The Progressive Economics Forum

It is striking that, even while moved to concern and some action, the Bank of Canada and the Minister of Finance are still desperately afraid to admit that Canada is experiencing a housing bubble.
One can go on and on about how difficult it is to spot a bubble. But, as Dean Baker has often argued [...]

This morning federal finance minister Flaherty announced a number of measures ostensibly aimed at reining in speculation in the housing market. 
His announcement was typically well-timed to coincide with the Vanier Institute’s annual report on the state of Canadian family finances, which reports record high levels of household debt, growing inequality and housing prices increasingly out of [...]

I want to share with everyone a new CAW resource that was produced for our Constitutional Convention (which took place last month in Quebec City).
It’s a 4-page cartoon book explaining the core dynamics of financial cycles, that was illustrated and deesigned by Tony Biddle — the awesome Toronto political cartoonist who also illustrated Economics for [...]

Martin Wolf of the Financial Times has written a pretty scathing critique of the new US Administation’s overhaul of the TARP program.  I am increasingly convinced by Duncan Cameron’s  argument that - in the US at least - the best way out is to nationalize the banks, run them as a public utility, and compensate [...]

Over at Worthwhile Canadian Initiative, Stephen has posted a nice graph comparing the average projections from the private sector (as compiled by the Parliamentary Budget Officer) and the Bank of Canada with the paths of the last two recessions. He is poking a hole in a story that there is a gap between the more [...]

I highly recommend “The Credit Crunch: Housing Bubbles, Globalisation and the Worldwide Economic Crisis” by Graham Turner.
“Graham Turner is one of only a handful of economists to understand the roots of the current financial crisis, its implications for all of us and crucially what should be done now. I strongly recommend you read this book.”
—Larry [...]

I was in Washington last week for meetings of economists from central trade union bodies, mainly from the OECD countries. While the main purpose of the meetings was to draft the annual union statement to the upcoming G-8 summit in Japan, we had a full day of meetings with researchers and senior officials from the [...]

As background to the “flight from risk” which underpins the growing financial crisis in the US and Europe, see the latest annual report from the Bank for International Settlements published in June, especially the chapter on financial markets in the advanced industrial countries. The BIS is a kind of central bank for central banks.
http://www.bis.org/publ/annualreport.htm
While cautiously [...]

Over at MaxSpeak, the state of housing and whether or not it is a bubble is reviewed:
THE GREAT HOUSING BUBBLE FLAP
Probably most who read this blog accept that there was a bubble in the US housing market, and that it has come to an end. Some regulars here, notably the notable Dean Baker, were early [...]

Thomas Palley credibly suggests that the Bush White House has been driving up oil prices by expanding this reserve, but then lowering them during American elections by depleting the reserve. I have also heard suggestions that the Clinton White House depleted the reserve at election time, but am not sure whether it expanded the reserve outside of [...]

http://business.guardian.co.uk/comment/story/0,,2023410,00.html
The current panic on the world’s markets is indicative of more than just the madness of crowds, writes Larry Elliott
Wednesday February 28, 2007
Guardian Unlimited
Predictably, the crash in global share prices is being shrugged off as a mere blip. The fact that Shanghai fell by 9% in a day and Wall Street had its biggest one-day [...]

The CAW has merged with about 35 smaller unions since we were formed in 1985.  That doesn’t stop me, however, from questioning the economic usefulness of Canadian corporate mergers.  M&A activity last year reached an incredible $270 billion.  That’s 20 percent of our GDP.  And what good actually comes from it?  At best, the M&A [...]

Compare and contrast. First, the “soft landing” view, from Carlos Leitao, Chief Economist of The Laurentian Bank, as quoted in the Globe and Mail:
[T]he Canadian economy is in the midst of ”a significant slowdown that we still think should be relatively short-lived. Nevertheless, the downside risks are important and far outweigh upside risks.”
[T]he U.S. economy [...]

Larry Elliott, writing in The Guardian’s Comment is Free area, on Thailand’s capital controls and its subsequent capitulation:
A financial U-turn

Thailand’s use of capital controls was intended to penalise short-term investors - but the market reaction was swift and brutal.
December 20, 2006 07:04 PM
It’s not often I feel sorry for military regimes, but I must confess [...]

This is scary:
The Concerns of Comptroller of the Currency About the Excesses in the Mortgage Market

Nouriel Roubini | Dec 18, 2006
A colleague in the financial sector pointed to my attention a speech that the Comptroller of the Currency - John Duggan - has recently given where he expressed some serious concerns about [...]

Paul Krugman is in the bears’ camp for 2007 (thanks to Economist’s View for posting NYT Select content):
Economic Storm Signals
… Before I explain what the bond market is telling us, let’s talk about why the economy may be at a turning point. Between mid-2003 and mid-2006, economic growth in the United States was fueled mainly [...]

Dean Baker has a gloomy take on the impact of the housing bubble bursting:
After the Housing Bubble Bursts
By Dean Baker
t r u t h o u t | Perspective
Tuesday 24 October 2006
Every new release of data on the housing market provides more evidence that [...]

I have twice now been invited to join pyramid schemes for my child. The other day we got a letter in the mail from a friend soliciting us to join a “sticker club” (a few months ago, it was a “book club”). Two other children’s names and addresses were on the page, with the instructions [...]

Dean Baker looks back to 2001 for a reality check (note: Canada, unlike the US, did not technically have a recession in 2001) about the reliability of most forecasters:
Virtually all economists missed the 2001 recession, in most cases not even predicting it until it was almost over. The main reason was that the recession did [...]

Nouriel Roubini in recent posts has provided some of the best economic analysis of the housing bubble and debunking of the spin from optimists. Full posts are here and here. Analysis is focused on what is happening in the US. In Canada, we appear to be lagging developments south of the border. What is scary [...]

My latest column for The Tyee:
Without any fanfare a report popped up on the web site of Human Resources and Social Development Canada this past month. No press release, no communications strategy at all. Just another statistical report on poverty in a society that thinks of itself as middle class.
But this is not just another [...]

That sinking feeling is coming on. The US economy is slowing and several well-respected economists have made their call. Leading off, Paul Krugman:
The key point is that the forces that caused a recession five years ago never went away. Business spending hasn’t really recovered from the slump it went into after the technology bubble burst… [...]

Are we headed towards a recession in 2007? Housing markets have begun to turn, interest rates are back where they were pre-9/11 and oil is near $80 a barrel. Nouriel Roubini puts the risk of a US recession at 50% for 2007. I like this approach – no one can predict the future so we [...]

The bad news is starting to come in from south of the border. For those interested in following bubblemania, I recommend The Vancouver Housing Market Blog.
The LA Times reports:

The chief economist of the California Assn. of Realtors has stopped using the term “soft landing” to describe the state’s real estate market, saying she no longer [...]

This makes me nervous:

Mortgages getting risky: CIBC
HEATHER SCOFFIELD
Globe and Mail Update
TORONTO — Household credit is stable, but that statement masks the growing popularity of untraditional and risky mortgages, a new study by CIBC World Markets says.
Household credit is growing steadily at an 11-per-cent annual pace, pushed by a 10.9-per-cent rise in residential mortgages for year [...]

UCLA's Edward Leamer sees a slowdown for the US in 2006, as the real estate party comes to an end. He sets the context well:
The discovery of the Internet set off a mad dash for the Web, and that powered the U.S. economy forward at breakneck speed from 1997 to 2000. Every business in [...]