The bad news is that this recession fully matches the early part of the Great Depression. The good news is that the worst can still be averted.
—Martin Wolf in the FT
There can be no successful global currency system if the financial instruments that are used are denominated in only one currency. Today this is the case and the currency is the dollar.
—Medvedev at the Shanghai Cooperative Organization
…possibly placing part of reserves in the financial instruments of partner countries…In the long term, it is beneficial for all and all agree that the world needs a few strong currencies. It cannot happen quickly.
—Arkady Dvorkovich, top economic advisor to Russian President Dmitry Medvedev
Stories are the best democracy we have.
—Colum McCann
Privately-owned housing starts in May were at a seasonally adjusted annual rate of 532,000. This is 17.2 percent (±14.4%) above the revised April estimate of 454,000, but is 45.2 percent (±5.8%) below the May 2008 rate of 971,000.
—US Department of Commerce. May’s number is below December, which was second highest in the past six months, next to February’s reading of 574.
Nothing else we do on the fiscal front will matter much if we fail to address rapidly rising healthcare costs.
–Orszag in the FT, who references the Atul Gawande article in the New Yorker
What about the claim that the Fed is risking inflation? It isn’t. Mr. Laffer seems panicked by a rapid rise in the monetary base, the sum of currency in circulation and the reserves of banks. But a rising monetary base isn’t inflationary when you’re in a liquidity trap. America’s monetary base doubled between 1929 and 1939; prices fell 19 percent. Japan’s monetary base rose 85 percent between 1997 and 2003; deflation continued apace.
—Paul Krugman
It’s too early to speak of an alternative
Alexei Kudrin, Russian Finance Minister, on the role of a dollar as a reserve currency
Demand for Treasuries — as we have discussed extensively — hasn’t disappeared, unlike foreign demand for other kinds of US debt. But foreign demand hasn’t increased at the same pace as the Treasury’s need to place debt. The gap was filled largely by a rise in demand for Treasuries from US households.
—Brad Setser on the shifting appetite for US Treasuries and the financing of the current account deficit
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