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I beg to move:
That an humble Address be presented to His Majesty, to convey to His Majesty the deep sorrow with which this House has learned of the death of the President of the United States of America, and to pray His Majesty that, in communicating his own sentiments of grief to the United States Government, he will also be graciously pleased to express on the part of this House their sense of the loss which the British Commonwealth and Empire and the cause of the Allied Nations have sustained, and their profound sympathy with Mrs. Roosevelt and the late President's family, and with the Government and people of the United States of America.
...Rosa Luxemburg, Emma Goldman and Eleanor Marx. The first two survived these debilitating attachments, the third did not. At the age of 43, upon learning that her common law husband of 14 years had secretly married a 22-year-old actress, Eleanor took poison and died. Had her father, Karl Marx, been alive he would have been not only distressed by her death but, I think, dismayed that a daughter of his could not surmount this level of betrayal, for the sake of international socialism if nothing else.
I think Tony Yates gets it 100% correct. It is not just that I do not think that John Taylor's current positions are incorrect, it is that I cannot imagine a possible world in which they would be consistent:
...He contends the following: That the Great Moderation was due to adherence to the Taylor Rule [and to ‘rules-based’ fiscal policy]. That during the early 2000s, monetary policy was set looser than that prescribed by the Taylor Rule. This caused the build up of debt and risk-taking, which ultimately led to the bust, and the end of the Great Moderation. Weak activity following the crisis has been due to departures from rules based monetary policy, in the form of unconventional monetary policy. And departure from rules based fiscal policy, in the form of the fiscal stimulus enacted by Obama in 2009. These departures have created uncertainty that has weighed against activity. Tighter policy on both counts would have led to more buoyant activity during the recovery on account of being more certain.
I think he’s wrong on every point.
Tweet of the Day: @grodeau: buying German bonds at negative interest rates is like throwing dimes in front of the steamroller! https://mobile.twitter.com/grodaeu/status/589833904011538435
Across the Wide Missouri: 20th Anniversary of the Oklahoma City Bombing:
Yesterday we were on the road all day. The country-side was clothed in a filmy haze which softened the bright sun-light. This part of Germany looks like a fairy-land. Little farms, with the apple and pear blossoms framing the red-tiled roofs, set in neat patterns over the gently-rolling green hills, broken here and there by a grove of delicate birch trees, or green pine. What a setting for the tide of human misery which thronged the road-side!
Liberated workers and freed prisoners of war, mostly men, but also many women streamed past us as we rode, like a movie reel. Russians, Poles, Italians, French, Dutch, and Belgians, dressed in scraps of uniforms, patched work-clothes, rags and tatters; carrying little or big bundles, or pushing little wheel-carts; tired and hungry; apathetic, sprawled out under the tress in little groups; trying to get back and away from the front.
Over at Equitable Growth: This is what Ben Friedman wrote about in the late 1970s:
...Chapter 4, on business investment... weak... [because of] a special problem of lack of business confidence, driven by fiscal worries, failure to make needed structural reforms, and maybe even careless rhetoric... [or] weak because the economy is weak[?]... The IMF comes down strongly for the second view....
But wait, there’s more.... To deal with... reverse causation... it looks for episodes of weak growth... clearly caused by... fiscal consolidation... [and] manages in passing both to refute a very widely held but false belief... that government deficits necessarily ‘crowd out’ investment, so that reducing deficits should free up funds that lead to higher investment. Not so, says the IMF: when governments introduce deficit-reduction measures, investment falls instead of rising. This says that the deficits were crowding investment in, not out... empirical confirmation of the existence of the paradox of thrift! Remarkable stuff. Someone tell Wolfgang Schäuble. READ MOAR
Must- and Should-Reads:
- Europe’s Poisoned Chalice of Growth Must-Read: : The Safety Trap :
- Must-Read: A Real Problem with the ACA :
- Must-Read: Bond bubbles, MMT, and the Limits to Fiscal Policy :
- Afternoon Seminar: Genevieve Kenney on Medicare and Medicaid
- Recession in Oil Patch Red States This Year?
- Breaking down the decline in the U.S. labor share of income :
- Determining the optimal U.S. tax rate for higher earners :
- Weekend reading :
And Over Here:
On Robert A. Heinlein (1964):
So the banker is the son of a bitch in the deal--Or is he, now? Bankers never handle their own money to any important extent; they are custodians of other people’s money. If the banker thinks that it is a bad deal in the long run [because of discrimination], is it not his solemn duty to his stockholders and his depositors to refuse it? No matter how it offends the “human rights” of purple people eaters? Is he morally justified in hypothecating other people’s money in a deal which he considers risky--whether the risk be on that one piece of paper, or long-term risk for his whole crazy structure of loans and futures and so forth? I say he is not; he is a steward and must behave as one--not as a social reformer. Are you and I entitled to a backseat veto over his judgment? No, it ain’t our money. So far, I think, no argument--You, the banker, and the subdivider are each morally entitled to turn down the purple people eater...
And me on Twitter via Storify:
Over at Equitable Growth: In the Oil Patch, probably yes--lost demand from the failure to expand Medicaid is likely to push them over the edge and into recession. Elsewhere it will be close, but probably not:
...is leaving red states poorer and sicker.... King v. Burwell.... If the Supreme Court rules for the plaintiffs, those states, including Arizona, will lose their subsidies. That would be a disaster for those states. As Sarah Kliff writes: READ MOAR
Niall Ferguson @nfergus · 12h 12 hours ago: Cliff Asness very good on the bogus arguments deployed by those claiming that Obamacare has 'worked': http://on.wsj.com/1JLu73Z https://twitter.com/nfergus/status/588537594134269952
Dwight David Eisenhower Liveblogs World War II: April 18, 1945: Letter to Marshall on Concentration Camps and Other Subjects
Dwight David Eisenhower:
18 April 1945
Dear General [Marshall]:
Today I forwarded to the Combined Chiefs of Staff the essentials of my future plans. In a word, what I am going to do now that the western enemy is split into two part, is to take up a defensive line in the center (along a geographical feature that will tend to separate our forces physically from the advancing Russians) and clean up the important jobs on our flanks. A mere glance at the map shows that one of these is to get Lubeck and then clear up all the areas wet and north of there. The other job is the so-called "redoubt". I deem both of these to be vastly more important than the capture of Berlin--anyway, to plan for making an immediate effort against Berlin would be foolish in view of the relative situation of the Russians and ourselves at this moment. We'd get all coiled up for something that in all probability would never come off. While true that we have seized a small bridgehead over the Elbe, it must be remembered that only our spearheads are up to that river; our center of gravity is well back of there.
The Heinlein Foundation appears to have taken down its Virginia Edition Sample.
Here's the letter to F.M. Busby from it:
EDITOR’S NOTE: This letter may never have been sent, possibly due (in part) to its racial contents, still incandescently incendiary forty-five years later. Heinlein moved the letter bodily to his “Story Notes” desk file, possibly because of its relevance to the underlying background of Farnham’s Freehold. The first page of the letter is missing, so we pick it up in mid- sentence and undated, though Virginia Heinlein noted on an index card stored with the letter that it must, by internal evidence, have been written sometime in 1964 or 1965 and in any event before October 1965 (when the Heinleins moved from Colorado Springs). The letter is printed otherwise complete and as Heinlein wrote it.
...long enough that I am seriously annoyed at the amount of time I've wasted on it, because that time could have been better spent reading a good book. Or even writing one. And I think I've finally hit my ohfuckitall point. Brad Torgersen has made himself the point man in this year's brouhaha--and I have patiently slogged through his endless blogs, his self-serving sideways denials, his squalid victim racket, and his astonishing refusal to recognize that he has committed all the same sins he is now projecting onto others.
Thank you for a wonderful talk. A comment, and a question:
The comment: I have long had a bone to pick with Amy Finkelstein and company and their Oregon Medicaid study. They use “significant” in two different ways in their paper. Improvements in blood pressure and in blood sugar levels in their study were not statistically significant. Not a lot of people in the sample had high blood pressure or high blood sugar, and so the drops seen were not big enough to be confident in a statistical sense that they were not just the luck fo the draw. But the drops in blood pressure and in blood sugar levels were in line with what we expect to follow from prescribing first line lisinopril and metphormin to those who need them, and those drops are clinically significant. I’ve been trying to get them to say that the improvements in the physical health indicators they found were clinically but not statistically significant — but without conspicuous success. READ MOAR
...are coming around to the realization that the economy is screwing them, too. There was a moment when a lot of them (we're talking ones at elite outlets, not your random small town paper) thought they'd done everything right, would become celebrities, and get Tom Friedman's speaking fees. The economy sure was working for them, and screw everybody else. But then, well, that didn't quite happen.
Live from the Fairfax Hotel: And why won't my computer automatically autocorrect "pubic" to "public"?
It is brilliant.
I have some other thoughts:
Live from the Fairfax Hotel: In April, Washington DC can be an amazingly delightful and livable city.
: [My Day):
WASHINGTON, Monday—When you have lived for a long time in close contact with the loss and grief which today pervades the world, any personal sorrow seems to be lost in the general sadness of humanity. For a long time, all hearts have been heavy for every serviceman sacrificed in the war. There is only one way in which those of us who live can repay the dead who have given their utmost for the cause of liberty and justice. They died in the hope that, thru their sacrifice, an enduring peace would be built and a more just world would emerge for humanity.
Must- and Should-Reads:
- Must-Read: Hottest Tax Idea in Washington Actually Terrible :
- Must-Read: The Mistakes Made by Most Development Reformers :
- Must-Must-Read: The Fed Can Be Patient About Raising Interest Rates :
- Europe’s Poisoned Chalice of Growth :
- Must-Read: The New Liberal Consensus Is a Force to Be Reckoned With :
- Must-Read: Research Summary :
- The Zombie Statistic [that Health Care Is Responsible for Just 10% of Overall Health] Revisited :
- Must-Read: Fixed Mindsets :
- Things I Probably Will Have Time to Say: Rethinking Macro Policy III Conference, Washington D.C., April 15-16 - Washington Center for Equitable Growth
- Things I Won't Have Time to Say III: Rethinking Macro Policy III Conference, Washington D.C., April 15-16 - Washington Center for Equitable Growth
- Things I Won't Have Time to Say II: Rethinking Macro Policy III Conference, Washington D.C., April 15-16 - Washington Center for Equitable Growth
- Things I Won't Have Time to Say: Rethinking Macro Policy III Conference, Washington D.C., April 15-16 - Washington Center for Equitable Growth
- The path to more U.S. exports? :
And Over Here:
In the early hours of 16 April, the offensive began with a massive bombardment by thousands of artillery pieces and Katyushas. Well before dawn, the 1st Belorussian Front attacked across the Oder and the 1st Ukrainian Front attacked across the Neisse. The 1st Belorussian Front was the stronger force, but it had the more difficult assignment since it was facing the bulk of the German forces.
Things I Probably Will Have Time to Say: Rethinking Macro Policy III Conference, Washington D.C., April 15-16
Things I Probably Will Have Time to Say
It could have turned out very differently.
It could have been that the money-center universal banks did understand their derivatives books. It could have been that, after the financial crisis, trust in financial intermediaries would rebuild itself quickly. It could have been that the North Atlantic's central banks would have been able to nail market expectations to a rapid return to normalcy, thus providing cash holders with powerful incentives to spend. It could even have been the case that fiscal expansion would have proven ineffective. It was Karl Smith who pointed out to me that in the guts of even the IS-LM model, fiscal policy expands
I+G private spending [satisfied, RJW?] by reducing the perceived average riskiness of and thus getting households to hold more. In the model it is guaranteed that a sovereign that issues more debt thereby necessarily reduces the perceived riskiness of average debt. In the world not. READ MOAR
I mean: What can one possibly say when confronted by this?
Well, one can quote Ben Bernanke:
...if the real interest rate were expected to be negative indefinitely, almost any investment is profitable. For example, at a negative (or even zero) interest rate, it would pay to level the Rocky Mountains to save even the small amount of fuel expended by trains and cars that currently must climb steep grades. It’s therefore questionable that the economy’s equilibrium real rate can really be negative for an extended period...
So where is our Rhine-Danube-Po tunnel-canal underneath the Alps?
I understand that the marginal holder of Bunds is expecting the euro to rise relative to the dollar in the future. But why not simply hold zero-yielding deposits instead? Presumably it is some form of counterparty risk. But what form of counterparty risk.
I am supposed to be a trained professional. I am supposed to understand this stuff...
Things I Won't Have Time to Say III: Rethinking Macro Policy III Conference, Washington D.C., April 15-16
Things I am almost surely not going to have time to say III:
Can, in a political-economy sense, central banks be trusted with the full-employment-and-price-stability stabilization-policy mission? Are they not captured, to too great an extent, by the commercial-banking sector that, myopically, favors higher nominal interest rates to directly improve bank cash flows and indirectly dampen inflation and so redistribute wealth to nominal creditors--like banks?
No, they cannot be trusted. Yes, they are captured to too great an extent by the commercial-banking sector. Yes, the commercial banking sector is very myopic in its conventional wisdom.
Things I Won't Have Time to Say I: Rethinking Macro Policy III Conference, Washington D.C., April 15-16
Things I am almost surely not going to have time to say I:
It could have turned out very differently.
It could have been--as those of us who more-or-less hooted Raghu Rajan down at Jackson Hole in August 2005 wrongly thought—-that the money-center universal banks did understand their derivatives books; that asset-price innovation variances did drift up or down with time relatively slowly; that the weak point in the global economy in the mid 2000s was the global imbalance of the US trade deficit, and the possibility that some large bad actor had been selling unhedged dollar puts on a very large scale--not the subprime mortgages on houses built in the desert between Los Angeles and Albuquerque, and the use of securities based on those subprime mortgages as core banking reserves. READ MOAR
Adolf Hitler: Order of the Day:
Soldiers of the German Eastern front!
For the last time our deadly enemies the Jewish Bolsheviks have launched their massive forces to the attack. Their aim is to reduce Germany to ruins and to exterminate our people. Many of you soldiers in the East already know the fate which threatens, above all, German women, girls, and children. While the old men and children will be murdered, the women and girls will be reduced to barrack-room whores. The remainder will be marched off to Siberia.
...to understanding economic and financial processes. The Global Financial Crisis of 2008 and the Great Recession that followed challenged much conventional wisdom and academic orthodoxy with respect both to theory and policy. New economic thinking was needed and that need has been extended and amplified through the succeeding years. But: what constitutes 'new economic thinking?'
Must- and Should-Reads:
- Increased Globalisation Explains Some Of The Increase In The US Profit Share :
- "I show adjusting for increased income inequality lowers the rate of U.S. economic growth since 1980 by roughly 15-20%, implying a social cost of increased income inequality in the U.S. of roughly $400 billion. Adjusting for differences in income inequality across countries, the U.S. is poorer than countries like Austria and the Netherlands, despite having higher national income per capita..." :
- Facebook, Network Externalities, Regulation :
- A Tenured Professor On Why Hiring Adjuncts Is Wrong :
- Must-Read: Macroeconomists Need New Tools to Challenge Consensus :
- Today's Must-Must-Read: A Chart Obamacare's Critics Have a Hard Time Explaining :
- Must-Read: Macro Teaching and the Financial Crisis :
- Must-Read: Is Your Job ‘Routine’? If So, It’s Probably Disappearing :
...Lean over backwards so you do not fool yourself, and teach your students the discipline correctly from the start, rather than teaching them things at the start you will have to unteach them later.
Paul Krugman endorses Hillary Rodham Clinton--or, rather, endorses the Democratic Party and her as its overwhelmingly-likely standard bearer:
...read significance into what she says or doesn’t say about President Obama, endless thumb-sucking.... Please pay no attention. Personality-based political analysis is always a dubious venture.... Pundits are terrible judges.... We were assured that George W. Bush was a nice, affable fellow who would pursue moderate, bipartisan policies.... There has never been a time in American history when the alleged personal traits of candidates mattered less.... Each party is quite unified on major policy issues--and these unified positions are very far from each other....