Posts tagged ‘Economy’

2011/02/26

US Home Prices Could Fall Another 25%

Real estate prices declined in nearly every city and region of the US in December, according to the Case-Shiller Home Price Index, pushing US home prices back down to near their lowest levels since the crash began.

The Case-Shiller Home Price Index is within a percentage point of the 2009 low, with 11 of the 20 cities surveyed showing home prices below the lows of the 2009 trough.

As of the fourth quarter of 2010, “average home prices across the United States are at similar levels to what they were in the first quarter of 2003,” according to the report.

While some analysts believe that the worst is behind American homeowners, others are becoming increasingly concerned that so-called “double-dip” scenario market has definitively begun.

This week, Yale economist Robert Shiller, the co-creator of the Case-Shiller Home Price Index and who predicted the looming housing crash in 2006, noted in an interview with CNBC that “price[s] may go down substantially.” In a subsequent conference call, Shiller defined “substantially” as being in the 15% – 25% range.

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2011/02/25

Roubini: US, Global Recession Ahead

By Nouriel Roubini

In recent weeks, the global liquidity and credit crunch that started last August has become more severe. This is easy to show: in the United States, the euro zone, and the United Kingdom, spreads between Libor interest rates (at which banks lend to each other) and central bank interest rates – as well as government bonds – are extremely high, and have grown since the crisis began. This signals risk aversion and mistrust of counter-parties.

To be sure, major central banks have injected dozens of billions of dollars of liquidity into the commercial banking sector, and the US Federal Reserve, the Bank of England, and the Bank of Canada have lowered their interest rates. But worsening financial conditions prove that this policy response has failed miserably.

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2011/02/23

Bill Gross: Investment Outlook 02.11

Devil’s Bargain by Bill Gross

There are lots of ways to describe money: moolah, lean green, dinero … I memorized one definition of “money” from an economic textbook way back in 1966: “A medium of exchange and a store of value,” it said. Well, yes, I suppose, although it failed miserably in the latter capacity in subsequent years. My primer also neglected to mention the increasingly dominant function that money was to assume in a finance-oriented, capitalistic system: Money can be used to make money. Not that interest rates and biblical usury aren’t millenniums old. I remember a story from Sidney Homer’s history of finance that described how a BC-era borrower would be forced to turn over his wife as collateral upon default – wondering at the time whether that might be an incentive for a future Mesopotamian debt bubble! Still, my textbook was nowhere near contemplating the half century of financial “innovation” that was ahead and how money and its levering was to be the foundation for much of America’s prosperity.

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2011/02/07

What Will Come After Capitalism?

Ed. Note: Over the past 1200 years, the world’s system of economic organization has evolved from Feudalism to Mercantilism to Capitalism. But is capitalism the end of the line?

In a highly thought-provoking commentary, Life After Capitalism, Robert Skidelsky, member of the British House of Lords, Professor Emeritus of Political Economy at Warwick University, board member of the Moscow School of Political Studies, and author of a prize-winning biography of economist John Maynard Keynes, postulates what may come next and why.

Project Syndicate

Life After Capitalism, by Robert Skidelsky

London – In 1995, I published a book called The World After Communism. Today, I wonder whether there will be a world after capitalism. That question is not prompted by the worst economic slump since the 1930’s. Capitalism has always had crises, and will go on having them. Rather, it comes from the feeling that Western civilization is increasingly unsatisfying, saddled with a system of incentives that are essential for accumulating wealth, but that undermine our capacity to enjoy it. Capitalism may be close to exhausting its potential to create a better life – at least in the world’s rich countries.

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2011/02/04

US Jobless At 9.0%

US employment rose a meager 36,000 jobs in January, far less than expected, but the unemployment rate fell to 9.0%, its lowest level since April 2009.

The increase in nonfarm payrolls reported by the Labor Department on Friday was a quarter of the 145,000 increase that economists had expected.

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2011/02/01

Bill Gross: Investment Outlook

Not only does Bill Gross run the world’s largest (by far) bond fund, he’s also a darn good writer. His current Investment Insight argues that the global economy’s lack of aggregate demand is creating “furious” competition among nations “for their share of the diminishing growth pie” and, consequently, job growth in developed economies “is moving inexorably to developing economies because they are more competitive.”

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