AWESOME: Brand New Richard Koo Presentation On The Global Economic Crisis

richard koo

He’s back!

Nomura economist Richard Koo is out with a new presentation given at the Institute For New Economic Thinking in Berlin.

Koo is, of course, an expert on the great lost decades of Japan, and he’s broken new ground in understanding the unique nature of balance sheet recessions.

His new presentation looks at the current state of the global economy, what’s been tried to jump start things, what’s worked, and what hasn’t.

Let's get started ...

Housing is looking very Japanese

So is commercial real estate

No amount of rate cutting will help the real estate market (or even jobs)

The US economy is still well below the previous peak

Europe is much worse

The one country doing well: Germany, of course

In a balance sheet recession, Fed pumping doesn't work. Just look at Japan.

Even more proof that liquidity measures don't increase the money supply

Same in the UK. Pumping didn't help.

Again, no benefit to liquidity pumping in Japan.

The deleveraging cycle can take a LONG time ...

In Japan, GDP grew despite deleveraging because the government borrowed so much

Government spending keeps GDP afloat

When Japan tried fiscal austerity, the economy deteriorated and the deficit got WORSE!

The same story is happening in the US. There's been a big increase in private sector savings.

Same in the UK. MASSIVE private sector deleveraging.

Meanwhile, the bond market says the whole word is going Japanified.

The Eurozone, on the other hand, is seeing yields explode higher

Again though in the Eurozone, there's been tons of private sector deleveraging

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