Grasping Reality on TypePad, by Brad DeLong

Note to Self: America's Equities Are Worth 20% Less than They Were Worth Three Months Ago...

The Great American Tax Heist Turns One: No Longer Live at Project Syndicate: Let me hammer this point again: the failure of any of Barro, Bhagwati, Boskin, Calomiris, Cogan, Holtz-Eakin, Hubbard, Lazear, Lindsey, Mankiw, Rosen, Shultz, Taylor, and a hundred-odd others to write about—or even express curiosity about why—their confident predictions of a year ago that the Trump-McConnell-Ryan corporate tax cut would generate a huge investment boom—that silence speaks very loudly about the genre in which they viewed their forecasts back at the time...

For the Weekend: Mary J Blige: Real Love

Weekend Watching: Barry Eichengreen: The Economic Consequences of Mr. Trump

Jon Schwarz: The 10 Most Awful Articles in the Weekly Standard’s Short Life V: "'Breaking the Climate Spell' by Rupert Darwell, 2017. The Weekly Standard has published dozens upon dozens of articles ridiculing anyone who believes climate change is real and a serious problem. But perhaps their best work on the subject is this.... 'Trump is breaking the spell of inevitability of the transition to renewable energy', Darwell writes excitedly. 'The impression of irresistible momentum has been one of the most potent tools in enforcing compliance with the climate catechism. Like socialism, the clean-energy transition will fail because it doesn’t work'. Don’t get mad, snowflakes, that’s just science... #journamalism #orangehairedbaboons #moralresponsibility

If the Fed had had a 4%/year inflation target for the past decade, odds are that right now the Federal Reserve would be in a situation without great workers. But it hasn't, and it isn't: Mohamed A. El-Erian: Fed Rate Hike: Powell Tries to Balance Growth and Volatility: "Fed’s No-Win.... Powell increasingly must make the best of factors mostly outside his control, increasing fears of a policy mistake... #monetarypolicy

Narayana Kocherlakota: The Fed’s Risky Plan to Boost Unemployment - Bloomberg: "The Fed is planning to raise its interest-rate target above its long-run level of around 2.8 percent. We can actually see this happening in the Fed’s rate forecasts for the next three years.... The Fed is planning to eliminate over a million jobs — and put millions more at risk — in order to avoid a tiny deviation from its inflation target. I’ll leave it for readers to judge whether this is a desirable gamble... #monetarypolicy

It was a huge mistake for the Federal Reserve to nearly invest the yield curve in 2007. In fact, I cannot think of any reason why a central bank with inflation not well above target would ever seek or tolerate such a near-inverted yield curve: Joe Rennison: Yield Curve Hits New Cycle Low in Wake of Fed Meeting: "The difference between two- and 10-year Treasury yields, a common permutation of the so-called yield curve, sank below 10 basis points for only the second time this year, and hit 9.87 basis points in morning trading on Thursday. It’s the lowest level for the measure since June 2007...

Popehat: Alan Dershowitz Is Lying To You: "Trading on his reputation as a legal titan, he's offering normative views (what the law should be) as descriptive views (what the law is.)... Alan Dershowitz, in describing the Special Counsel investigation, is posing as a subject-matter expert but acting like an advocate—and a dishonest one... #orengehairedbabooons

Josh Chafetz: "Never tweet is looking better and better as life advice: "'The entire party supports Trump, which is why we are considering canceling a party primary to make sure he doesn't lose it.' https://www.washingtonexaminer.com/news/campaigns/south-carolina-gop-could-scrap-2020-primary-to-protect-trump. Special shout-out to all the people who thought... [this] was a sincere statement of my own views. Keep doing what you do. You make this website the wondrous place. Never tweet is looking better and better as life advice... #journamalism #orangehairedbaboons

Matthew Yglesias: Paul Ryan’s Farewell Address: Transcript Shows Nonsense on Poverty: "Leaving Congress with a legacy of empty words.... A perfect capstone to Ryan’s career: Rich people get tax cuts; poor people get pious words and misleading rhetoric.... It’s important... to correctly understand the hierarchy of Ryan’s priorities. Ideas to help the poor, like the EITC, need to take a back seat to deficit concerns. Tax cuts for the rich, however, are worth doing even when they increase the deficit. And when it comes time to cut the deficit, the best way to do it is to take away poor people’s health insurance. Under the circumstances, America’s struggling families should feel lucky that Ryan never really got around to implementing his vision for their future... #orangehairedbaboons

The Fed ought to pursue a symmetric 4%/year inflation target. It cannot even successfully communicate and pursue a 2%/year symmetric inflation target. And Tim Duy is an unhappy camper: Tim Duy: Fed Hikes Rates, Market Tumbles: "The implication here is that there is substantial downside risk to the economy. So much that the Fed is reducing its forecasts across the board. So much so that the Fed anticipates they will fall short of their inflation target yet again. And yet they continue to hike rates and signal more rate hikes to come. It is an unnecessarily and explicit hawkish message that is an artifact of a communications strategy that only made sense when you could reasonably promise zero rates for an extended period... #monetarypolicy

Antonio Fatas: How low is low for Chinese GDP growth? ~ Antonio Fatas on the Global Economy: "The deceleration of GDP growth rates in China can be seen as a natural evolution of the economy as it follows its convergence path, in particular if we use recent decades in South Korea as a benchmark...

Barry Ritholtz: Transcript: Bethany McLean (Enron & Fracking): "I was naïve then. I never would’ve guessed that a company could be so riddled with overstatements and outright fraud as Enron was.... The piece was skeptical... pointed out problems in Enron’s business... lack of cash flow... burgeoning debt load... nobody understood how this company actually made its money. But if you would ask me at that time that I—would be bankrupt in six months or nine months, I would have said 'What? No'...

James Montier: The Late Cycle Lament: The Dual Economy, Minsky Moments, and Other Concerns: "Clinical studies have found one group of people who perceive reality the way it truly is. These are the clinically depressed, which is of course why they are clinically depressed! This leaves us with an unenviable choice–either be happy and deluded, or sad and accurate...

Karl Smith is correct: to solve the "skills gap", create an economy in which companies have an incentive to solve the "skills gap": Karl Smith: @karlbykarlsmith: "Meh. Turn demand up to 11, watch gap solve itself..." Noah Smith: @Noahpinion: "YESSSSS..." : Joe Nocera: How to Turn a Community College into an Economic Engine: "Bridging the skills gap starts with a conversation between community colleges and employers... #labormarkets #equitablegrowth

Ernie Tedeschi: Unemployment Looks Like 2000 Again. But Wage Growth Doesn’t: "Trying to solve an economic mystery: This is, to put it mildly, a mystery. If workers are as scarce as the unemployment rate and many other measures suggest, employers should be raising wages to compete for them...#labormarkets #equitablegrowth

Binyamin Appelbaum : "As the old saying goes, there are no efficient market hypothesists in foxholes. They gave a guy a Nobel Prize for writing that financial markets are efficient. I'll never find that not funny." *Noah Smith: "EMH is the best investing advice you or most people will ever receive."... *Brad DeLong: EMH is a reasonable theory of short run returns. It is a lousy theory of values. And it is an even lousy her theory of price movements. Fans and co’s inability to distinguish between those three at all was what convinced me they were morons... #twitter #economicsgonewrong #finance

WTF?!?!? Paul Krugman: "This is amazing.: It's as if Mnuchin was trying to create a panic over something nobody was worried about until this release. Alternatively, Mnuchin could just be an idiot. Not just me... #finance #orangehairedbaboons

And a happy Feast of Sunreturn to you too: Brendan Greeley: There's No Process Left at the White House: "Literally on the night before Christmas, after determining that a thing that is not a problem is not a problem, the Secretary of the Treasury of the United States of America is convening the President's Working Group on Financial Markets, an organisation that doesn't really exist. It doesn't have an office, or legal authority, or even employees. There's an executive order from 1988 that says the president can tell several department and agency heads to get together and talk... Whatever the working group used to periodically do, it's been replaced since the financial crisis by the formal work of the Financial Stability Oversight Council. Mr Mnuchin could just as easily call on the order of the garter to take up arms and defend the realm. He's throwing glitter on a football. This isn't how any of this is done... #oranghairedbaboons