I love that expression . . . manana economics. It covers those areas of economics that can be dealt with tomorrow, i.e., where kicking the can down the road is a good idea. Fareed Zakaria is a native of India with a Ph.D. from Harvard and writes a column for Newsweek, as well as being … Continue reading Manana Economics

The Wall Street Journal just released their latest survey of economists. Generally, they are more optimistic! The economy grew at 2.5% in the third quarter. Estimates for the fourth quarter were raised from 2.4% to 2.6% and 3.0% for the first half of 2011. Also, they reduced the odds of a double-dip recession from 22% … Continue reading A Grain of Salt

Yesterday, the Senate took the first step in creating certainty about our tax burden next year. A believer in Supply-Side economics will be delighted because there are tax cuts. A believer in Keynesian economics will be relieved we didn’t increase taxes during a recession. A believer in Austrian economics will be horrified that we made … Continue reading Tax Cut Deal

When the Fed announced QE2, they expected interest rates would fall. At first, everything went as expected. Now, those rates have started to rise. Ten-year Treasury bonds now pay 3.36%, which is a six-month high. One reason for interest rates to rise is that the Fed is causing it intentionally, which is not the case. … Continue reading Half Full or Half Empty

We’ve often mentioned the bond vigilantes who could cause unimaginable trouble for the U.S. and greatly increase the burden of paying interest on our huge national debt. Today, our Treasury Department auctioned off $21 billion in 10-year bonds. Fewer bidders wanted the bonds. The bid-to-cover ratio was 2.92 compared to a recent average of 3.12. … Continue reading Attack of the Vigilantes

Last night, the President announced a bi-partisan deal to extend the tax cuts for another two years, which reduced uncertainty. This morning, the Dow futures are up 81 points at this hour. You’ll recall the inverse relationship between uncertainty and the markets. It should be a good day for the markets! It is probably not … Continue reading Reducing Uncertainty

Normally, I am careful to avoid any discussion of politics, finding it seldom helpful. Both parties spin shamelessly. So, it may have been surprising to see me quoted twice in The Virginian-Pilot last Friday, referring to comments I made to a Senate hearing on redistricting. Redistricting is as exciting as watching paint dry but terribly … Continue reading Partisanship

It has been fascinating, if saddening, to observe the political spinning around expiration of the Bush and Obama tax cuts this month. (Don’t forget a third of Obama’s $787 billion Stimulus bill was also a tax cut.) My inner-Keynesian economist is afraid consumer demand will decrease if they are paying more in taxes, so the … Continue reading The Schizophrenic Economist

When was the last time you heard the word “deficit” used so often? I’ll bet I heard it or read it more often last week than the last two years combined. That’s a good thing! When President Obama first appointed the Deficit Commission, I was disappointed the Republican Party did not support that effort and … Continue reading I was wrong . . . I hope!

Recently, I blogged that market reflects tidal changes in certainty and uncertainty. The market goes down when uncertainty goes up and vice versa. Increasing certainty is good for the market. An old and dear friend sent me a Shakespearean quote from his play Julius Caesar saying There is a tide in the affairs of men, … Continue reading There are tides . . . and there are tides

Today’s Jobs Report was awful! Economists were expecting 144 thousand jobs were created and were stunned when they learned only 39 thousand were created. Given the steady flow of relatively good economic data over the past few months, this is a surprise . . . a fishy surprise. Data for last month’s Jobs Report was … Continue reading Awful . . . but fishy

It was no secret that small, unassuming, professorial Ben Bernanke straddles the U.S. like a colossus. I have long felt that his “out-of-the-box” thinking and long study of The Great Depression made him extraordinarily effective as head of our Fed during the dark days of the Global Financial Crisis. I think he did a great … Continue reading Like A Colossus