"It is easy to confuse what is with what ought to be, especially when what is has worked out in your favor."
- Tyrion Lannister
"Lannister. Baratheon. Stark. Tyrell. They're all just spokes on a wheel. This one's on top, then that's ones on top and on and on it spins, crushing those on the ground. I'm not going to stop the wheel. I'm going to break the wheel."
- Daenerys Targaryen
"The Lord of Light wants his enemies burned. The Drowned God wants them drowned. Why are all the gods such vicious cunts? Where's the God of Tits and Wine?"
- Tyrion Lannister
"The common people pray for rain, healthy children, and a summer that never ends. It is no matter to them if the high lords play their game of thrones, so long as they are left in peace. They never are."
- Jorah Mormont
"These bad people are what I'm good at. Out talking them. Out thinking them."
- Tyrion Lannister
"What happened? I think fundamentals were trumped by mechanics and, to a lesser extent, by demographics."
- Michael Barone
"If you want to know what God thinks of money, just look at the people he gave it to."
- Dorothy Parker
Saturday, April 05, 2014
Thursday, April 03, 2014
Simon Wren-Lewis asks,
Why does the economic policy pursued or proposed by the left in Europe often seem so pathetic?
citing the Hollande government as the prime example, but also the limpness of Labour in Britain. And he suggests that it’s a question of resources and organization:
Seeking out good advice (and distinguishing it from bad advice) takes either money or time. An established government finds this much easier than an opposition or a new government.
Well, I can’t speak to the European situation, but we had our own version of the sorta-kinda left utterly failing to take on austerian macro — Obama’s “pivot” from jobs to deficits, which actually began in 2009, back when Democrats still controlled both houses of Congress. And you can’t make the resources argument there; not only was Obama a sitting president with a Congressional majority, but modern U.S. progressivism has a large policy-analysis apparatus outside the government, much of which was arguing strenuously against the pivot. Yet there was Obama in November 2009 (!) warning, on Fox News no less, that excessive deficits mightcause a double-dip recession.
So how did that happen? Based on my observations, I’d put it down to the influence of the Very Serious People, whose views on economics tend in turn to be driven largely by the financial industry. It’s hard to believe, but back when Obama was telling Fox that the deficit was a huge threat, there were also widespread rumors that he would soon replace Tim Geithner with … Jamie Dimon.
And what those finance-industry people were telling Obama was tobeware of the invisible bond vigilantes.
I would guess that it’s much the same in Europe. Labour should be listening to Jonathan Portes and, well, Simon Wren-Lewis, but I’m sure that it’s listening much more to well-tailored men from the City. Hollande may be a man of the left in a way that nobody in US politics is, but he’s still getting advice from bankers telling him that fiscal rectitude is all (and although France may be well to the left of the United States in most respects, it has nothing like the intellectual infrastructure of the US progressive movement to counter the alleged wisdom of big money.)
I guess you could say that it was ever thus. But the nature of our current economic situation is that smart policy requires that you ignore what supposedly responsible people, who sound as if they know what they’re talking about — and hey, they’re rich, so they must know something — have to say. And no government of the moderate left has had the intellectual and moral courage to do that.A Working Class Disarmed by Doug Henwood
Bitcoin's deflation problem by Ryan Avent
TWO weeks ago we published a Free exchange column examining whether Bitcoin could be considered a true money, and if not, why not. Mike Hearn, one of Bitcoin's most prominent software developers, responded to the column somewhat dismissively. I wrote an e-mail response to Mr Hearn, the gist of which I will reproduce here. He makes two broad criticisms. The first is that we have lazily repeated the argument that deflation will kill Bitcoin, which in his view has been debunked. And the second is that we are naive to think put much faith in official inflation statistics.
I think Mr Hearn may have misunderstood the piece's argument. It was not that deflation would kill Bitcoin. Rather, it is that deflation will prevent Bitcoin from becoming a unit of account, and that, in turn, will keep it from displacing traditional currencies. But Bitcoin could survive and indeed thrive without becoming the coin of the realm.
The issue, as the piece explains, is that deflation in the unit of account leads to unemployment, thanks to the fact that wages generally don't adjust downward. Mr Hearn suggests that the idea that deflation might be costly is controversial among economists. I must disagree; it really isn't. Economists would love it if he were right that deflation didn't matter—that money, in economists' parlance, is neutral. If wages adjusted quickly and cleanly then they could go back to applying really straightforward classical economic models and everyone's life would be simpler. But the data are very clear on this point; wages are "sticky", and so deflation in the currency in which wages are set is costly.(emphasis added.)
Baker has a contrarian take which has some truth to it.
Wednesday, April 02, 2014
By contrast, the front-running high speed trader, like the inside trader, is providing no information to the market. They are causing the price of stocks to adjust milliseconds more quickly than would otherwise be the case. It is implausible that this can provide any benefit to the economy. This is simply siphoning off money at the expense of other actors in the market.
There are many complicated ways to try to address this problem, but there is one simple method that would virtually destroy the practice. A modest tax on financial transactions would make this sort of rapid trading unprofitable since it depends on extremely small margins. A bill proposed by Senator Tom Harkin and Representative Peter DeFazio would impose a 0.03 percent tax on all trades of stocks, bonds, and derivatives. This would quickly wipe out the high-frequency trading industry while having a trivial impact on normal investors....