Moby Ben, or, The Washington Super-Whale: Hedge Fundies, the Federal Reserve, and Bernanke-Hatred
Liveblogging World War II: May 11, 1943

Noted for May 11, 2013

  • Tim Duy: Rising Structural Unemployment?: "Circles don't get more vicious than this. The people who need work the most can't even get an interview, let alone a job. It's a cycle that could end with the long-term unemployed becoming unemployable. It's what economists call hysteresis, the idea being that a slump, left untreated, can make us permanently poorer by reducing our future ability to do and make things…. One would think that a low hires/openings ratio suggests that wage growth would be accelerating (as employers appear to face a relative shortage of workers), but that is not the case…. How does this fit with the long-term unemployed story above? Perhaps that although firms have a bias against the long-term unemployed, those potential workers still place downward pressure on wages. The newly employed don't require higher wages despite demand for their skills because they know there is a large pool of people available with similar skills…. This also explains the low quits rate.  The consequences of becoming long-term unemployed are particularly severe, raising the expected cost of voluntarily leaving a job."

  • Matthew Zeitlin: Does the Sohn Conference Make Hedge-Fund Geniuses Stupid?: "Yesterday, big-name investors, their fans and journalists (the latter two categories are not mutually exclusive) gathered at the Ira Sohn Conference in New York to hear some of the best ideas of the hedge-fund illuminati…. Bass yesterday gave yet another version of his 'Japan is doomed' thesis. He said the 'the beginning of the end has begun' and that inflation and skyrocketing debt costs will drive Japan into something like insolvency sometime in the next three years, causing the value of Japanese government bonds to plummet. He’s been making this pitch since late 2011, and since then yields on Japanese bonds have gone down -- 25 basis points on 10-year debt in the last 12 months -- despite a debt-to-gross-domestic-product ratio around 230 percent. There’s a reason going short Japanese debt is called the 'widow-maker'."

Do Nominal Wage Cuts really stabilize Demand-driven Recessions? | The Progressive Alternative | Steve Conover: Money Printing Isn’t Always Inflationary: "Republicans are wrongly giving fear of money printing a higher priority than the growth debate. Robust growth is as close as we can get to a panacea for our monetary and fiscal problems" | Chapin White: "My hope is that the dynamic cost-shifting theory is hereby put to rest…. In the two-stage least squares analysis, the estimated elasticity was 0.773, meaning that a 10 percent reduction in the Medicare payment rate was associated with a 7.73 percent reduction in the private rate" | Alex Tabarrok: Sodomy and Usury | Antigone: Irene Papas, Manos Katrakis, Maro Kodou, Nikos Kazis, Ilia Livykou, Giannis Argyris, Byron Pallis, Tzavalas Karousos, Thodoros Moridis, Giorgos Vlahopoulos, Yorgos Karetas, Thanasis Kefalopoulos, Dinos Katsouridis, Yorgos Javellas, Giorgos Tsaoulis, James Paris, Sperie Perakos, Sophocles | GeoGuessr - Let's explore the world! | Google Earth Engine | Jordan Rau: A patient’s view on the Oregon Medicaid experiment | David Donaldson: Railroads of the Raj: Estimating the Impact of Transportation Infrastructure |

  • Jeff Weintraub: Eugene V. Debs captures a central feature of US politics ... a century ago and today: Screenshot 5 10 13 8 28 AM

  • Austin Frakt: For economist/biostats geeks only (a bleg): "If you’re not into instrumental variables (IV) econometrics and/or power calculations don’t bother reading this post. I’m not even going to try to make it widely accessible. But if you are an econ/biostats type, I have a question for you. I want to know if you have seen anything like the following in any paper or book. I am looking for a supporting reference…. Steve Pizer did the math and got a nifty little result…. Assume you have done a power calculation that suggests you need N observations in the treatment group to obtain a sufficiently powered estimate of the effect of treatment X on outcome Y, pretending it’s a randomized trial (no IV). Steve showed that the IV setup requires N/R² observations, where R² is the “R-squared” of the first-stage [IV] shown above…. This is such a simple, appealing result that someone else must have written it down in some book or paper. My question for you is, who and where?… Sargan, John D. (1958) “T'e Estimation of Economic Relationships Using Instrumental Variables', Econometrica 26, 393-415."

  • Norm Ornstein: Green Lantern II: "I have grown increasingly frustrated with how the mythology of leadership has been spread in recent weeks. I have yelled at the television set, 'Didn’t any of you ever read Richard Neustadt’s classic Presidential Leadership? Haven’t any of you taken Politics 101 and read about the limits of presidential power in a separation-of-powers system?' But the issue goes beyond that, to a willful ignorance of history. No one schmoozed more or better with legislators in both parties than Clinton. How many Republican votes did it get him on his signature initial priority, an economic plan? Zero in both houses. And it took eight months to get enough Democrats to limp over the finish line. How did things work out on his health care plan? How about his impeachment in the House? No one knew Congress, or the buttons to push with every key lawmaker, better than LBJ. It worked like a charm in his famous 89th, Great Society Congress, largely because he had overwhelming majorities of his own party in both houses. But after the awful midterms in 1966, when those swollen majorities receded, LBJ’s mastery of Congress didn’t mean squat. No one defined the agenda or negotiated more brilliantly than Reagan. Did he 'work his will'? On almost every major issue, he had to make major compromises with Democrats, including five straight years with significant tax increases. But he was able to do it—as he was able to achieve a breakthrough on tax reform—because he had key Democrats willing to work with him and find those compromises. And one could cite FDR’s relationship with Southern Democrats as well. Again, the inability of presidents to get Congress to pass legislation legislative majorities don’t want to pass isn’t a strategic failure; it’s the inherent nature of the office."