ground where most of us are, it doesn't feel as if it has ended.

This is the final part of two parts of "The Economics of Mass Destruction." I examine the fallout of globalization of bad economics. At the end there is a link to a PDF of the entire article that you may download.

The globalization of Keynesian economic policy will destroy capital and harm economies worldwide. The days of refuge from economically oppressive states by fleeing to America or some other relatively free capitalist country are gone. This is Part I of a two part article.