Category Archives: recession

Restructuring the International Financial System: A New Bretton Woods?

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The members of the G-20 are meeting in Washington on November 15 to discuss reform of the global financial system.  The first thing to say about the calls for a “new Bretton Woods” is that they overreach, in the sense that it is very unlikely that any changes in the structure of the international monetary or financial system will or should, at this point in history, come out of multilateral discussions that are big enough to merit comparison with the first Bretton Woods. Certainly we are not talking about fixing exchange rates, as the 1944 meeting did. read more

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The Revised Troubled Asset Relief Plan Should Have Passed

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When the Treasury came out with its $750 bailout plan on September 22, I  thought it lacked so many necessary ingredients that it deserved a thumbs down.  (Many others had similar objections, including George Soros.)

But in the negotiations between the Treasury and Congressional leaders over the course of last week, most of the missing ingredients were inserted.    Starting with the additions that were most necessary on the merits, and moving toward the ones where the necessity was more political, they were: read more

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Goldman Sachs Puts Odds That NBER Committee Will Declare Current Recession at 95%

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A guest post, from Goldman Sachs — U.S. Economic Research:

September 9, 2008

 

  

To us, the very weak employment report last Friday pretty much closes the argument when it comes to whether or not the economy is in recession—it is.

 

The model puts the chance that August will be classified as part of a recession by the NBER at 95%.  Several factors push the probability so high.  Most important is the ongoing labor market deterioration.  The large increases in unemployment combined with the decline in payroll employment, both over the last three months, are very significant signs pointing toward recession.  The decline in the stock market and the fact that housing starts are off 30% from the prior year also push up the estimated probability.

In fact, April was the only month this year for which the data did not signal a recession, as the probability temporarily dipped below 50%.  The reasons for this were: (1) some temporarily better labor market data, since largely revised away; and (2) the brief rally in the equity market following the government brokered purchase of Bear Stearns.  Apart from this dip, the general trend has been a slow drift up from a somewhat high probability of being in recession to a very high probability.,.. 

….  Put differently, if the economy is not in recession now, then the meaning of the term has changed, at least according to this model. 
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