Start your workweek right with our artisanal morning train reads:
• Strong Dollar Hammers Profits at U.S. Multinationals (WSJ)
• Richard Fisher, Often Wrong but Seldom Boring, Leaves the Fed (NY Times)
• Economists agree: deflation is either good, or bad, or irrelevant (FT Alphaville)
• Why are so few homes for sale in the Bay Area? (SF Gate) see also The cities where houses are suddenly going underwater (WaPo)
• Who Invented the Computer Virus? (Priceonomics)
What are you reading?
The unheralded health crisis looming: the macro-social physiological impacts of the tech boom.
Coming soon to generations coming of age.
Default panic and other tall stories
People still say to me that the UK or the US had to embark on austerity, because otherwise the markets would have taken fright at the ‘simply huge’ budget deficit. How do they know this? Because people ‘close to the market’ keep telling them so.
What can I do to show that this is wrong? The most obvious point ….
NB: I suspect that even many of the cynics promoting government spending cuts as a policy club actually believe in austerity at the level of childhood fable, an Aesopic myth illustrating both moral virtue and herding path.
Richard “Often-Wrong” Fisher to join Pepsi’s board.
It’s not about merit, brains, or even being right some of the time. It’s about who you cozy up to. I’m sure he’ll be up to speed with salty snacks before his term is over.
The American meritocracy rolls on.
And speaking of loud Any Randian’s who are wrong.
This is the guy who hates asset Allocation. Calling AA a “New Lie.”
ROFL! Give a clown air time, he uses it.
Aren’t we moving to the part of the investment cycle where the focus on earnings is quaint old-school thinking?
seems like that is an old quaint view, from all the way back to 2008, if not before.
There is good deflation and bad deflation. The industrial age, technology, era, and information age have resulted in a good deflation where the cost of producing a product with specific attributes has declines over time. However, product improvements have been available, so the same dollar buys a better product. We now have tiny cellphones that do more than what a desktop computer could do 30 years ago with more connection to the rest of the world. Our cars are far safer and more fuel efficient etc.
Meanwhile coal, oil etc. had virtually no value at all 200 years ago. For the past century they have been indispensable commodities but that might be starting to wane now, so they may go back to not having much value a few decades from now. That would be another good deflation.
If, on the other hand, deflation is driven by unemployment, lack of spending, and despair on the part of the population then we have the Great Depression which results in massive negative social turmoil with the likelihood of a number of bad outcomes (that one turned into WW II and the Iron Curtain and Maoist China).
So our business are generating both types of deflation. They continue to create new and better products but they are also “maximizing shareholder value” on the backs of their employees that ultimately hurts their consumer base. In addition, many developed governments seem quite determined to relive the Great Depression with their austerity policies. To make matters worse, we are ending up with government deficits leading to high debt burdens because of military spending and because austerity policies are reducing the money available to be taxed to pay for the deficit social spending required due to the unemployment and underemployment.
While I think the Feed botched a bunch of their monetary policy in the late 90s and early 2000s creating a moral hard for investors, the Bernanke Fed did step into the breach in the 2009 crisis when everybody else abandoned ship and left a vacuum behind. Unfortunately, they have not backfilled in behind the Fed and so it is still fighting a lonely battle that it should not have to be fighting.
What you are describing is a form of the logical fallacy of equivocation.
Here, they are using the word “deflation” in two different ways in the same argument. This looks like a classic case of equivocation.
The title for the FTAlphaVille article on inflation/deflation is suitably puckish and not entirely misleading but misses the central theme of the article by a wide enough margin to be worth comment. I suspect it was an editor rather than the writer who labeled the article, “Economists agree: deflation is either good, or bad, or irrelevant,” but regardless it smacks too much of “opinions on the shape of the earth differ” pseudo-balance endemic in corporate media for either comfort or incentive to read further, at least IMO.
I did however read further — FTaphaville articles are usually worth the trouble — and the article itself is fairly nuanced, concluding (correctly I think) that inflation or deflation or neither each may matter more or less in different economic contexts so the mandate typical of most central banks — maintaining price stability within some definable (and usually narrow) band — is unlikely to be an optimal overall or global strategy response in all scenarios; e.g., one of the problems faced by the ECB is that, unlike our Fed, their sole mandate is price-stability and Mario Draghi really had to push the envelope of what was permissible (some would say he ripped the seams) to make even a modestly effective monetary response to the European crisis.
Can someone help me with Ted Cruz?
He shuts down gov’t, creams about it, makes it his cause célèbre, claims nothing is lost, there are no consequences and it’s good They backs off? Blames others. How do you scream and shout about how great it is to shut down government, bring media attention to yourself then deny you did it later? I mean either be loud and proud, or do it in secret and deny it, but don’t be loud and proud and go back into the closet.
OBAMA shut down gov’t not Ted Cruz!
The liberal Media is pathetic: Bob Schieffer Drags Up Tired Old Attack That Ted Cruz Shut Down Gov’t
The GOP is proving they can’t govern.
What grade would you give the current GOP controlled Congress?
In a democracy like ours you can’t bomb throw when in the minority. You right wing nuts need to realize that.
Look at their budget proposal.
If you think that the US is spending to little on military and too much on the poor – I guess you would give them an A.
It’s all about the low information voter. How proud they must be.
“but don’t be loud and proud and go back into the closet.”
There is a certain Senator who strikes me, shall we say, as closeted… And no I am not talking about Lindsey Graham. haha
European Far-Right Parties Call for End to ‘Cold War’ Against Russia
”…Speakers also criticised homosexuality and cited Russia as the guardian of European values...”
I’m with these guys, Tea Party Euros. They should read their manifesto’s on open mike night at Liberty University.
Obama to pledge $240 million for STEM at science fair
Amusing to watch these left wingers attack STEM education. What clowns. Don’t worry, after you understand math you can pursue a career in creating farcical Sociological studies that happen to hit a high enough r-squared to make through your like-minded pier-reviewed softies. Until then. let kids learn science, OK?
Let the Far Left and the Liberty University-led Far Right debate each other to extinction on how to stop science.
ACA Big Job Creator
You just have to appreciate the tireless efforts of Congress to attach unrelated riders to bills. Apparently, the “doc fix” agreement between Boehner and Pelosi for Medicare may struggle in the Senate due to “anti-abortion” provisions. I assume the anti-abortion provisions are in this bill so that the taxpayer will not have to foot the bill for 65+ grandmothers who suddenly find themselves pregnant.
after all we see lots of 65+ having kids.
Talk about March Madness.
The assume 2 trillion of expenses for the outlay side of ObamaCare to be reduced by its repeal; however the 2 trillion + of revenue from ObamaCare apparently will be retained after they repeal it?
They are also presuming that taxcuts which have never before produced any economic growth suddenly will produce spectacular growth and tax revenues.
This is either March Madness or March brilliance. Maybe this is that new “dynamic scoring” they all talk about. Just make it up, regardless of what reality and previous experience tells you.
just when you thought the parties could get any more …foolish
Missouri is going to provide state money to help provide health coverage to cows. but cant do that for people.,
Is that Richard Fisher’s bio or Indiana Jones’? There’s a movie in there somewhere: “Flophouse landlord rises to Fed President”.