Felix Salmon Firmly Believes Not in the Inflation-Expectations Imp, But in the Tightening Tommyknockers...
Liveblogging World War II: June 30, 1943

Noted for June 30, 2013

  • Izabella Kaminska: Advantage Abe: "The first bits of post-Abenomics data are finally trickling in. And so far, it has to be said, it’s looking good for Shinzo Abe. Lombard Street Research’s Michael Taylor takes us through the initial findings…. 'A recovery in industrial production and consumer spending points to above-trend growth in Q2. Consumer price inflation may soon make a brief appearance above zero on the back of higher energy and import prices. But deflation isn’t beaten yet. The splurge of Japanese data overnight confirms the overall positive trend in the economy. Notably, industrial production increased by 2% in the month of May, the fourth consecutive monthly increase. Output in May was boosted by electronic components and machinery in particular. Both industrial production and exports are now on an upward trend (see chart below). To a large extent this recovery is due to the weaker yen. Although the yen is above its recent lows against the US dollar, it is still 19% lower than last November…. The fall in the yen has coincided with an equity market rally. This, plus an increase in inflation expectations triggered by aggressive monetary ease from the Bank of Japan, is also helping to boost consumer spending. For May household spending data show a 0.1% monthly gain, while retail trade data were up by 1.5%. Both are on an upward trend and will support another quarter of fairly robust GDP growth in Q2. Meanwhile headline CPI inflation was -0.3% in May, up from -0.7% in April.'"
  • Felix Salmon: The spread of link rot: "My boss, Jim Ledbetter, used to edit a site called The Big Money, which was unceremoniously killed off by the Slate Group, its archives lost to history; more recently, Thomson Reuters did the same thing to one of their sites, News and Insight. (The press release announcing the move was one of its victims; a shadow of it lives on here.) When these decisions are made, the fate of the archives never seems to matter; the result is thousands more dead links scattered across the internet every day, pointing to once-valuable resources which no longer exist."

  • Gavyn Davies: How the Fed lost control of short term interest rates: "The declines in the prices of bonds and many risk assets… have come as surprise to some Fed officials, who thought that their decision to taper the speed of balance sheet expansion in the next 12 months, subject to certain economic conditions, would be seen as entirely separate from their thinking on the path for short rates…. The FOMC under Chairman Bernanke has worked very hard on its forward policy guidance, so there is probably some frustration that the markets have 'misunderstood' the Fed’s intentions. Richard Fisher, the President of the Dallas Fed, said that 'big money does organise itself somewhat like feral hogs', suggesting that markets were deliberately trying to 'break the Fed' by creating enough market turbulence to force the FOMC to continue its asset purchases. This is dubious logic. Investors who dumped bonds after the FOMC meeting would make money if bond prices fell further. They therefore presumably want the Fed to tighten policy, which is the opposite of what Mr Fisher indicates. Nor is it right to suggest that big money 'organises itself' at all; investors act in competition with each other, not in collusion."

  • John Cassidy: Austerity and the Mistaken Lessons of History: "George Osborne, arguably the worst Chancellor in modern U.K. history (it’s a tough contest) has just reaffirmed his commitment to austerity policies. Delivering an annual financial review to Parliament on Wednesday, Osborne promised yet another round of spending cuts…. At this stage, when even the International Monetary Fund has turned against Osborne and called upon him to reverse course, I won’t bother retreading the arguments against austerity. Suffice it to say that compared with the behavior of the U.S. economy, which until recently was benefitting from a Keynesian fiscal stimulus, the U.K. economy has been performing dismally…. Despite this sorry record, Osborne hasn’t been run out of office. Recently, in fact, he’s gotten something of his old smirk back. The most interesting—and depressing—aspect of his latest pronouncement is how little outrage it provoked. In the country of Keynes’s birth, it’s almost as if he never existed. Despite the example of the United States, many Britons have lost faith in the government’s capacity to borrow and spend its way out of a recession…. It’s reached the stage where even the Labour Party has adopted the language of austerity. Rather than laughing at Osborne’s discredited economic projections and pledging to reverse his cuts, Ed Balls, Labour’s senior economic official, has promised to keep in place the government’s spending plans after the next general election…. How did things get to this sad state? The answer has more to do with recent history, and the lessons that people take from it, than it does with economic theory. In Britain, as in the United States, conservative economists remain on the defensive: Keynesianism is struggling not in the Academy but, rather, in pubs and sitting rooms."

  • Paul Krugman: >Acelaland Versus Mayberry: "Hmm. One thing I’ve noticed in recent discussions is that on the right, the Acela — America’s only sorta-kinda high-speed passenger train — has become a symbol of liberal elitism. What’s that about? Well, it has several useful attributes. For one thing, it is indeed kind of pricey — although not as pricey as the first-class plane tickets, let alone private planes, that are favored by a lot of people at the top of the right-wing coalition. (By the way, when I do take the Acela — which isn’t that often; I’m mainly a New Jersey Transit guy — I usually avoid first class, and go for the quiet car instead. I mean, a slightly smaller seat for 2 1/2 hours is worth enduring to avoid some guy loudly talking business deals). Second, it plays into the whole trains-are-evil thing. I mean, George Will says that the only reason liberals like trains is that they diminish individualism and make people more susceptible to collectivism. Of course, this creates the interesting picture of egotistical liberal elitists riding the train to diminish their individualism and become collectivized. I think my head is starting to hurt. But finally, and I guess somewhat reasonably, the Acela is useful shorthand for the Northeast Corridor, which is more or less equivalent to the chain of metropolitan areas the Acela serves. And so Acela-bashing serves as a way to make the old claim that northeasterners aren’t the 'real America'. Except they (we) are, in fact, the real America — a lot realer than the small-town, all-white America such people have in their minds. As I’ve pointed out before, the average American lives in a census tract with a population density of more than 5,000 per square mile. That’s not Mayberry — it’s dense, even quasi-urban suburbia. It is, as it happens, the population-weighted density of greater Baltimore."

Max Blau: This Georgia hospital shows why rejecting Medicaid isn’t easy | Matthew Yglesias: Recession underspending: Pain will last for years | Carola Binder: Possible Futures for the European Banking Union | Laura Tyson: The Myriad Benefits of a Carbon Tax | Mark Thoma: FDL Book Salon Welcomes David Stuckler and Sanjay Basu, The Body Economic: Why Austerity Kills: Recessions, Budget Battles, and the Politics of Life and Death |