Should we be surprised? Policy makers continue to employ models of an economy with no financial system.
The aggregate level of debt, especially private, matters in
forecasting economic growth.
Stopping addictive habits is not easy, but extending those actions will only make the eventual adjustment more difficult and painful.
Chinese consumers continue to increase savings in lieu of domestic consumption. Japan is attempting to rebuild its trade surplus, but which countries will allow their surplus to decline or deficit to increase? Global (and domestic) imbalances not addressed remain significant risks to the global economic outlook.
Scientific exploration incorporating complex systems and networks continues to move our understanding of reality forward.
Businesses save instead of investing in labor when consumer demand is weak. Until policy focuses on improving the consumer balance sheet (e.g. debt write-downs), unemployment will remain high.
The best investors are often early and patient.
Microeconomics is not especially sound in predicting all outcomes
either.
Positive for households but will Bank of America (and others) really accept the associated losses?
In early 2009, at the market bottom, the P/E jumped to over 100 as profits plummeted. Using E/P corrects for this issue and shows the market is slightly overvalued currently.
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