“Mary Magdalene and the other Mary went away quickly from the tomb, fearful yet overjoyed, and ran to announce the good news to his disciples. And behold, Jesus met them on their way and greeted them. They approached, embraced his feet, and did him homage. Then Jesus said to them, ‘Do not be afraid.’”
Matthew 28: 8-10
이 공간을 방문해 주시는 regular reader 중에는 이미 2008년 리먼 사태 이전에 미국 경제가 심한 중병에 걸려있다는 것을 알고 계셨다. 또 지난 근 3년간 전세계 경제 상황이 어떤 식으로 전개되고 있다는 것도 잘 알고 계시리라. 아직 우리는 초기 단계에 있을 뿐이라는 것도.
어려운 시기를 겪으면서 많은 것도 얻고 있지 않은가. 그 중 significant한 것은 온전히 하나님께 내어드려야 한다는 것, 아주 작은 일에도 감사하면서, 겸허히, 겸손하게 인도하시는 대로 따라야 한다는 것이다.
건강도 그렇다. 우리에게 주어진 시간 동안 기쁘게, 기도하면서 the paths of God를 모두 함께 걸어가야 하리라.
Sunday, May 8, 2011
Friday, May 6, 2011
Outside Forces: Significant Challenge Since the 1997 Financial Crisis
One of the significant challenges Korea has had to deal with since the 1997 financial crisis is outside forces.
IMF has introduced an austerity program, mainly financial liberalization: for example, opening Korea’s equity market and banking to foreigners and allowing real estate ownership.
It is debatable whether IMF-induced austerity program has brought about a genuine reform Korea needed and whose interest the IMF has served most.
Korea had been in austerity mode even before the 1997 financial crisis. Much research on Korea’s development path doesn’t pay attention to this.
For better or worse, globalization has intensified since the 1997 financial crisis. Increase in FDI was notable.(Unlike other developing countries, Korea didn’t rely on FDI as a main source of finance in the early days of industrialization) It is important to point out that FDI was perceived as more attractive in service sector than in manufacturing sector. Meanwhile, the major Korean high-tech firms have shifted its manufacturing operation overseas.
Global forces have been blowing bubbles worldwide. Bubbles in Korea are just part of their bigger game.
One has to recognize these outside forces in understanding the overall picture of the Korean economy as well as its political environment.
And yet, as noted many times, outside forces are no excuse for policy failure. Policies could have been formulated in such a way that it fosters organic growth and protects its citizens.
IMF has introduced an austerity program, mainly financial liberalization: for example, opening Korea’s equity market and banking to foreigners and allowing real estate ownership.
It is debatable whether IMF-induced austerity program has brought about a genuine reform Korea needed and whose interest the IMF has served most.
Korea had been in austerity mode even before the 1997 financial crisis. Much research on Korea’s development path doesn’t pay attention to this.
For better or worse, globalization has intensified since the 1997 financial crisis. Increase in FDI was notable.(Unlike other developing countries, Korea didn’t rely on FDI as a main source of finance in the early days of industrialization) It is important to point out that FDI was perceived as more attractive in service sector than in manufacturing sector. Meanwhile, the major Korean high-tech firms have shifted its manufacturing operation overseas.
Global forces have been blowing bubbles worldwide. Bubbles in Korea are just part of their bigger game.
One has to recognize these outside forces in understanding the overall picture of the Korean economy as well as its political environment.
And yet, as noted many times, outside forces are no excuse for policy failure. Policies could have been formulated in such a way that it fosters organic growth and protects its citizens.
Bill Gross: PIMCO Would Only Buy Treasuries If Potential for Another Recession
It seems that another round of QE will get underway, which means more inflationary pressure.
From Reuters:
PIMCO's Bill Gross, who runs the world's largest bond fund, said on Friday the only way he would reverse his "short" position on U.S. government-related bonds and purchase Treasuries again is if the United States heads into another recession.
Since the news on April 11 that Gross turned more bearish on government debt including Treasuries, reflecting his growing worries over the country's fiscal deficit and debt burden, Treasury prices have been soaring.
On Friday Treasury prices fell after an unexpectedly strong U.S. monthly employment report. Treasuries then reversed course on a media report, later denied, that Greece is mulling quitting the euro zone, which revived safe-haven demand for bonds.
Asked Friday what would change his bet against government debt, Gross told Reuters: "Treasury yields are currently yielding substantially less than historical averages when compared with inflation. Perhaps the only justification for a further rally would be weak economic growth or a future recession that substantially lowered inflation and inflationary expectations."
http://www.reuters.com/article/2011/05/06/us-investing-treasuries-pimco-idUSTRE7454RP20110506
From Reuters:
PIMCO's Bill Gross, who runs the world's largest bond fund, said on Friday the only way he would reverse his "short" position on U.S. government-related bonds and purchase Treasuries again is if the United States heads into another recession.
Since the news on April 11 that Gross turned more bearish on government debt including Treasuries, reflecting his growing worries over the country's fiscal deficit and debt burden, Treasury prices have been soaring.
On Friday Treasury prices fell after an unexpectedly strong U.S. monthly employment report. Treasuries then reversed course on a media report, later denied, that Greece is mulling quitting the euro zone, which revived safe-haven demand for bonds.
Asked Friday what would change his bet against government debt, Gross told Reuters: "Treasury yields are currently yielding substantially less than historical averages when compared with inflation. Perhaps the only justification for a further rally would be weak economic growth or a future recession that substantially lowered inflation and inflationary expectations."
http://www.reuters.com/article/2011/05/06/us-investing-treasuries-pimco-idUSTRE7454RP20110506
Thursday, May 5, 2011
Atlantic Capital Management Report: Radical Monetary Policies and the Radical Adjustments That Must Follow
We seem to be experiencing inflation and deflation at the same time, which is called biflation.
From the report:
The Federal Reserve System operates monetary policy as if economic activity during the asset bubbles was representative of true economic potential. To the Fed, the Great Recession has pushed economic activity so far below that potential it can stimulate with zero interest rates and quantitative easing well into the future, even after two years of it already. We believe the Fed is mistaken for the reasons contained in this report. Chief among them is that The Great Recession actually brought the economy back down toward its true potential. Further than that, it is likely that the current weak recovery is still running above true potential, and that is leading to a wide array of problems. Inflation pressures are the biggest.
http://www.scribd.com/doc/54663217/April-2011-Special-Report
From the report:
The Federal Reserve System operates monetary policy as if economic activity during the asset bubbles was representative of true economic potential. To the Fed, the Great Recession has pushed economic activity so far below that potential it can stimulate with zero interest rates and quantitative easing well into the future, even after two years of it already. We believe the Fed is mistaken for the reasons contained in this report. Chief among them is that The Great Recession actually brought the economy back down toward its true potential. Further than that, it is likely that the current weak recovery is still running above true potential, and that is leading to a wide array of problems. Inflation pressures are the biggest.
http://www.scribd.com/doc/54663217/April-2011-Special-Report
Wednesday, May 4, 2011
U.S. Treasury Asks For $2 Trillion Increase in Debt Capacity; U.S. To Reach the Debt Limit on May 16
One may have to see the pattern here.
“Believe me, the next step is a currency crisis because there will be a rejection of the dollar, the rejection of the dollar is a big, big event, and then your personal liberties are going to be severely threatened.”
U.S. Congressman Ron Paul who used to be a medical doctor
From Reuters:
The Treasury has told lawmakers a roughly $2 trillion rise in the legal limit on federal debt would be needed to ensure the government can keep borrowing through the 2012 presidential election, sources with knowledge of the discussions said.
Obama administration officials have repeatedly said that it is up to Congress to decide by how much the $14.3 trillion debt limit should be raised.
But when lawmakers asked how much of an increase would be needed to meet the government's obligations into early 2013, Treasury officials floated the $2 trillion working figure, Senate and administration sources told Reuters.
http://www.reuters.com/article/2011/05/04/us-usa-budget-limit-idUSTRE7434UG20110504
Again from Reuters:
The following are highlights from the U.S. Treasury Department's announcement on Wednesday of its quarterly debt refunding, which will raise $72 billion in new cash.
The Treasury said it would auction $32 billion in three-year notes, $24 billion in 10-year notes and $16 billion in 30-year bonds next week.
When the note and bond sales are settled on May 16, they will exhaust the government's remaining borrowing capacity under the $14.3 trillion statutory debt limit. This will require the government to employ emergency measures to continue borrowing, but these will only be sufficient until Aug. 2, according to Treasury projections. The measures include dipping into two federal employee pension funds.
Treasury officials reiterated their view that they believe Congress will raise the debt limit in time. A Treasury official said that reduced auction sizes or frequencies were options that could be considered to refund maturing debt in case the debt limit increase was delayed.
http://www.reuters.com/article/2011/05/04/usa-budget-debt-idUSN0418427220110504
“Believe me, the next step is a currency crisis because there will be a rejection of the dollar, the rejection of the dollar is a big, big event, and then your personal liberties are going to be severely threatened.”
U.S. Congressman Ron Paul who used to be a medical doctor
From Reuters:
The Treasury has told lawmakers a roughly $2 trillion rise in the legal limit on federal debt would be needed to ensure the government can keep borrowing through the 2012 presidential election, sources with knowledge of the discussions said.
Obama administration officials have repeatedly said that it is up to Congress to decide by how much the $14.3 trillion debt limit should be raised.
But when lawmakers asked how much of an increase would be needed to meet the government's obligations into early 2013, Treasury officials floated the $2 trillion working figure, Senate and administration sources told Reuters.
http://www.reuters.com/article/2011/05/04/us-usa-budget-limit-idUSTRE7434UG20110504
Again from Reuters:
The following are highlights from the U.S. Treasury Department's announcement on Wednesday of its quarterly debt refunding, which will raise $72 billion in new cash.
The Treasury said it would auction $32 billion in three-year notes, $24 billion in 10-year notes and $16 billion in 30-year bonds next week.
When the note and bond sales are settled on May 16, they will exhaust the government's remaining borrowing capacity under the $14.3 trillion statutory debt limit. This will require the government to employ emergency measures to continue borrowing, but these will only be sufficient until Aug. 2, according to Treasury projections. The measures include dipping into two federal employee pension funds.
Treasury officials reiterated their view that they believe Congress will raise the debt limit in time. A Treasury official said that reduced auction sizes or frequencies were options that could be considered to refund maturing debt in case the debt limit increase was delayed.
http://www.reuters.com/article/2011/05/04/usa-budget-debt-idUSN0418427220110504
Tuesday, May 3, 2011
Marshall Auerback: Global Growth Slowdown
From New Deal 2.0:
Governments across the globe are headed for a disaster entirely of their own making.
Though capital markets remain strong, the global economic backdrop continues to deteriorate as fiscal retrenchment takes hold. Commodity markets have rallied in tandem with the fall in the dollar even though there are signs that growth in the emerging world is slowing. Japan’s economy is in the soup, the U.S. economy has failed to pick up as many thought (with a mere 2% growth rate expected to be released for Q1 shortly), and the European economy is overdue for its own slowdown. The U.S. stock market has also rallied despite the threat of a very high gasoline price, disappointing economic growth data, and a fairly mixed earnings picture.
The new theme in the market seems to be that the Fed, unlike other central banks, will stick with super easy money policies, hence the tendency to push the weak dollar, rising equity prices, and soaring commodity prices. But the news that real GDP growth has fallen sharply in the first three months of 2011 is evidence that the current policy mix, with its emphasis on public spending cuts, is not working. If gasoline prices spike as high as they did in June 2008, they will further weaken an already feeble economy. Consumers did not show up at Walmart at the end of the month because they ran out of money. House prices are still falling.
The evidence of an increasingly imploding euro zone (which continues to embrace fiscal austerity with the zeal of a religious fanatic) does not seem to have shifted the debate much in this country. Many European governments are facing a fiscal crisis due to their failure to advance public purpose and raise the funds needed to maintain existing programs. Only the interventions of the ECB are saving the whole system from total meltdown, but the underlying solvency problem for the individual member states is getting worse as the days go by. The Euro bosses are failing, and with any luck, so is political resistance to rational economic policy.
In Asia, things are not much better. Japan’s industrial production is down far, far more than anyone imagined, as is household consumption. Destructive IMF-style thinking still predominates in Tokyo, where the government is in thrall to a gaggle of deficit terrorists who think they can’t afford to fund a proper reconstruction in the country.
The economic data coming out of China is so bad it is hard to assess what is happening, but there is enough evidence to suggest that the Chinese economy too slowed in the fourth quarter of last year and has slowed further in the first quarter of this year.
http://www.newdeal20.org/2011/05/03/get-ready-for-a-global-growth-slowdown-43616/
Governments across the globe are headed for a disaster entirely of their own making.
Though capital markets remain strong, the global economic backdrop continues to deteriorate as fiscal retrenchment takes hold. Commodity markets have rallied in tandem with the fall in the dollar even though there are signs that growth in the emerging world is slowing. Japan’s economy is in the soup, the U.S. economy has failed to pick up as many thought (with a mere 2% growth rate expected to be released for Q1 shortly), and the European economy is overdue for its own slowdown. The U.S. stock market has also rallied despite the threat of a very high gasoline price, disappointing economic growth data, and a fairly mixed earnings picture.
The new theme in the market seems to be that the Fed, unlike other central banks, will stick with super easy money policies, hence the tendency to push the weak dollar, rising equity prices, and soaring commodity prices. But the news that real GDP growth has fallen sharply in the first three months of 2011 is evidence that the current policy mix, with its emphasis on public spending cuts, is not working. If gasoline prices spike as high as they did in June 2008, they will further weaken an already feeble economy. Consumers did not show up at Walmart at the end of the month because they ran out of money. House prices are still falling.
The evidence of an increasingly imploding euro zone (which continues to embrace fiscal austerity with the zeal of a religious fanatic) does not seem to have shifted the debate much in this country. Many European governments are facing a fiscal crisis due to their failure to advance public purpose and raise the funds needed to maintain existing programs. Only the interventions of the ECB are saving the whole system from total meltdown, but the underlying solvency problem for the individual member states is getting worse as the days go by. The Euro bosses are failing, and with any luck, so is political resistance to rational economic policy.
In Asia, things are not much better. Japan’s industrial production is down far, far more than anyone imagined, as is household consumption. Destructive IMF-style thinking still predominates in Tokyo, where the government is in thrall to a gaggle of deficit terrorists who think they can’t afford to fund a proper reconstruction in the country.
The economic data coming out of China is so bad it is hard to assess what is happening, but there is enough evidence to suggest that the Chinese economy too slowed in the fourth quarter of last year and has slowed further in the first quarter of this year.
http://www.newdeal20.org/2011/05/03/get-ready-for-a-global-growth-slowdown-43616/
Monday, May 2, 2011
Japan’s QE Continues: Public Debt of One Quadrillion Yen by March, 2012
From Zero Hedge:
Part 2 of our "Japan resumes hyprintspeed speed" series comes courtesy of The Privateer's Bill Buckler who has discovered that quadrillion is the new black.
The latest projections from the Japanese Finance Ministry regarding the fiscal year which started on April 1 make for sobering reading. They say that Japan’s “public” (funded) debt will probably rise by 5.8 percent this year - to 997.7 TRILLION Yen ($US 12.2 TRILLION at current exchange rates). Should these projections be even slightly on the optimistic side - and government financial projections always are - then Japan could easily be looking at a public debt of 1,000 TRILLION Yen by March 31, 2012.
There is another way of expressing 1,000 TRILLION. It is the same as ONE QUADRILLION.
The sheer magnitude of these numbers has long been a talking point for the watchers of international finance. Now, they are becoming very nervous indeed. The OECD has recently “urged” the Japanese government to “do something” about their deficits, especially in the wake of the earthquake disaster. Noting that Japanese sovereign debt is about to hit 204 percent of GDP, they suggested that Japan’s current sales tax be “at least” doubled from its present 5 percent to 10 percent. The Japanese Foreign Ministry politely declined to comment on this suggestion, contenting themselves with assuring the OECD that - “We will continue to work to maintain and secure trust in Japanese government bonds.”
http://www.zerohedge.com/article/japan-resumes-hyprintspeed-part-2-here-comes-one-quadrillion
Part 2 of our "Japan resumes hyprintspeed speed" series comes courtesy of The Privateer's Bill Buckler who has discovered that quadrillion is the new black.
The latest projections from the Japanese Finance Ministry regarding the fiscal year which started on April 1 make for sobering reading. They say that Japan’s “public” (funded) debt will probably rise by 5.8 percent this year - to 997.7 TRILLION Yen ($US 12.2 TRILLION at current exchange rates). Should these projections be even slightly on the optimistic side - and government financial projections always are - then Japan could easily be looking at a public debt of 1,000 TRILLION Yen by March 31, 2012.
There is another way of expressing 1,000 TRILLION. It is the same as ONE QUADRILLION.
The sheer magnitude of these numbers has long been a talking point for the watchers of international finance. Now, they are becoming very nervous indeed. The OECD has recently “urged” the Japanese government to “do something” about their deficits, especially in the wake of the earthquake disaster. Noting that Japanese sovereign debt is about to hit 204 percent of GDP, they suggested that Japan’s current sales tax be “at least” doubled from its present 5 percent to 10 percent. The Japanese Foreign Ministry politely declined to comment on this suggestion, contenting themselves with assuring the OECD that - “We will continue to work to maintain and secure trust in Japanese government bonds.”
http://www.zerohedge.com/article/japan-resumes-hyprintspeed-part-2-here-comes-one-quadrillion
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