Emerging market economies (EMEs') growth prior to to the financial crisis was not sustainable either because it was driven by the credit bubbles in the US and the EU.
BNP Paribas: - Because the EME boomed both before and after the Lehman shock, the impression has taken root that the EMEs are the global economy’s driver. But the robust EME growth prior to the Lehman shock was also not sustainable. In retrospect, we can see that that brisk EME expansion was made possible by an export boom that was fueled by the bubble-driven economies of Europe and America. That China became the world’s production hub is due not just to its strong competitiveness but also to the voracious demand from the US and Europe.This of course does not bode well for global growth in the coming years.
BNP Paribas: - At long last, the process of undoing this bubble seems to have started. Now if my supposition about an EME bubble is correct, the big three EMEs will continue to slow for a while, and even if a cyclical recovery kicks in, returning to the former robust growth rates will be hard. That is why we cannot expect the global economy to pick up the pace for the time being2---Michael Hoexter: Deficit Hawks (Obama, Romney, Bowles, Boehner) Plan to Shrink YOUR Economy , naked capitalism
President Obama has tended towards the “deficit hawk” position though has recruited “deficit doves” to play along with him at times. Early in his Administration there were a number of “deficit doves” in his and in Vice President Biden’s teams, including Jared Berstein and Christine Romer but these have, interestingly, been sidelined in favor of economic advisors who are the Democratic, “centrist” version of deficit hawks. In his recent speaking and writing, Obama has moved more decisively towards the deficit hawk position as he has seemed to have swallowed whole many myths about the private sector’s autonomous role in the economy, government’s ineffectiveness as a tool in that economy, and the notion that reducing government spending is an almost universal good. Obama appears to either sincerely believe that government possesses only a fixed amount of “money things” or he is cynically manipulating this belief in others to restructure the American state increasingly in the direction of a “private-public partnership” where the private sector makes most of the rules.
3--Trade slows around the world, WSJ
Global trade is stalling, dimming prospects that exports will buoy the U.S. economy in the coming months.
Trade rebounded after its collapse in the recession. Now several indicators of export activity are flashing red as Europe's recession, anemic U.S. growth and the slowing Chinese economy damp exports world-wide.
The World Trade Organization just projected the global volume of trade in goods would expand only 2.5% this year, down from 5% last year and nearly 14% growth in 2010. A Dutch government agency, the CPB Netherlands Bureau for Economic Policy Analysis, estimates it fell outright in June and July.
"The problems of the advanced economies, particularly the euro zone, are being spread around the world," said Andrew Kenningham, senior global economist at Capital Economics, a London-based consulting group. "Everybody is being dragged down."
4--Lost Decades; Two years later, econoobrowser
There are two ways to interpret these developments. The first is that there exist true believers. Expansionary fiscal contraction, extraordinarily high labor and capital supply elasticities, neoclassical financial markets, are all articles of faith. The second is that the promulgation of these ideas and accompanying policies are merely cynical ploys to achieve other aims: Demands to cut government spending in the name of "fiscal responsibility" are merely a cover for an agenda to shrink the size of government; else tax revenue increases would be a reasonable measure.
5--Payroll Tax Cut Is Unlikely to Survive Into Next Year, NYT
6---Housing Alert: Short Sales May Be in Big Trouble, realty check
A short sale is debt forgiveness. Debt forgiveness is taxable
7--Housing fades as low-end "cheap" homes vanish, Realty check (video)
The nation's housing market heads into the slow season on still shaky ground. Gains in home sales and prices during the spring and summer months appear to be fading slightly. Looking ahead, contracts to buy existing homes in august fell short of expectations as did contracts to buy newly built homes. Mortgage rates are at new record lows, but mortgage applications are not reacting as strongly as one might expect. because this market has been fueled by investors largely using all cash. The investor share of sales has been falling briskly lately as properties dwindle, especially out west. without those sales on the low end, the housing recovery could take a step back ward.
8--U.S. Mortgage Rates for 30-Year Loans Fall to Record Low of 3.4%, LA Times
U.S. mortgage rates declined to record lows as the Federal Reserve pushed down borrowing costs by resuming purchases of mortgage-backed securities.
The average rate for a 30-year fixed loan fell to 3.4% in the week ended today from 3.49%, McLean, Virginia-based Freddie Mac said in a statement. It was the lowest in data going back to 1971. The average 15-year rate dropped to 2.73%, also a record, from 2.77%.