1
Your Money
Individuals Find Ideas in the Institutional Investment World
Some wealthy investors are exploring investment policy statements, which are used by foundations to create parameters for how securities are bought and sold.Hard Hearts, Soft Heads
Many years ago my colleague Alan Blinder wrote a very good book with, it seemed to me, a slightly unfortunate title. It was way too easy to slip from “Hard heads, soft hearts” to the reverse.
On the other hand, maybe that’s a book that needs to be written about today’s austerians, both on our side of the Atlantic and in Europe.
What set me off this morning was an interview by Jens Weidmann, head of the Bundesbank:
Let’s think about the current problems of the euro are in terms of perfectly ordinary, textbook macroeconomics.
First, take the aggregate view. The euro area as a whole has record high unemployment and record low inflation. By any normal standards, this says that monetary policy is too tight. Yes, there’s a problem getting traction, because the ECB is close to the zero lower bound — but that’s a problem of implementation. On what possible grounds could you argue that printing money is not at least a partial solution to the crisis?
Next, look at the internal adjustment problem. The big capital flows from north to south during europhoria have left Spain etc. overvalued , and in need of “internal devaluation”. But there is now completely overwhelming evidence for downward nominal wage rigidity: it’s much easier to get Spanish wages relative to German wages in line through rising German wages than falling Spanish wages. Germany’s own internal devaluation from 2001 to 2007 was accomplished through inflation abroad, not deflation at home. But a too-low overall euro inflation rate pushes the burden onto deflation in debtor countries. Again, on what possible grounds could you argue that a somewhat higher inflation rate — remember, it’s now running at just 0.8 percent — would do nothing to help solve the crisis?
Finally, to the extent that debt levels are a problem, low inflation makes this problem much worse, for all the usual reasons.
Now maybe, maybe, there would still be a euro crisis even if Europe had strong internal demand and 2-plus percent inflation. But we don’t know that — and it’s bizarre to dismiss any effort to move in that direction presumptively.
What it comes down to is that Weidmann — like, I’m afraid, much conventional opinion in Europe — has thrown analysis out the window in favor of a peculiar form of wishful thinking. What’s peculiar about this wishful thinking is that it doesn’t consist of fantasies about the existence of easy, painless solutions; it consists of fantasies about the absence of easy solutions, even when the evidence says very clearly that such solutions exist. Instead of a weak-minded search for pleasure without pain, it’s a search for reasons to inflict pain regardless of the actual economic situation.
Yes, it fits the definition of sadomonetarism.
What’s awesome is that this grim fantasy passes for wisdom, and dictates policy."
On the other hand, maybe that’s a book that needs to be written about today’s austerians, both on our side of the Atlantic and in Europe.
What set me off this morning was an interview by Jens Weidmann, head of the Bundesbank:
“We have lowered interest rates and are offering banks unlimited liquidity. But there are no easy and quick ways out of this crisis,” he told German weekly Die Zeit in an interview to be published on Thursday.What could possibly justify this remark, other than sheer faith in the redemptive power of (other peoples’) pain for its own sake?
“The money printer is definitely not the way to solve it. It will still take years until the causes of the crisis are eliminated.”
Let’s think about the current problems of the euro are in terms of perfectly ordinary, textbook macroeconomics.
First, take the aggregate view. The euro area as a whole has record high unemployment and record low inflation. By any normal standards, this says that monetary policy is too tight. Yes, there’s a problem getting traction, because the ECB is close to the zero lower bound — but that’s a problem of implementation. On what possible grounds could you argue that printing money is not at least a partial solution to the crisis?
Next, look at the internal adjustment problem. The big capital flows from north to south during europhoria have left Spain etc. overvalued , and in need of “internal devaluation”. But there is now completely overwhelming evidence for downward nominal wage rigidity: it’s much easier to get Spanish wages relative to German wages in line through rising German wages than falling Spanish wages. Germany’s own internal devaluation from 2001 to 2007 was accomplished through inflation abroad, not deflation at home. But a too-low overall euro inflation rate pushes the burden onto deflation in debtor countries. Again, on what possible grounds could you argue that a somewhat higher inflation rate — remember, it’s now running at just 0.8 percent — would do nothing to help solve the crisis?
Finally, to the extent that debt levels are a problem, low inflation makes this problem much worse, for all the usual reasons.
Now maybe, maybe, there would still be a euro crisis even if Europe had strong internal demand and 2-plus percent inflation. But we don’t know that — and it’s bizarre to dismiss any effort to move in that direction presumptively.
What it comes down to is that Weidmann — like, I’m afraid, much conventional opinion in Europe — has thrown analysis out the window in favor of a peculiar form of wishful thinking. What’s peculiar about this wishful thinking is that it doesn’t consist of fantasies about the existence of easy, painless solutions; it consists of fantasies about the absence of easy solutions, even when the evidence says very clearly that such solutions exist. Instead of a weak-minded search for pleasure without pain, it’s a search for reasons to inflict pain regardless of the actual economic situation.
Yes, it fits the definition of sadomonetarism.
What’s awesome is that this grim fantasy passes for wisdom, and dictates policy."
2
Automobiles
The Future Is Here. Are Customers?
The two major auto shows that have just opened, in Los Angeles and in Tokyo, are awash in dozens of technologically advanced vehicles that have moved beyond design studies and are ready for purchase.
3
Science
Video: ScienceTake: Sea Slug Love
In the mating game, males and females can have different agendas even when they inhabit the same body.
4
Science
Wine Cellar, Well Aged, Is Revealed in Israel
Where rulers of a Middle Bronze Age city-state once feasted, researchers have found one of civilization’s oldest and largest wine cellars.
5
7
Opinion
The Only-Child Blues
Relaxing the one-child policy may hurt some Chinese women by reviving patriarchal Confucian practices.
8
N.Y. / Region
Carnegie Mellon Bringing Sciences Programs to Brooklyn
The university plans to offer graduate education in emerging media and game design, as well as four more fields, at an outpost campus in Steiner Studios.
9
Fashion & Style
The Return of Logo Culture
The recent rise in logos is in part a rejection of the anti-capitalist, grunge, no-logo 1990s.
10
Opinion
Taxing Times for the Tax Collector
As years of budget reductions take a toll on public services and on the national psyche, France’s sense of balance is lost.Hard Hearts, Soft Heads
Many years ago my colleague Alan Blinder wrote a very good book with, it seemed to me, a slightly unfortunate title. It was way too easy to slip from “Hard heads, soft hearts” to the reverse.
On the other hand, maybe that’s a book that needs to be written about today’s austerians, both on our side of the Atlantic and in Europe.
What set me off this morning was an interview by Jens Weidmann, head of the Bundesbank:
Let’s think about the current problems of the euro are in terms of perfectly ordinary, textbook macroeconomics.
First, take the aggregate view. The euro area as a whole has record high unemployment and record low inflation. By any normal standards, this says that monetary policy is too tight. Yes, there’s a problem getting traction, because the ECB is close to the zero lower bound — but that’s a problem of implementation. On what possible grounds could you argue that printing money is not at least a partial solution to the crisis?
Next, look at the internal adjustment problem. The big capital flows from north to south during europhoria have left Spain etc. overvalued , and in need of “internal devaluation”. But there is now completely overwhelming evidence for downward nominal wage rigidity: it’s much easier to get Spanish wages relative to German wages in line through rising German wages than falling Spanish wages. Germany’s own internal devaluation from 2001 to 2007 was accomplished through inflation abroad, not deflation at home. But a too-low overall euro inflation rate pushes the burden onto deflation in debtor countries. Again, on what possible grounds could you argue that a somewhat higher inflation rate — remember, it’s now running at just 0.8 percent — would do nothing to help solve the crisis?
Finally, to the extent that debt levels are a problem, low inflation makes this problem much worse, for all the usual reasons.
Now maybe, maybe, there would still be a euro crisis even if Europe had strong internal demand and 2-plus percent inflation. But we don’t know that — and it’s bizarre to dismiss any effort to move in that direction presumptively.
What it comes down to is that Weidmann — like, I’m afraid, much conventional opinion in Europe — has thrown analysis out the window in favor of a peculiar form of wishful thinking. What’s peculiar about this wishful thinking is that it doesn’t consist of fantasies about the existence of easy, painless solutions; it consists of fantasies about the absence of easy solutions, even when the evidence says very clearly that such solutions exist. Instead of a weak-minded search for pleasure without pain, it’s a search for reasons to inflict pain regardless of the actual economic situation.
Yes, it fits the definition of sadomonetarism.
What’s awesome is that this grim fantasy passes for wisdom, and dictates policy."
http://www.nytimes.com/2013/11/11/opinion/krugman-the-plot-against-france.html?partner=rssnyt&emc=rss
On the other hand, maybe that’s a book that needs to be written about today’s austerians, both on our side of the Atlantic and in Europe.
What set me off this morning was an interview by Jens Weidmann, head of the Bundesbank:
“We have lowered interest rates and are offering banks unlimited liquidity. But there are no easy and quick ways out of this crisis,” he told German weekly Die Zeit in an interview to be published on Thursday.What could possibly justify this remark, other than sheer faith in the redemptive power of (other peoples’) pain for its own sake?
“The money printer is definitely not the way to solve it. It will still take years until the causes of the crisis are eliminated.”
Let’s think about the current problems of the euro are in terms of perfectly ordinary, textbook macroeconomics.
First, take the aggregate view. The euro area as a whole has record high unemployment and record low inflation. By any normal standards, this says that monetary policy is too tight. Yes, there’s a problem getting traction, because the ECB is close to the zero lower bound — but that’s a problem of implementation. On what possible grounds could you argue that printing money is not at least a partial solution to the crisis?
Next, look at the internal adjustment problem. The big capital flows from north to south during europhoria have left Spain etc. overvalued , and in need of “internal devaluation”. But there is now completely overwhelming evidence for downward nominal wage rigidity: it’s much easier to get Spanish wages relative to German wages in line through rising German wages than falling Spanish wages. Germany’s own internal devaluation from 2001 to 2007 was accomplished through inflation abroad, not deflation at home. But a too-low overall euro inflation rate pushes the burden onto deflation in debtor countries. Again, on what possible grounds could you argue that a somewhat higher inflation rate — remember, it’s now running at just 0.8 percent — would do nothing to help solve the crisis?
Finally, to the extent that debt levels are a problem, low inflation makes this problem much worse, for all the usual reasons.
Now maybe, maybe, there would still be a euro crisis even if Europe had strong internal demand and 2-plus percent inflation. But we don’t know that — and it’s bizarre to dismiss any effort to move in that direction presumptively.
What it comes down to is that Weidmann — like, I’m afraid, much conventional opinion in Europe — has thrown analysis out the window in favor of a peculiar form of wishful thinking. What’s peculiar about this wishful thinking is that it doesn’t consist of fantasies about the existence of easy, painless solutions; it consists of fantasies about the absence of easy solutions, even when the evidence says very clearly that such solutions exist. Instead of a weak-minded search for pleasure without pain, it’s a search for reasons to inflict pain regardless of the actual economic situation.
Yes, it fits the definition of sadomonetarism.
What’s awesome is that this grim fantasy passes for wisdom, and dictates policy."
http://www.nytimes.com/2013/11/11/opinion/krugman-the-plot-against-france.html?partner=rssnyt&emc=rss
"On Friday Standard & Poor’s, the bond-rating agency, downgraded France.
The move made headlines, with many reports suggesting that France is in
crisis. But markets yawned: French borrowing costs, which are near historic lows, barely budged. So what’s going on here? The answer is that S.& P.’s action needs to
be seen in the context of the broader politics of fiscal austerity. And
I do mean politics, not economics. For the plot against France — I’m
being a bit tongue in cheek here, but there really are a lot of people
trying to bad-mouth the place — is one clear demonstration that in
Europe, as in America, fiscal scolds don’t really care about deficits.
Instead, they’re using debt fears to advance an ideological agenda. And
France, which refuses to play along, has become the target of incessant
negative propaganda.
Let me give you an idea of what we’re talking about. A year ago the magazine The Economist declared
France “the time bomb at the heart of Europe,” with problems that could
dwarf those of Greece, Spain, Portugal and Italy. In January 2013, CNN
Money’s senior editor-at-large declared France in “free fall,” a nation
“heading toward an economic Bastille.” Similar sentiments can be found
all over economic newsletters.
Given such rhetoric, one comes to French data expecting to see the
worst. What you find instead is a country experiencing economic
difficulties — who isn’t? — but in general performing as well as or
better than most of its neighbors, with the admittedly big exception of
Germany. Recent French growth has been sluggish, but much better than
that of, say, the Netherlands, which is still rated AAA.
According to standard estimates, French workers were actually a bit
more productive than their German counterparts a dozen years ago — and
guess what, they still are.
Meanwhile, French fiscal prospects
look distinctly nonalarming. The budget deficit has fallen sharply
since 2010, and the International Monetary Fund expects the ratio of
debt to G.D.P. to be roughly stable over the next five years.
What about the longer-run burden of an aging population? This is a
problem in France, as it is in all wealthy nations. But France has a
higher birthrate than most of Europe — in part because of government
programs that encourage births and ease the lives of working mothers —
so that its demographic projections are much better than those of its
neighbors, Germany included. Meanwhile, France’s remarkable health care
system, which delivers high quality at low cost, is going to be a big
fiscal advantage looking forward.
By the numbers, then, it’s hard to see why France deserves any particular opprobrium. So again, what’s going on?
Here’s a clue: Two months ago Olli Rehn, Europe’s commissioner for
economic and monetary affairs — and one of the prime movers behind harsh
austerity policies — dismissed France’s seemingly exemplary fiscal
policy. Why? Because it was based on tax increases rather than spending
cuts — and tax hikes, he declared, would “destroy growth and handicap the creation of jobs.”
In other words, never mind what I said about fiscal discipline, you’re supposed to be dismantling the safety net.
S.& P.’s explanation
of its downgrade, though less clearly stated, amounted to the same
thing: France was being downgraded because “the French government’s
current approach to budgetary and structural reforms to taxation, as
well as to product, services and labor markets, is unlikely to
substantially raise France’s medium-term growth prospects.” Again, never
mind the budget numbers, where are the tax cuts and deregulation?
You might think that Mr. Rehn and S.& P. were basing their demands
on solid evidence that spending cuts are in fact better for the economy
than tax increases. But they weren’t. In fact, research at the I.M.F.
suggests that when you’re trying to reduce deficits in a recession, the
opposite is true: temporary tax hikes do much less damage than spending cuts.
Oh, and when people start talking about the wonders of “structural
reform,” take it with a large heaping of salt. It’s mainly a code phrase
for deregulation — and the evidence on the virtues of deregulation is
decidedly mixed. Remember, Ireland received high praise for its
structural reforms in the 1990s and 2000s; in 2006 George Osborne, now
Britain’s chancellor of the Exchequer, called it a “shining example.”
How did that turn out?
If all this sounds familiar to American readers, it should. U.S. fiscal
scolds turn out, almost invariably, to be much more interested in
slashing Medicare and Social Security than they are in actually cutting
deficits. Europe’s austerians are now revealing themselves to be pretty
much the same. France has committed the unforgivable sin of being
fiscally responsible without inflicting pain on the poor and unlucky.
And it must be punished."
11
U.S.
Concerns as Austin Residents Drill New Wells
As more Austin residents drill wells to offset the drought, officials and environmentalists grow concerned that it will negatively impact groundwater supplies.
12
Business Day
Katie Couric Is Said to Be Close to Taking a Job at Yahoo
The negotiations with Yahoo are said to be in the late stages. They are independent of Ms. Couric’s syndicated talk show, whose future is uncertain.
13
Style
Making 'Healthy' Treats of Halloween Leftovers
On the one hand, I don’t want to waste what’s left of the Halloween candy. On the other, I don’t want the pumpkin buckets decorating my Thanksgiving table. Whole Wheat Leftover Halloween Candy Oatmeal Cookies were the perfect solution.
Is Sugar Toxic?
That it makes us fat is something we take for granted. That it might also be making us sick is harder to accept.April 13, 2011 - - Magazine - Article - Print Headline: "IS SUGAR TOXIC?"It's the Sugar, Folks
Sugar is indeed toxic. It may not be the only problem with the Standard American Diet, but it's fast becoming clear that it's the major one. A study ...February 27, 2013 - - Opinion - Print Headline: "It’s The Sugar, Folks"
14
Sports
I.O.C. Expects ‘Stringent’ Tests in Sochi
The International Olympic Committee said that the drug-testing program for February’s Winter Olympics in Sochi, Russia, would be the “most stringent” in the history of the Winter Games.
15
World
At a Philippine Hospital, Survivors Face Quiet Despair
The main hospital in Tacloban, the Philippine city that bore the brunt of Typhoon Haiyan, lacks the supplies to help the wounded, with some just left to die.
16
World
Private Donors’ Funds Add Wild Card to War in Syria
The flow of millions of dollars in private money to extremist fighters has added an unpredictable factor to the war, analysts say, exacerbating divisions in the opposition.
17
N.Y. / Region
Crayons Down. Now Dig Into That Healthful Parfait.
A new anti-obesity initiative by the Children’s Museum of Manhattan and the National Institutes of Health seeks to teach children under 5 to enjoy fruits and vegetables daily.
18
U.S.
Leonard Herzenberg, 81, Immunologist Who Revolutionized Research, Dies
Dr. Herzenberg, who developed a device to better examine cells, helped facilitate stem cell research and advance the treatment of cancer and other illnesses.
19
Opinion
A Permanent Slump?
The new normal for our economy may be a state of mild depression.
"But what if the world we’ve been living in for the past five years is
the new normal? What if depression-like conditions are on track to
persist, not for another year or two, but for decades?
You might imagine that speculations along these lines are the province
of a radical fringe. And they are indeed radical; but fringe, not so
much. A number of economists have been flirting with such thoughts
for a while. And now they’ve moved into the mainstream. In fact, the
case for “secular stagnation” — a persistent state in which a depressed
economy is the norm, with episodes of full employment few and far
between — was made forcefully recently at the most ultrarespectable of
venues, the I.M.F.’s big annual research conference. And the person
making that case was none other than Larry Summers. Yes, that Larry Summers."
20
Education
Texas Education Board Flags Biology Textbook Over Evolution Concerns
The State Board of Education delayed final approval of a widely used biology textbook because of concerns raised by one reviewer that the book presents evolution as fact rather than mere theory.
2
Business Day
South Korea Is Expected to Buy Lockheed Fighter Jets
New requirements announced on Friday effectively leave the American contractor’s F-35A stealth jet as the only viable option.
3
4
7
11
12
13
16
Opinion
Twisted Sister, and Brothers
Thanksgiving horror story: Three twisted sibling sagas play out in the public arena.
17
Business Day
Katie Couric Is Said to Be Close to Taking a Job at Yahoo
The negotiations with Yahoo are said to be in the late stages. They are independent of Ms. Couric’s syndicated talk show, whose future is uncertain.
19
Books
An Old Chinese Novel Is Racy Reading Still
An American scholar reveals the novel “Plum in the Golden Vase,” famous for its pornography, as an encyclopedia of imperial Chinese life.Science and Civilisation in China
20
U.S.
In One County, the State’s Political Future
Tarrant County, the largest reliably Republican county in Texas, is now a focal point in the state’s political future as Democrats try to shift the minds of voters there.The future of Texas is confused.
The faithful do not learn.
|
No comments:
Post a Comment