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Gene Ellis

Efforts to Revive the Economy Lead to Worries of a Bubble - NYTimes.com - 0 views

dealbook.nytimes.com/...my-lead-to-worries-of-a-bubble

shared by Gene Ellis on 18 Apr 13 - No Cached
  • The Federal Reserve is well into its third round of “quantitative easing,” in which it buys longer-term assets to bring down long-term lending rates.
  • In March, a smaller percentage of working-age people were actually working than at any other time since 1979.
  • In March, a smaller percentage of working-age people were actually working than at any other time since 1979.
  • ...6 more annotations...
  • Ben S. Bernanke and company would also like to kindle inflation expectations, spurring people to buy and companies to invest today instead of waiting until tomorrow. Supposedly, all of this will drive a self-sustaining economic recovery.
  • Alternatively, many investors look at something called the Q, devised by the economist James Tobin, which compares stock prices with corporate net worth. The nonfinancial companies are overpriced by 57 percent.
  • Investors are desperate for yield and are paying up for riskier assets.
  • There are more reliable measures of stock market value, and they look frothy. One gauge, the price of stocks based on the past decade of earnings, is named after the Yale economist Robert J. Shiller. Using that, stocks are too expensive by 65 percent.
  • Instead, the Fed has kindled speculation.
  • Last month, investors were paying more for such loans than at any time in the last five years. They are snapping up billions of dollars in securities made up of subprime auto loans.
Gene Ellis

EZ crisis and historical trilemmas | vox - 0 views

www.voxeu.org/...risis-and-historical-trilemmas

shared by Gene Ellis on 30 Oct 13 - No Cached
  • The big difference in the EZ is that nations cannot go off the euro as they went off the gold standard
  • A major part of Lenin’s analysis, for instance, was devoted to the demonstration that Russia had become a quasi-colony as a result of the large scale capital imports, and that the foreign creditors in effect controlled Russia’s foreign policy.
  • The linkages of these issues can be summarized as a series of impossible trinities or trilemmas.
  • ...5 more annotations...
  • The move in Europe to monetary union for weaker countries was a credibility enhancing mechanism that would lower borrowing costs. For countries that had strong creditor positions, the attractions of monetary union lay in the depoliticizing of the adjustment process (James 2012). The Eurozone worked quite well as a disciplining mechanism before it entered into effect, but much less well afterwards.
  • Banking expanded after the establishment of the euro (Shin 2012). No adequate provision on a European basis existed for banking supervision and regulation, which like fiscal policy, was left to rather diverse national authorities. An explosion of banking activity occurred simultaneously with the transition to monetary union and may well have been stimulated by the new single money.
  • The implicit national government backstop was really only credible because of the international commitment to the European integration project. It was that commitment that led markets to believe that – in spite of the no bailout provisions of the Maastricht Treaty – there were almost no limits to the amount to which debt levels could accumulate both in the private and the public sector.
  • When the democratic/popular backlash occurs, it takes the form of rejection of international/cross-border political commitment mechanism.
  • Opinion poll data shows a major increase in hostility to the EU in peripheral countries, but with no corresponding unpopularity of the common currency.
Gene Ellis

Intel Says It Will Cut 1,500 Jobs in Costa Rica - WSJ.com - 0 views

online.wsj.com/...702304819004579489860932369306

shared by Gene Ellis on 25 Apr 14 - No Cached
  • Intel, based in Santa Clara, Calif., has been grappling with the effects of a slowdown in sales of personal computers that use its microprocessor chips. The company has also been slow to build a sizable business in chips for smartphones and tablets.
  • Brian Krzanich and Renee James —appointed last May as Intel's chief executive and president, respectively—have been studying Intel operations and concluded that reducing the assembly and test operations in Costa Rica made most economic sense, said Chuck Mulloy, an Intel spokesman. "We have to be more efficient and effective," he said. Most of Intel's chips are fabricated in the U.S., Ireland or Israel and then sent to other companies to be encapsulated in packaging and tested. Those chores now handled in Costa Rica will be moved to existing Intel operations in Malaysia, Vietnam and China, Mr. Mulloy said.
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