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U.S.
Seattle Approves $15 Minimum Wage, Setting a New Standard for Big Cities
The City Council’s unanimous vote guarantees workers the highest big-city minimum wage in the nation, and more than double the federal level.
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Business Day
Euro Zone Edges Closer to Dreaded Deflation
Consumer prices in the 18 nations of the euro zone rose at an annual rate of just 0.5 percent in May, further pressuring the European Central Bank to ease monetary policy.Lowflation and the Two Zeroes
Via the always invaluable Mark Thoma, the IMF blog — yes, the IMF has in effect become an econblogger — has a terrific piece on the problem with low inflation in Europe.
It’s the perfect antidote to the do-nothing voices insisting that
there’s no problem, because we don’t see actual deflation yet.
Part of the IMF analysis concerns debt
dynamics. They don’t put it quite this way, but I’d say that to have
debt deflation — in which falling prices due to a weak economy increase
the real burden of debt, which depresses the economy further, and so on —
you don’t need to have literal deflation. The process begins as soon as
you have lower inflation than expected when interest rates were set.
It’s also noteworthy that inflation rates in the highly indebted
countries are all well below the eurozone average (pdf), with actual deflation in Greece and near-deflation in the rest. So the debt deflation spiral is in fact well underway.
Beyond that, the trouble with low inflation is that it exacerbates the problem posed by the two zeroes — the impossibility of cutting interest rates below zero and the great difficulty of cutting nominal wages.
Is ECB policy constrained by the zero lower
bound? You could argue that it isn’t, since it could cut a bit further
than it has but hasn’t. I’d argue, however, that if nominal interest
rates were much higher — say, 4 percent — but the overall euro macro
situation were what it is, with inflation clearly below target and
unemployment very high, the ECB wouldn’t (and certainly shouldn’t)
hesitate at all about cutting rates substantially. It’s only the fact
that zero is already so close that makes cutting rates seem like a big
deal, an admission that things are looking dangerous (which they are).
Meanwhile, the zero on wages is hugely
important now. The fundamental issue here is that Spain (and other
debtors) needs to reduce its wages relative to Germany, reversing the
runup in relative wages during the bubble years. The argument some of us have been making
for a long time is that it’s vastly easier if this adjustment takes
place via rising German wages rather than falling Spanish wages — partly
because of the debt dynamics, but also and crucially because it’s very
hard to cut nominal wages.
What would you look for if downward nominal
wage rigidity were a seriously binding constraint? A spike in the
distribution of actual wage changes at zero. And sure enough:
International Monetary Fund
To be technical about it: Yowza. This is prima facie evidence that excessively low European inflation is already a huge problem.
The point is that there is no red line at
zero inflation; excessively low inflation is still a very severe
problem, especially given the European situation, even if the number is
positive.
So when people warn about Europe’s potential Japanification,
they’re way behind the curve. Europe is already experiencing all the
woes one associates with deflation, even though it’s only low inflation
so far; and the human and social costs are, of course, far worse than
Japan ever experienced.
This need not lead to a breakup of the euro:
Pessimists on that front, me very much included, misjudged the strength
of European elites’ commitment to the project. But the euro might yet
survive — and be a continuing disaster."
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U.S.
Justices Enter Into Dispute Over Districts Alabama Set
Democratic lawmakers contend that the state Legislature packed minority voters into a few districts, diluting their voting power.
4
Magazine
How to Succeed in Washington Without Really Trying
Become a cause célèbre. There’s never been a smoother path from anonymity to Wolf Blitzer’s greenroom.
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Business Day
Reflections on Lewis Katz, a Believer in Journalism
Mr. Katz, who died in a plane crash on Saturday, had just won an auction last week to take control of the Philadelphia newspapers.
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World
Protests in Nigeria Over Captives Banned
The police in Abuja, the capital, said Monday that they had banned protests organized to demand that the government rescue more than 200 girls still held captive by Boko Haram militants.Business Day
Hospital Charges Surge for Common Ailments, Data Shows
Hospitals charged more for every single one of 98 common ailments in 2012, and the increase for all but seven exceeded the nation’s 2 percent inflation rate for that year, according to a Times analysis.
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World
U.N. Cables Reveal a Turning Point in Rwanda Crisis
Nearly 300 recently declassified documents capture the reluctance of the United Nations Security Council to respond to the deepening crisis in Rwanda in 1994.
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U.S.
Washington: Uncertainty Over Search for Climbers
It may be weeks or months, if ever, before rescuers can get on the ground to search for six climbers who likely plummeted to their deaths high on Mount Rainier.
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11
U.S.
Democrats in Coal Country Run From E.P.A.
President Obama’s proposal to cut emissions from coal-fired power plants could become a key election issue in some battleground states.
12
World
Ciro de Quadros, 74, Dies; Leader in Ridding Latin America of Polio
Dr. de Quadros navigated war zones and reimagined outmoded public health practices to lead a successful immunization campaign in Latin America and the Caribbean.
13
U.S.
Republicans Weigh Odds in Primaries in Iowa and Mississippi
Party officials are confident that State Senator Joni Ernst should be able to prevail in Iowa, but Senator Thad Cochran faces a strong challenge in Mississippi.
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15
U.S.
Investigators Find Recorders in Jet Crash Near Boston
Fifteen investigators were on scene, but they were not yet able to determine the cause of the crash, according to a National Transportation Safety Board official.
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World
Secret Global Strike Kills 2 Malicious Web Viruses
A coordinated effort by government agents in the United States and Europe aimed at two pernicious viruses also led to the identity of the Russian man suspected of masterminding the malware.
Computer Malware; Cyberattacks and Hackers
I suspect overconfidence.
There is always a more clever person.
The authorities do not have a person in a box.
We know who owns the web.
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I suspect overconfidence.
There is always a more clever person.
The authorities do not have a person in a box.
We know who owns the web.
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Technology
Daily Report: At WWDC, Apple Expected to Expand Into Health and Home Monitoring
Apple is said to be ready to introduce mobile apps that will track a user’s health and fitness routine, and smart home devices, potentially turning niche categories into consumer must-haves.
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Business Day
Citing Wireless Trends, AT&T Raises Sales Outlook
AT&T is raising its full-year revenue forecast citing strong wireless trends.
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U.S.
California: Mayor Details Affordable-Housing Plan
Mayor Edwin M. Lee of San Francisco unveiled a $94 million initiative to expand affordable housing over the next two years in the latest bid to address surging home prices, rental rates and evictions.
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