United States retail sales data through February show that while the last three months have been positive they have not in fact been inspiring at all. We see that the volatility in total sales was driven by the motor vehicle and motor vehicle parts market during August, September, and October of 2009. I attribute this… Read more

I recently gave a talk and itemized my principals for bank regulation. They are: • Keep it simple • Preserve correct incentives • Minimize political influence • Maximize market feedback • Minimize moral hazard issues • Regulation is not protection Our friends at KERN Economics have come up with a plan that meets all of… Read more

Corporate bond spreads are returning to normal levels. The first chart below shows that the monthly spread between Baa bonds and Aaa bonds are close to what they were back in 2007 before the 2008 crisis. This is good because the rate on Baa bonds is declining. This indicates that the perceived risk in lower… Read more

Two articles today give us an idea of how hard it is for governments to cut back. The first one, in the Los Angeles Times, reports that the city’s Mayor, Antonio Villaraigosa, is recommending that the city “Slash city services.” In the second article, Dan Walters discusses the politics of California’s Governor’s proposal to cut… Read more

Below are two quotes from this article: “We’ve actually walked through this horrible recession with our economic base unscathed,” said Stephen Levy of the Center for Continuing Study of the California Economy. “The core of the California economy is still in place,” said Chris Thornberg of Beacon Economics in Los Angeles. With all due respect,… Read more