The Most Important Economic Graphs of 2011

[Puppycow]

I came across this a few days ago and I think it's worth a thread:

The Most Important Graphs of 2011

One interesting graph is the comparison between bond yields for Sweden vs. Finland, the latter being punished for being a member of the Eurozone.

Quote:

"A phrase you sometimes hear in financial markets is 'punish the printer.' The idea is that countries that are printing a lot of money will see their currencies dive. But a defining characteristic of 2011 was that markets loved printers. Specifically, countries that were able to print their own money saw their borrowing costs plunge, while countries (even fiscally responsible ones) that didn't have this ability saw their borrowing costs jump.

"My favorite example of this is Sweden vs. Finland. The former is outside of the euro zone and can print its own money; the latter uses the Euro and can't. Historically, the two countries have borrowed money at roughly the same rate. Both are considered to be stable and fiscally disciplined.

"In this chart, the green line is the yield on the Finnish 10-year bond. The orange is the Swedish 10-year bond. Starting in the Spring, Finland began to pay a penalty, but still, the two roughly moved in the same direction. It was in late November, when the European crisis got to its hairiest point (even Germany had a failed auction) that you really saw the difference. Finnish yields spiked at the same time Swedish yields plunged. Investors flocked to the country that could print its own money. This defining idea of 2011 also resulted in ultra-cheap rates in the UK, Japan, and of course the U.S." -- Joseph Weisenthal, Deputy Editor, Business Insider

Of course, one could argue that it's not the ability to print money that attracts investors, but Finland's membership in the Euro and hence the possibility of being dragged down by other euro countries that can't pay their debts which is scaring investors. If investors suspected that Sweden might abuse that ability to print money, they would probably be less willing to lend to Sweden. But with euro countries the risk of printing money is replaced with the risk of some kind of default or "voluntary" (Ha!) restructuring of debt as happened in Greece.

[kevsta]

I think this will be the most important of those graphs for 2012

http://www.theatlantic.com/business/...50240/#slide17

Quote:

The "Plank Curve": When Liquidity Walks the Plank

"This is my favorite graph of 2011--and of every year in which there is a financial crisis. It is the Plank Curve, which shows the amount of funding ("liquidity") available to any entity as its perceived risk increases past a panic threshold. The most recent company to experience this curve is, of course, MF Global. But it is only one of a long line of instances. I first drew this curve in 1985, to describe the fall of Continental Illinois Bank, and called it the "Plank Curve" because it is also the path of a man walking the plank." -- Alex J. Pollock, Resident Fellow, AEI

if so, the rest of them wont mean very much.

Happy New Year

[Trakar]

Originally Posted by Puppycow

I came across this a few days ago and I think it's worth a thread:

The Most Important Graphs of 2011
...

Great resource, excellent find!

So little time, so much information to mine.

[Tsukasa Buddha]

Mmm, I am a bit dubious. It just seems to be disparate graphs smashed together to fit a narrative. Look at "As Union Membership Declines, Income Declines, Too". Classic case of confusing correlation and causation. I am not opposed to the notion, but such a simple graph does not show "the decline of the union movement is a prime reason why income has disproportionally gone to the 1 percent and not the broad middle class." Though I suppose that is what you get when you gather responses from think tanks and newspapers.

[timhau]

Correct me if I'm wrong, but isn't Sweden running a small budget surplus for 2011? Finland is running a deficit, so I assume we've been borrowing more than the Swedes.

[The Central Scrutinizer]

Aren't all Economics threads supposed to have a loony tune YouTube video for us to watch?

[timhau]

Originally Posted by The Central Scrutinizer

Aren't all Economics threads supposed to have a loony tune YouTube video for us to watch?

Hard to say, since we're already so far off the mainstream by having no reference to the Rothschilds, the Fed, or looming hyperinflation.

[daenku32]

Originally Posted by timhau

Correct me if I'm wrong, but isn't Sweden running a small budget surplus for 2011? Finland is running a deficit, so I assume we've been borrowing more than the Swedes.

Well, it could be because you are now paying more in interest. And as the article notes, as the euro crunch time took place Finland became a riskier country because it used the Euro.

[kevsta]

Here's another 11 most important charts / trends over the last 11 years, these ones tell it more like it is IMO

http://www.scribd.com/doc/76802342/1...-Last-11-Years

[timhau]

Originally Posted by daenku32

Well, it could be because you are now paying more in interest.

Even if things were equal, we'd have to be paying more in interest because we're selling more bonds.

[timhau]

Originally Posted by daenku32

Well, it could be because you are now paying more in interest.

Even if things were equal, we'd have to be paying more in interest because we're selling more bonds.

BTW, there are non-trivial and non-currency-related differences between the economies of Finland and Sweden which may contribute to the difference in interest rates. Finland has the more export-oriented economy and our exports are geared towards cyclical products (esp. industrial machinery), so if we're expecting a global economical slowdown, Finland is likely to be hit harder than Sweden.