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61. Listen to the Markets

Author:
John H. Makin
Publication Date:
11-2004
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Market behavior in 2004 has defied most predictions. Interest rates and stock prices have dropped—the reverse of most forecasts at the start of the year. The dollar has been broadly trendless despite a rising and "unsustainable" current account deficit that was supposed to have pushed it down. And, of course, the price of oil, which was widely expected in January—not to mention February, March, April, May, and June—to drop back below $30 per barrel has risen relentlessly to well above $50 per barrel.
Topic:
Economics, International Trade and Finance, and Political Economy

62. The Recovery: Three Years On

Author:
John H. Makin
Publication Date:
10-2004
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The U.S. post-bubble economic recovery, which officially began in November 2001 after a recession of just six months, will be three years old by election day. The prior recession had lasted a mere eight months-from July 1990 to March 1991-and was followed by an expansion of ten years, the longest on record. The expansion before that one lasted ninety-two months-from November 1982 through July 1990-following a recession of just sixteen months. The period following November 1982 until the stock market crash of March 2000 witnessed one of the longest and most powerful stock market rallies in U.S. history, accompanied by falling inflation and falling interest rates. The remarkable performance of the last twenty or so years will be difficult to match over the next decade. Indeed, merely sustaining the growth in the current expansion will require some changes to current policy.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States

63. Paradise Lost

Author:
John H. Makin
Publication Date:
05-2004
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
It sure was wonderful while it lasted. Last year was a halcyon period of higher growth and lower inflation, when annualized productivity increases of over 5 percent during the last two quarters gave us GDP growth averaging over 6 percent, while inflation and interest rates fell and earnings surged. These conditions were wonderful for the stock market. Fourth-quarter 2003 corporate profits were more than 20 percent above year earlier levels—nearly four times the average rate of increase over the past decade. The S rose over 40 percent between April 2003 and January 2004.
Topic:
Economics, International Trade and Finance, and Political Economy

64. America Demands; China Supplies

Author:
John H. Makin
Publication Date:
04-2004
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Say's Law, named after French economist Jean- Baptiste Say (1767–1832), was promulgated at the time of the Industrial Revolution when some feared that purchasing power would be insufficient to absorb the ever-growing output of the newly mechanized economy. It states simply and reassuringly that supply creates its own demand. More specifically, the production of output tends to generate purchasing power equal to the value of that output.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
China, America, and Asia

65. Watch Growth, Not Exchange Rates

Author:
John H. Makin
Publication Date:
03-2004
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The attention being paid to exchange rates and to utterances about them by finance ministers and central bankers is misplaced. It is distracting policymakers from tending to more serious issues such as global excess capacity and attendant deflation risks.
Topic:
Economics, International Trade and Finance, and Political Economy

66. The Opposite of Stagflation

Author:
John H. Makin
Publication Date:
02-2004
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The blissful combination of higher growth and lower inflation that has characterized the U.S. economy since last spring is the inverse of stagflation, the nightmare scenario that followed the oil shock of 1973–74, when higher oil prices produced lower output, lower growth, and higher inflation. The current cycle is fundamentally benign—more output at lower prices—but if policymakers fail to recognize it as such and ignore falling prices because output growth is strong, a global recession could occur.
Topic:
Economics, International Trade and Finance, and Political Economy

67. As Good As It Gets

Author:
John H. Makin
Publication Date:
01-2004
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Old habits die hard. Often, criticism leveled at policymakers is well founded. I certainly have offered up my share. But as 2003 ends and 2004 begins, we find ourselves at a point where the performance of the U.S. economy is about as good as it gets. The stock market is up 20 percent this year, inflation and interest rates are low, productivity growth is high, and U.S. exports are rising strongly. The biggest danger going forward arises from ill-founded criticism aimed at policy measures employed to achieve this excellent outcome and the (fortunately low) chance that policymakers will heed such criticism.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States

68. Taking Stock of Business: Public Opinion After the Corporate Scandals

Author:
Karlyn H. Bowman and Todd J. Weiner
Publication Date:
11-2003
Content Type:
Working Paper
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
More than a dozen corporate scandals have unfolded since December 2001. How have ordinary Americans reacted? One answer can be provided by the performance of the stock market. Another indicator is public opinion. As some of the key trials get underway, it's worth examining the polls to see how the scandals have affected perceptions of business. The results should provide some warning flags for Congress as that institution takes a closer look at the mutual fund industry.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
United States and America

69. Bolivia: A Revolt That Leads Nowhere

Author:
Mark Falcoff
Publication Date:
12-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Joseph Conrad's novel Nostromo: A Tale of the Seaboard (1905), considered by many the Polish master's best novel, is set in the fictitious South American country of Costaguana. During the colonial period and for decades thereafter, the republic flourished thanks to the existence of a rich vein of silver mined since the early days of the Spanish conquest. At the time the novel opens, however, Costaguana has fallen on hard times because the most accessible deposits of the precious ore have been exhausted; massive new investment and technology are required to return the mine to full operation. Anglo-Costaguanan Charles Gould finds the necessary financing in London and New York, and almost as if by magic the resumption of mining breathes new life and progress into the republic.
Topic:
International Relations, International Trade and Finance, and Political Economy
Political Geography:
New York, London, South America, and Bolivia

70. Venezuela: Raising the Stakes

Author:
Mark Falcoff
Publication Date:
11-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
It's official: the long-awaited referendum on Venezuela's president Hugo Chávez will take place on February 29, 2004—if all the requirements laid down by the National Electoral Council are met. Theoretically this should put to rest once and for all the question of whether Venezuelans want their president to continue in office and should make possible the selection of a replacement thirty days thereafter should he fail to win the referendum.
Topic:
International Relations, International Trade and Finance, and Political Economy
Political Geography:
South America