No Way to Run an Economy

Graham Turner

Description

In The Credit Crunch, Graham Turner predicted that banks would be nationalised and interest rates would be reduced too slowly to halt the crisis. His predictions were correct. His new book, No Way to Run an Economy, is the essential guide to the turbulent times ahead.



Turner recommended radical measures, such as quantitative easing, in early 2008 but argues that action has been taken too late and been too timid to make a real difference. He dissects the policy mistakes of the last 12 months including Obama's doomed market-led response to the crisis and the obsession of central banks with the red herring of inflation.



There is no doubt the economy is still in serious trouble, but Turner shows that learning from the mistakes made so far can prevent a situation worse than that of the 1930s crisis.
List of Tables and Figures

Glossary

GFC Economics

Acknowledgements

Introduction

1. From Bear Stearns to Recession

2. Learning from the Great Depression

3. Policy Mistakes in the 2008/09 Bear Market

4. Globalisation and the Race to the Bottom

5. Structural Causes of the Recession

6. A Flawed Economic System?

7. Obama’s Crisis?

8. Breaking with the Past

Notes

Index

Sujets

• Economic History
• International finance
• International economics
• General officer
• Economics
• Business
• General
• International

Informations

• Publié par: Pluto Press
• Date de parution: 07 septembre 2009
• Nombre de lectures: 0
• EAN13: 9781849644402
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

NO WAY TO RUN AN ECONOMY

NO WAY TO RUN AN ECONOMY Why the System Failed and How to Put it Right

GRAHAM TURNER

PLUTO PRESS www.plutobooks.com

First published 2009 by Pluto Press 345 Archway Road, London N6 5AA and 175 Fifth Avenue, New York, NY 10010

www.plutobooks.com

Distributed in the United States of America exclusively by Palgrave Macmillan, a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010

Copyright © Graham Turner 2009

The right of Graham Turner to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.

British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library

ISBN ISBN

978 0 7453 2977 2 978 0 7453 2976 5

Hardback Paperback

Library of Congress Cataloging in Publication Data applied for

This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental standards of the country of origin. The paper may contain up to 70 per cent postconsumer waste.

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Designed and produced for Pluto Press by Chase Publishing Services Ltd, 33 Livonia Road, Sidmouth EX10 9JB, England Typeset from disk by Stanford DTP Services, Northampton, England Printed and bound in the European Union by CPI Antony Rowe, Chippenham and Eastbourne

CONTENTS

List of Tables and Figures Glossary GFC Economics Acknowledgements

Introduction 1 From Bear Stearns to Recession 2 Learning from the Great Depression 3 Policy Mistakes in the 2008/09 Bear Market 4 Globalisation and the Race to the Bottom 5 Structural Causes of the Recession 6 A Flawed Economic System? 7 Obama’s Crisis? 8 Breaking with the Past

Notes Index

vi ix xiii xiv

1 12 43 63 97 112 140 148 163

178 213

LIST OF TABLES AND FIGURES

Table

2.1

Markit ABX.HE closing prices

Figures

0.1 US Consumer Credit 0.2 US Real GDP 0.3 UK Real GDP 0.4 Euroland Real GDP 1.1 US Asset Backed Securities, Residential Mortgages 1.2 Commodity Prices 1.3 US Average Hourly Earnings 1.4 US Consumer Prices ExFood/Energy 1.5UK Retail Sales Deflator 1.6UKFood Inflation 1.7 UK Retail Sales Deflator, NonFood Stores 1.8 Euroland Retail Sales 1.9 UK Banks, External Liabilities 1.10 US Libor Spread, July 2007 to June 2009 1.11 UK Bank Lending to Other Financial Institutions 1.12 UK Bank Lending to Personal Sector 1.13 Spain Unemployment 2.1 US Corporate Bond Spreads and Banks Tightening Credit 2.2 US Corporate Bond Spreads and Banks Increasing Rate/Cost of Funds Spread 2.3 Corporate Bond Yields, 1919 to 1939 2.4 US Manufacturing Production, 1919 to 1939 3.1 US Federal Reserve Assets 3.2 US House Prices 3.3 US Personal Sector Debt/Disposable Income

vi

4

9

2 3 4 5 14 16 18 19 20 21 22 27 28 31 38 39 41

4

5

46 47 59 68 71 72

3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 4.1 4.2 4.3 4.4 4.5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16

LIST OF TABLES AND FIGURES vii

US Job Losses and Corporate Borrowing Costs US Fed Funds Target, 1989 to 1993 US Fed Funds Target, 2005 to 2009 US 10Year Treasury Yields, 1989 to 1993 US 10Year Treasury Yields, 2005 to 2009 US ‘Real’ Borrowing Costs, 1989 to 1993 US ‘Real’ Borrowing Costs, 2005 to 2009 US Stock Market US Foreclosures Started US Borrowers In Foreclosure US Homeowners Delinquent US Homeowners Delinquent, 90+ Days US Homeowners Delinquent, SubPrime US Homeowners Delinquent, Prime US Homeowners, Delinquent and In Foreclosure US and UK Unemployment Rates, 1920 to 1949 US Unemployment Rate, U6, 1994 to 2009 China Trade Balance US Average Hourly Earnings UK Average Earnings, Excluding Bonuses US Wages and Salaries/GDP US Business Inventories to Sales Ratio Japan Exports Japan Industrial Production Japan Real GDP Germany Manufacturing New Orders Euroland Industrial Production US Industrial Production UK Industrial Production Japan Capacity Utilisation Japan Manufacturing Current Profits US Manufacturing Capacity Utilisation Japan Foreign Machinery Orders US Corporate Profits/GDP US Corporate Profits/Investment US Corporate Profits, Rest of the World/Domestic

73 77 78 79 80 81 82 86 89 90 91 92 93 94 95 98 105 108 110 111 113 117 122 123 124 125 126 127 128 129 130 131 132 133 134 135

viii NO WAY TO RUN AN ECONOMY

5.17 US Domestic Corporate Profits, NonFinancial/Total 5.18 US Corporate Profits Domestic NonFinancial/Investment 5.19 US Investment/GDP, Real 7.1 US Real Personal Consumption 7Nationwide Consumer Price Index,.2 Japan Excluding Food and Energy (Core) 7.3 Japan Nationwide Land Price Index 7.4 US Delinquency And ChargeOff Rates, All Loans 8.1 US Federal Government Budget Balance 8.2 US Federal Government Outlays, Adjusted by Consumer Price Index 8.3 US Federal Government Receipts, Adjusted by Consumer Price Index 8.4 UK Public Sector, Total Net Borrowing 8.5 UK Central Government, Current Receipts, Adjusted by Consumer Price Index 8.6 UK Central Government, Current Expenditure, Adjusted by Consumer Price Index 8.7 Dow Jones Industrials Adjusted by Consumer Price Index 8.8 FTSE 100 Price Index Adjusted by Consumer Price Index 8.9 Baltic Exchange Dry Index

136

137 139 149

151 152 157 164

165

166 167

168

169

172

173 175

GLOSSARY

Asset inflation– A continuous rise in either property prices or the stock market. Average earnings – Monthly average wages or salaries, per person. BAA bonds– Medium risk bonds, neither highlyprotected nor poorlysecured. Bank of England– Central bank of the United Kingdom. Bank of Japan– Central bank of Japan. Base metals– Industrial nonferrous metals, including aluminium, copper, lead, nickel, tin and zinc. Bretton Woods – The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world’s major industrial states in 1944. Capacity utilisation– The percentage of capacity within industry being used for production. Charge-off rate– The value of loans and leases removed from the books of banks and charged against loss reserves, net of recoveries. Consols – A British government bond (gilt), dating from the eighteenth century. Credit easing– The purchase of riskier assets by a central bank in an attempt to influence the price and, therefore, the implied yield on these assets. Debt deflation– High levels of debt leading to falling asset prices and possibly negative inflation. Debt trap– Attempts to pay off outstanding loans leading to a higher debt burden, as a result of the negative impact on prices.

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