Declining velocity of money in the United States is a function of lenders that are afraid to lend, and when then do lend charge extra, and borrowers that are afraid to borrow and can't afford it when then want to. Bernanke's Complaint and other thoughts.

Across countries people aren't dying as young increasingly at the same rate but do die older at increasingly different rates. The British government announces new reforms for its National Health Service (NHS), India's new China strategy, more Wolf on taxing land not income, and America's permanent war debt trap.

The Fed's own data shows that small businesses are paying more for loans over the Fed funds rate than at any time in the past quarter century. But Mom, I thought that monetary policy was supposed to be mega-easy?!

US small businesses are having to pay more to borrow relative to the Federal Reserve’s benchmark rate than at any time in at least a quarter of a century, according to official data from the central bank. http://www.ft.com/cms/s/0/d956ba70-8d22-11df-bad7-00144feab49a.html

Ben's not amused.

One of the largest - and often unspoken - restraints on the US recovery in this cycle has been the failure of small businesses to start cranking out more output and employment, partly because of sluggish demand for their products, but also because of a lack of available credit. http://blogs.ft.com/money-supply/2010/07/12/bernanke-and-the-small-business-lending-drought/

Hoisington's case for the risk of deflation. Too much deficit spending, taxes too high, too much debt, impotent Fed equals bad economy.

Real GDP has improved for four consecutive quarters (2nd qtr. est.), albeit at a substandard pace following the steep decline in economic activity of the previous year and a half. An impressive recovery in business sales and industrial production has occurred. http://www.ritholtz.com/blog/2010/07/recession-deflation-and-deficits/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

Hoisington on the money trap that the Fed has fallen into.

"In 2008, when the fed purchased all manner of securities, to the tune of about $1.2 trillion, the fed was not “printing money”. Bank deposits at the fed exploded to the upside, the monetary base rose from $800 billion to $2.1 trillion, yet no money was “printed”. Deposits did not rise, loans were not made, income was not lifted, and output did not surge."

M2 underlines how enfeebled the central bank is when lending institutions are reluctant to lend and borrowers reluctant to borrow.

 Robert Samuelson on the Great Recession, changing how Americans behave.

It has been the most egalitarian of all the 11 recessions since World War II. http://www.washingtonpost.com/wp-dyn/content/article/2010/07/11/AR2010071103038.html?wprss=rss_opinions

If the private sector is hamstrung then surely public austerity will need to be carefully thought through.

Ian Bremmer and Nouriel Roubini's thoughts on balancing reducing long-term debt and increasing short-term deficits.

It looks as if the global economy is heading for a serious slowdown this year. http://www.ft.com/cms/s/0/eaf81fbe-8de3-11df-9153-00144feab49a.html

Joe Stigliz's new book Freefall and the lessons we aren't learning. Thanks to John of Toronto for sending this in.

In a November 2008 Op-Ed article for The New York Times, the Nobel Prize-winning economist Joseph E. Stiglitz wrote that a huge stimulus package — as much as $1 trillion over two years — was needed to turn the Great Recession into a robust recovery and that new regulations were needed to change the destructive behavior of Wall Street that had brought about the fiscal calamities in the first place.  http://www.nytimes.com/2010/01/19/books/19book.html?_r=2

Infant mortality and life expectancies.

In the last 30 years, the difference in life expectancy at birth across the globe has fallen dramatically. This column presents new data on life expectancy within and between countries for the period 1970 to 2000. Controlling for infant mortality, it finds that while within-country inequality in life expectancy fell, between-country inequality rose, leaving total inequality unchanged.

 

 

http://www.voxeu.org/index.php?q=node/5285

For the sixth time in twenty years Britain's NHS will undergo major reform. What's the point?

The NHS is to be slimmed down, smartened up and democratised to deliver better quality care, Andrew Lansley, the Health Secretary, announced yesterday.  http://www.independent.co.uk/life-style/health-and-families/health-news/financial-control-devolved-to-gps-in-huge-nhs-reform-gamble-2025070.html

Perhaps the better way for India to manage relations between China and Pakistan is make a good friend with China.

President Asif Ali Zardari's visit to China has caused predictable anxiety among those in India who tend to view relations with Beijing as a zero-sum game with Islamabad. http://www.thehindu.com/opinion/editorial/article511064.ece

Martin Wolf on why land not income should be taxed.

Something strange happened to economics about a century ago. In moving from classical to neo-classical economics — the dominant academic school today — economists expunged land — or natural resources. Neo-classical value theory — based on marginalism and subjective valuation — still makes a great deal of sense. Expunging natural resources from the way economists think about the world does not. http://blogs.ft.com/martin-wolf-exchange/2010/07/12/why-were-resources-expunged-from-neo-classical-economics/

The cost of permanent war.

With record foreclosures and child poverty at a shameful level, can we really afford to stay in Afghanistan and Iraq for 10 years?  http://www.guardian.co.uk/commentisfree/cifamerica/2010/jul/13/us-poverty-war-afghanistan-iraq

The great bear market chart from The Chart Store.

 

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