Afternoon Must-Read: Tim Duy: Quick FOMC Recap
Afternoon Must-Read: Ed Luce: Too Big to Resist: Wall Street’s Comeback

Noted for Your Afternoon Procrastination for December 18, 2014

Screenshot 10 3 14 6 17 PMOver at Equitable Growth--The Equitablog


Must- and Shall-Reads:

And Over Here:

  1. Tim Duy: Quick FOMC Recap: "In normal times the Federal Reserve moves slowly and methodically. Policymakers were apparently concerned that removal of 'considerable time' by itself would prove to be disruptive. Instead, they opted to both remove it and retain it: "Based on its current assessment, the Committee judges that it can be patient.... The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program in October....' If you thought they would drop 'considerable time,' they did. If you thought they would retain 'considerable time,' they did. Everyone's a winner.... The April meeting is still on the table [for a rate increase], although I still suspect that is too early. Yellen... dismissed falling market-based inflation expectations as reflecting inflation 'compensation' rather than expectations... dismissed the disinflationary impulse from oil... indicated that inflation did not need to return to target prior to raising rates, only that the Fed needed to be confident it would continue to trend toward target... unconcerned about the risk of contagion either via Russia or high yield energy debt.... The Federal Reserve... have their eyes set firmly on June... see the accelerating economy and combine that with, as Yellen mentioned, the long lags of monetary policy.... Believe it or not, the Fed is seriously looking at mid-2015 to begin the normalization process. And there is no guarantee that it will be a predictable series of modest rate hikes. As much as you think of the possibility that the hike is delayed, think also of the possibility of 1994."

  2. Brett Norman: ACA Employer Mandate: Not as Bitter in Better Economy: "Contrary to the once dire predictions of health law critics and the business community, employers are not dropping coverage en masse and steering workers into the federally subsidized plans on the new Obamacare exchanges. In advance of the mandate finally kicking in, many are already increasing the number of employees offered coverage to ensure compliance. ‘The economic reality has changed,’ said Paul Fronstin, a senior associate at the Employee Benefit Resource Institute. Unemployment’s below 6 percent, down from the double-digit days in which the mandate was first debated. ‘Employers are remembering why they offered benefits in the first place--to compete for workers.’ The mandate is the Affordable Care Act’s last big piece of coverage expansion to be put into place. The Obama administration twice delayed it in the face of furious lobbying by the business community and repeated votes by the House to kill it.... ‘As we’ve gone along, I think there are other factors that have come into play – employee morale, retention of managers,’ said Michelle Neblett, director of labor and workforce policy for the National Restaurant Association. ‘I don’t hear people talking about dropping coverage, I hear about people figuring out how to afford to offer coverage.’..."

  3. Itzhak Gilboa et al.: Economic Models as Analogies: "Why [do] economists analyze models whose assumptions are known to be false[?]... Economists feel that they learn a great deal from such exercises.... Economists often analyze models that are 'theoretical cases', which help understand economic problems by drawing analogies between the model and the problem.... Models... data, experimental results, and other sources of knowledge... all provide cases to which a given problem can be compared. We offer complexity arguments that explain why case-based reasoning may sometimes be the method of choice and why economists prefer simple cases..."

  4. Paul Krugman: The Limits of Purely Monetary Policies: "I understand where Evans-Pritchard is coming from, because I’ve been there.... I had my road-to-Damascus moment... in 1998.... Back in 1998 I... believed that the Bank of Japan could surely end deflation if it really tried. IS-LM said not, but I was sure that if you really worked it through carefully you could show... doubling the monetary base will always raise prices even if you’re at the zero lower bound.... (By the way, I screwed up the aside on fiscal policy. In that model, the multiplier is one.) To my own surprise, what the model actually said was that when you’re at the zero lower bound, the size of the current money supply does not matter at all.... Doubling the current money supply and all future money supplies will double prices. If the short-term interest rate is currently zero, changing the current money supply without changing future [money] supplies... matters not at all. And as a result, monetary traction is far from obvious. Central banks can change the monetary base now, but can they commit not to undo the expansion in the future, when inflation rises? Not obviously.... But, asks Evans-Pritchard, what if the central bank simply gives households money? Well, that is, as he notes, really fiscal policy.... I’m pretty sure that neither the Fed nor the Bank of England has the legal right to just give money away as opposed to lending it out; if I’m wrong about this, put me down for $10 million, OK?..."

  5. Lynn Yarris: Back to the Future with Roman Architectural Concrete: "The concrete walls of Trajan’s Markets in Rome have stood the test of time and the elements for nearly 2,000 years.... A crystalline binding hydrate prevents microcracks from propagating.... The mortars that bind the concrete composites used to construct the structures of Imperial Rome are of keen scientific interest not just because of their unmatched resilience and durability, but also for the environmental advantages they offer.... Roman architectural mortar... is a mixture of about 85-percent (by volume) volcanic ash, fresh water, and lime, which is calcined at much lower temperature than Portland cement..."

Should Be Aware of:


  1. Daniel Larison: Jeb Bush and Our Bankrupt Cuba Policy: "Jeb Bush is reconfirming that he is just as conventional and ideological as any other hawk in the GOP... not only reaffirmed his support for the U.S. trade embargo, but said America should consider strengthening it. It’s no great surprise that a Florida Republican is still committed to continuing a failed Cuba policy, but it seems worth noting because it is so completely at odds with his normal self-presentation as a pragmatist.... That tells us much more about the kind of foreign policy that Jeb Bush would conduct if he were somehow to become president than anything else he said in his speech yesterday. When faced with policy failure, he urges more of the same failed policy, and faults those that are making any attempt to change the policy for the better. We already saw where this tendency to persist in foreign policy error got the country under his brother. There is no need to risk repeating that experience."

  2. John Abraham: 2014 will be the hottest year on record : "I predict the annual temperature anomaly will be 0.674°C. This beats the prior record by 0.024°C. That is a big margin in terms of global temperatures... [and] this year wasn’t supposed to be particularly warm... [it] didn’t even have an El Niño.... Among the experts, there is little fixation on the record. On the other hand, there was little fixation on the so-called ‘halt’ to global warming that the climate-science deniers have been trumpeting for the past few years.... The Earth is warming. The oceans are warming, the land is warming, the atmosphere is warming, the ice is melting, and sea level is rising.... Climate science deniers have had a bad year.... The so-called ‘halt’ to global warming was never true.... Of course, the science deniers will look for something new to try to cast doubt on the concept of global warming. Whatever they pick will be shown to be wrong. It always is. But perhaps we can use 2014 as a learning opportunity. Let’s hope no one is fooled next time when fanciful claims of the demise of climate change are made."

  3. Nick Murray: The First Casualty of a Bear Market: "$6,200,000,000. Yes, that’s right, it’s six billion two hundred million dollars. A very large sum of money, wouldn’t you say? Now what, you ask, does it represent? It is roughly how much Warren Buffett’s personal shareholdings in his Berkshire Hathaway, Inc. declined in value between July 17 and August 31, 1998. And now for the six billion dollar question. During those forty-five days, how much money did Warren Buffett lose in the stock market? The answer is, of course, that he didn’t lose anything. Why? That’s simple: he didn’t sell..."

  4. Kevin Drum: Torture Is Not a Hard Concept | Mother Jones: "Like all of us, I've had to spend the past several days listening to a procession of stony-faced men—some of them defiant, others obviously nervous—grimly trying to defend the indefensible, and I'm not sure how much more I can take. How hard is this, after all? Following 9/11, we created an extensive and cold-blooded program designed to inflict severe pain on prisoners in order to break them and get them to talk. That's torture. It always has been, and even a ten-year-old recognizes that legalistic rationalizations about enemy combatants, 'serious' physical injury, and organ failure are transparent sophistry. Of course we inflicted severe pain. Moderate pain would hardly induce anyone to talk, would it? And taking care not to leave permanent marks doesn't mean it's not torture, it just means you're trying to make sure you don't get caught. Christ almighty. Either you think that state-sanctioned torture of prisoners is beyond the pale for a civilized country or you don't. No cavils. No resorts to textual parsing. And no exceptions for 'we were scared.' This isn't a gray area. You can choose to stand with history's torturers or you can choose to stand with human decency. Pick a side."