Category Archives: Adolfo Laurenti
The ECB’s Reluctant Rate Cut
The European Central Bank (ECB) bites the bullet and cuts target rates a quarter of one percent to 0.5%. This is the historical low for interest rates in the Eurozone, a sign that the ECB is coming to terms with the worsening economic situation. Critics will argue that it is too little, too late. In [...]
Progress for Italy
Italy may be closer to a political solution. Napolitano, reelected president by parliament, has asked Enrico Letta to form a government. Letta is a moderate from a center-left coalition, likely to seek support from former prime minister Silvio Berlusconi to form a “Grosse Koalition” government A coalition between the center-left and center-right is the only option, after [...]
Does Cyprus matter?
As a matter of fact, it shouldn’t. The country is a small island in the Eastern Mediterranean, with one million people and not quite $24 billion in GDP; Cyprus represents a small fraction of the more than $13 trillion GDP of the Eurozone. Furthermore, the rescue package decided by the European Union (EU) over the [...]
Italian Elections officially Result in Chaos
The Italian elections have resulted in no clear winner and several losers. Most importantly, the already-precarious political credibility of the country appears to be lost, too. Prime Minister Mario Monti’s commitment to austerity and structural reform has been rejected by the voters; he won only 10% of the votes. The center-left coalition, led by Mr. [...]
Japan enters the age of QE
Japan’s move toward quantitative easing (QE) is a revolutionary step for that country, and a step that will have broad economic and political implications, as the decision was taken despite an older population living on fixed-income pensions and deeply concerned about inflation. Japan had made efforts during the past 20 years but never radically departed [...]
GDP Contracts in Q4 2012
Real GDP fell 0.1%, much weaker than the already weak estimates for the fourth quarter. Inventories, government spending and exports all declined. This is likely to be a disappointment for markets and analysts, who expected a meager growth rate below 1.0%. The drop in inventories was mostly due to the residual drop in farm stocks [...]
Question on retail sales
We received the following question: Why do the seasonally adjusted, electronics sales appeared to have declined in December vs. November? I answered: The big jump in unadjusted figures is the “holidays” effect on sales. In adjusted terms, the decline from November to December is relatively minor;
Notes on the Federal Reserve
A few talking points, ahead of Federal Reserve Chairman Ben Bernanke’s speech on Tuesday: First, we expect the Fed to decide on an extension of Operation Twist, or at least to roll over the assets into more Treasuries. This will be the case because the Fed has repeatedly argued that discontinuing existing programs would likely [...]
Hurricane Repairs
I received the following question from an international journalist this morning: Is the reconstruction effort being discussed now simply ‘robbing Peter to pay Paul’ by taking money that would otherwise be spent in other areas of the economy? I do believe that our (economists’) understanding is often clouded by the numbers we collect. We look [...]
Business Investment Flat, though Aircraft Boost Durable Goods Orders
Orders for durable goods rose 9.9% in September after tumbling 13.1% in August. The reason behind this large swing was aircraft orders; big-ticket items add a lot of volatility to monthly readings. Despite the headline number, which was better than expected, there is some reason for disappointment in the report. Orders for non-defense capital goods [...]
Bloomberg asks Diane Swonk to explain Fed concern over unemployment
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