A bad month ends a typical year.
Economists and analysts were reasonably hopeful that the labor market had entered a period of self-sustaining recovery.
jobs report takes a sledgehammer to those hopes. The year ended with a roar of disappointment. The economy added only 74,000 jobs last month. While the unemployment rate fell to 6.7%, the drop was driven by a contraction in
the labor force of 347,000.”
Growth momentum goes away.
The Fed has to worry about a worsening employment
picture. First, because it can’t do anything about it —
monthly employment growth in 2013 was identical to that in 2012
and second because it has said it can.
Fed risks extend across the pond.
As the Federal Reserve now begins unwinding its unprecedented quantitative easing program, one would think that it would be well served by being
mindful of Wall Street’s turkey adage. For never before has global liquidity been as ample as it has been
in the past few years. And never before have the countries that have allowed their economic policies to
slip in the good times been so important to the global economy as they are today.”
The US is no longer a world leader in economic freedom.
The 2014 Heritage/Wall Street Journal national ranking index of economic freedom was published yesterday, and it makes for some sobering reading. The recent overall index rankings for the US among approximately 165 nations since 2008 are as follows:
Policies for stronger growth in 2014.
“Don't expect a grand bargain with entitlement
changes to address the structural fiscal imbalance, or a pro-growth tax reform aimed at putting the U.S. economy back onto a permanently better trajectory. The administration's policy horizon has shrunk, meaning that these long-term challenges will be left for the next President. But there is still a chance of movement this year on immigration, trade, and housing finance reform, all of which would constitute
meaningful progress toward a stronger U.S. economy.”
AEI EVENT VIDEO and summary
Regulators follow the money, but not systemic risk.
It is difficult to see how asset managers, of whatever size, could create systemic risk. Losses suffered by a managed fund flow through immediately to investors in the fund. According to the Office of Financial Research, the total amount of funds under management is approximately $53 trillion. This means that no matter how large the losses
incurred by funds, there is about $53 trillion in equity that is available to absorb them.”
Banks are safer, but regulators are not.
The demise of a large bank will be no minor event, but the financial system is safer than previously and so too is the broader economy as a result. Even if incidents such as Madoff or the Whale do not pose a systemic risk, this still leaves the difficult question of how to ensure that they do not slip past financial supervisors. Even before the financial crisis, regulators already had ample powers to head
off harmful behavior.”