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Are You Feeling Repressed?

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Are You Feeling Repressed?

Text of Are You Feeling Repressed?

  • 1. August 2012 Are you feeling repressed?
  • 2. % GDPSource: IMF 140 100 120 0 20 40 60 80 1791 1800 US public debt 1809 1818 1827 1836 1845 1854 1863 1872 1881 1890 1899 1908 Great 1917 Depression 1926 1935 1944 World War II 1953 1962 1971 1980 1989 1998 2007
  • 3. Its HEAVY!!
  • 4. Indeed growth in DM has been sliding for decades 6 12 5 10 4 8 %yr %yr 3 6 2 4 1 2 0 0 1900-50 50s 60s 70s 80s 90s 00s US (lhs) France (lhs) UK (lhs) Japan (rhs) Germany (rhs)Source: HSBC
  • 5. US new home sales index 1400 1200 1000 800 Index 600 400 200 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12Source: Bloomberg
  • 6. US median house price existing home sales 20 15 Median house price 10 5 0 %yr -5 -10 -15 -20 01 02 03 04 05 06 07 08 09 10 11 12Source: Bloomberg
  • 7. % 15 20 25 30 40 45 50 10 35 0 5 Jan-48 Jan-50 Jan-52 Jan-54 Jan-56 Jan-58Source: Bureau of Labor Statistics, USA Jan-60 Jan-62 Jan-64 Jan-66 Jan-68 Jan-70 Jan-72 US long-term unemployment Jan-74 Jan-76 Jan-78 Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Long term unemployment rate Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12
  • 8. Do we need Fiscala helicopter cliff!! drop?
  • 9. Why governments need growthDebt dynamicsChange in debt/GDP =(D (t-1) ) x (r-g) primary balancePrimary surplus required to keep debt level stable:Primary balance = Debt (t-1) x (r-g)
  • 10. Euro area is running lower budget deficits than rest of DM 0 -2 Fiscal balance -4 -6 % GDP -8 -10 -12 -14 2007 2008 2009 2010 2011 United States United Kingdom Euro Area Japan Source: IMF, January 2012
  • 11. In aggregate Europes govt. debt ratio is lower than the US 120 250 100 200 80 150 % GDP % GDP 60 100 40 50 20 0 0 2007 2008 2009 2010 2011 United States United Kingdom Euro Area Japan Source: IMF, January 2012
  • 12. %yr -8 -4 -2 -6 0 2 6 8