Deutsche Bank: The US May Now Be In A Recession

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Three months ago, we presented an analysis which showed something disturbing: according to Deutsche, the “current business cycle is already the fourth longest in the post- WWII period, and the corporate debt-to-GDP ratio suggests that imbalances are building”, and that worse, as a result of soaring corporate debt and rolling-over profit margins, “a recession could hit as soon as the second half.” Continue reading

The world economic crisis

We are on the threshold of a new economics that would form the basis of a new public policy quite different from the one that was followed within the neo-classical paradigm that has held sway over the last six decades. Here I examine briefly the origins and nature of the latest crisis in the world capitalist economy and its implications for economic theory.

In the process of its growth, the world economy has undergone a structural change in the post-war period in terms of two important features. First, the multinational corporations that emerged in this period not only sold goods and services on a global scale but were able to achieve internationalisation in their production processes such that different components of a particular good could be manufactured in their facilities in different countries to take advantage of country specific resource endowments. This laid the basis of an unprecedented growth in productivity, and profits. Given the problem of investing these profits within the sphere of production, due to demand constraints, profits from the sphere of production began to flow into the financial sphere. Continue reading

Will the US Economy Collapse Soon?

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After a weak first quarter, America’s financials are bloated while the real economy is barely a step away from recession, however, the overall economy is closer to a lengthy stagnation rather than a full-blown demise.

Kristian Rouz – US economy has not fared well in 2015 thus far, staggering and almost nearing a halt in Q1 as the federal government has been gradually reducing its investment in the non-financial sector. Continue reading