A lot happened this year. And an awful lot happened in the last few months, even setting the US Presidential election aside.
-- The US experienced its worst financial crisis since the Depression. The Fed dramatically expanded its balance sheet, becoming the world’s lender of last resort and the United States’ lender of almost every resort.
-- Capital flows to the emerging world reversed. Inflows turned to outflows.
-- High carry currencies tumbled. So did the pound. The dollar rallied even as the US financial system teetered on the edge of collapse, then slid as the Fed cut rates to zero.
-- Global trade, and I would guess global economic activity, started to contract. Just look at fall in Japan’s exports in November ...
-- Oil prices fell. A lot. Several oil-exporters that were on top of the world with oil at $145 are now looking at serious financial trouble.
It consequently isn’t a surprise that America started to think about the holiday festivities a bit later than usual. That isn’t just a conjecture either. My colleagues at the CFR’s Geoeconomics Center compared Google searches for "Santa" to Google searches for "foreclosures." It turns out that Santa overlook foreclosures a bit later than normal. And it took even longer for Santa to overtake foreclosures in those parts of the country where home prices have gone down the most. Do look at the chart.
Never fear. The housing grinch didn’t quite steal Christmas. Santa eventually won out, even in those parts of the US with the biggest fall in home prices.
To celebrate, I’ll be taking a few days off.
Happy Holidays to all. And, if it fits, Merry Christmas.