Around The Net On Friday Morning – February 13, 2015

Noted for your morning ruminations or procrastinations – take your pick. Here is what I read earlier that you may also find interesting:

  1. Are We Becoming a Part-Time Economy? – But that doesn’t necessarily imply we are moving toward a permanently higher share of the workforce engaged in part-time employment. As our colleague Julie Hotchkiss pointed out, almost all jobs created on net from 2010 to 2014 have been full-time. As a result, from 2009 to 2014, the part-time share of employment has declined from 21 percent to 19 percent and is about halfway back to its prerecession level.
  2. Interview with Timothy Geithner – We should distinguish between two types of financial risks or shocks. There is an infinite variety of pain or trauma that can hit a financial system, individual institutions, or asset prices. During the 30 years before the crisis, we experienced all sorts of shocks. Some of them were just idiosyncratic failures of single firms that got risk management wrong or were consumed by fraud. Then you had a series of more generalized shocks, like the savings and loan crisis and the stock price plunge in 1987. These kinds of shocks can cause some trauma, but the scale of the threat they present to the system or to the economy is completely different from a classic systemic crisis like the one we faced in 2008.
  3. How Much Deleveraging Has Happened? – The countries with higher debt/GDP ratios (on the horizontal axis) are mostly advanced economies, while the countries with lower debt/GDP ratios are mostly emerging and developing economies. This pattern is somewhat expected. A eocnomy with very little debt is a country where financial markets are underdeveloped (Nigeria) or ill-functioning (Argentina). As per capita GDP rises in a country, the debt/GDP ratio also tends to rise, reflecting the development of financial markets.
  4. Chinese monetary policy undergoes big shift – For most of the past decade, the People’s Bank of China’s main challenge was to sterilise huge inflows of foreign exchange in order to prevent runaway money growth. Its task now is the opposite: find new ways to inject funds to fill the gap as huge inflows turn to moderate outflows.
  5. Greece, Germany Said to Offer Compromises on Aid Terms – Greece is prepared to commit to a primary budget surplus, as long as it’s lower than the current 4 percent of gross domestic product, according to Greek government officials. Tsipras’s coalition also might compromise on privatizations, one of the officials said. The officials asked not to be named because the deliberations are private and still in progress.
  6. Euro-Area Economic Growth Picks Up on Fuel From German Surge – In the euro area, “the bulk of fourth-quarter GDP growth is likely due to domestic demand, with private consumption growing considerably again,” said Evelyn Herrmann, an economist at BNP Paribas SA in London. “Further consumption-growth acceleration can be expected in early 2015. Investment, meanwhile, is unlikely to have moved much in the fourth quarter.”
  7. German Growth Surprise Driven by Domestic Demand – The Bundesbank said last month that the German economy has overcome the “weak phase” it hit early last year, with consumers benefiting from falling oil prices and rising salaries. Real wages rose 1.6 percent last year, the most since data collection started in 2008.
  8. S&P 500 Approaching New Highs – Relative strength for the Utilities sector has fallen apart since the last FOMC meeting, which coincided with the short-term low in interest rates as well.  Taking its place on the positive side are sectors like Consumer Discretionary — which is now outperforming the S&P 500 over the last year — Materials, Financials, and Technology.  Other sectors that have seen relative strength pull in a bit recently include Consumer Staples (another defensive) and Health Care.
  9. China Money Rate Caps Longest Run of Weekly Gains Since 2013 – The central bank injected a net 205 billion yuan this week, the most since January 2014, when the festive break started on Jan. 31. Additions amount to 400 billion yuan in the past four weeks. The PBOC also lowered banks’ reserve requirements last week, and said Wednesday it will expand a lending facility nationwide to ensure money rates remain stable.
  10. Money Makes Crazy – Modern money — consisting of pieces of paper or their digital equivalent that are issued by the Fed, not created by the heroic efforts of entrepreneurs — is an affront to that worldview.
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