Recently in Macroeconomics Category

GDP

By now most of you have heard that the GDP number yesterday morning came in at an annualized growth of 3.5%, what is interesting is where the nice boost came from. Here is a link to the report itself. People have pointed out that personal consumption expenditures.contributed nicely to growth, 3.05. However, a part that is normally a drag on GDP contributed 1.64 that being net exports of goods and services. Exports increase 10% and imports decline 3.2%. In the time series included in the report, this part hasn't contributed as much to GDP as it has this quarter.

A couple of points, first is that inventories contributed a negative .71 as it looks like business was weary of a slowdown. I wouldn't be surprised if importers were as well. Second, the 10% growth in exports indicate that global growth is strong. Third, the decline in the dollar has had the effect expected( and no it isn't crashing as some would suggest). All this indicates that some of the surprising current account data wasn't a fluke.

The dynamics of this report make a scenario that at least the first part of next year could see some very strong growth led by a rebound in business investment, inventories, an improvement in the housing sector and continued improvment in the trade numbers.

Bonds News

Here's a round up of news concerning bonds south of the border:

Brazil: A total of $500 million of dollar-denominated bonds maturing in 2037 were sold yesterday as the government took advantage of record-low borrowing costs. Brazil sold the 30-year bonds to yield 6.635 percent, or 1.73 percentage points above similar U.S. Treasuries. The yield on the 7 1/8 percent dollar bonds due 2037 fell to a low of 6.52 percent on Jan. 3, down from a 8.1 percent high in May 2006.

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The yield on Colombia's benchmark 11 percent bond due July 2020 fell 4 basis points to 9.15 percent, according to the central bank.

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The yield on Peru's benchmark 9.91 percent bond maturing May 2015 fell 5 basis points to 6.25 percent, according to Citibank Peru.

On a side note, the more time I spend with politics people the less I am impressed.

Podcast of the Day- Lecture 3 Reform and Deregulation

The Boyer lectures by Ian Macfarlene, former governor of Reserve Bank of Australia, continuos;
By the 1970s the world's developed economies were stuck in the worst position they had been in since the Great Depression of the 1930s. Australia shared this experience but, propelled by a program of reform and deregulation, it slowly became competitive again and began to register strong rates of growth. In this environment the corporate sector embarked on an era of heightened activity, driven by massive borrowings, takeovers and mergers. It is now apparent that the implications of sudden financial deregulation were not fully understood, and the dawn of the 1990s would bring with it new challenges for those charged with navigating the twin hazards of boom and bust.

Listen to the podcast. Some excerpts below;

“Let me digress for a moment to discuss another epithet routinely applied by those opposed to economic reasoning, which is to refer to economics as the dismal science. Whenever I hear this term, I wonder how many people who use it know its origin. It was coined by Thomas Carlyle, in 1849, in an essay called, Occasional Discourse on the Negro Question, in which he argued for the reintroduction of slavery into the West Indies. He viewed the former slaves as 'indolent, two-legged cattle, who should be subject to the beneficent whip'. It is extraordinary that the author of these views which were reactionary and racist even by the standards of 1849, should have had the temerity to refer to his opponents, the most prominent of whom was John Stuart Mill, as representing the dismal science, when all they were doing was arguing that freed slaves should have the same rights as other free people. Mill wrote a reply to Carlyle expressing views that would be widely held today, but unfortunately it is Carlyle's throwaway line that has endured, not Mills' sensible reply….

Vernon Smith on Dark Matter

An interview with Dr. Vernon Smith in the latest edition of Journal of Financial Transformation;

Q: Do you agree with Ricardo Hausmann and Federico Sturzenegger about the fact that as a result of dark matter, the U.S. current account deficit is not as large as many believe?

Prof. Smith: There may be some measurement issues, which is what Hausmann and Sturzenegger are talking about, but what I am more concerned about is the fact that the dollar has taken such a pounding because of our financial policies. The deficit itself is not a problem. In fact, we had a deficit before the dollar came down

Related;
Perspectives on “Dark Matter”
Can Gravity Be Defied?
What Are the Risks to the United States of a Current Account Reversal?
Transcript for the Annual Research Conference: How Does Capital Account Liberalization Affect Economic Growth?

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