The lack of exciting headline news has caused a lack of discussion here in D&D, but the world continues to turn. So here's an update on our drab, unexciting world of The Biggest Recession Since 1929!
US vital statistics
US fiscal outlook
news is that US unemployment doesn't appear to be continuing to increase:
news, of course, is that unemployment remains very high and Congress has failed to extend unemployment benefits
(as late as November last year the Senate managed to unanimously extend unemployment benefits. How things change).
In the meanwhile, prices have surprisingly fallen
in recent months:
e: output has recovered, though! thanks enc0re:
US monetary policy
US government spending has steadily increased, albeit by not as much as you might think, given cuts in state and local spending (net spending is the blue line):
At this point it appears unlikely that Congress will pass further large spending increases; if anything there is pressure to engage in austerity, despite the Treasury remaining easily able to raise funds and low market expectations of inflation.
The unimportant and insignificant
The US interest rate - the federal funds rate - has remained at 0-0.25% since December 17 2008. There are now mutterings that the Federal Reserve may engage in either more unconventional easing
, in the name of fighting future deflation, or raising rates
, in the name of fighting future inflation.
The Federal Reserve engaged in some unconventional quantitative easing in 2009 after hitting the zero bound; regrettably, it has been neutralized by banks choosing to dump said easing back into Federal Reserve coffers:
presumably because the Federal Reserve is paying interest on excess reserves. Why it has chosen to do this is, of course a mystery.
Of the Federal Reserve board of governors two of the traditional seven seats are empty and one more retiring; somewhat like the Supreme Court, the balance of votes is crucial since the board normally dominates the FOMC and thus essentially sets monetary policy. Obama delayed nominating three more until April this year
, possibly due to the unexpectedly vicious fight over Bernanke's reappointment as Chairman.
Many European countries entered the crisis with considerable budget deficits and, in the case of Greece, a spectacularly large hidden deficit that caused its credit rating to deteriorate dramatically upon discovery. With falling revenues due to recession, these countries have been forced to either risk default or engage in austerity.
Portugal, Ireland, Italy, Greece, and Spain started engaging in austerity first, to varying degrees of political success. Greece is undergoing the largest cuts and the most trouble
. How successful austerity has been or will be seems to vary among pundits (it sucks! No, it works!
Britain, Germany, and Latvia are also cutting their budgets; however, Germany and Britain are far richer than the other countries to begin with, so perhaps they will face less trouble! And for Latvia, well, "with memories of Soviet living standards still fresh, however, the public is resilient and Latvia is weathering a crisis on a scale that would have triggered mayhem in western Europe". So says The Guardian, anyway.
Thus far, France remains the only Western Europe major economy to avoid legislating cuts, although this may soon change. Embarrassingly, among the EU states only Luxembourg has remained able to remain within the EU limit of controlling the deficit at less than 3% of GDP. Of major European economies, Turkey has also done well, but it isn't in the EU (yet?).
The PRC abandoned the RMB peg against the US dollar last month; moving forward it will peg the RMB against a basket of currencies instead. In any case, domestically its ridiculously fast growth has meant that the global recession has caused it to only grow a little less fast. Maybe Beijing quietly thinks the whole mess is a good thing, given worries over inflation and overheating back in 2007. Who knows?
Russia has avoided facing a budget crisis due to a rapid recovery in oil prices from the 2008-2009 slump, but it still is facing high unemployment. Happily, unemployment appears to have dropped in May and June, so perhaps it is improving.
India has similarly managed to shrug off unemployment this year, and managed to duck a budget crisis by selling off vast amounts of government-owned assets. It's a good time to be a recently socialist state.
Pretty good, growth-wise:
The problem among developed economies is the prospect of a jobless recovery - where growth recovers but jobs annoyingly don't. Developing economies appear to be chugging along well.
(no, this isn't the economics
thread I promised I would make. Haven't had the time, sadly...)