Three years ago, the best treasurer in the world, Wayne Swan, described the then 3% level of official interest rates as ’50-year emergency lows’. Now we’re approaching these levels again.October 4th, 2012 | Greg Canavan+ | 4 comments | Continued
All Posts Tagged With: "consumption"
Interest rates fall when people are more willing to save and rise when people want to consume and borrow. But what happens when central banks start fiddling around with this delicate balance? What if they start to manipulate interest rates? Disaster!July 7th, 2012 | Nick Hubble+ | 1 comment | Continued
“Home on the Range” is regarded as the unofficial anthem of the American west. It’s also a slogan available on vanity license plates in Kansas – where few Buffalo now roam. The wide-open spaces are now rangeland for the final installment of commodity critters: chicken, hogs and cattle.September 14th, 2010 | Alan Knuckman+ | 0 comments | Continued
It’s a given that increases in household wealth support higher consumer spending. For one, when people see their share portfolios or housing investments go up, they are, in fact, richer on paper. This may give them more disposable income to actually spend. Or maybe they just feel richer and spend more freely (the wealth effect).But one thing we recall seeing at the peak of the U.S. housing bubble is a massive increase in borrowing against home equity.August 5th, 2010 | Dan Denning+ | 10 comments | Continued
If we’re right, households have just begun reducing their debt loads. It will take years for the leverage in the system to be wound down. See Bill’s comments about that below. If you’re buying bank stocks you’re assuming credit and debt growth will resume once this recession is over. That’s a big assumption. And probably stupid.August 12th, 2009 | Dan Denning+ | 4 comments | Continued
Giving people who don’t pay a lot in taxes even more money is even more popular. So in that sense, the arrival of thousands of dollars in government cash to various Aussie households will ‘work’ in the sense that it distracts people from the ongoing disaster that is the world financial crisis. “Look honey! Free bread. Let’s go to the circus!” Please note that shuffling a bit of cash around will not lessen a national debt-to-GDP ratio of around 140%. Nor does it do much to create long-term jobs…February 4th, 2009 | Dan Denning+ | 18 comments | Continued