Sunday, December 21, 2014

Stannis Baratheon


("They'll bend the knee or be destroyed.")


(Stannis is coming to Winter.)

From the series.

Stannis was born the second son to Steffon Baratheon and Cassana Estermont, the younger brother of Robert Baratheon and the older brother of Renly Baratheon. His parents died when he was thirteen. He lost his faith in the Seven on that day, vowing that gods who were cruel enough to take his father and mother in sight of their children would never have his worship.[8] Even in his youth he was said to be a serious, dour and humorless boy.
Stannis's stubbornness and determination are legendary and served him well during Robert's Rebellion. He successfully held the Baratheon castle of Storm's End against Mace Tyrell's siege,[9] which lasted the majority of the war, unintentionally ensuring one of the largest loyalist forces did not take the field against the rebels. His garrison held under desperate conditions, only avoiding starvation by the timely intervention of a smuggler, Davos. His cargo of onions allowed them to hold the fortress. After the siege was lifted by Lord Eddard Stark, Stannis took Davos into his service, dubbing him "The Onion Knight" and allowing him to choose the name Seaworth for his new house. True to Stannis' inflexible sense of justice, he also punished Davos for his crimes as a smuggler by removing the first joint from each finger of Davos's left hand, as payment for his past crimes. Davos accepted the punishment provided Stannis carry it out himself.
Following the Sack of King's Landing and the surrender of the Tyrells at Storm's End, the new king, Robert Baratheon, charged his brother Stannis with building a new fleet to seize Dragonstone, which was still loyal to the TargaryensViserys and Daenerys Targaryen were smuggled from the island before Stannis could capture Dragonstone, which upset Robert. The king blamed Stannis for letting the Targaryen heirs escape,[10] although the two children had been spirited to safety by Targaryen loyalists shortly before Stannis set sail.[11] After commanding the successful assault on Dragonstone, Stannis was displeased to discover that King Robert had named him Lord of Dragonstone, instead of the wealthier Storm's End, which was given to their younger brother Renly, who had not done anything of true note during the war. Stannis resented this as an intentional slight,[6] which Cersei Lannister agrees with.[10] However, Robert needed a strong ruler to control what had been a holdout of the Mad King's loyalists, and Stannis was much more suited for this role than Renly was.[12] The island castle was the traditional seat of the heir of the Iron Throne, the Prince of Dragonstone, so the then-childless Robert was granting it to his heir at that time, Stannis.[13] It had the added advantage of taking prickly Stannis away from the mainland of Westeros. True to his nature, Stannis became an effective and efficient administrator as head of House Baratheon of Dragonstone.
During his wedding to Lady Selyse Florent, King Robert deflowered Delena Florent on Stannis's wedding bed. This coupling led to the birth of Edric Storm, the only acknowledged bastard of the king. Stannis insisted that he was a blight upon the honor of his wife's house and promptly shipped him off to his other uncle, Lord Renly, at Storm's End.[15]Stannis was appointed to the small council as well, as the master of ships.[9] During Greyjoy's Rebellion, Stannis commanded the royal fleet and trapped and destroyed much of the Iron Fleetat Fair Isle. Afterwards, he subdued Great Wyk in his brother's name.[14] While he was at court in King's Landing, Stannis left Ser Axell Florent as castellan of Dragonstone.
Despite his loyalty and service to his brother Robert, Stannis feels Robert has given him little in return. Instead of thanking him for holding Storm's End against the Tyrells he thanked Eddard Stark for lifting the siege instead. Instead of thanking Stannis for capturing Dragonstone for him, Robert blamed Stannis for the escape of the Targaryen children.[6] Stannis helped Jon Arryn, Robert's Hand of the King, in ruling the kingdoms but received little or no acknowledgement or thanks from his elder brother, who spent his time, hunting, drinking and whoring. Stannis never complained publicly since service without expectation of reward was required of him in his positions, although he often did so privately to Robert and Cersei.[10]
Just prior to the events of A Game of Thrones, Stannis suspected that the children of Queen Cersei Lannister were not actually Robert's. He confided his suspicions to Lord Arryn, and they investigated the matter together. Stannis did not bring his suspicions to Robert, as he knew Robert would not believe the charges coming from him. Since Robert had no love for his brother Stannis, the younger Baratheon would be seen as making himself heir. However, Stannis felt Robert would listen if the charges came from Jon Arryn, whom Robert loved. They visited several of Robert's baseborn children in the city and Stannis pointed out that all had black hair and they looked like Robert. Jon consulted the book The Lineages and Histories of the Great Houses of the Seven Kingdoms of past marriages of noble houses and discovered the same was true: whenever a Baratheon wed, their sons and daughters would have black hair, even if the other parent was a golden-haired Lannister.
After determining that Cersei's children were in fact not Robert's, Jon meant to act and planned for his son Robert Arryn to be fostered with Stannis on Dragonstone. However, Lord Arryn died before he could bring the evidence before Robert.

After the death of Jon Arryn, Stannis flees to Dragonstone to gather his strength and plan his next move.[16] Lord Eddard Stark wonders why Stannis left, believing it was due to the discovery of whatever secret Jon Arryn was allegedly murdered for, although not realizing that Stannis was also slighted by Robert's selection of Eddard as his new Hand of the King. Ned, via Grand Maester Pycelle, sends a raven with a polite letter requesting Lord Stannis to return to his seat on the small council.[17] During Eddard's investigation of Jon's death, he discovers that Stannis and Jon had spent a great deal of time together. When he is told Stannis and Jon visited a brothel, when Stannis is normally so righteous to the point of prudish, he gets closer to the truth.[9] Robert dies after a boar hunt and is succeeded by his son, Joffrey Baratheon.[18] Eddard tries to rule as regent, but is outmaneuvered by Robert's widow, Cersei Lannister. The boy king Joffrey subsequently has Eddard executed.[19]
On Dragonstone, Stannis declares he is the true heir of Robert Baratheon to the Iron Throne, as Joffrey has no true claim to the throne. Since the king's death Stannis has been gathering what strength he can from the lords of the narrow sea and from Myrish and Lyseni sellswords, but his forces are too few to challenge the Lannisters in King's Landing. Additionally, his younger brother, Renly, has also declared himself king with the support of House Tyrell; most of the Baratheon bannermen in the Stormlands are following Renly. Stannis's maesterCressen, suggests he should treat with Robb Stark, who has been declared King in the North, or Lysa Arryn, but his wife, Selyse, says Stannis should not treat for what is his by right.
Selyse has fallen under the influence of Melisandre, a priestess of the Lord of Light. She declares the Red Comet is a sign that Stannis must sail and the banners of the Reach and the Stormlands will flock to him, but Stannis is not convinced. Selyse then tells him to embrace the Lord of Light. She says Melisandre has looked into the flames and seen Renly dead.[6] Stannis renounces the Faith of the Seven and embraces the Lord of Light, seeking only the power that Melisandre promises will follow. The statues of the Seven at Dragonstone are burned in sacrifice. Melisandre proclaims Stannis to be Azor Ahai reborn, a messianic figure in the R'hllor faith. His switch to the faith of R'hllor divides Stannis's own men into two factions: King's Men who still follow the Faith of the Seven and Queen's Men who worship R'hllor.[8]
As a first step toward claiming the Iron Throne, Stannis has hundreds of letters sent to lords throughout Westeros proclaiming himself king and claiming, correctly, that Ser Jaime Lannister, not Robert Baratheon, is the father of Cersei's children.[8] Rather than a direct assault on King's Landing, Stannis leads his forces to besiege Storm's End, hoping to convince his younger brother to join forces with him. He offers Renly to be his heir and a place at the king's small council. Renly makes light of the offer and the brothers have an inconclusive parley that fails to reconcile them. They agree that their forces will meet at dawn. That night, Melisandre uses her magic to birth an animated shadow, which assassinates Renly in his tent at first light. The majority of Renly's followers subsequently swear allegiance to Stannis.
One of Renly's sworn swords who refuses to follow Stannis is Ser Cortnay Penrose, castellan of Storm's End. Cortnay refuses to surrender the castle, fearing what Stannis would do to the bastard within, Edric Storm. He challenges Stannis to a duel, which the king refuses. Ser Davos Seaworth rows Melisandre beneath the fortress, and the priestess assassinates Penrose as she did Renly.
With Storm's End under his control, Stannis launches an amphibious assault on King's Landing. Braving wildfire, a river-spanning chain, and other defenses, Stannis's forces are defeated at the cusp of victory when Lannister and Tyrell reinforcements unexpectedly arrive, seemingly led by Renly's ghost; it is in fact Garlan Tyrell wearing the deceased Renly's armour.
Stannis returns to Dragonstone, his host broken by the Battle of the Blackwater.[20] He has his Hand of the King, Lord Alester Florent, imprisoned when the man attempts to make peace with the Lannisters by offering them Stannis's daughter, Shireen Baratheon, as a hostage.[21]
When Ser Davos Seaworth returns to Dragonstone, Stannis has him brought before him to hear Axell Florent's plan to assault Claw Isle and put the island to the sword in retaliation for Lord Ardrian Celtigar's submission to King Joffrey. Davos calls the plan evil, stating that the smallfolk of Claw Isle are not traitors. Stannis agrees and names Davos Seaworth his new Hand of the King, since Davos is one of the few men who have the courage to tell his king the truth, even when he knows the truth will not be well-received.[22]
Melisandre urges Stannis to sacrifice Robert's bastard Edric Storm to complete a spell she claims will raise dragons from stone and grant him more power. Stannis, though initially reluctant,[22] is about to follow through with the ritual when Davos smuggles the boy away and urges Stannis to take his remaining forces north to defend the Wall.[23]
Stannis sails his forces north to the Wall, leaves Selyse and Shireen at Eastwatch-by-the-Sea, and marches west along the Wall. His forces arrive just in time to crush Mance Rayder's wildling army at the Battle of Castle Black.[24] He stays at the King's Tower of Castle Black to negotiate a settlement with the wildlings and offers to legitimize Jon Snow as Lord of Winterfell if he supports Stannis's rule.[25] The offer falls through when Jon is selected as Lord Commander of the Night's Watch.[26] Stannis continues to seek support in the North for another attempt at the throne.
Stannis sends flocks of ravens from the Wall to all northern houses asking them to declare for him. He receives silence or refusals from the lords, with only the Karstarks, led by the castellan of KarholdArnolf Karstark, declaring for him.[27][28]
According to the current High Septon, Stannis has turned from the truth of the Faith of the Seven to worship a red demon, and his false faith has no place in the Seven Kingdoms.
Stannis sends Davos Seaworth to White Harbor to treat with Lord Wyman Manderly on his behalf.[29] Stannis receives many rejections from his demands of fealty from the northern lords, although he does win the support of a portion of House Umber led by Mors Umber. Stannis has the King-Beyond-the-WallMance Rayder burned for the crime of being a deserter of the Watch.[30] He then offers the remaining Free Folk a choice - bend the knee or go back to the wild. Given the severe threat posed by the Others in the wild, nine of every ten wildlings bend the knee.[30] Unbeknownst to Stannis, however, the burned Mance was actually a glamoured Rattleshirt.[31]
Stannis is counseled by Arnolf Karstark via raven messages to join his strength to his and attack the Dreadfort, seat of the new Warden of the North, Lord Roose Bolton. Stannis agrees and plans to make his assault when Ramsay Bolton marches south to take Moat Cailin from the ironborn. Stannis does not know that Arnolf Karstark is secretly working for House Bolton and is trying to lure Stannis into a trap. Upon hearing the plan, however, Lord Commander Jon Snow persuades Stannis not to go down this course, as Jon knows how strong the Dreadfort is even with a small garrison.[32]
Instead, Stannis travels west to take Deepwood Motte from the ironborn that hold it. Jon Snow advises him to go through the mountains north of Winterfell and win the support of the mountain clans, including the FlintsWullsNorreys and Liddles. The mountain clans are deeply loyal to the memory of Eddard Stark and would take pride in receiving a king. Stannis wins over several of their chiefs, such as Old Torghen Flint and Hugo "Big Bucket" Wull. With an additional three thousand men in his army, Stannis then retakes Deepwood Motte.[14] Stannis takes several ironborn captive, including Asha Greyjoy, and returns Deepwood Motte to House Glover, an act that gains him popular support in the North and earns him the support of the Glovers and House Mormont. Stannis's men are also reinforced by survivors of the battle at Winterfell who have been hiding in the wolfswood.[33] His army marches on Winterfell and is eventually joined by the forces of Arnolf Karstark and Mors Umber. However, they are slowed by relentless snowstorms.[34][35] Learning of Arnolf Karstark's planned treachery from Arnolf's niece, Alys, Jon Snow sends a message to Stannis trying to warn him.
According to a taunting letter written by Ramsay Bolton to Jon Snow, Stannis was killed along with most of his army in the siege of Winterfell.[36] Stannis's last known location was a snowed-in crofters' village three days west of Winterfell.[35][37][38] It is unknown, however, if Stannis is really dead, or if it is just a lie written by Ramsay.
Though reportedly isolated and secluded, Stannis is actively and efficiently preparing for the looming battle against the Boltons. At the crofters' village, Stannis receives the Braavosi banker Tycho Nestoris and the two sign a contract. Stannis plans to send the banker back to the Wall so he does not get caught up in the fighting.
Stannis is made aware of Arnolf Karstark's planned treachery due to the message Jon Snow gave the banker. Stannis has Arnolf, his son Arthor and three grandsons arrested and plans to execute them, though whether their death will be quick beheadings or by fire depends on their willingness to confess. Stannis prepares his position to battle the coming vanguard of Lord Roose Bolton's army led by Ser Hosteen Frey. Stannis sends Ser Justin Massey to escort "Arya Stark" back to the Wall to reunite the girl with her half-brother, Jon Snow, in gratitude for Jon warning him to amass the northern mountain clans rather than march straight into the Karstarks' plans.
Stannis orders Justin Massey to go with Tycho Nestoris to Braavos, where Justin will use the money given to him by the Iron Bank of Braavos to hire sellsword companies till he has a force no less than twenty thousand strong and then sail back to Westeros. Stannis also gives orders that if he is slain in the coming battle, Justin is still to do as instructed, with the intention of using the army to place his daughter, Shireen Baratheon, on the Iron Throne.
Stannis plans to have Theon Greyjoy executed, hoping to gain favor with his northern allies by exacting justice for the murders of Bran and Rickon Stark.[39]
[to be continued]

Game of Thrones


The Horn of Winter by Robert Waldmann

HBO is rerunning Season Four today. In episode 3, "Breaker of Chains," Sandor Clegane and Arya Stark are taken in as guests by a good farmer loyal to the Tullys and his daughter. The farmer is religious and discusses the Red Wedding and how the Freys are cursed by the Gods because they violated Guest Rights.

And then Clegane turns around and violates Guest Rights by stealing the farmer's silver. Arya is upset at him. And - spoiler alert - Clegane doesn't make it through the season, thanks to Brienne of Tarth.

Along with Arya and the poor farmer, another good, kind person is Shireen Baratheon, daughter of Stannis. Shireen doesn't like how her father and Melisandre burned her uncle and others for being infidels and refusing to burn their idols to the Seven Gods. Her kindness and goodness leads her to a friendship with Ser Davos and in a discussion with him, she gives him the notion that the Iron Bank of Bravos isn't big on distinctions, just like Shireen's father, Stannis. Davos understands that the Iron Bank doesn't care who rules Westeros as long as they get paid. Davos will convince them that Stannis will pay them back for their support as the Lannisters have been weakened by Joffrey's death and Lord Tywin won't be around forever.

Jorah Mormont is one of my favorite characters. I always cut him some slack for informing on Daenerys. He didn't know her and wanted to get home. Did he inform for too long though? In episode 5, "First of His Name," though I noticed how we wavered from advising Daeneyrs to take King's Landing after learning that Joffrey Baratheon was dead. Barristan Selmy wanted to. Mormont wavered perhaps because he realized if they went back, Daenerys would learn the truth. I would like to believe he was so honorable and in love with Daenerys that he was giving his best council.

I love Davos, Stannis, Arya, Daario, Tyrion, Daenerys, Brienne and many others, but on the show Sansa really survives so much and remains good and kind. That last scene of her this season as she walks down the stairs in nice black clothes, one imagines you can see her aunt Lyanna in her, the dark beauty of the North who Rhaegar Targaryen started a war for.

Along with the karmic or God's justice the Hound suffers, the evil leader of the renegade Nights Watch at Craster's Keep encounters it as well, or just bad luck. He lectures Jon Snow about fighting with honor, when one of the abused women stabs him the back. Then as he turns, Snow gets him through the head. A man without honor has consequences to suffer as well. Or maybe it's just bad luck and bad things happen to everyone, good and bad, in Westeros.

Saturday, December 20, 2014

2 percent and the fiscal-monetary mix

Of Kiwis and Currencies: How a 2% Inflation Target Became Global Economic Gospel by Neil Irwin

THE FISCAL-MONETARY MIX by Chris Dillow

(via Thoma)


fiscal councils

How Fiscal Policy Failed During the Great Recession by Mark Thoma
But I’m not very hopeful that Congress will change its ways voluntarily, any more than I think the financial system will change on its own. So what else can we do? Another answer would be to create an independent, Fed style committee in charge of making recommendations for fiscal policy during recessions. Unlike the Fed, the committee wouldn’t actually set fiscal policy, it would only make recommendations to Congress (preferably a plan that is budget neutral over a period of years, and a plan that would take effect unless Congress votes it down)

Wednesday, December 17, 2014

Person of Interest

Butlerian Jihad: "Thou shalt not make a machine in the likeness of a human mind."

AV Club reviews Person Of Interest: “The Cold War”


Baker, DeLong and Krugman on monetary policy

"Since Abe took office, Japanese companies have had little problem hiring workers. The employment to population ratio has risen by two full percentage points in the less than two years since Abe took office. This would be comparable to an increase in employment in the United States of almost 5 million people. That is almost 1 million more than the job growth we have actually seen over this period."
The Washington Post Wants Japan to Fire Workers by Dean Baker

Over at Equitable Growth: I Hate Those Blurred Lines! Monetary Policy and Fiscal Policy: Daily Focus by DeLong


Saturday, December 13, 2014

torture and mendicants and war enablers

During the Iraq, some on the anti-war left blamed human rights organizations for paving the way to war with criticisms of the regime's human rights abuses. But without those norms, you wouldn't have had people in the U.S. government fighting back against torture policies.

America’s Shame: What’s in the Senate Torture Report? by John Cassidy


recognition

Golden Globe nominations include Rosamund Pike for Gone Girl; Benedict Cumberbatch for The Imitation Game; Fincher for Gone Girl; Linklater for Boyhood; Clive Owen for the Knick; Silicon Valley; The Normal Heart; Juila Louis-Dreyfus for Veep; Louis CK. Game of Thrones. True Detective and Fargo were good too if dark.

Time magazine recognized Game of Thrones, The Americans, Broad City, Louis CK, True Detective, Fargo, and Last Week with John Oliver.

Friday, December 12, 2014

Tuesday, December 09, 2014

Continuum





Continuum has been renewed for one last season

"The Canadian series, which stars Rachel Nichols as a well-meaning fascist from the future and Erik Knudson as her sidekick, Teenage Canadian Steve Jobs, will return for a six-episode fourth season, set to air next year. Hopefully, those six episodes will give creator Simon Barry and his staff time to close the book on the series’ convoluted but entertaining take on militarized police forces, idealistic terrorists, and magical skintight spy suits, since the fourth season will be the show’s last."

Sunday, December 07, 2014

liquidity

What to Read on Liquidity by J.W. Mason

"the point is liquidity, the point is liquidity, the point is liquidity."

Or as Andrew Mellon is reported to have advised Hooover:
liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people

Monday, December 01, 2014

The Walking Dead and Beth Greene

AV Club reviews The Walking Dead: “Coda”

"You keep telling yourself you have to do whatever it takes just until this is all over. But it isn't over. This is it. This is who you are and what this place is until the end."

- Beth Greene to Dawn


Star Wars: The Force Awakens




Baker on DeLong

Question for Brad DeLong and the Debt School of the Downturn: What Would Our Saving Rate Be If We Didn't Have Debt? by Dean Baker
Brad DeLong tells us that he is moving away from the cult of the financial crisis (the weakness of the economy in 2014 is somehow due to Lehman having collapsed in 2008 -- economists can believe lots of mystical claims about the world) and to the debt theory of the downturn. Being a big fan of simplicity and a foe of unnecessary complexity in economics, I have always thought that the story was the lost of housing wealth pure and simple. (And yes folks, this was foreseeable before the collapse. Your favorite economists just didn't want to look.)
Just to be clear on the distinction, the loss of wealth story says it really would not have mattered much if everyone's housing wealth went from $100k to zero, as opposed to going from plus $50k to minus $50k. The really story was that people lost $100k in housing wealth (roughly the average loss per house), not that they ended up in debt. Just to be clear, the wealth effect almost certainly differs across individuals. Bill Gates would never even know if his house rises or falls in value by $100k. On the other hand, for folks whose only asset is their home, a $100k loss of wealth is a really big deal.
The debt story never made much sense to me for two reasons. First, the housing wealth effect story fit the basic picture very well. Are we supposed to believe that the housing wealth effect that we all grew up to love stopped working in the bubble years? The data showed the predicted consumption boom during the bubble years, followed by a fallback to more normal levels when the bubble burst. 
The other reason is that the debt story would imply truly heroic levels of consumption by the indebted homeowners in the counter-factual. Currently just over 9 million families are seriously underwater (more than 25 percent negative equity), down from a peak of just under 13 million in 2012. Let's assume that if we include the marginally underwater homeowners we double these numbers to 18 million and 26 million.
How much more money do we think these people would be spending each year, if we just snapped our fingers and made their debt zero? (Each is emphasized, because the issue is not if some people buy a car in a given year, the point is they would have buy a car every year.) An increase of $5,000 a year would be quite large, given that the median income of homeowners is around $70,000. In this case, we would see an additional $90 billion in consumption this year and would have seen an additional $130 billion in consumption in 2012.
Would this have gotten us out of the downturn? It wouldn't where I do my arithmetic. For example, compare it to a $500 billion trade deficit than no one talks about. Furthermore, the finger snapping also would have a wealth effect. In 2012 we would have added roughly $1 trillion in wealth to these homeowners by eliminating their negative equity. Assuming a housing wealth effect of 5 to 7 cents on the dollar, that would imply additional consumption of between $50 billion to $70 billion a year, eliminating close to half of the debt story. So how is the downturn a debt story? (You're welcome to put in a higher average boost to consumption for formerly negative equity households, but you have to do it with a straight face.)
Finally, getting to the question in my headline, the current saving rate out of disposable income is 5 percent. This is lower than we ever saw until the stock wealth effect in the late 1990s pushed it down to 4.4 percent in 1999, it hit 4.2 percent in 2000. The saving rate rose again following the collapse of the stock bubble, but then fell to 3.0 percent in 2007. The question then for our debt fans is what they think the saving rate would be absent another bubble, if we eliminated all the negative equity.

Monday, November 24, 2014

Eichengreen on competitive devaluations

Competitive devalution to the rescue by Barry Eichengreen
In fact, this popular account is a misreading of both the 1930s and the current situation. In the 1930s, it is true, with one country after another depreciating its currency, no one ended up gaining competitiveness relative to anyone else. And no country succeeded in exporting its way out of the depression, since there was no one to sell additional exports to. But this was not what mattered. What mattered was that one country after another moved to loosen monetary policy because it no longer had to worry about defending the exchange rate. And this monetary stimulus, felt worldwide, was probably the single most important factor initiating and sustaining economic recovery. 
It is true that the process was disorderly and disruptive. Better would have been for the countries concerned to co-ordinate their moves to a more stimulative monetary policy without sending exchange rates on a roller-coaster ride. But, not for the first time, they failed to agree. Those in the most precarious positions had no choice but to pursue the new policy unilaterally. 
In any case, monetary easing achieved through a process of "competitive devaluation" was better than no monetary easing. Those countries that shifted in this direction first were also first to recover. But in the end – the end coming after an excruciating five years – they had all moved in the requisite direction, and they all began to recover.

Friday, November 21, 2014

Saturday, November 15, 2014

the Banks

Rant Of The Day by Andrew Sullivan

Friday, November 14, 2014

Emily Bazelon

Bazelon was one of my favorite regulars on The Colbert Report along with the German ambassador. Hopefully she'll visit the new show.


Thursday, November 06, 2014

Mid Terms and minimum wage

Bad news is that Republicans took governorships and the Senate. Good news on the minimum wage and rewarding work.
For all that, the minimum wage is popular, very popular, as voters in four red states proved once again Tuesday. Nebraskans approved a ballot measure to raise that state’s minimum wage to $8 an hour next year and $9 in 2016; South Dakotans voted to raise it to $8.50 next year. Arkansas voters approved a gradual increase to $8.50 by 2017. And Alaskans agreed to raise it to $9.75 by 2016. 
In Illinois, the one blue state to consider the issue, voters opted for $10 an hour starting next year, albeit in a nonbinding referendum. 
Consequently, a majority of states, containing more than half of the working-age population, have or soon will have minimum wages higher than the federal minimum.

via Dean Baker
Anyhow, Lane wants politicians to stop raising the minimum wage so he proposes indexing it to the rate of inflation. The idea of indexation is good, but Lane has the wrong target. Back in the good old days, when we had 4.0 percent growth and 3.0 percent unemployment, the minimum wage rose in step with productivity. If it had continued to rise in step with productivity since its peak level in 1968 it would be more than $17 an hour today.

Tuesday, November 04, 2014

Keynes and the ZLB

The Liquidity Trap, the Great Depression, and Unconventional Policy: Reading Keynes at the Zero Lower Bound by Richard Sutch


QE and inflation

The Effect of QE on UST Yields by Mark Dow

Via Matthew Klein
Mark Dow has persuasively argued that it boils down to learning: a lot of people used to think bond-buying was equivalent to the policies that led to the Weimar hyperinflation and those people either changed their mind or were forced to leave the market because their trades kept blowing up. 
(Peter Thiel comes to mind.) 
Another possibility is that QE3 did affect inflation expectations but in a way that is invisible to the naked eye because we can’t know what would have happened in the absence of additional bond-buying. While intriguing, this unfalsifiable hypothesis leaves us feeling empty inside.
Did Dow anticipate Robert Waldmann?


Friday, October 31, 2014

Konczal on monetary policy

Did the Federal Reserve Do QE Backwards? by Mike Konczal

It would have been nice for a journalist or Congressperson to have asked Bernanke. This is why they wanted to get out of QE ASAP.

Thursday, October 30, 2014

O'Brien on QE

Why the Fed is giving up too soon on the economy by Matt O'Brien

Kockerlakota and the North Dakota oil boom

Kocherlakota dissents. I believe his turn about first came when he visited the North Dakota "man camps" of the oil boom.

Oct. 29 FOMC statement:
Voting against the action was Narayana Kocherlakota, who believed that, in light of continued sluggishness in the inflation outlook and the recent slide in market-based measures of longer-term inflation expectations, the Committee should commit to keeping the current target range for the federal funds rate at least until the one-to-two-year ahead inflation outlook has returned to 2 percent and should continue the asset purchase program at its current level.

'The Overnighters' shows dark side of North Dakota oil boom


Tuesday, October 28, 2014

Her

Joaquin Phoenix turned 40 today and I just watched his film Her by Spike Jonze. It was really good and has some great actresses and actors in it: Chris Pratt, Rooney Mara, Scarlett Johansson, Olivia Wilde, Amy Adams and Matt Letscher.*

--------
* Letscher was the father in the Carrie Diaries with Annasophia Robb who in turn was in the saddest movie ever. He also plays the fascist Joe Kennedy on Boardwalk Empire.


Sunday, October 26, 2014

DeLong: productive vs. extractive

Very Rough: Exploding Wealth Inequality and Its Rent-Seeking Society Consequences: (Early) Monday Focus for October 27, 2014 by DeLong
What I would like to see Emmanuel and Gabriel guess it is the share of wealth that is productive–that boosts the productivity of the working class and that shares those productivity benefits with workers–and the share of wealth that is extractive–that are pure claims on income rather than useful instruments of production, and thus that erode rather than boost the incomes of others. Wealth plays two roles, you see: as useful factors of production that boost productivity, and as extractive social power that is the result, the cause, and the maintainer of the rent-seeking society.

Saturday, October 25, 2014

Baker and Krugman on QE

Krugman on Quantitative Easing and Inequality by Dean Baker

Housing and Fed Fail

Baker would agree investment is as expected - pace Yglesias, but would disagree about housing.

Over at Equitable Growth: Is There Really a Profits-Investment Disconnect?: (Late) Friday Focus for October 24, 2014 by DeLong
As a result of the housing bubble, the mortgage frauds, the attempts at regulatory arbitrage on their balance sheets by the money-center universal banks, the financial crisis, et sequelae, U.S. real GDP today is now 12% below what we back in 2007 expected it to be now. Since the post financial-crisis trough U.S. real economic growth has proceeded at 2.24%/year, compared to the 3.00%/year growth rate we saw between 1990 and 2007.

So far there are no signs anywhere that the gap between today and the pre-2007 trend in levels will be made up. So far there are no signs anywhere that the gap between today and the pre-2007 trend in growth rates will be made up. 
That means that, come 2024 a decade hence, we can now expect a U.S. economy to be 19.5% smaller than the economy we confidently projected as of 2007 we would have. 
And, with a capital-output ratio of roughly 3, that means that between 2007 and 2024 cumulative net investment will be lower than projected back in 2007 by 58.5%-point years of GDP--and cumulative gross investment considerably lower.

Gross versus Net

Reading it a lot lately.

Thursday, October 23, 2014

Gough Whitlam

Gough Whitlam has died by John Quiggin


Wednesday, October 22, 2014

NGDP futures market

Quick update on NGDP futures
by Scott Sumner

No one told me it was going to be hard to give away money!  Seriously, there are a few more complications than I anticipated, and I am now waiting for specific instructions from iPredict and Hypermind about how to proceed.  But it will get worked out.
Meanwhile the early Hypermind Q3 futures contract, with 100 euros in prize money, has now been upgraded to a combined Q3 and Q4 with 1000 euros in prize money. So it just became much more attractive.  Recall that at Hypermind, traders do not have to put up their own money–it’s not “gambling.”  But you do need to register first.  

Eventually we will deliver much more money for prizes at Hypermind.

Update:  I was sent the following information:
The real-time forecasts are published on this page, which requires the password: “illusion“.

The contracts are at about 34/35 right now, which means 3.4% to 3.5% annualized growth.  That seems like an opportunity. :)
PS.  Super busy this week.  All I have time for is to point out that the collapse of the Chinese economy, predicted for 20 years, once again failed to materialize in Q3.  Now some brave souls are predicting Chinese growth will slow over time.  You mean they won’t keep growing at 10% as they become highly developed?  I never would have guessed.

Person of Interest



AV Club reviews Person Of Interest: “Prophets”


Tuesday, October 21, 2014

Rogue


20 additional episodes have been ordered.

Sorrowing man, look how worn you've become
You once were Lord of the barren sea
There's blood on our hands in this perfect madness
You're living on borrowed time

Oh how you have lost your way,
Oh how you have lost your way

There's no sympathy f
or we don't know the cure
Cause what you've got, well it runs too deep
But you've lived and breathed more than any man I know
But you're not done, oh, at least I hope

Oh how you have lost your way,
Oh how you have lost your way
In this life we have made together
Oh how you have lost your way

Oh, how you have lost your way
Oh, how you have lost your way.

Yglesias on neoliberalism, dividends and buybacks

One paragraph that explains why the American economy isn't working for the middle class by Matt Yglesais

Saturday, October 18, 2014

Steampunk - The Knick


AV Club reviews The Knick: “Crutchfield”


Deflation feeds global fears.

Was the taper a mistake?

Risk of Deflation Feeds Global Fears
By JON HILSENRATH and BRIAN BLACKSTON

Updated Oct. 16, 2014 12:01 p.m. ET

Behind the spate of market turmoil lurks a worry that top policy makers thought they had beaten back a few years ago: the specter of deflation.

A general fall in consumer prices emerged as a big concern after the 2008 financial crisis because it summoned memories of deep and lingering downturns like the Great Depression and two decades of lost growth in Japan. The world’s central banks in recent years have used a variety of easy-money policies to fight its debilitating effects.

Now, fresh signs of slow global economic growth, falling commodities prices, sagging stock markets and declining bond yields suggest the deflation risk hasn’t gone away, particularly in the often-frenetic eyes of investors. These emerging threats come as the Federal Reserve is on track this month to end a bond-buying program that has been one of the main tools in its fight against falling prices.

The deflation concern is particularly pronounced in Europe and Japan, two economies where policy makers are struggling to come up with solutions to counter especially slow economic growth.

However, recent declines in commodities prices suggest that downward pressure on inflation—if not all-out deflation—could become a wider-ranging phenomenon, and one with some mixed implications for economies like the U.S. and emerging markets.

Investor worries about the global economy appeared to gather force Wednesday. European stock markets sagged; the Stoxx Europe 600 index fell 3.2% to its lowest level since last December. U.S. stocks pared steep losses, but still finished down for the fifth straight day; after falling more than 450 points at one point, the Dow Jones Industrial Average fell 173.45, or 1.1%, to 16141.74.

Meantime, yields on 10-year U.S. Treasury notes fell to 2.091%, their lowest level since June 2013, and are down nearly a percentage point from the beginning of the year. Bond yields fell to new lows in Germany, too. Crude-oil prices dropped further; crude futures on the New York Mercantile Exchange fell to $81.78 a barrel, the lowest level since June 2012.

The deflation concerns are particularly acute in Europe, where annual inflation in the 18 nations that use the euro was 0.3% last month, a five-year low that is far below the European Central Bank’s target of just under 2%.

With inflation so low, it wouldn’t take much of a shock—such as weakness in Germany’s economy or geopolitical tensions in nearby Ukraine—to tip the whole region into a deflationary downturn. Some eurozone countries, such as Italy, have already tipped into deflation. Even countries outside the currency bloc are feeling the pain. Sweden’s statistics agency said Tuesday that consumer prices fell 0.4% in annual terms last month after a 0.2% fall in August, well below its central bank’s 2% target.

The risk of deflation in Europe is “a real worry,” Harvard University professor and former Federal Reserve governor Jeremy Stein said in an interview. “The right prescription [for policy makers] is to be aggressive.”

ECB President Mario Draghi acted against deflation risks in June and September, pushing the central bank to slash interest rates to record lows each time—including a negative rate on bank deposits at the ECB—and unveiling new bank-lending and asset-purchase plans for asset-backed securities and covered bonds.

But there is little consensus for more-dramatic measures—the kind of monetary stimulus the Fed, the Bank of England and the Bank of Japan have deployed—namely large-scale purchases of government bonds to raise the money supply.

The head of Germany’s central bank, Jens Weidmann, has signaled his opposition to such bond buying, and other members of the ECB’s governing council appear sympathetic to his argument that with government and corporate borrowing costs already superlow, the policy wouldn’t even do much good.

“I am very much for a steady-hand approach, and I think this is what we are doing,” Austria’s central bank governor, Ewald Nowotny, said in an interview last week.

Hard fiscal problems are part of Europe’s problem. Last week, Standard & Poor’s stripped Finland of its triple-A credit rating and downgraded France’s outlook. On Tuesday, Fitch put France on review for a possible downgrade.

Struggling economies such as France and Italy face a tough choice: Take additional austerity measures to shrink budget deficits, inflicting more pain on their economies, or attempt to flaunt the EU’s budget rules calling for low deficits, which could damage their credibility in Europe.

The resistance Mr. Draghi faces has shaken the faith of some investors that policy makers in Europe will address the threat.

“Market valuations, especially for rich countries, have been well above what was warranted by fundamentals. What kept them up there was a belief that central banks were markets’ best friends,” said Mohamed El-Erian, chief economic adviser at Allianz Group. “Most people now recognize that the ability of central banks to address what ails the global economy is weaker than they believed.”

Meanwhile, Japan had recently begun to stir sustained growth, which helped to push its inflation rate above 1%, after years of on-again, off-again deflation. But inflation decelerated again in recent months as the economy softened after an April sales-tax increase meant to restrain mounting government debt. Many private economists forecast a slip back below 1% this year.

Japanese officials must now decide whether to follow through on another planned sales-tax increase that could dent growth even more. And the Bank of Japan is weighing whether it needs to provide even more stimulus. BOJ Governor Haruhiko Kuroda launched new asset purchase programs last year to reverse two decades of deflation and has pledged to persist until he reaches the 2% target.

Japan’s struggles to exit deflation, even with massive central-bank stimulus, illustrate just how difficult it is for an economy to pull out of the trap, once it has settled in.

A weak global outlook “has to be a worry for every economy,” Reserve Bank of India Governor Raghuram Rajan told The Wall Street Journal in an interview last week.

The U.S. confronts much different circumstances than Europe and Japan. U.S. inflation had been rising toward the Fed’s 2% objective earlier this year but now faces a downward tug amid the weakening global growth and a strengthening U.S. dollar. The Labor Department reported Wednesday that producer prices in the U.S. fell in September. Sharp drops in commodities prices this month could add to downward pressure.

Yet falling commodities prices have silver linings. For one, the decline is being driven in part by a U.S. energy production boom—not just sagging global demand for goods. Moreover, falling gasoline prices are a boon to U.S. consumers: One rule of thumb is that every one-cent drop in the price of gasoline amounts to a $1 billion boost to U.S. household incomes, and gasoline prices have dropped by 13 to 17 cents from a year ago, according to the automobile group AAA.

“All else equal, when energy gets cheaper, we benefit,” Mr. Stein said.

Meanwhile, the Fed is on track this month to end its bond-buying stimulus program launched in September 2012. And Fed officials have largely stuck to their line that they expected to start raising short-term interest rates by the middle of 2015. Still, traders in futures markets have been pushing up the prices of contracts tied to the Fed’s benchmark interest rate—a sign they see diminishing odds that the Fed will follow through on that plan.

Harvard’s Mr. Stein said he didn’t think the U.S. central bank needed to alter its thinking much in light of recent developments. “I wouldn’t dramatically revise my expectations,” he said. “The balance of the job-market news in the U.S. has been very positive.”

A Commerce Department report Wednesday showed U.S. retail sales dropped in September, but many economists are sticking to estimates that the U.S. economy expanded at a rate in excess of 3% in the third quarter, potentially the fourth time in the past five quarters it exceeded 3%. Moreover job growth has been stronger than Fed officials expected.

Friday, October 17, 2014

Wolf and Rogoff

Ken Rogoff reviews Martin Wolf's The Shifts and Shocks


Darryl FKA Ron's history:

[BIG TIME!

The end of Bretton-Woods is generally considered to have been the end of US dollar convertibility (into precious metals) and the establishment of the US dollar as the global reserve currency upon which to anchor exchange rates, trade reserves, and trading prices. Even OPEC nationalization tipped its hat to the US dollar as the global price tag.]

http://en.wikipedia.org/wiki/Bretton_Woods_system

...On 15 August 1971, the United States unilaterally terminated convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency.[1] This action, referred to as the Nixon shock, created the situation in which the United States dollar became a reserve currency used by many states. At the same time, many fixed currencies (such as the pound sterling, for example), also became free-floating...

*

[Meantime you had commercial banks going inter-state which broke up some of the relationships between local banks and traditional constituents in agriculture and small business when those local banks were bought. MOstly though it just positioned commercial banking for the post Glass-Steagal world of the current century, a lamb being fattened for later slaughter.

My story of the new finger on the scale of capital gains preference in 1954 is one of corporate and private equity leverage upon which investment banks grew their more speculative bond markets for buyouts and takeover financing. Schumpeter's argument against competition won the day for firm consolidation AND investment banks. Fast forwards to the end of first Bretton Woods and then the Cold War and the hegemony of multi-national corporations allied with major investment banks all resting on the shoulders of Uncle Sam's imperial dollar is a feat of global conquest that would have made Ghenghis Khan blush.]

*

http://en.wikipedia.org/wiki/Nationalization_of_oil_supplies

Early nationalizations

Prior to 1970, there were ten countries that nationalized oil production: the Soviet Union in 1918, Bolivia in 1937 and 1969, Mexico in 1938, Iran in 1951, Iraq in 1961, Burma and Egypt in 1962, Argentina in 1963, Indonesia in 1963, and Peru in 1968. Although these countries were nationalized by 1971, all of the “important” industries that existed in developing countries were still held by foreign firms. In addition, only Mexico and Iran were significant exporters at the time of nationalization...

*

[And then all hell broke loose. Oil shortages got us rising oil prices and by the time it all settled out global finance had its claws deep into crude. What Reagan and Thatcher did is make a narrative of all this or maybe just the backup band to Milton Fridman's narrative of all this that blame it on public spending and deficits instead of an imperialistic dollar in the hands of multinational corporations and investment banks taking advantage of financialization and globalization. Autos and steel were among the first to fall in the US because their managements were the most over-confident and unprepared to deal with change. BOth failed modernize, both in production and in marktet focus.]

The reason it is so difficult to accept that our problems originate from Ike and Nixon instead of Ronnie Rayguns is that such a narrative would not give our feeling of intellectual superiority and moral self-righteous a leg to stand on.

Rayguns was so blatantly contemptuous of liberalism that it must have been his fault. THat is like thinking that a psychopath has no guile and can easily be picked out of a crowd. It is not the guy that spits in your face that catches you unawares, but the one that puts the knife in your back while patting you on the shoulder.

Clinton probably did more to roll back the New Deal than Reagan did what with Welfare "reform" (or was that deform) and financial deregulation. Reagan screwed unions, but he was not their first time, and his recession ushered in the Great Moderation, which fathered contemporary secular stagnation. Mergers accelerated under Reagan era anti-trust "enforcement." But Reagans foulest contribution and legacy was less about legislation or administration than it was the Alfred E. Newman "Whot, me worry" attitude of the people regarding their own economic affairs. THe tonic he sold to ward off the nanny state was the individualistic patriarchal state. The public bought it and ate it up. "I got mine and screw everyone else" became the new pledge of disallegiance. Ronnie's start was as a PR man and a pitch man and he had gotten pretty good at it.

Yellen, the Fed, K21 and inequality

Perspectives on Inequality and Opportunity from the Survey of Consumer Finances by Chair Janet L. Yellen

Chair Yellen Holds Forth on the Inequality of Opportunity by Jared Bernstein

What Janet Yellen Said, and Didn’t Say, About Inequality by Neil Irwin


Waldman on "Econometrics, open science, and cryptocurrency"

Econometrics, open science, and cryptocurrency by Steve Randy Waldman

Mark Thoma wrote the wisest two paragraphs you will read about econometrics and empirical statistical research in general:
You are testing a theory you came up with, but the data are uncooperative and say you are wrong. But instead of accepting that, you tell yourself "My theory is right, I just haven't found the right econometric specification yet. I need to add variables, remove variables, take a log, add an interaction, square a term, do a different correction for misspecification, try a different sample period, etc., etc., etc." Then, after finally digging out that one specification of the econometric model that confirms your hypothesis, you declare victory, write it up, and send it off (somehow never mentioning the intense specification mining that produced the result). 
Too much econometric work proceeds along these lines. Not quite this blatantly, but that is, in effect, what happens in too many cases. I think it is often best to think of econometric results as the best case the researcher could make for a particular theory rather than a true test of the model.
What Thoma is describing here cannot be fixed. Naive theories of statistical analysis presume a known, true model of the world whose parameters a researcher need simply to estimate. But there is in fact no "true" model of the world, and a moralistic prohibition of the process Thoma describes would freeze almost all empirical work in its tracks. It is the practice of good researchers, not just of charlatans, to explore their data. If you want to make sense of the world, you have to look at it first, and try out various approaches to understanding what the data means. In practice, that means that long before any empirical research is published, its producers have played with lots and lots of potential models. They've examined bivariate correlations, added variables, omitted variables, considered various interactions and functional forms, tried alternative approaches to dealing with missing data and outliers, etc. It takes iterative work, usually, to find even the form of a model that will reasonably describe the space you are investigating. Only if your work is very close to past literature can you expect to be able to stick with a prespecified statistical model, and then you are simply relying upon other researchers' iterative groping.
...

rising wealth inequality's "snowball effect."

See the Bernstein link below about the decoupling of productivity and compensation for the wage class.

If not r > g, what’s behind rising wealth inequality? By Nick Bunker
The Initiative on Global Markets at the University of Chicago yesterday released a survey of a panel of highly regarded economists asking about rising wealth inequality. Specifically, IGM asked if the difference between the after-tax rate of return on capital and the growth rate of the overall economy was the “most powerful force pushing towards greater wealth inequality in the United States since the 1970s.” 
The vast majority of the economists disagreed with the statement. As would economist Thomas Piketty, the originator of the now famous r > g inequality. He explicitly states that rising inequality in the United States is about rising labor income at the very top of the income distribution. As Emmanuel Saez, an economist at the University of California, Berkeley and a frequent Piketty collaborator, points out r > g is a prediction about the future. 
But if wealth inequality has risen in the United States over the past four decades, what has been behind the rise? A new paper by Saez and the London School of Economics’ Gabriel Zucman provides an answer: the calcification of income inequality into wealth inequality.
“Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data,” their new working paper, is firstly an impressive documentation of the significant changes in wealth distribution in the United States. 
Saez and Zucman create a data series using tax records to measure wealth inequality going back to 1913. The trend is similar to the one for income inequality in the United States: a high level of inequality at the beginning of 20th century that declined substantially during the mid-century only to climb starting in the late 1970s and reaching high levels again in recent years. 
Rising wealth inequality since the late 1970s has been a case of the top of the distribution pulling away from everyone else. Specifically, the rise of the 0.1 percent is the dominant story. In 1979, the top tenth of the top 1 percent held 7 percent of the wealth in the United States. By 2012, the share held increased threefold to 22 percent. (An earlier version of this data was highlighted at Equitable Growth’s annual conference in September.) In fact, almost half of the total increase in wealth from 1986 to 2012 went to the top 0.1 percent of wealth holders. The increase is dramatic and brings wealth inequality to a level around that prevailing in 1929. 
What caused this increasing concentration of wealth? In short, an increase in income inequality coupled with rising savings inequality. As income flowed upward to those at the top, rich individuals increased the rate at which they saved income. Saez and Zucman refer to this phenomenon as the “snowballing effect.” And Piketty does consider the calcification of top incomes into wealth inequality in “Capital in the 21st Century.” 
This effect certainly isn’t the well-known r > g phenomenon. But Saez and Zucman’s research shows that there’s more than one way for wealth inequality to arise.

Thursday, October 16, 2014

Bernstein on productivity share and wage growth or lackthereof



Inequality, opportunity, and growth are all really important. So is wage stagnation. by Jared Bernstein

Note: From 1948 to 1979, productivity rose 108.1 percent, and hourly compensation increased 93.4 percent. From 1979 to 2013, productivity rose 64.9 percent, and hourly compensation rose 8.0 percent.

Fed Fail

When will they learn? by Ryan Avent


Manhattan was renewed for a second season

Yeah, science! The new trend in TV drama by Brandon Nowalk


Monday, October 13, 2014

Person of Interst and cannibals

Eat the poor and weak.

AV Club reviews The Walking Dead: “No Sanctuary”

Samaritan versus The Machine is price versus value in economics or rather political economy.  Terminus is more like Price/Samaritan. Rick Grimes, Glenn and the gang are more like Value/The Machine. Every life is valuable (although feminists will quibble and rightly so.)

Robert Waldmann anchored inflation expectations

What's the name Noah Smith gave to the economics of CNBC? Chris Dillow calls it mediamacro.

Anchored Perceived Inflation or How Fox News Helped Obama by Robert Waldmann (July 20, 2014)