when economic growth rates are lower than usual (trend), in a long period this is normal. an attempt to bring the growth rate back there, where they simply cannot be a way of permanent stimulation – it is both dangerous and useless.
in the short run, against, slowdown in growth may trigger negative employment dynamics, income and sales. Really, such a situation is hardly fatal and not even a fact, what falls under the definition of a recession.
It is one of the great myths of post-bubble economies that conditions are made much worse by banks’ unwillingness to lend. In some cases they are: the impulse for many lenders, particularly in the immediate aftermath, is not to build assets but to repair capital ratios.
But the bigger, more pervasive problem is on the demand side. Leverage becomes associated with hubris and ruin, rather than a short cut to growth.
via
the idea is, what is the main problem of low lending – not unwillingness of banks to give, and the reluctance of the private sector to take. this , naturally does not pretend to be absolutism.
kaknal is often a good indicator of sentiment with the expectation of an `` opposing view ''. if the upcoming report is touted all day – expect bad)) (these are isolated cases, certainly. a couple of times you will notice, already come up with a trend)
but there are also reverse moments. recently (I occasionally glance) the thought that, that `` maybe we have a problem on the demand side?".
consensus – interesting thing. and the market consensus – this is x3))) street stubbornly awaits great results from the real estate market. and every time the same. ouch, Miss Expectation. ay-ay, sel-sel. market, certainly, efficient, but like this in the moment, just like yuan on monday. the devil's machinations are solid. whether the volatility of depletion, that's the beginning. I 'm afraid, that we won't get a plus today, but must, just have to.
About & quot; Japanese script" development of the US economy (and others like them) everyone heard. Interesting, what's in the concept of 'japanese script" different people include completely different, albeit somewhat correlated ideas. Among the general public, this' scenario" usually means two points: deflation and non-recovery of asset prices (for example stocks). The more advanced ones have a third point. – zero nominal GDP growth. During the discussion (especially in post-Soviet countries) in the subject of & quot; Japanese script" the problem of debt must be added, demographic difficulties in developed countries and, which also happens often – manipulation of the exchange rate.
In general, the topic is wide, and the term & quot; Japanese script" anything is understood.
The second interesting feature is, what's the name of richard koo (author of The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession) became associated with the idea of 'Japanese script'" in all its discussed manifestations. Along the way, how communication, and in the course of observing the communication of others, it was discovered that such an idea is attributed to Ku:
`` Japan has a balance sheet recession, the US is now in a balance sheet recession – which means, that in the USA everything will be the same as in Japan ''.
Simplified, but something like that. Therefore, the second thread of the discussion on the topic `` Japanese script" usually goes into evidence why Japan – this is not the USA. And the content of the term balance sheet recession is usually not specified..
The third interesting feature is, that Ku's book itself is absent in translation and free access in principle. Therefore, the vast majority of people formed their ideas about Ku's ideas based on one or two speeches., videos of which are on the network and one or two corresponding presentations. ( And ). As a result, there is a lot of discussion in the style of `` did not read, but I condemn '', and different perception of the content of terms, least.
Since I was lucky enough to read the book itself, I will try to lay out a summary of the main chapters of the book with scanned graphs (the quality is appropriate, Unfortunately).
I'll tell you right away, what – the book is, in principle, crude and acts rather as a training manual for that, what questions to ask, but not an answer to questions. I am very critical of Ku himself., many arguments seem weak to me, some however undeniable. But it's all so to speak – my IMHO and it will not be very useful to you (despite, that the retelling of chapters will be accompanied by some comments in brackets)).
Finally about, as I understand the term "balance sheet recession", which I often abuse. BR – this is a mechanism for reducing GDP through a reduction in aggregate demand caused by a decrease in demand for credit, which is caused by the need to normalize balances. That's all. And whether there will be a decrease in GDP in response depends on other factors, as well as unclear, what will happen to deflation / inflation. Economy – the thing is not one-factor, and NO – this is just one of the processes.
Everything, in the next post, a short retelling of the first chapters titled "The Japanese Recession".
by By the way, often mentioning Richard Koo and reading his `` holy grail of macroeconomic '', I can't say at all, that I fully share his ideas. there is some element of super-forgiveness in his logic, which haunts me. here is the same idea about, that the corporate sector minimizes Bulgaria because it is afraid to show the current state of affairs on the balance sheets. well, that's not convincing for me. I hope I'll figure it out from time to time. otherwise, in one of the recent posts, I quite mistakenly assumed about the sources of bank profits (thanks for that, what corrected).
_________
one of the best videos of Ku, briefly and clearly. By the way, here budget revenues in the United States are growing (true within expectations).. but Ku warned, that during a balance sheet recession, budget revenues will grow and buyout and incentives are not only not harmful, but also vital (joking of course, but partly))..
in support of PIMCO. misunderstanding by the cleverest comrades of the simplest features of the current moment scares me because:
and) these comrades considered the concept of a balance sheet recession, analyzed it and came to the conclusion, what can you forget about it as unnecessary. and I stopped at the stage of studying the concept itself, ignoring reality.
b) comrades actually, not interested. "мол, we had a couple of ordinary recessions after WW2, it's the same & quot;. why is the second scary?) but by a funny analogy: not yet clear, which is worse – be right or wrong yourself)
I will somehow collect my thoughts and sign, What did Richard Koo really write about the balance sheet recession?, while you can remember And .
While a little about that, what we already know (on the supply side):
1) financial panic was stopped at all costs, debt growth, Fed balance sheet and so on, these are minor secondary effects of treatment. (analogy with medicine – before the patient is treated, this patient must be alive, and if he needs to cut or ruin something to support life, then it should be done. the question of the price is not worth it. if the patient dies, then it will be too late to rejoice in the kidneys not killed as a result of treatment).
2) the unprecedentedness of the measures allowed `` unexpectedly" give the economy a powerful boost to recovery: incentives,inventory cycle and low base for selected indicators (sorry for the banality) have done and continue to do their job. Really, according to my estimates, inventory cycle, to a greater extent continues to smoke on the sidelines, not yet fully operational.
3) the reactions of indicators and markets are normal, hard anomalies have not yet been observed. we are in the process of normalizing, which still has a certain momentum, who really tried to dry out at the beginning of the year, but as we know it has not dried up.
(and here the demand side already enters about which we still know little)
4) within the usual recession after WW2, this is where it all ends. as part of an ordinary recession, the segments most sensitive to rates suffer mainly as a result of the growth of these same rates (durable goods + mortgage), the rest of the segments remain at the level. all the trick is, that this time we have a different recession. or still not different?)
5) the next in line to be involved in economic growth is the consumer. in our case demand – this is the patient's heart restarted as a result of the use of a defibrillator. run launched, now the question is, will it beat on its own?
6) what can prevent consumption from growing? (yes we all heard about the theory of the crisis and the shutdown of the economy, but right, there are no vacancies in the circus, although if the adepts share their salaries, Who knows, eternal demand))). on-the-go, option one: balance sheet recession. fur-m short: the value of your assets (real estate) decreased – distorted the balance – debt burden needs to be reduced (concerns both households, and the private sector). decrease in debt load = decrease in demand. households save more to some extent (which, by the way, we see in the part `` to some extent more .. ''), and the private sector does not borrow what households save (as well as the households themselves do not take very much on credit). as a result, we get a direct reduction in GDP, which must be replenished by state expenses.
7) the problem of the balance sheet recession is not in its presence, but in ignoring her. we ignore the problem of balances, we get Japan with its attempts to reduce the deficit, which for some reason led to a deterioration (oh how strange, but it seemed that incentives did not work. but we turned a little and got it right away). ________________________________________ Eventually, if we have a balance sheet recession – then there are still a lot of surprises and problems awaiting us, of which the problem of debt growth becomes a problem, only in case of an attempt to combat this problem. therefore, long-phobia in government can become the most formidable weapon of the apocalypse)) ________________________________________ How to determine, do we have a balance sheet recession? there is such an option – answering a question: Was there a real estate bubble in the United States?? just let's decide what to call a bubble..
here 90% falling land prices in Japan, this is a bubble. and 30% decline in house prices, it's still just an overheated market correction. it is not so difficult to patch the existing hole in the balances. but if it starts to grow… (we read the prices for residential real estate will reach at least – 50% from the peak).
about the bubble, whether he was or was not.. I've heard, that Amsterdam, we are the maximum 16-18 (?) centuries in real terms have not yet overcome. and Greenspan was right, talking about regional bubbles…
