"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, February 14, 2015
Here’s the basic point: Greece has, through incredible sacrifice, managed to achieve a primary budget surplus — a surplus excluding interest payments — despite a depression-level slump. That surplus is believed to be currently running at about 1.5 percent of GDP. The Greek government is not calling for a return to primary deficits; as I understand it, it is merely proposing that it be allowed to stabilize the surplus at that level, as opposed to raising it to 4.5 percent of GDP, a number that has few precedents in history.
Now, you might think that 3 percent of GDP is not that big a deal (although try finding $500 billion a year of spending cuts in the United States!) Given the macroeconomics, however, it is much bigger than it looks. Much like the reparations the Allies tried to extract from Germany after World War I — although for somewhat different reasons — forcing Greece to run huge primary surpluses at this point would impose a very large “excess burden” over and above the direct cost of the surpluses themselves.
First, austerity has a very negative effect on output in a country that does not have its own currency, and therefore cannot offset the fall in demand with monetary policy. The attached figure shows what was supposed to happen to Greek GDP according to the original 2010 request for a stand-by arrangement – that is, the original austerity-and-internal-devaluation plan — compared with what actually happened. There’s little question that the huge shortfall reflects the adverse effects of austerity, which the IMF admits it greatly understated. At this point a reasonable estimate for the Greek multiplier is on the order of 1.3.
This multiplier effect has immediate fiscal implications. Suppose that Greece were to spend somewhat more than contemplated under the current agreement; the primary surplus would surely be less than would otherwise be the case, but the effect would be much less than one-for-one. We can summarize the actual effect of higher government spending (ΔG) on the primary surplus (ΔPS) as follows:
ΔPS = -ΔG*(1-μτ)
where μ is the multiplier and τ is the marginal effect of a one-euro rise in GDP on revenues and/or cyclically linked spending like unemployment benefits. Say μ = 1.3 and τ=0.4, both more or less in the middle of the evidence; then higher spending would reduce the primary surplus by less than half the initial spending rise.
Or to turn this around, to achieve the extra three points of surplus the troika is demanding, Greece would actually have to find more than 6 points of GDP in spending cuts or tax hikes. And note that the multiplier is almost surely greater than one; this means that the fall in government spending would induce a fall in private spending too, which is an additional excess burden from the austerity.
The point, then, is that by demanding that Greece run even bigger primary surpluses, the troika is in effect demanding that Greece make sacrifices on the order of an additional 7.5 or 8 percent of GDP as compared with the standstill the Greek government proposes.
Thursday, February 12, 2015
The procedural step forward came after the ECB's Governing Council extended a cash lifeline for Greek banks for another week, authorizing an extra 5 billion euros in emergency lending assistance (ELA) by the Greek central bank. The council decided in a telephone conference to review the program on Feb. 18.Monday was the deadline for the bridge deal, but apparently that's pushed until Wednesday. Euro zone finance ministers will meet Monday.
Wednesday, February 11, 2015
The landslide winner's curse by Daniel Davies
I imagine Dsquared looks and sounds like the Spice Trader of Qarth in this video who is mildly trolling Khaleesi. He's very eloquent in his writing and thinking!
The - strained - analogy is this. Magic is coming back into the world with Dany's dragons. The red comet was a sign of this. With Dany's dragons, the Warlocks' power is increasing as well. They symbolize the fascists. And the increase in magic is the failure of austerity in Europe and increasing economic distress. This increases the appeal of the xenophobes and neo-fascists. The Warlocks team up with the King of Qarth to depose the Spice Trader and the Thirteen, but Dany's magic is too strong for them as she escapes the House of the Undying.
Tuesday, February 10, 2015
Monday, February 09, 2015
...Theon's laugh was half a titter, half a whimper. "Lord Ramsay is the one Your Grace should fear."
Stannis bristled at that. "I defeated your uncle Victarion and his Iron Fleet off Fair Isle, the first time your father crowned himself. I held Storm's End against the power of the Reach for a year, and took Dragonstone from the Targaryens. I smashed Mance Rayder at the Wall, though he had twenty times my numbers. Tell me, turncloak, what battles has the Bastard of Bolton ever won that I should fear him?"The link no longer works. Maybe Martin changed his mind.