Month: February 2014

Tim Duy: Markets Tumble. How Will the Fed React?: “The Fed’s decision to taper despite the obvious challenge to their inflation target looks increasingly questionable….

Across the Curve points us to the Wall Street Journal’s anecdotal account of intense pricing pressures (and still weak demand) facing firms…. Despite the Fed’s claim that tapering is not tightening, that it is the stock of assets held, not the flow, that matters, that they could change the policy mix without changing the level of accommodation, market participants are acting as if tapering is indeed tightening…. Bond market participants, who had been starting to get optimistic that improving economic conditions would prompt the Fed to tighten sooner than later are now rethinking that scenario…. If this keeps up, it looks like Yellen will face an early test in her first few weeks as Chair. And I would say there is a good chance this does keep up until the Fed changes direction and decides that the US economy may not have reached escape velocity as believed…. The hawks fought long and hard for the taper; they will not be easily dissuaded from by a few sloppy days on Wall Street….

Continue reading “Late-Afternoon Must-Read: Tim Duy: Markets Tumble. How Will the Fed React?” →

Must-Reads:

1. Harold James: Europe’s fringes appear determined to escape into the past: “Europe’s western and eastern fringes obsess about dates that recall their struggles with the core: 1914, 1815, 1709, 1707, 1704, and 1612, among others. By contrast, the European core is obsessed with transcending history, with working out institutional mechanisms for overcoming the conflicts that scarred Europe in the first half of the twentieth century. The European integration project is a sort of liberation from the pressures and constraints of the past…. Is the European center currently too naive, or too idealistic? Is it really possible to escape from history? Or, on the contrary, is there something odd in the way that the European fringes obsessively resort to historical milestones?…. De Gaulle and Churchill knew plenty about war, and they wanted to transcend the blood-soaked legacy of Poltava, Blenheim, and Waterloo. They viewed history as offering concrete lessons about the necessity of escaping from the past. Today, Europe’s fringes, by contrast, appear determined to escape into it.”

2. Elias Asquith: The 1 percent’s most ruinous sin: How they sap our politicians of all decency: “‘Mitt’, Netflix’s recently released documentary… has, on the whole, been rather well-received…. Not everyone believes that the film succeeds in giving viewers a behind-the-scenes look… but most seem to have found it… a humanizing depiction of a seemingly decent man…. Even if the man in “Mitt” is not so charming and sympathetic a figure as to counterbalance the woeful policies on which he ran, there is the lingering question of why there is such a great distance between Candidate Romney and Mitt Romney. How could the same guy who at one point in the film acknowledges the immense privilege he was born into repeatedly insist, on the campaign trail, that he was a self-made man, a testament to the American meritocracy? How could the guy who infamously sneered that roughly half of the country were irresponsible, entitled, greedy moochers seem, in another context, to be kind, thoughtful, polite and fundamentally well-meaning?”

3. Paul Krugman: Demography and Employment: “A blog post reporting research by Samuel Kapon and Joseph Tracy of the New York Fed is creating a splash…. The aging of the adult population would have meant a considerable [i.e., 1.5%-point] decline in the employment-population ratio over the past 7 years even if the economy had remained near full employment…. [But their] other [claim]… far from obvious is that the economy was highly overheated in late 2007…. The actual decline was from 62.9 to 58.6, or 4.3 points…. [Their] small employment gap [today] isn’t mainly because of the demographic adjustment…. The dramatic-sounding result that we don’t have much labor market slack isn’t… unless you accept the idea that the U.S. economy was above full employment even during the early-Bush slump years, and that by late 2007 it was a highly overheated economy on the edge of major inflation.”

4. Nicholas Crafts and Terence C. Mills: Rearmament to the Rescue? New Estimates of the Impact of “Keynesian” Policies in 1930s’ Britain

5. Paul Krguman: The Great Recession: Lecture 1
6. Richard Startz : How Should an Economist Do Statistics?

Continue reading “Things to Read at Lunchtime on February 4, 2014” →

Harold James: Europe’s fringes appear determined to escape into the past:

Europe’s western and eastern fringes obsess about dates that recall their struggles with the core: 1914, 1815, 1709, 1707, 1704, and 1612, among others. By contrast, the European core is obsessed with transcending history, with working out institutional mechanisms for overcoming the conflicts that scarred Europe in the first half of the twentieth century. The European integration project is a sort of liberation from the pressures and constraints of the past…. Is the European center currently too naive, or too idealistic? Is it really possible to escape from history? Or, on the contrary, is there something odd in the way that the European fringes obsessively resort to historical milestones?…. De Gaulle and Churchill knew plenty about war, and they wanted to transcend the blood-soaked legacy of Poltava, Blenheim, and Waterloo. They viewed history as offering concrete lessons about the necessity of escaping from the past. Today, Europe’s fringes, by contrast, appear determined to escape into it.

Elias Asquith: The 1 percent’s most ruinous sin: How they sap our politicians of all decency:

‘Mitt’, Netflix’s recently released documentary… has, on the whole, been rather well-received…. Not everyone believes that the film succeeds in giving viewers a behind-the-scenes look… but most seem to have found it… a humanizing depiction of a seemingly decent man…. Even if the man in “Mitt” is not so charming and sympathetic a figure as to counterbalance the woeful policies on which he ran, there is the lingering question of why there is such a great distance between Candidate Romney and Mitt Romney. How could the same guy who at one point in the film acknowledges the immense privilege he was born into repeatedly insist, on the campaign trail, that he was a self-made man, a testament to the American meritocracy? How could the guy who infamously sneered that roughly half of the country were irresponsible, entitled, greedy moochers seem, in another context, to be kind, thoughtful, polite and fundamentally well-meaning?

Continue reading “Morning Must-Read: “Mitt”, Tom Perkins, The 1%, The 47%, and How Inequality Is Destroying Our Leadership” →

Paul Krugman: Demography and Employment: “A blog post reporting research by Samuel Kapon and Joseph Tracy of the New York Fed is creating a splash….

The aging of the adult population would have meant a considerable [i.e., 1.5%-point] decline in the employment-population ratio over the past 7 years even if the economy had remained near full employment…. [But their] other [claim]… far from obvious is that the economy was highly overheated in late 2007…. The actual decline was from 62.9 to 58.6, or 4.3 points…. [Their] small employment gap [today] isn’t mainly because of the demographic adjustment…. The dramatic-sounding result that we don’t have much labor market slack isn’t… unless you accept the idea that the U.S. economy was above full employment even during the early-Bush slump years, and that by late 2007 it was a highly overheated economy on the edge of major inflation.

…and having him say: “That’s my Project Syndicate column for two days from now.”

“It’s like R-A-A-A-A-I-I-I-N on your wedding day..,”

Miles Kimball starts a train of thought that leads to the conclusion that our descendants 500 years in the future–if we have a good future, that is–may well likely to regard our tolerance of our present-day restrictions on global migration from country to country with roughly the same kind of horror that we today regard James Madison’s, Thomas Jefferson’s, and Aristotle’s tolerance of slavery.

The equities seem considerably analogous: a social institution that causes misery for many but gives others at and near the top of the social pyramid preferential access to the good things of life. Yes, an immediate move to global open borders would be immensely disruptive. Yes, many would find themselves much poorer as a result. But is there any doubt that globe wealth would increase? And is there any doubt that any Benthamite utilitarian calculus would conclude that–provided societies did not collapse into chaos during the transition–that the utilitarian value of each dollar wealth that was transferred to the previous losers would outweigh its value to the previous winners?

So, from today’s perspective, it was with chattel slavery. So–if the future holds a good world–we might suspect that our descendants 500 years from now to think about us

Continue reading “Miles Kimball on the Extraordinary Inequities of Restrictions on International Migration: Monday Focus (February 3, 2014)” →

Burr-Coburn-Hatch

Still trying to wrap my mind around Republican Senators Burr-Coburn-Hatch PCARE health care… well, not “bill”… and not really “proposal”either…

Last week Burr-Coburn-Hatch thought they had their ducks all lined up. For example, the Weekly Standard, James Capretta:

The Burr-Coburn-Hatch Proposal: As Bill Kristol and Jeff Anderson noted earlier today, the introduction by Republican Senators Burr, Coburn, and Hatch of an Obamacare replacement plan is an important milestone in the health care debate. This is a serious and practical replacement proposal, offered by three prominent legislators. It could easily serve as the starting point for a legislative effort, perhaps even next year if Republicans regain control of the Senate, to undo Obamacare and replace it with something far better. This plan is well thought out substantively and politically…

Only, it turns out, not so much. A bunch of those who were supposed to endorse don’t show up. And soon the three are backing away from some elements of their own proposal…

Continue reading “More Musings About Why Burr-Coburn-Hatch Are Backing Away from Their PCARE Propsal” →

Must-Reads:

1. Chris Dillow: Why inequality matters: “We lefties care about inequality… because… three things that would make inequalities tolerable are–to some extent–missing. Firstly, inequalities don’t all arise from fair processes…. Secondly, we fear that inequality has adverse effects… economic growth, social cohesion… other aspects of well-being… inequality is, as Sean McElwee says, an ‘affront to democracy’…. Thirdly, we’ve no great beef with inequality if it is combined with some form of risk-pooling…. We’d favour some redistribution to mitigate the effects of bad luck–be it the bad luck of a bad draw in the genetic lottery or of being hurt by a recession…. Libertarians should worry about income inequality as it is often the product of statism…. Getting the rich to pay more tax is nowhere near enough to reduce the inequalities we should tackle.”

2. David Beckworth: The Two Big Failures of the Bernanke Fed: “The Bernanke Fed never tried Abenomics. That is, for all the Fed has done over the past five years it never tried to do the kind of monetary regime change now being done by the Bank of Japan…. So for all the praise the Bernanke Fed gets for preventing the second Great Depression, it should be equally noted that it allowed the long slump… effectively kept monetary policy tight for the past five years… failed to meaningfully address the endogenous fall in the money supply and the decrease in money velocity…. In my view, this is the biggest failure…. But it was not the only serious failure…. In the second half of 2008, housing prices, many commodity prices, inflation expectations and stocks all suggested deflation was coming. Fed officials, though, kept talking about backward-looking measures of inflation that made it look high. Their hawkish pronouncements effectively tightened monetary policy by shaping market expectations about its future direction…. Looking back, the Fed’s response from about mid-to-late 2008 was amazingly bad…. Though this Bernanke failure was big, I do view it as less heinous than the failure to do an Abenomics-like program.”

3. Cardiff Garcia: The Fed’s converging misses on inflation and unemployment: “The unemployment rate… has been falling quickly towards the Fed’s central tendency forecast of 5.2-5.8 per cent for the long-term rate…. Inflation (1.1 and 0.9 per cent respectively) [has] remained well below the Fed’s explicit 2 per cent target–as they have for nearly two years…. If… current trends hold, the extent of the Fed’s miss on inflation will start to converge with its miss on its full-employment mandate. To increasingly emphasise the former as a signal that policy will remain loose… wouldn’t be too difficult to justify.”

4. Jay Rosen: Keep me informed: parsing the logic of Ezra Klein’s move to Vox Media » Pressthink: “If you want to understand… look at these phrases…. Keep me informed. Help me understand this. Don’t give me updates when you have them, but when I need them to stay on top of things. Missing background often prevents me from understanding the news; solve that problem for me and I will rely on you for my information. Here’s Klein: ‘New information is not always–and perhaps not even usually–the most important information for understanding a topic. We are better than ever at telling people what’s happening, but not nearly good enough at giving them the crucial contextual information necessary to understand what’s happened. We treat the emphasis on the newness of information as an important virtue rather than a painful compromise. The news business, however, is just a subset of the informing-our-audience business–and that’s the business we aim to be in.’ The product is not ‘news’ but understanding and that steady state of feeling well informed. The news system we have is simply not organized that way. And so it’s no surprise to me that Ezra Klein had to leave the Washington Post to find backers who understood what he wanted to do.”

5. Rich Yeselson: James Madison’s Worst Nightmare: Today’s Republicans have become the very kind of obstructionist faction—with apocalyptic politics—that the primary author of our Constitution warned us against

6. Sahil Kapur: Requiem For The Filibuster
7. Ludwig Siegele: Cheap and ubiquitous building blocks for digital products and services have caused an explosion in startups

Continue reading “Things to Read on the Morning of February 2, 2014” →

Chris Dillow: Why inequality matters: “We lefties care about inequality… because… three things that would make inequalities tolerable are–to some extent–missing.

Firstly, inequalities don’t all arise from fair processes…. Secondly, we fear that inequality has adverse effects… economic growth, social cohesion… other aspects of well-being… inequality is, as Sean McElwee says, an ‘affront to democracy’…. Thirdly, we’ve no great beef with inequality if it is combined with some form of risk-pooling…. We’d favour some redistribution to mitigate the effects of bad luck–be it the bad luck of a bad draw in the genetic lottery or of being hurt by a recession…. Libertarians should worry about income inequality as it is often the product of statism…. Getting the rich to pay more tax is nowhere near enough to reduce the inequalities we should tackle.