RGE Monitor - Weekly Roundup

Check out all the great contributions that were published during the past week on RGE’s Nouriel Roubini's Global EconoMonitor, RGE Analyst’s EconoMonitor, Finance & Markets Monitor, Peterson Institute for International Economics Monitor, Global Macro EconoMonitor, U.S. EconoMonitor, Emerging Markets Monitor, Asia EconoMonitor, Latin America EconoMonitor and Europe EconoMonitor.

On Nouriel Roubini's Global EconoMonitor, Nouriel discusses the extent to which the U.S. labor market is struggling as job losses are likely to continue until the end of 2010 at the earliest, and the unemployment rate will most likely peak close to 11% and remain at a very high level for two years or more.  Please read The Worst is yet to Come: Unemployed Americans Should Hunker Down for More Job Losses

Please watch Video of Roubini Speech in Tel Aviv.

On the RGE Analyst’s EconoMonitor, as President Obama met with Chinese leaders this week, external pressure is building on China for currency appreciation. But Chinese officials will be reluctant to undermine the nascent exports recovery, particularly if it seems to be ordered up from overseas. Adam Wolfe and Rachel Ziemba look at the internal and external pressures on the RMB, China’s likely exit strategy from its extremely loose monetary policies and the consequences of such a move. See What is China's Exit Strategy?

In Obama Tours Asia with a Full Agenda, the RGE Analyst Team examine President Obama’s highly anticipated maiden visit to Asia and provide analysis on many of the looming political questions.

In Obama Sets New Myanmar Policy in Motion, Julie Ginsberg analyzes the implications of the policy shift from isolation to engagement by the Obama administration with respect to relations with Myanmar.

In U.S. Retail Sales Grow in October, But Watch the Holiday Season Christian Menegatti and Prajakta Bhide assess the latest U.S. retail sales data.

In Latin American CDS: Fully Recovered, What are the Risks? Alejandro Rivera, Elisa Parisi-Capone and Bertrand Delgado take a close look at Latin America’s 5yr CDS fundamental and counterparty risk dynamics.  They conclude that counterparty risks explain most of the sharp movement in CDS spreads, both during and after the crisis.  However, they highlight that as we move forward, given the aftermath of the crisis, not only a risk reversal but also some country specific deterioration will likely affect CDS behavior.

In "Deja Vu: Will the U.S. Undergo a Reprise of 1937?", RGE Analyst Mikka Pineda identifies striking similarities in U.S. inflation attitudes between the mid-1930s, when the U.S. began to show signs of recovery from the Depression, and 2009. The report serves as a qualitative accompaniment to her Comparing Three Crises report published earlier this year. The eerie resemblance in the psychological and economic backdrop of the mid-1930s and 2009 - both historic junctures when recovery was thought to have begun - suggests the U.S. teeters on the edge of a double-dip.

On the Finance & Markets Monitor, Robert Reich distinguishes between an asset-based recovery and a Main Street recovery; the former, while influencing the stock market temporarily, will probably lead to a big stock market correction and a double dip.  Read The Great Disconnect Between Stocks and Jobs .

In Note to Jamie Dimon: Repeating Something Doesn’t Make It True, James Kwak argues against the argument that says big banks serve an important role.

In A Cheaper Dow 10,000 ? Barry Ritholtz considers the overall markets’ valuation and points out that most investors would be better off with an asset allocation strategy rather than traditional stockpiling or even index approaches.

Also on the Finance & Markets Monitor:

Comparing Market Rallies by Barry Ritholtz

Operation Direct Growth by Carlo Resta

Slow Cat, Fast Mouse by James Kwak

On the Peterson Institute for International Economics Monitor, Simon Johnson offers testimony before the Joint Economic Committee hearing on The Impact of the Recovery Act on Economic Growth, and discusses current U.S. issues, comparisons with Japan, and proposals for change.

In Is King Euro Naked? Carlo Bastasin makes the case for why a political government for the euro area would be desirable.

On the Global Macro EconoMonitor, there was much discussion of trade imbalances as a weak dollar and an undervalued renminbi have the U.S. and China engaging in political exercises, but will there be reform?  See the following:

China Slams U.S. for Inflating Global Asset Prices Via Carry Trade by Edward Harrison

Who’s Afraid Of A Falling Dollar? by Simon Johnson

China Lambastes Dollar “Carry Trade,” Diverting Attention from Its Currency Manipulation by Yves Smith

China and the American Jobs Machine by Mark Thoma

As the financial crisis has left many advanced economies with staggering government debt, Carlo Cottarelli discusses how these countries should go about improving their fiscal conditions and implementing their exit strategies.  Read: Post-Crisis: What Should Be the Goal of a Fiscal Exit Strategy? and Balancing Fiscal Support with Fiscal Solvency.

On the U.S. EconoMonitor, Edward Harrison challenges President Obama’s understanding of how the economy works based on the administration’s decision to focus first on reducing the deficit and then on jobs, and offers better solutions.  Read Obama: Debt Could Cause a Double Dip Recession.

In Counting "Jobs Saved" by Obama Fiscal Stimulus, Jeffrey Frankel takes issue with those who don’t believe that the fiscal stimulus is creating jobs.

In Unlike the New Deal, Obama’s Plan does not put People on the Public Payroll, Mark Thoma looks at some at the politics involved in helping people get back to work.

Also on the U.S. EconoMonitor:

An Open Letter to Harry Reid on Controlling Health Care Costs by Robert Reich

News from 17 November 1930: “We Face a Winter of Hunger and Distress” by Edward Harrison

On the Emerging Markets Monitor, Michael Pettis continues to stress that trade imbalances are due to the policies that are in place, which is making China vulnerable because of its dependence on U.S. consumption.  Please read Lecturing Each Other on Trade.

On the Asia EconoMonitor, China Economist is on the side of those who believe there is a dangerous property bubble that is inflating in China and he presents some harrowing pollution pictures.  See: Property: The Bubble that Keeps on Inflating and Pictures of Pollution in China.

On the Latin America EconoMonitor, Alejandro Schtulmann analyzes the implications of the spike in violence in Mexico as the drug cartels push back against law enforcement.  See Drug Violence: Reaching a New Pinnacle.

On the Europe EconoMonitor, Edward Hugh analyzes the economic data to determine Just How Much of a Eurozone Rebound Really Was There in Q3?

In A Mini-Split on the MPC, David Smith reports that there was a little bit of division on quantitative easing from the Bank of England’s monetary policy committee’s November meeting, as well as the cut in the rate on commercial bank reserves at the Bank.

ECB Shows the Exit: Timing and Signposts, Aurelio Maccario considers what to expect from the ECB over the next couple of months.