» Posted by Martin Weil on July 01, 2008

Guess who is getting richer as we get poorer...

That's the sovereign investment funds of Saudi Arabia (SAMA), Abu Dhabi (ADIA), Qatar (QIA) and Kuwait (KIA).

So excuse me if I vent for just one moment. WHAT IN GOD'S NAME DO WE THINK WE ARE DOING? Trillions of dollars spent on an occupation of Iraq, for which I for one see little economic, let alone diplomatic, return any time soon. Meanwhile, our nation's wealth (note that's yours and mine) bleeds out of every pore into the hands of folks whose own agendas are not necessarily in sync with our own. Is there not something desperately misguided about our nation's priorities?

We now return to our regular programming.

Graph and data courtesy of Brad Setser.

» Posted by Martin Weil on June 30, 2008

Ben Stein, in rare form, writing in the NY Times, says "balance the Federal budget."

The world price of oil is denominated in dollars. The dollar is weak for many reasons, but a big one is the immense budget deficits run by our government. If President Bush and Senators John McCain and Barack Obama were to stand together in front of a camera and solemnly swear that they would balance the budget in four years, even if it required tax increases on people earning millions, the dollar would rise against the euro, and oil would fall in dollars.

Ben is not optimistic on this point. But he offers this hopeful note:

But we will get through it, just as we get through everything else, one adaptive, smart American at a time.

» Posted by Martin Weil on May 16, 2008

The relative size of national GDP as compared to that of the US in picture form. Ten years ago, perhaps even five, China would not have even been visible on this chart. (Image and data from the World Bank)

» Posted by Martin Weil on May 13, 2008

The NY Times has an excellent graphic (registration required) detailing the components that make up the official US inflation measurement (CPI). In it, you will learn that, of the pieces that make up CPI, the largest percentage increase in the last year was, unsurprisingly, in energy costs, with fuel oil increasing 48% since March 2007. On the other end, girls' clothes declined by 9% and TVs 18%. although the latter is a manipulated number and not a reflection of what you or I actually would pay for a new TV today.

» Posted by Martin Weil on April 21, 2008

In a surprisingly populist tone, this weekend's edition of the Wall Street Journal examines the income gap between rich and poor in the US. The article (subscription required) finds vast disparities in the economy of the last 6 years, with literally all of the economic gains accruing to the top 10% of the wealth spectrum. The graph below tells the whole story in one picture.

» Posted by Martin Weil on March 24, 2008

Steve Waldman offers an illustration for everyone, not just 5 year-olds.

» Posted by Martin Weil on March 18, 2008

A century ago we had banks. They created systemic risk. We decided to regulate them in order to limit the systemic risk they could create. That was wise.

Now we have non-banks. They create systemic risk...

Brad DeLong

I have long believed that our global financial system had some time back outgrown in size and complexity the monitoring tools available to the banking regulators in the US and abroad. Sooner or later, it was natural that this system was going to proceed to excess and have a major systemic crisis.

This looks like it.

» Posted by Martin Weil on March 12, 2008

The Fed is worried about a lack of liquidity in the credit markets. The Fed acts to make the markets more liquid. Is the Fed's action foolish? We hope so!

We like to think: "market -- trade -- liquidity -- good, etc.", forgetting the Glosten-Milgrom point that liquidity often rests upon the presence of fools.

If the problem is that there are too few fools in the market, it might make perfect sense for the Fed to step in as a fool of last resort. With any luck, once the Fed starts acting foolishly, other market participants will follow suit.

From Felix Salmon

» Posted by Martin Weil on February 27, 2008

Image courtesy of Calculated Risk

» Posted by Martin Weil on February 22, 2008

Public views of the U.S. economy, already quite negative, have plummeted since January. Just 17% currently rate the nation's economy as excellent or good, down from 26% last month. The percentage of Americans rating the economy as "poor" has increased even more dramatically, from 28% to 45% in one month...

The public's ratings of the national economy now are nearly as poor as they were in early 1992.

From Pew Research