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Economic Discussion
Economic Discussion

... effects on developing economies. It would help those countries as Americans would have more buying power, some of which would be spent overseas. Debt service by foreign borrowers would become more expensive, however. Also, increased short-term rates would put pressure on domestic companies with weak ...
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... banks affected by fall in earnings and weaker ability of borrowers to pay if the banks further tighten the provision of credit or due to other factors (really difficult to assess the effects of the financial crisis on the real economy). ...
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... Official acknowledgment that this has become a real issue came this week when central bankers and regulators, meeting in Basel, Switzerland, agreed how first-ever global liquidity standards should be applied to banks. The original plan was to keep the definition of “high quality liquid assets” relat ...
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Dual Economies: The Developing Storm + = x + = x

... the summer of 2006, the The Economist stated that the “worldwide rise in house prices is the biggest bubble in history,” with “the total value of residential property in developed economies [rising] by more than $30 trillion over the past five years to over $75 trillion, an increase equivalent to 10 ...
L8 Monetary and Fiscal Policy
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... “In settling on Mr. Bernanke, President Bush ... chose a candidate who would satisfy others -- investors on Wall Street, lawmakers in Congress -- more than himself or his Republican base.” ''They needed somebody that everybody, including the financial markets, would react positively to.'' “But Mr. B ...
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Balance of Payments BoP Account Definitions

Economics - Spring Branch ISD
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The Economic Benefits of Higher US Household Saving

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Slide 1
Slide 1

... mild and extreme.  The mild scenario covers both the credit risk and interest rates risk. The stress test results do not indicate the risk that is present in case of shocks from mild scenario.  The extreme scenario includes, along with the credit risk and interest rates risk, also the foreign exch ...
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Global saving glut

Global saving glut (also global savings glut, GSG, cash hoarding, dead cash, dead money, glut of excess intended saving, shortfall of investment intentions), describes a situation in which desired saving exceeds desired investment. By 2005 Ben Bernanke, chairman of the Federal Reserve, the central bank of the United States, expressed concern about the ""significant increase in the global supply of saving"" and its implications for monetary policies, particularly in the United States. Although Bernanke's analyses focused on events in 2003 to 2007 that led to the 2007–2009 financial crisis, regarding GSG countries and the United States, excessive saving by the non-financial corporate sector (NFCS) is an ongoing phenomenon, affecting many countries. Bernanke's ""celebrated (if sometimes disputed)"" global saving glut (GSG) hypothesis argued that increased capital inflows to the United States from GSG countries were an important reason that U.S. longer-term interest rates from 2003 to 2007 were lower than expected.Alan Greenspan testifying at the Financial Crisis Inquiry Commission in 2010 explained, ""Whether it was a glut of excess intended saving, or a shortfall of investment intentions, the result was the same: a fall in global real long-term interest rates and their associated capitalization rates. Asset prices, particularly house prices, in nearly two dozen countries accordingly moved dramatically higher. U.S. house price gains were high by historical standards but no more than average compared to other countries.""An 2007 Organisation for Economic Co-operation and Development (OECD) report noted that the ""excess of gross saving over fixed investment (i.e. net lending) in the ""aggregate OECD corporate sector"" had been unusually large since 2002. In a 2006 International Monetary Fund report, it was observed that, ""since the bursting of the equity marketbubble in the early 2000s, companies in many industrial countries have moved from their traditional position of borrowing funds to finance their capital expenditures to running financial surpluses that they are now lending to other sectors of the economy."" David Wessell in a Wall Street Journal article observed that, ""[c]ompanies, which normally borrow other folks’ savings in order to invest, have turned thrifty. Even companies enjoying strong profits and cash flow are building cash hoards, reducing debt and buying back their own shares—instead of making investment bets."" Although the hypothesis of excess cash holdings or cash hoarding has been used by the Organisation for Economic Co-operation and Development (OECD), the International Monetary Fund and the media Wall Street Journal, Forbes, Canadian Broadcasting Corporation, the concept itself has been disputed and criticized as conceptually flawed in articles and reports published by the Hoover Institute, the Max-Planck Institute and the CATO Institute among others. Ben Bernanke used the phrase ""global savings glut"" in 2005 linking it to the U.S. current account deficit.In their July 2012 report Standard and Poors described the ""fragile equilibrium that currently exists in the global corporate credit landscape."" U.S. nonfinancial corporate sector NFCS firms continued to hoard a ""record amount of cash"" with large profitable investment-grade companies and technology and health care industries (with significant amounts of cash overseas), holding most of the wealth.By January 2013, NFCS firms in Europe had over 1 trillion euros of cash on their balance sheets, a record high in nominal terms.
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