Category: Economics

Categories
Economics

[2461] The unexpected 5.8% growth

The GDP growth number for Malaysia shown on the Bloomberg machine surprised me. I had expected somewhere between 4.0% and 5.0%.

Trade numbers had been very good for the fast few months but I did not expect it to push the GDP growth figure close to 6%. In fact, I watched in awe the growth of the trade numbers given the current confusing state of the world’s economy.

For the GDP figures themselves, the year-on-year growth for the third quarter was 5.8%. The average growth expected by economists listed on Bloomberg was 4.8%. This number had progressively grown over the past months from a number close to 4.0% to what it is now.

Looking at the numbers sweepingly and superficially, government spending grew the largest percentage wise. It grew close to 22%. In terms of absolute value, consumption grew the largest and indeed, it was the main contributor to most of the GDP growth.

I am tempted to say the consumption growth was related to government spending (since the separation between government and the private sector is not so clear cut) but without the energy to mine for that, I will refrain from making more courageous statement.

But what exactly is the driver behind the consumption? In my head, I can only think of government. If I want to know more, I clearly need to dig deeper into the numbers.

Was the growth due to base effect? I do not believe so. Base effect is not a convincing case in post-recovery period. Year 2010 had been a year of normalization and year 2011 grew from a somewhat normalized base. So, I am discounting base effect from explaining the unexpected high growth rate.

Categories
Economics Humor

[2460] Prof Dan on the Daily Show!

That is my former econometrics professor at Michigan, the famed Daniel Hamermesh! And he was on the Daily Show!

Categories
Economics

[2459] Did you spot something?

If you were the editor, what would you do?

PETALING JAYA: Total vehicle sales in October 2011 rose slightly by 3% to 53,654 units from 52,297 units a year earlier, boosted by the fact that it was a longer working month (versus September) and the return in consumers’ buying interest. [Eugene Mahalingam. Vehicle sales up. The Star. November 17 2011]

Here is a clue: year-on-year.

Categories
Economics

[2455] Rising expectation of defaults

More on CDS and the European crisis.

U.S. banks increased sales of insurance against credit losses to holders of Greek, Portuguese, Irish, Spanish and Italian debt in the first half of 2011, boosting the risk of payouts in the event of defaults.

Guarantees provided by U.S. lenders on government, bank and corporate debt in those countries rose by $80.7 billion to $518 billion, according to the Bank for International Settlements. Almost all of those are credit-default swaps, said two people familiar with the numbers, accounting for two-thirds of the total related to the five nations, BIS data show. [Yalman Onaran. Selling More CDS on Europe Debt Raises Risk for U.S. Banks. Bloomberg. November 1 2011]

This should be read in the context of the 50% Greek haircut, although that haircut itself is in question after the Greek government decided to have a referendum on the bailout and its conditions instead of executing it outright. Because of the referendum, CDS holders, especially speculative holders, may yet win their bet.

But even if they win, this might be a repeat of AIG. A Pyrrhic victory, one might say.

Categories
Economics Politics & government

[2454] Oh, Papandreou the socialist, the coward, the opportunist

If I were a European taxpayer seeing my money being used to bailout a near-bankrupt socialist government due to outrageous spending while I live responsibly, I would be angry. Why should I be the guarantor of a profligate? But if I wanted the Eurozone to stay intact, I would bite the bullet and angrily pay for the bailout.

If I were a European taxpayer funding the bailout, I would be fuming mad with the Greek Prime Minister Georgios Papandreou’s referendum plan. After all the hassles and the blows punched to get the money, however insufficient it is for the whole of Eurozone, Papandreou hides behind the angry masses, trying to deflect blame from the Greek government to the benefactors of the bailout facility.

The Greek government is a bunch of coward socialists, refusing to own up for its mistake, too insignificant to be bold and solve it. Papandreou may say it is done in the name of democracy, but he forgets the adjective representative. He could easily do it but no. He is afraid of the political cost and so he adopts direct democracy and gambles the whole structure for his own convenience. He wants to refresh his mandate but he has his mandate already. This is about passing the buck.

Oh, he is Papandreou the socialist, the coward, the opportunist.

But I am not a European. Yet, I am very angry at the Greek government.

I hope Greece burn. Let Papandreau fiddles while Greece burns, as Nero did when Rome did. Let us see how bad the austerity plan compares to a complete bankruptcy. Let Greece be demoted to the third world. On with the natural experiment on the socialists.