The Great Preventer

von Nouriel Roubini, aus der NYT

LAST week Ben Bernanke appeared before Congress, setting off a discussion over whether the president should reappoint him as chairman of the Federal Reserve when his term ends next January. Mr. Bernanke deserves to be reappointed. Both the conventional and unconventional decisions made by this scholar of the Great Depression prevented the Great Recession of 2008-2009 from turning into the Great Depression 2.0.

Business Outlook: A Second-Half Recovery Could Be Fleeting

aus der dieswöchigen Business Week:

Output may rise to slow inventory depletion, but gains won’t be sustainable without stronger consumer spending. Trouble is, job markets remain weak

By James C. Cooper

The worst recession since the 1930s is drawing to a close. The sharp contraction in the economy appears to have moderated notably in the second quarter, and a return to growth in the third quarter is now widely expected. Unfortunately, it won’t feel much like a recovery, because growth in the second half likely will be too puny to generate enough jobs to make a dent in the unemployment rate. There is also a more important issue: Will the upturn last?

Politicians Accused of Meddling in Bank Rules

Hochinteressaant, aus der heutigen NYT: äusserst kritische Stimmen von Accounting Standard Profis.

Accounting rules did not cause the financial crisis, and they still allow banks to overstate the value of their assets, an international group composed of current and former regulators and corporate officials said in a report to be released Tuesday.

The report, from the Financial Crisis Advisory Group, also deplored successful efforts by politicians to force changes in accounting rules and said that accounting standards should be kept separate from regulatory standards, contrary to the desire of large banks.

Hungary Monetary Policy: Central Bank Cuts Key Rate to 8.5% in July

• Hungary’s central bank (MNB) cut its benchmark interest rate for the first time in six months to 8.5% from 9.5% on July 27. The MNB has limited room to deliver rate cuts, despite a sharp recession and slowing inflation, due to a weak currency and distressed financial markets.

Credit Crunch in the Euro Zone: Bank Lending to the Private Sector Continues to Slow

• European Central Bank: „The annual rate of growth of M3 decreased to 3.5% in June 2009 from 3.7% in May 2009. Regarding the main components of M3, the annual rate of growth of M1 increased to 9.3% in June 2009 from 7.9% in May. The annual growth of credit extended to the private sector was 3.0% in June after 3.1% in May. Among the components of the latter, the annual rate of growth of loans to the private sector decreased to 1.5% in June from 1.8% in the previous month. The annual growth rate of loans to non-financial corporations decreased to 2.8% in June from 4.4% in May (monthly flow is negative). The annual rate of change of loans to households increased to 0.2% in June from -0.2% in the previous month.“

Are There Risks to China’s Stimulus?

• Aggressive government led stimulus (direct government investment and encouraging banks to lend) contributed to a reacceleration of growth in Q2 2009, one of the first countries to have a growth acceleration in H1 2009. While upside risk is certainly present for China’s GDP growth outlook, serious downside risks from China’s fiscal and monetary expansion remain. In particular the risks that stimulus is contributing to asset bubbles in property and equity markets, worsening the risk of non-performing loans and adding to overcapacity could, especially in the absence of a rebound of external demand contribute to weaker than trend growth in 2010-11.

MARKET THOUGHTS

by David A. Rosenberg (former Chief Economist at the former Merrill Lynch  and now Chief Economist at Gluskin Sheff + Associates Inc., which is one of Canada’s pre-eminent wealth management firms.

The Dow is coming off its best weekly performance since March 2000, and if memory serves us correctly, that month was marking the beginning of the end of the great bull market at that time. While the bear market rally has been of 1930 proportions, from our lens, that is what it remains and what is lacking in this extremely flashy runup in equity prices are: (i) leadership, (ii) quality, and (iii) volume. There were some very useful statistics in Barron’s (despite the fact that the headline in the ‘The Trader’ column is Why the Rally Should Keep Rolling … for Now):

Neue Anmerkungen zur Bundesfinanzierungsagentur

• Die „Einsparungen“ in der Aussendung des FM Pröll beinhalten also die Gestion von Cash und Schulden des Bundes (bei einer saldierten Nettoverschuldung!)
• Aus den Cash Veranlagungen haben sich jedenfalls die dargestellten geringen Erträge ergeben (bei Betrachtung der Refinanzierungskosten sogar massive Verluste!) Ich bleibe dabei: selbst ein Sparbuch wäre günstiger gewesen!

7/22/09 – Nightly Business Report, PBS – NYU Professor Nouriel Roubini’s Outlook on the Economy

Transcript from PBS:

Wednesday, July 22, 2009

SUZANNE PRATT: Joining me now with his thought on the economy is Nouriel Roubini. He is the economics professor at NYU’s Stern School of Business, who forecasted the housing bubble way before everyone else. Professor Roubini, welcome back to NIGHTLY BUSINESS REPORT.

NOURIEL ROUBINI, ECONOMICS PROF., NYU STERN SCHOOL OF BUSINESS: Pleasure being with you tonight.

South Korea Grew 2.3% in Q2 2009: Will the Growth Momentum Continue?

• South Korean economy grew 2.3% q/q in Q2 2009 (the fastest quarterly growth in almost six years), though it contracted 2.5% y/y. In Q1 2009, the nation barely missed a technical recession by growing 0.1% q/q after plunging 5.6% q/q in Q4 2008. 

• In Q2 2009, manufacturing sector grew 8.2% after falling 3.4% in Q1. Construction sector contracted 1% after growing 5.9% in Q1, while service sector expanded 1% (0.3% in Q1). Exports and industrial production grew 14.7% and 8.2% respectively, helped by inventory restocking in the electronics sector. It is unclear whether South Korea can maintain the current recovery path without an improvement in external demand.