Greg Ip

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

Archive for September 2010

Cramped quarters: As children postpone their departure, households get larger

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[Greg Ip] IT IS hard to be an optimist about the housing market these days, but those so inclined like to note that as long as the population keeps growing, so should the demand for homes. But what if the larger population decides to share the same number of homes?

America’s census bureau has been publishing massive amounts of data from several, parallel surveys of the population in recent weeks. One of its more intriguing findings is that after shrinking for decades, households have started to grow. 

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September 30, 2010 at 11:28 am

Posted in Demographics, Housing

US-China trade relations: Speak less softly, carry a stick

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The Obama administration’s patience with China wears thin

Sep 23rd 2010 | WASHINGTON, DC

 [Greg Ip] CHINESE officials like to lecture their American counterparts that, when it comes to loosening their tightly controlled currency, pressure is counterproductive. Tim Geithner, the treasury secretary, has resisted direct confrontation with China over the yuan’s value. Like his predecessors, he worries that overt pressure would undermine advocates of reform inside China, principally the People’s Bank of China, and erode co-operation on other issues such as Iran and North Korea. Read the article on

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September 23, 2010 at 11:34 am

The brains trust dissolves: All the president’s economic principals are leaving, bar the treasury secretary

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[Greg Ip] HISTORIANS may one day label the first two years of Barack Obama’s presidency as the most activist in economic policy of post-war history. For that, credit both circumstance and the star-studded economic team Mr Obama assembled when he took office.

That team is now breaking up. On September 21st Larry Summers, the director of the National Economic Council and the president’s chief economic policy co-ordinator, said he would return to Harvard after the mid-term elections.

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September 23, 2010 at 11:31 am

The American economy: The great debt drag

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Sep 16th 2010 | WASHINGTON, DC

[Greg Ip] IN THREE decades of selling cars in southern California, David Wilson has been through countless ups and downs. So when sales at his 16 dealerships, mostly around Los Angeles and Orange Counties, fell by a third in 2008, he naturally expected them to go up again. They still haven’t.

Mr Wilson now realises that his boom-year sales were a by-product of the state’s housing bubble. Dealers reckon that before the crisis a third of new cars in California were bought with home-equity loans. “Now there’s no home equity,” says Mr Wilson, “there’s no down-payment for cars.” He foresees no sales growth for another two to three years. “The country is not optimistic. If you’re not optimistic you don’t buy a new house or new car.”

He’s right: Americans are not optimistic. Official statistics say that the economy has been growing for nearly 15 months, but so sluggishly that most people seem to think it is still in recession. For a few months it looked as if the economy might even shrink again, as growth slowed to a mere 1.6% (at an annualised rate) in the second quarter, job creation almost stopped and home sales plunged. Read the rest of this entry »

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September 16, 2010 at 4:00 pm

The tax debate: Someone will pay

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[Greg Ip] AMERICA’S mid-term elections are turning into a referendum on the role of the state, and George Bush junior’s tax cuts are the litmus test. Barack Obama has attacked Republicans for wanting the cuts for the richest 2% of families to be made permanent, robbing the government of the means to invest in the economy. Harry Reid, the Democratic leader in the Senate, is mulling a vote on making only the middle-class tax cuts permanent, virtually daring the Republicans to vote no. Read the rest of this entry »

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September 16, 2010 at 4:00 pm

Posted in Uncategorized

From Zombie Banks to Zombie Mortgages?

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Op-Ed in The Wall Street Journal
  • SEPTEMBER 10, 2010

Japan misallocated capital during its lost decade. How the U.S. can avoid its mistakes.

By Greg Ip

Japan’s recent demotion to world’s third-largest economy, behind China, triggered two distinctly different feelings in the United States.

One was Schadenfreude. At the end of the 1980s Japan was a contender for the No. 1 spot. It was the rich world’s fastest growing big country. Its companies dominated electronics, steel, automobiles and even banking. Its political and business leaders were paragons of long-term strategic thinking, while budget and trade surpluses left it rich with cash. Meanwhile, the U.S. was on the brink of recession, its corporate managers obsessed with short-term profits and its politicians incapable of mustering a coherent industrial strategy. “Japan has created a kind of automatic wealth machine, perhaps the first since King Midas,” Clyde Prestowitz wrote in 1988. The U.S. was “a colony-in-the-making.”

What happened next, of course, is history. Japanese property and stock prices cratered, its banking system seized up, and a decade (actually, two now) of economic stagnation followed.

The second feeling Japan’s misfortunes evoked is dread. The U.S. has gone through its own spectacular property crash and banking crisis and is now mired in a painfully weak recovery. Does it face a long period of stagnation as Japan did? Read the rest of this entry »

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September 11, 2010 at 5:26 pm

Economics Focus: War footing

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Monetary and fiscal stimulus make a potent, if uneasy, combination

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September 2, 2010 at 8:51 am