It’s the general equilibrium, stupid | vox - Research-based policy analysis and commentary from leading economists

It’s the general equilibrium, stupid | vox - Research-based policy analysis and commentary from leading economists: "While the focus of commentators and policymakers is on secondary (although still important) regulatory and corporate governance issues, the fundamental problem in the current global macroeconomic and financial equilibrium is one of asset shortages. In particular, there is a shortage of safe “AAA” assets. The world seems to need more US Treasury-like instruments than are available."

Yanukovich ordered Ukraine to grow

Янукович поставил перед собой амбициозную цель � Новости экономики – Корреспондент: "экономика страны будет развиваться в соответствии с планами долгосрочной программы."

Since policy makers never have full control over the growth rate of a country, I wonder what would he do if the actual growth rate deviates from the planned one.

Wishful thinking?

Kyiv Post. Independence. Community. Trust - Ukraine - Medvedev: Russia, Ukraine need annual trade volume of $100 billion: "Medvedev: Russia, Ukraine need annual trade volume of $100 billion"

Here is the figure of actual bilateral trade in 2001-2009, plus projection for 2010 of 40 bln US$ that both presidents expressed as realistical target, plus what Medvedev called as a long term goal of 100 bln US$ for the future (I defined the future as 2020 at my own discretion).

If one believes that both economies will come back to the trend they had before 2009, the 100 bln US$ in 2020 looks feasible. However, I do believe that Russia and Ukraine are on another long term equilibrium path now, and I bet that the level of bilateral trade of 2008 (35 bln US$ ) will not be reached neither this year nor in 2011. Speaking about the long run goal, 100 bln US$ is possible, but meaningless goal. If, as some economist warn us, we entering a phase with high inflation, value of 100 bln US$ can be reached pretty quickly but the volume of trade will not grow 5 times in foreseeable future. 

IMF Fiscal Monitor

IMF issued a fiscal monitor and projections of future fiscal deficits. This graph projects how public debt and government balance change in 2007-2015

Return to the Abyss - Project Syndicate

Return to the Abyss - Project Syndicate: "If fiscal imbalances are not addressed through spending cuts and revenue increases, only two options remain: inflation for countries that borrow in their own currency and can monetize their deficits; or default for countries that borrow in a foreign currency or can’t print their own."

Минэкономики ограничило рентабельность аренды торговых площадей � Новости рынка недвижимости – Корреспондент

Минэкономики ограничило рентабельность аренды торговых площадей � Новости рынка недвижимости – Корреспондент: "Министерство экономики установило рентабельность цен на арендную плату за торговые помещения на уровне 20%."

That is the new ministry of economy in action. Price controls is the worst regulatory policy out of all available options, but the new team of "professionals" did not study Economics 101

Here comes deflation

Ukrainian CPI in April is 99.7 percent of the price level in March. It is usually the case that inflation slows down or even turns negative in summer when local fruits and vegetables become cheaper. This time it is not seasonal, it reflects the overall depression of aggregate demand.
Moderate deflation caused by seasonal factors is not bad. However, if deflation is caused by some fundamental factors that depress the aggregate demand, it can lead to a protracted period of depressed economic activity.

Op-Ed Columnist - A Money Too Far - NYTimes.com

Op-Ed Columnist - A Money Too Far - NYTimes.com: "The bad news is that Greece’s problems are deeper than Europe’s leaders are willing to acknowledge, even now — and they’re shared, to a lesser degree, by other European countries. Many observers now expect the Greek tragedy to end in default; I’m increasingly convinced that they’re too optimistic, that default will be accompanied or followed by departure from the euro."

Wild day on Wall Street leaves electronic exchanges under scrutiny

Wild day on Wall Street leaves electronic exchanges under scrutiny: "The shares of Accenture, a consulting firm, fell from $40 to a single penny and then back to $40 again. Procter & Gamble traded at $54 on the New York Stock Exchange. But at the same time, Nasdaq was reporting that the company's shares were selling for $39."

It's all about Euro

U.S., Asia Stocks Plunge as Debt Concern Spurs Electronic Rout - Bloomberg.com: "“It’s all about Europe,” said Tom Wirth, senior investment officer for Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “There’s a perception that what’s going on in Europe will be dragging the region back into a recession. The question is how much of that is going to be contagious to the rest of the world.”"

Ukrainian agriculture gets a boost

Kyiv Post. Independence. Community. Trust - Business - General - In sign of investor confidence, three agribusiness giants raise $350 million in two-day period: "“It looks like a good week for Ukrainian agriculture,” said Oleksandr Paraschiy of BG Capital brokerage, talking up the nearly $350 million raised by three major companies in a 48-hour period on April 28-29."

Kyiv Post. Independence. Community. Trust - Ukraine - Azarov meets with Turkish Foreign Minister Ahmet Davutoglu

Kyiv Post. Independence. Community. Trust - Ukraine - Azarov meets with Turkish Foreign Minister Ahmet Davutoglu: "Azarov meets with Turkish Foreign Minister Ahmet Davutoglu"

I see here a sign that the new government takes the free trade zone with the EU seriously. To get a free trade with EU, all loopholes should be closed. Namely, Turkey as well as some European countries that are not members of the EU have free trade agreements with the EU. If Ukraine joins the free trade area, it should sign agreements with EU and other countries that have free trade status.

ECB’s Weber Sees Threat of ‘Grave’ Greek Contagion (Update2) - Bloomberg.com

ECB’s Weber Sees Threat of ‘Grave’ Greek Contagion (Update2) - Bloomberg.com: "Contagion from the Greek crisis swept through European markets today, triggering a surge in the cost of insuring European banks against default to a one-year high and driving Spanish and Portuguese debt swaps wider."

More bad news from the EMU zone. in 2008 Europeans said that the US is the source of crisis and the burden of reforming financial sector is on the US. I have talked to some German economists in summer of 2008 and they were convinced that nothing could possibly happen to Germany exports, because they are the best in making perfect products. I would love to hear their opinion today. Germans and Chinese fail to understand that they are as responsible for the current situation as any other country.

Some people think that China is on the road to hell

China May ‘Crash’ in Next 9 to 12 Months, Faber Says (Update3) - Bloomberg.com: "China is “on a treadmill to hell” because it’s hooked on property development for driving growth, Chanos said in an interview last month. As much as 60 percent of the country’s gross domestic product relies on construction, he said. Rogoff said in February a debt-fueled bubble in China may trigger a regional recession within a decade."

Until now, Asia was a bright spot on the gloomy economic picture. If China goes to recession, we will see the deepening of the crisis, likely to be more severe than in 2008-2009