Monday, March 15, 2010

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Thursday, March 11, 2010

A debate on where the US economy is headed

I am leaning toward Rosenberg's view on this.

Wednesday, March 10, 2010

Goldman and bubbles

Blaming Goldman Sachs for every bubble sounds silly. But is regulation the solution? Maybe, or maybe not --- Bubbles also happens in tightly regulated market, say, in China.

Maybe what we need is smart regulation. Or, bubble is just an integral part of capitalism --- As long as there are animal spirits and human greed, bubble can never be rid of.

Ten years after bubble

Comparing market performance after big crashes...

(click to play video; source: FT)

The pattern is the market usually go on sideways for a VERY LONG TIME after big crash. This offers a sober lesson for those who got too excited in predicting a robust recovery.

Tuesday, March 09, 2010

New financial indicator predicts downturn ahead

A new financial indicator predicts economy is likely to suffer downturn ahead.

This is from Jim Hamilton's Econbrowser blog. More details about this new indicator.

Most recently, researchers have tried to gauge the degree of financial stress using indicators such as the LIBOR-OIS spread ([1], [2]) or deviations of yields from predictions of interest rate models (e.g., the recent paper by Christensen, Lopez, and Rudebusch). There are also a number of composite indexes that various private-sector analysts rely on, such as the Bloomberg financial conditions index.

Two private-sector analysts (Jan Hatzius of Goldman Sachs and Peter Hooper of Deutsche Bank) have recently teamed up with three academics (Rick Mishkin of Columbia, Kermit Schoenholtz of NYU, and Mark Watson of Princeton) to produce a new financial conditions index that attempts to combine the information of 44 separate series including those mentioned above along with a great number of others. One of the differences between their approach and previous work is that HHMSW seek to isolate the separate information of the financial indicators from aggregate business cycle movements by looking at the residuals from a regression of each indicator on lags of inflation and real GDP growth rates.

Monday, March 08, 2010

Shiller: Double-dip is less likely

The more plausible scenario is very slow growth. Bob Shiller also has some interesting comments on confidence and bubbles, how they reinforce each other.

Saturday, March 06, 2010

Musing on world economy with Joe Stiglitz

Joseph Stiglitz interview with Charlie Rose.

The Inevitable Endgame

Interview of Chris Wood, top ranked Asian Equities Strategist. He talks about the outlook for China, Europe and the US.

He predicts the inevitable endgame will be a systemic government debt crisis in the Western world.