All Posts Tagged With: "gdp"

Economic Growth is stalled…debts are mounting up. Already the weight of debt is pressing down growth rates…and it’s getting worse.

How about that? Contrary to our gloomy disposition yesterday, the stock market has taken off like a rocket this morning. The material sector is up 2.9% today alone. It was the worst performing sector in Australia on the ASX in 2011, down 25% thanks to lower commodity prices.

Last week, Mr. James Bullard was being both cagey and clairvoyant. The president of the St. Louis Federal Reserve Bank noticed what everyone else has seen for months; the US economic recovery is a flop. GDP growth was last measured pottering along at a 2.4% rate in the second quarter, less than half the speed of the last quarter of ’09.

If the economy tries to revert back to providing something of value, it will notice that capital, resources and employment will have to be reallocated. This is not a fun process. It is called a depression. But if you don’t have the depression, you will continue to misallocate the capital into malinvestments, which turn out to be worthless to the economy in real terms.

You’ll recall that the Great Correction seemed to be aiming to put a number of things right. Foremost were the economies of the USA and China.

About a decade ago, the Chinese government chose a policy of growth at any cost. China’s leaders considered strong GDP growth essential for political survival and national stability.

Without technically lying, Krugman perpetuates the myth that Herbert Hoover insisted on budget austerity in the midst of the Great Depression.

We believe the “expansion” reported in the GDP figures is mostly counterfeit. It’s government spending and hot money filtering into the economy.