Greg Ip

Articles by The Economist’s U.S. Economics Editor

Archive for October 2009

Obama and the unions: Love of Labour

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Oct 29th 2009 | WASHINGTON, DC
From The Economist print edition

Unions are winning again in Washington, but the big fights are still ahead

Getty Images
Getty Images


[Greg Ip] THREE years ago, when negotiations with the union representing air-traffic controllers reached an impasse, the administration of George Bush simply imposed a deal that froze salaries, slashed entry-level pay and even set a dress code. Barack Obama, then a senator, sponsored a bill to send the parties to arbitration, without success at the time. As president, Mr Obama ordered talks to resume. In late September, with the help of the arbitrators, the union got its new contract: 3% annual pay increases, higher starting pay and the right, once again, to wear jeans.


Ronald Reagan’s mass firing of illegally striking controllers in 1981 came to signify a turning-point in the fortunes of organised labour, whose share of private-sector workers has fallen to a new low of 7.3% so far this year (see chart). It is tempting to see the controllers’ new deal as marking a turning-point in the other direction. Read the rest of this entry »

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October 29, 2009 at 4:00 pm

The economy: A joyless recovery

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Oct 29th 2009 | WASHINGTON, DC
From The Economist print edition

New figures suggest that America has at last moved out of recession

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Getty Images

[Greg Ip] ON October 29th the government reported that gross domestic product rose at an annualised rate of 3.5% in the third quarter compared to the second. This was the first increase since the second quarter of 2008. It backs up other evidence that the recession ended in the third quarter or just before, though the official decision, by the National Bureau of Economic Research, a group of academic economists, is still some way off. Robert Gordon, a member of this group, is confident that the recession, which began in December 2007, ended in June. But at 18 months that would still make it the longest since 1933.

Consumers are sceptical. Read the rest of this entry »

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October 29, 2009 at 12:00 pm

The use & abuse of economic history

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80 years after the crash that ushered in the Great Depression, we’re not repeating history’s mistakes. We’re making our own.

By Greg Ip

Sunday, October 25, 2009

 Book review of:

THIS TIME IS DIFFERENT: Eight Centuries of Financial Folly,  By Carmen M. Reinhart and Kenneth S. Rogoff, Princeton Univ. 463 pp. $35

THE CREATION AND DESTRUCTION OF VALUE: The Globalization Cycle, By Harold James, arvard Univ. 325 pp. $19.95

The Dow’s recent vault back to the neighborhood of 10,000 inspired a sense of relief far more than it did any urge for celebration. We have been through a dreadful recession, but at least, the market tells us, we have avoided a depression.

Or have we? This week marks the 80th anniversary of the crash that ushered in the Great Depression. In recent months, the Dow’s behavior has eerily mimicked those dark days when the index leapt from its 1929 lows to rally 48 percent into 1930. It was a false dawn: The worst of the Depression was still to come.

A popular refrain during our modern-day financial crisis is that we have forgotten the lessons of economic history. But Americans are not ignorant of the past: Many are obsessed with it. Countless investors scrutinize stock charts and bet on history repeating itself. However, few win this way. Our problem is not ignorance of history but an inability to know which bits are most relevant to the present. Read the rest of this entry »

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October 26, 2009 at 4:08 pm

America’s public debt: Tomorrow’s burden

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Oct 22nd 2009 | WASHINGTON, DC
From The Economist print edition

America’s debt crisis will be chronic, not acute

Illustration by Belle Mellor


[Greg Ip] AS AMERICA’S financial crisis recedes, the rumblings of its next crisis can be heard. The federal government has wrapped its guarantees around banks and the housing market. It has borrowed hundreds of billions of dollars to stimulate the enfeebled economy, while tax revenues crumble. And in the years to come the cost of retirees’ benefits will explode. “There is every reason to worry that the banking crisis has simply morphed into a long-term government-debt crisis,” says Kenneth Rogoff of Harvard University.

But what kind would it be: acute or chronic? Read the rest of this entry »

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October 22, 2009 at 9:41 pm

Why did only some countries have banking crises?

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On Oct. 9 I appeared on a panel at the American Enterprise Institute discussing a paper by Vincent Reinhart on the financial crisis. While many countries were affected by common global factors, I focused on how some countries escaped crisis even while they were affected by the same factors as others. View the slide show of my presentation here:

Greg Ip comment on Reinhart.

View my written essay from the conference volume here:

No Way Out – Greg Ip

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October 9, 2009 at 4:27 pm

Posted in Uncategorized

The economy’s stumble: Air pocket or second dip?

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Oct 8th 2009 | WASHINGTON, DC
From The Economist print edition

A slump in September prompts thoughts of new stimulus


[Greg Ip] AFTER riding a wave of improvement since the spring, the economy stumbled in September according to the latest figures. Non-farm employment sank by 263,000, which was 62,000 more than in August, and the unemployment rate rose by 0.1% to 9.8%. Car sales tumbled as the federal “cash-for-clunkers” programme expired. Manufacturing activity cooled a bit.

All this is probably an air pocket; overall economic output almost certainly began to rise in the third quarter of the year and employment will eventually follow. Leading indicators such as the stockmarket and new claims for unemployment benefits are signalling recovery. But it is taking a painfully long time. Read the rest of this entry »

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October 8, 2009 at 4:15 pm

Manufacturing’s future: Wanted: new customers

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Oct 1st 2009 | WASHINGTON, DC
From The Economist print edition

Pummelled by recession, manufacturers face an uncertain future

[Greg Ip] AFTER the worst slump in modern memory, American factories are showing signs of life. Manufacturing production rose in August for the second straight month, and a survey of purchasing managers says new orders are rising briskly.

Yet manufacturers remain gloomy. Both output and employment are down 15% from the start of the recession in December 2007, far more than overall GDP and employment. Shipments collapsed when the near-paralysis of the financial system a year ago caused businesses worldwide to cancel orders and run down their stocks. On September 15th Dan DiMicco, head of Nucor, a steel company, said operating rates would be higher in the third quarter than the second, but only because of inventory replenishment. “Real demand is in for a long, slow recovery,” he said. Bad as this year has been, John Engler, president of the National Association of Manufacturers, a trade group, says many of his members “think next year will be worse”. Read the rest of this entry »

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October 1, 2009 at 4:20 pm


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