Liveblogging the American Revolution: January 25, 1777: Massachusetts Raises Troops for the Continental Army
...announced that it is exploring jettisoning its struggling PC business in favor of investing more heavily in software, where it sees better potential for growth. Meanwhile, Google plans to buy up the cellphone handset maker Motorola Mobility. Both moves surprised the tech world. But both moves are also in line with a trend I've observed, one that makes me optimistic about the future growth of the American and world economies, despite the recent turmoil in the stock market.
In short, software is eating the world.
John Harwood's claim that Dean Baquet's first priority is turning the New York Times into a trusted information intermediary runs on to and then sinks offshore of the reef that is Thomas Friedman:
That is all...
Must- and Shall-Reads:
And Over Here:
Indeed, there is a great hiatus in his analysis of the economic system as a whole or, perhaps more accurately, in his implied analysis of what the economic system as a whole would be like when virtually the whole of it was controlled by large modern corporations. Professor Galbraith asserts that each modern corporation plans ahead the quantities of the various products which it will produce and the prices at which it will sell them; he assumes we will discuss this assumption later that as a general rule each corporation through its advertising and other sales activities can so mould consumers’ demands that these planned quantities are actually sold at these planned prices. But he never explains why and by what mechanism these individual plans can be expected to build up into a coherent whole....
On the 24th January they reached the river Oder, the modern day border between Poland and Germany, they were now only 60 miles from Berlin. There was post war controversy between Soviet Generals as to whether they should have pushed on to Berlin at this point and smashed the Germans while they were in disarray. There were still very substantial German formations on their flanks, however, which led to the order to halt and consolidate.
for the business community--Michael Bloomberg... Hank Paulson, and... Tom Steyer--are back.... A higher prevalence of extremely hot temperatures could severely impact corn and wheat production, the report warns, unless we take serious evasive action.... By 2100... the more likely range for losses, says the document, is 11 to 69 percent...
For an organization that is working as hard as it possibly can to become a trusted information intermediary--and, overwhelmingly, a useful trusted information intermediary--look at David Leonhardt's The Upshot:
...an online news and data visualization portal on the New York Times' website... entrust[ed]... to the paper's former Washington bureau chief and economics columnist David Leonhardt.... To Leonhardt, The Upshot is more of a laboratory where he can lead a team of 17 cross-disciplinary journalists to rethink news as something approachable and even conversational. The goal: to enable readers to understand the news and by extension, the world, better. publisher. But we live in the puppy-GIF era...
Antioch on the Orontes.... Two routes from the Mediterranean, lying through the Orontes gorge and the Beilan Pass, converge in the plain of the Antioch Lake (Balük Geut or El Bahr) and are met there by the road from the Amanian Gate (Baghche Pass) and western Commagene, which descends the valley of the Karasu River to the Afrin River, the roads from eastern Commagene and the Euphratean crossings at Samosata (Samsat) and Apamea Zeugma (Birejik), which descend the valleys of the Afrin and the Quweiq rivers, and the road from the Euphratean ford at Thapsacus, which skirts the fringe of the Syrian steppe. A single route proceeds south in the Orontes valley.
After Alexander's death in 323 BC, his generals divided up the territory he had conquered. Seleukos I Nikator won the territory of Syria, and he proceeded to found four 'sister cities' in northwestern Syria, one of which was Antioch, a city named, according to Suda, after his son Antiochus.... An eagle... had been given a piece of sacrificial meat and the city was founded on the site to which the eagle carried the offering.... Antioch soon rose above Seleukia Pieria to become the Syrian capital...
Must- and Shall-Reads:
And Over Here:
the first female to land the role in the publication’s 170-year history...
From my perspective, likely to be a very good hire. However, two things seem to me to require rapid repair and a quick turn away from the Micklethwait era:
I've been trying to think of an intelligent comment to make on the extremely-fast-at-the-keyboard Taxation in the name of equity on the desirability of taxing borrowing by big banks. I strongly approve: too-big-to-fail banks are extremely bad news, I have come to believe, for three reasons:
The estimable What have we learned about the ACA over the last year? assesses how ObamaCare has done over its first implementation year with a nice set of links and commentary:in his
We see this strikingly in the many, many right-wing economists who assign moral fault to liberals who don't free ride, don't pollute, don't work hard to externalize as many costs as they can and make others bear them. A doctrine that gleefully assigns positive moral value to being a schmuck is a very odd doctrine to advocate indeed...
...Tabarrok and Cowen are trying to communicate... ‘incentives matter’... a methodological point... [that] should be presented in... as platitudinous [a way] as possible.... There are many ways of doing that, since the problem with the public... is not that they think incentives don’t matter... it’s just that they underestimate the[ir] power of incentives, or they don’t see some of the unexpected ways.... The right way... is to say ‘here’s something that we can all agree upon--but have you thought through the consequences of it? Perhaps not. That’s what economists do.’ But Tabarrok and Cowen are unable to restrain themselves....
As Dean Baker points out, stabilizing financial speculators are an enormous asset to an economy:
Robert Burns Jeff Greene...
...richly deserves to be ridiculed... [for] want[ing] people to get used to lower living standards.... People are wrongly attacking Greene when they complain about his betting against subprime mortgage backed securities.... The securities were in fact bad. Greene betting against them made that clear in the markets somewhat sooner than would have otherwise been the case, bringing down the bubble earlier and more rapidly. This is good... fewer people were caught up in it than if the bubble had continued....
It would have saved people an enormous amount of pain if there had been lots of Jeff Greenes betting against subprime mortgage backed securities in 2003-2004.... Greene was acting out of greed, not a desire to help the economy and society. But this is a case where greed was good..."
Tony Yates gives an even more pessimistic assessment of Eurozone QE than I gave yesterday.
But it is hard to disagree with him, and to be even as less-pessimistic as I was yesterday.
And that even this small, tentative step which carries no risks whatsoever that I can see excites such extraordinary opposition is a very bad sign for the Eurozone as a whole.
Must- and Shall-Reads:
And Over Here:
If it is courageous to face a grave danger with a light heart, Charles and I were courageous that morning. We extended our explorations to the SS camp, immediately outside the electric wire-fence. The camp guards must have left in a great hurry.
On the tables we found plates half-full of a by-now frozen soup which we devoured with an intense pleasure, mugs full of beer, transformed into a yellowish ice, a chess board with an unfinished game. In the dormitories, piles of valuable things.
In my inbox...
The design of the European Central Bank must follow the design of the Bundesbank. That means, first, goal independence: the ECB must have a fixed objective,and that objective should be an inflation rate near but less than 2%/year.
So what if inflation is far below its goal of near-but-less-than-2%/year? We like 0%/year now! Forget goal independence!
The design of the European Central Bank must follow the design of the Bundesbank. That means, second, instrument independence: the ECB as a technocratic institution must not have its elbow joggled by those less-expert in their understanding of monetary policy.
On interest rates, you ran out of room to cut and into the ZLB while the economy was still depressed. So you want to try this QE idea now? Why? that sounds very strange to us! Forget goal independence!
The design of the European Central Bank must follow the design of the Bundesbank. That means, third, following fixed, settled, and well thought-out rules rather than making it up on the fly.
Thank goodness our monetary policy is carried out via rules not discretion!”
ECB QE guesswork, cut out and keep edition: Deutsche Bank::
Name a Friedman Solow debate which, with the benefit of hindsight, we agree was won by Friedman. I do not think this is easy to do....
My challenge was to name a Friedman-Solow debate and convince me (Robert Waldmann) that Friedman was right. Rowe interpreted 'we' to refer to... mainstream... macroeconomics.... For that set of people I use the pronoun 'they'....
Newsletter: A Baker's Dozen for the Week of January 21, 2015:
Over at Equitable Growth: From my perspective, QE has always seemed to me to be likely to be:
...and Hong Kong’s now look remarkably similar.... So is the Hong Kong dollar at risk of a franc-like event? No, it isn’t. There’s not a hint of pressure to drop the currency board. Why is Hong Kong different The answer...is that the institutional setup and history... plays very differently with hard-money ideologues... even though the facts... weren’t very different.... Swiss currency intervention looked to the usual suspects like activist monetary policy, runaway expansion of the central bank’s balance sheet, ‘printing money’ to debase the currency even if the goal was to keep it from getting stronger.
Meanwhile, Hong Kong has a currency board, which is the next best thing to the gold standard, so maintaining the peg... became a demonstration of stern Victorian monetary virtue.... It was the nagging from hard-money types that led to the debacle. Meanwhile, Hong Kong has managed to wrap the very same policy in libertarian clothes, and there’s no problem.
...First, deficient demand.... While demand is strengthening in the US and UK, as one might hope after years of aggressive monetary policies, the eurozone remains in a dangerously depressed condition. Meanwhile, Japan has still to escape its deflation trap. Second, stagnant productivity.... Third, fragile finance... in some respects even more fragile than it was before the crisis... the lack of transparency of balance sheets remains daunting....
Fourth, unstable politics. Deteriorating economic performance and rising inequality are generating substantial political stresses.... Fifth, tense geopolitics. Ours is an era of rapid changes in relative economic power, with the rise of China... and the relative decline of Europe and the US. China is assertive; Russia is irredentist; the west is cautious.... Sixth, challenge overload. These stressed political systems confront large domestic and international challenges... the supply of global public goods, which includes preserving the open world economy, peace and the global commons.... Managing climate change is the hardest. Yet 2014 was the hottest year on record.
These conditions are chronic, not critical.... They can, however, be managed...
Must- and Shall-Reads:
And Over Here:
First, "secular stagnation" was a bad phrase for Larry Summers to have chosen to label what he wants to talk about. It is true that it was the phrase used by Alvin Hansen when he worried about a very similar thing at the end of the 1930s. And it is true that the root cause of what worried Hansen was his fear that technological progress had reached its culmination point--hence that future high return investments would be scarce. But what Hansen and Summers both worry about is not the absence of rapid technological progress per se. READ MOAR
Coyle gives the historical example of the washing machine.... Sure, if the robots come and take everyone's jobs, but then people find ways to work the same amount doing different things, productivity will increase drastically. The economy will probably boom. But this assumes that nothing blows up the global economy before we get to that point.... If low interest rates continue to create asset bubbles that then pop dramatically--which seems to be the real fear of some people who are talking about secular stagnation--the economy could be in rough shape for a long time before the robot (or demographic) saviors come.
It is possible to be afraid of robots and of asset bubbles at the same time.
Mike Konczal sends us to:
...to stimulate investment and increase labor earnings. This paper tests for such real impacts of the 2003 dividend tax cutó one of the largest reforms ever to a U.S. capital tax rateó using a quasi-experimental design and a large sample of U.S. corporate tax returns from years 1996-2008. I estimate that the tax cut caused zero change in corporate investment, with an upper bound elasticity with respect to one minus the top statutory tax rate of .08 and an upper bound e§ect size of .03 standard deviations. This null result is robust across specifications, samples, and investment measures. I similarly find no impact on employee compensation.
The lack of detectable real effects contrasts with an immediate impact on financial payouts to shareholders. Economically, the findings challenge leading estimates of the cost-of-capital elasticity of investment, or undermine models in which dividend tax reforms a§ect the cost of capital. Either way, it may be difficult for policymakers to implement an alternative dividend tax cut that has substantially larger near-term effects.
Over at Equitable Growth: In my view, the best way to understand what has happened to the U.S. bond market over the past six months is this:
The bond market has continued to believe the four things it started believing in mid-2013, at the time of the taper tantrum:
And over the past six months the bond market has come to believe READ MOAR
The feel-good thing to read this week is my 2005 Social Security Reform statement:
In my view, a Social Security reform plan needs to clear five hurdles before it is worth considering:
You have already heard from Robert Shiller on how private accounts as proposed by the Bush administration are not a good deal for beneficiaries... higher returns are not worth the risk... the extra purchasing power gained in those states of the world when stocks do well does not match the losses beneficiaries see in states of the world when stocks do not do so well.... I don't have more than quibbles with Shiller....
I am actually, in at least one of my hearts-of-hearts, the heart-of-hears of an Eisenhower Republican, a believer in private accounts. I agree with Marty Feldstein that the... equity premium... over the past half-century tells us that the stock market has... not... mobiliz[ed] the risk-bearing capacity of the American economy... that... steps... to broaden and deepen stock ownership promise... significant improvements in the ability of America's business to raise capital.... I agree with ... Kent Smetters that it is a scandal and an outrage that the poorest half of Americans have no easy... low-fee way of investing in stocks.
But the Bush plan's private accounts are not private accounts that anybody should endorse. The 3%-plus-inflation clawback rate is just too high given likely future asset returns... READ MOAR
A British foraging party of 500 men, led by Lieutenant Colonel Robert Abercromby of the 37th Foot, left New Brunswick on January 20, and headed west toward the Millstone River. They crossed over the river (it is unclear exactly which bridge they used), leaving a rear guard of Hessians with some field artillery to cover the bridge, and eventually reached Van Nest's mill at Weston, New Jersey (near present day Manville, New Jersey), a few miles north of Somerset Court House, and near the point where the Millstone empties into the Raritan. There they seized supplies of all varieties, and prepared to return to New Brunswick.
Must- and Shall-Reads:
And Over Here:
...with the growing expectation that the Fed will take a dovish turn... global economic turmoil, collapsing oil prices, weak inflation, and a stronger dollar... pointing to rapidly rising downside risks.... Expectations of the first rate hike have been pushed out to the end of this year, seemingly in complete defiance of Fed plans....
During World War I, Britain suffers its first casualties from an air attack when two German zeppelins drop bombs on Great Yarmouth and King's Lynn on the eastern coast of England.
The zeppelin, a motor-driven rigid airship, was developed by German inventor Ferdinand Graf von Zeppelin in 1900. Although a French inventor had built a power-driven airship several decades before, the zeppelin's rigid dirigible, with its steel framework, was by far the largest airship ever constructed. However, in the case of the zeppelin, size was exchanged for safety, as the heavy steel-framed airships were vulnerable to explosion because they had to be lifted by highly flammable hydrogen gas instead of non-flammable helium gas.
In January 1915, Germany employed three zeppelins, the L.3, the L.4, and the L.6, in a two-day bombing mission against Britain. The L.6 turned back after encountering mechanical problems, but the other two zeppelins succeeded in dropping their bombs on English coastal towns.
In its review of my next-door office neighbor, friend, and patron Barry Eichengreen's superb Hall of Mirrors: The Great Depression, The Great Recession, and the Uses-and Misuses-of History, the London Economist writes things like:
Mr Eichengreen at times stretches the facts to fit his narrative. He accuses the Fed of keeping monetary policy too tight because of a preoccupation with inflation; but it enacted several rounds of unconventional stimulus...
This simply will not do.
Barry has substantial discussions of when, how, and why he thinks that the Federal Reserve kept monetary policy too tight because of a preoccupation with inflation.
You can disagree with the analytical framework he uses to make his assessment that monetary policy was "too tight"--smart people like Jeremy Stein do.
But you cannot say that Barry's documented and well-supported analytical judgment "stretches" the facts, without any further elaboratio--unless, of course, you want to get a reputation for being in the fact-stretching business yourself.
The London Economist is right now in a race to establish itself as a trusted information intermediary with entities like the Financial Times, Business Insider, and http://vox.com. Right now it appears to me at least to be well behind the leaders. Things like this do not help it...
...of the exchange rate floor.... The old regime, with or without the additional 50bps cut... was viable and superior to the new regime.... Central banks can live with very large balance sheets... diversify... out of euro forex.... There is no ostensible problem with the central bank having to live with becoming an even larger hedge fund/asset manager or Sovereign Wealth Fund.... It may be that the political scrutiny that would come with an even larger balance sheet... was a source of concern.... But such discomfort would seem to be a small price to pay compared to the cost to the nation of a massively overvalued currency, serious deflation and the resulting harmful effects on the real economy....
Via Eric Rauchway, Franklin Delano Roosevelt while signing the Social Security Act on January 19, 1935:
...The civilization of the past hundred years, with its startling industrial changes, has tended more and more to make life insecure. Young people have come to wonder what would be their lot when they came to old age. The man with a job has wondered how long the job would last.
...for getting outplayed, again and again, on health care:
Conservatives are falling into the same trap... conceding... that the government should be trying to provide everybody with health insurance.... Once you accept those premises, all of your solutions look like the left’s solutions....
Cannon is right.
Must- and Shall-Reads:
And Over Here:
...is threatened by the specter of secular stagnation and deflation. In... 2014... 10-year Treasury rates have fallen by more than 1 percentage point in the United States and are only half as high in Germany and Japan as they were a year ago. In... Germany, France and Japan, short-term interest rates are now negative... suggest[ing] a chronic excess of saving over investment and the likely persistence of conditions that make monetary policy ineffective.... The world has largely exhausted the scope for central bank improvisation as a growth strategy....
Over at Equitable Growth: Howard Gleckman writes:
...A recent debate between my Tax Policy Center colleague Bill Gale and UC Berkeley economist Brad DeLong.... Bill wrote that ‘a major priority should be to get our long-term fiscal house in order.’... Brad argued that... the fiscal gap is really not that bad... especially if you assume that Congress will eventually enact a carbon tax and that the Affordable Care Act will help control future health costs.... With interest rates so low... why worry about deficits in the current environment? Long-term debt is a problem for future generations. Let them figure out how to address it...
I don't think that that last paraphrase from the excellent Howard Gleckman quite gets at what I was trying to say. READ MOAR
And Wonkette tells us that National Review IS ON IT:
...to completely obliterate the good will you built up from starting a foundation to do brain surgery for poor kids?... Dr. Ben Carson, 2016 GOP presidential nomination hopeful/flirt... being a student of the scientific method, he is apparently extremely determined to find out.... Mannatech (yes, manna-tech, they wanted the religious overtones of naming it after the miraculous God-bread that fell from the sky in the Old Testament, combined with, y’know, modern science and technology)... our best buddies over at the National Review:
...on rentiers, their heirs, and the big banks to pay for $175 billion of tax credits that will reward work... fighting a two-front war against a Piketty-style oligarchy where today's hedge funders become tomorrow's trust funders... trying to slow the seemingly endless accumulation of wealth among the top 1, and really the top 0.1, no actually the top 0.001.... And...trying to help the middle help itself by subsidizing work, child care, and education....
Near the end of the war, when Germany's military force was collapsing, the Allied armies closed in on the Nazi concentration camps. The Soviets approached from the east, and the British, French, and Americans from the west. The Germans began frantically to move the prisoners out of the camps near the front and take them to be used as forced laborers in camps inside Germany. Prisoners were first taken by train and then by foot on 'death marches,' as they became known.
Must- and Shall-Reads:
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