The Bowtie Economist's Daily Dose of 70-Word Wisdom


Financial Repression

07/25/2013

While the Chinese government must rebalance its economy away from export and investment-led growth towards household consumption-led growth, the problem is that the combination of low wages, low interest rates on savings and an undervalued currency all conspire to keep…

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Finance Failure

07/24/2013

While the House and Senate work on competing bills to fix our broken housing finance system, where 91.2% of new mortgages are government backed, reform is years away. A Congress that can’t pass a budget, an immigration bill, or an…

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Greener Greenback

07/23/2013

The dollar has been dramatically strengthening against most currencies of late and this will hurt US exports by making them more expensive in local currency and boosting imports, worsening our trade deficit. It’s happening because as our economy strengthens, interest…

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Bleak Greek

07/22/2013

While the US economy is not great, be grateful you don’t live in Greece. Unemployment there is 27.4%, youth unemployment is a staggering 58% and car registrations are down 80%. This is because GDP is in its fifth straight year…

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Sexual Evolution

07/20/2013

The Friday File: Plants and pests naturally evolve in an arms race of resistance and conquest that usually has no winners. But grafted trees, because they don’t reproduce sexually, are genetically identical to each other and thus never evolve. However,…

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Disappointing Data

07/18/2013

Given a widening trade deficit, disappointing retail sales, weak inventory accumulation and now yesterday’s surprisingly bad housing starts at just 836,000 units, I’m reducing my Q2 GDP estimate to just 1%. Interestingly, single-family starts, 2-4 unit starts, and 5+ starts…

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Bank on China

07/17/2013

The recent Chinese cash crunch was a sign from the government of its intention to reign in credit growth to the shadow banking system, wasteful local governments and speculators. Part of the problem is that Chinese banks can’t offer competitive…

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Sinking Senate

07/16/2013

While the Senate is indeed broken, preventing the minority from filibustering presidential nominees to the executive branch will make things worse by beginning to turn the Senate into the House, where the minority party has no power. The Senate must…

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Varying Interest

07/15/2013

All interest rate increases aren’t created equal. A rise in 10-year treasury rates from 2%, where they are now, to 3% or 4% is a sign of improving business conditions and opportunities resulting from a strengthening economy. By contrast, a…

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Tunnel Boring

07/12/2013

The Friday File: The 35 mile Gotthard Base Tunnel in Switzerland will be the world’s longest rail tunnel when opened in 2016. Today, the world’s longest rail tunnel is the 33.5 mile Seikan Tunnel in Japan connecting the islands of…

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