1
U.S.
Justice Dept. Is Cautious on Joining C.I.A. Fight
The Senate Intelligence Committee and the C.I.A. have been at loggerheads over the conclusions of a report on the intelligence agency’s detention program.
2
Automobiles
Wheelies: The Baby Engine Boom Edition
G.M. announces its new generation of small Ecotec engines; BMW says it will increase U.S. production.
3
U.S.
A Livelihood in Nuclear Waste, Under Threat
The Waste Isolation Pilot Plant, the nation’s only permanent underground repository for nuclear weapons waste, revived Carlsbad, N.M. But it has been closed since a leak.
4
Opinion
To Cut Heating Bills, Look Beyond Coal Plants
The Natural Resources Defense Council and the Center for American Progress respond to a Business Day article.
7
http://www.nytimes.com/2014/03/21/opinion/krugman-the-timidity-trap.html?ref=paulkrugman
"There don’t seem to be any major economic crises underway right this
moment, and policy makers in many places are patting themselves on the
back. In Europe, for example, they’re crowing about Spain’s recovery: the country seems set to grow at least twice as fast this year as previously forecast.
Unfortunately, that means growth of 1 percent, versus 0.5 percent, in a deeply depressed economy with 55 percent youth unemployment.
The fact that this can be considered good news just goes to show how
accustomed we’ve grown to terrible economic conditions. We’re doing
worse than anyone could have imagined a few years ago, yet people seem
increasingly to be accepting this miserable situation as the new normal.
How
did this happen? There were multiple reasons, of course. But I’ve been
thinking about this question a lot lately, in part because I’ve been
asked to discuss a new assessment of Japan’s efforts to break out of its deflation trap.
And I’d argue that an important source of failure was what I’ve taken
to calling the timidity trap — the consistent tendency of policy makers
who have the right ideas in principle to go for half-measures in
practice, and the way this timidity ends up backfiring, politically and
even economically.
In other words, Yeats had it right: the best lack all conviction, while the worst are full of passionate intensity.
About
the worst: If you’ve been following economic debates these past few
years, you know that both America and Europe have powerful pain caucuses
— influential groups fiercely opposed to any policy that might put the
unemployed back to work. There are some important differences between
the U.S. and European pain caucuses, but both now have truly impressive
track records of being always wrong, never in doubt.
Thus,
in America, we have a faction both on Wall Street and in Congress that
has spent five years and more issuing lurid warnings about runaway
inflation and soaring interest rates. You might think that the failure
of any of these dire predictions to come true would inspire some second
thoughts, but, after all these years, the same people are still being
invited to testify, and are still saying the same things.
Meanwhile, in Europe, four years have passed since the Continent turned to harsh austerity programs.
The architects of these programs told us not to worry about adverse
impacts on jobs and growth — the economic effects would be positive,
because austerity would inspire confidence. Needless to say, the
confidence fairy never appeared, and the economic and social price has
been immense. But no matter: all the serious people say that the
beatings must continue until morale improves.
So what has been the response of the good guys?
For
there are good guys out there, people who haven’t bought into the
notion that nothing can or should be done about mass unemployment. The
Obama administration’s heart — or, at any rate, its economic model — is
in the right place. The Federal Reserve has pushed back against the
springtime-for-Weimar, inflation-is-coming crowd. The International
Monetary Fund has put out research debunking claims that austerity is painless. But these good guys never seem willing to go all-in on their beliefs.
What’s not as well known is that the Fed has, in its own way, done the same thing. From the start, monetary officials ruled out
the kinds of monetary policies most likely to work — in particular,
anything that might signal a willingness to tolerate somewhat higher
inflation, at least temporarily. As a result, the policies they have
followed have fallen short of hopes, and ended up leaving the impression
that nothing much can be done.
And
the same may be true even in Japan — the case that motivated this
article. Japan has made a radical break with past policies, finally
adopting the kind of aggressive monetary stimulus Western economists have been urging for 15 years and more.
Yet there’s still a diffidence about the whole business, a tendency to
set things like inflation targets lower than the situation really
demands. And this increases the risk that Japan will fail to achieve
“liftoff” — that the boost it gets from the new policies won’t be enough
to really break free from deflation.
You
might ask why the good guys have been so timid, the bad guys so
self-confident. I suspect that the answer has a lot to do with class
interests. But that will have to be a subject for another column."
http://krugman.blogs.nytimes.com/
Timid Analysis (Wonkish)
I referred to this briefly in today’s column, but here’s more.
I just left the Brookings Panel meeting (yes, I’m finally back in the US), which included a paper on Abenomics;
the two discussants were me and some guy named Ben Bernanke. Part of my
discussion involved an issue I’ve worried about for a long time, which I
think I’ve been able to formulate a bit better. Here goes:
If you look at the extensive theoretical literature on the zero lower bound since my 1998 paper,
you find that just about all of it treats liquidity-trap conditions as
the result of a temporary shock. Something – most obviously, a burst
bubble and/or deleveraging after a credit boom – leads to a period of
very low demand, so low that even zero interest rates aren’t enough to
restore full employment. Eventually, however, the shock will end. So the
way out is to convince the public that there has been a regime change,
that the central bank will maintain expansionary monetary policy even
after the economy recovers, so as to generate high demand and some
inflation.
But if we’re talking about Japan, when
exactly do we imagine that this period of high demand, when the ZLB is
no longer binding, is going to happen? Even in the US, we’re talking
seriously about secular stagnation, which means that it could be a very
long time before “normal” monetary policy resumes.
Now, even in this case you can get traction
if you can credibly promise higher inflation, which reduces real
interest rates. But what does it take to credibly promise inflation?
Well, it has to involve a strong element of self-fulfilling prophecy:
people have to believe in higher inflation, which produces an economic
boom, which yields the promised inflation.
But a necessary (not sufficient) condition
for this to work is that the promised inflation be high enough that it
will indeed produce an economic boom if people believe the promise will
be kept. If it isn’t, then the actual rate of inflation will fall short
of the promise even if people believe in the promise – which means that
they will stop believing after a while, and the whole effort will fail.
Here’s the picture I put up this morning:
On one side we have a hypothetical but I
think realistic Phillips curve, in which the rate of inflation depends
on output and the relationship gets steep at high levels of utilization.
On the other we have an aggregate demand curve that depends positively
on expected inflation, because this reduces real interest rates at the
zero lower bound. I’ve drawn the picture so that if the central bank
announces a 2 percent inflation target, the actual rate of inflation
will fall short of 2 percent, even if everyone believes the bank’s
promise – which they won’t do for very long.
So you see my problem. Suppose that the
economy really needs a 4 percent inflation target, but the central bank
says, “That seems kind of radical, so let’s be more cautious and only do
2 percent.” This sounds prudent – but may actually guarantee failure."
8
World
Diplomat From India Is Indicted Again Over Housekeeper
Devyani Khobragade faced the new charges of visa fraud, two days after a judge accepted her claim of diplomatic immunity and dismissed earlier charges.
10
World
Iranian Ship, in Plain View but Shrouded in Mystery, Looks Very Familiar to U.S.
Iran is building a nonworking mock-up of an American nuclear-powered aircraft carrier that United States officials say may be intended to be blown up for propaganda value.
11
World
In Iran, Hopes Fade for Surge in the Economy
Confronted with a lack of funds, President Hassan Rouhani has little option but to take steps that will increase the pain for the voters who put him into office.
12
World
Chhattisgarh Tests a Green Toilet for Its Poor
The government has seen some success in introducing biodigester toilets in the central Indian state, where three-fourths of the population have no access to latrines.
13
World
Palestinians Split in Gaza as Hamas Blocks Fatah Rally
The conflict is a sign of the enduring schism between Hamas and the Palestinian Authority, a factor that further complicates American-brokered Israeli-Palestinian peace efforts.
14
Sports
Bayern Munich President Accepts Jail Term for Tax Evasion
Uli Hoeness, a revered figure in German soccer, said that he would resign as team president and that he would not appeal his sentence of three and a half years in prison.
15
Arts
Norwegian Museum to Return Matisse Looted from French Art Dealer by the Nazis
A Norwegian museum has agreed to return a painting by Matisse that had been looted by the Nazis from a well-known Parisian art dealer during World War II.
16
World
U.N. Warns of Anti-Muslim Violence in Central African Republic
Navi Pillay, the human rights chief, also criticized the slow international response to what she said was a humanitarian catastrophe.
17
An inefficient structure can be better. it is easier to build new.
18
Business Day
British Budget Outlines Higher Growth and Help for Savers and Retirees
The chancellor of the Exchequer, George Osborne, announced a set of modest tax breaks and measures to bolster savings, business investment and exports.
19
Opinion
Pakistan’s Culture Wars
A literature festival reflects the battle for Pakistanis’ hearts and minds.
20
World
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