Claims/Eur Gwth Surprise?


Karim writes:
Initial claims fell 11k to 448k, lowest level in 1mth.
Anecdotes supporting further declines ahead:

  • VIACOM CEO SAYS ECONOMY IS GROWING STRONGER EACH DAY
  • Caterpillar CEO: “We enjoy hiring people and growing our business, and we’re delighted to see that opportunity coming back”

EU Sentiment and Manufacturing surveys for April out today and quite strong (except for Greece)

  • Of note is stock of inventories at all-time low while new orders and production are rising
  • Wouldn’t be surprised to see 5-6% GDP growth in Q2 for Europe; of course may not be sustainable due to fiscal issues,etc, but should still be a surprise

Yes, if the ECB, for example, simply guaranteed the national govt debt it would work reasonably well. The automatic stabilizers would get the deficits to as high as needed to restore growth and employment.

But that would introduce the moral hazard issue, as whoever ran the largest deficit would be the winner in real terms, in an inflationary race to the bottom.

So they don’t want to remove the ‘market discipline’ aspect even though a nation can become insolvent before the deficit has a chance to get high enough to turn things around.

This entry was posted in Employment, EU and tagged . Bookmark the permalink.

3 Responses to Claims/Eur Gwth Surprise?

  1. Dan Weintraub says:

    GDP Growth in the manner described by Karim does not translate into sustainable employment and pay/benefit structures. GDP growth would need to be in the 10% range, and with limited government subsidy, in order to stop the train of social dislocation from leaving the station. In fact, that train has already left the station in Greece. The problem with the operationally valid, but politically infeasible, scenario of government spending (to boost GDP and create jobs) is that the debt structure is SO massive, that international trust in the most influential fiat currencies will falter under the pressure of rising interest rates and increasing hard times for an ever-expanding number of people.

    Reply

    jcmccutcheon Reply:

    In the US Interest rates on exogenous

    Reply

  2. Panayotis says:

    There is no inflationary race to the bottom if fiscal policy is discretionary and horizontal oriented towards development reducing production inefficiencies/inedaquacies.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>