Pre-stimulus picture

The big story in today’s GDP numbers is that companies’ inability or unwillingness to invest has hit a record level. Non-financial firms’ financial balance - the gap between retained profits and investment - reached £26bn, or 7.4% of GDP, in Q4. This was by far the largest since current records began in 1987.

The vast majority of the Earth's estimated 13 million species are still unknown and to describe them all would take up to 2,000 years, according to a leading Brazilian scientist. "We estimate that there are a total of around 13 million species (known and unknown) in the world," says Thomas Lewinsohn, a renowned professor of ecology at the State University of Campinas (UNICAMP) in Sao Paulo state.

The congressional Republican goal of balancing the budget in 10 years seems a solution in search of a problem. Proponents seem more focused on the politics and optics of the idea than the economics. The 10-year goal supposedly provides a) sharp contrast to President Obama’s apathy toward the issue and b) clear and simple policy for dispirited GOPers to rally around.

Revised estimates of Japan's growth have been cut in half, from 1.4% to .7%. More importantly, Japan has a small but shrinking current account surplus (in spite of running a trade deficit for some time). Once the current account surplus vanishes, and I believe it will, Japan will become somewhat dependent on foreigners to handle its budget deficit. Good luck with that at 0% interest rates.

From today's Macroeconomic Advisers blogpost, by Joel Prakken: Frequently, partisan commentators — and even some economists — exclaim that the stimulus has failed because the unemployment rate now exceeds the peak shown in projections prepared before ARRA was implemented.

This revision to our Baseline Scenario is required reading for my Global Entrepreneurship Lab (GLAB) class at MIT this week.  For those classes, please also look at these updated slides.

Authored by Raghuram Rajan, originally posted at Project Syndicate, Two fundamental beliefs have driven economic policy around the world in recent years. The first is that the world suffers from a shortage of aggregate demand relative to supply; the second is that monetary and fiscal stimulus will close the gap.

Francesco Giavazzi, 21 April 2010Should Germany keep running a trade surplus? This column argues that any decision should be based on Germany’s interests alone. But new data suggests that its investments in southern Europe may be at risk of being wasted because the euro has removed the need for these countries to pay risk premiums. Germany might therefore consider cutting its surplus and boosting domestic consumption.Full Article: Germany’s trade surplus and investments in southern Europe