When assessing the uniqueness of the US economy, the flexibility of its labor markets is often cited as a critical factor. Businesses indeed have a largely free hand in hiring and firing workers. The unionization rate among the private sector continues to trend lower and dissent over tactics led to a split in organized labor about a year ago. There are no language barriers or other restrictions on the migration of workers between states, like there is in the euro-zone. Yet, many observers probably exaggerate the impact of this and the frequent downward pressure on real wages as a critical competitive element.
Friday, August 25, 2006
Wednesday, August 16, 2006
Investors and speculators have sometimes acted to impose financial discipline when they have concluded that officials are being too lax. The economist Ed Yardeni coined the name “bond vigilantes” to describe such participants when they are doing this. With the third year of a strong global expansion, rising commodity prices and nearly every country reporting rising price pressures, global bond yields remain low. Although numerous central banks have raised interest rates in recent months, credit expansion remains robust and the global economy still seems awash in liquidity. Moreover, in the midst of this global expansion, the major industrialized countries continue to run large budget deficits.
Friday, August 11, 2006
The historic significance of August 15 tends to be under appreciated. It is the day in 1620 that the Mayflower set sail from Southampton with 102 Pilgrims aboard that were destined to change the world. As they celebrated their anniversary 15 years late, the Plymouth colony was hit by its first hurricane. In 1914 the Panama Canal opened, which was both the cause and effect of the previous attempt at globalization. On August 15, 1947, India won its independence form Great Britain. In 1994, arguably the most famous terrorist before 9/1l Carlos the Jackal was arrested in Sudan.