Industrial Production

Macario Schettino's Informal Economics blog has been an indispensable source of insights about the financial crisis. In a post earlier this week, he wrote that industrial production is the key indicator of how bad the recession will be, and is so far the projection for 2009 is a 5 percent drop. In 2001, industrial production was down 3.4 percent, so the present catastrophe is worse, but not overwhelmingly so. By comparison, from the 1929 to 1932, industrial production fell by 47 percent. One question that he doesn't answer: given that the US economy is less dependent on industry now than it was 80 years ago, is that really such an all-encompassing indicator? Are their other measurements we should be looking at as well?

Schettino, who is pragmatic but typically leans pretty hard right, also comes down in favor of Gordon Brown's plan to buy shares of British banks, and criticizes the US reluctance to do so.

[T]hey will have to nationalize a portion of the banks, and that is what the Bush administration officials don't want to accept. There exists, I believe, the rigid thinking that we tend to associate with neoliberalism. But that thinking has failed continually, not just now: it was the same that failed in the early '80s in Reagan's first term, for example.

He also includes a message for Paul Krugman, who publishes a column in El Universal:

Allow me to congratulate myself for the award of the prize to [Krugman], and for a moment let me enjoy the fact that he is a colleague on these pages. It's the closest I'll be to a Nobel, so it's worth taking advantage of.