Tyrion becomes Hand of the Queen as the Targaryen forces sail towards Westeros including Yara Greyjoy's fleet, the Unsullied, the Dothraki, and three dragons. Daenerys's advisers include Missandei, Grey Worm, Varys the Spider and Theon Greyjoy. Jorah Mormont is off looking for a cure to Stonescale (I would like to see him reunited with Lyanna Mormont). Daario Naharis and the Second Sons have stayed behind in Meereen.
Varys has brokered an alliance with the Dornish and Lady Olenna Tyrell (and also the Reach with Randall Tarly?).
Cersei is Queen and holder of the Iron Throne, along with Jaime, Bronn, Qyburn, and Gregor Clegane. The Sparrows and Faith Militant are gone. So is Kevan Lannister.
But the Freys are gone also, following the traitorous and disloyal Boltons into oblivion. Will Edmure Tully - now freed - and Riverrun rejoin the Starks? What about Sandor Clegane and the Brotherhood without Banners? Where is Melisandre the Red Priestess heading?
Jon Snow holds the North. Advisers include Sansa, Ser Davos, Tormund, Brienne, Podrick Payne, Lyanna Mormont and the other leaders of the Houses of the North. The Knights of the Vale and a dissatisfied Petyr Baelish. Bran Stark and Meera Reed head south past the Wall. (They know the Night King is heading south as Winter has arrived.) Samwell Tarly is studying at the Citadel. Dolorous Edd is leading the Nights Watch at Castle Black. Uncle Benjen/Coldhands is beyond the Wall.
Both Jon Snow and Sansa Stark know and like Tyrion Lannister, Hand to the Queen.
What will Euron Greyjoy do? Where will Arya head to next?
And the risk of high inflation in the UK is zero. People are in a panic over this vote sort of like those poor people that heard a firecracker in the NYC's subway this week. I'm not saying there will not be self inflicted wounds that follow this vote but the vote itself does not mean that much. Stupid trade protection would be a bad thing but it is odd that a lot of people who are off in this panic attack lauded protectionism here. Go figure.
Finding examples of how companies use financial engineering—instead of the realengineer—to bolster their balance sheets is like shooting fish in a barrel. The latest involves the biggest deal of the moment: Microsoft’s acquisition of LinkedIn.
One of the reasons that LinkedIn many have wanted to be acquired, as Andrew Ross Sorkin explained in yesterday’s New York Times, is that it has been using a rather deceptive method of accounting that allows employee compensation paid in stock to be ignored as an expense. That makes for a bottom line that looks better than it really is. (This is especially true given that the amount of stock based-comp paid out by the company in the last two years was nearly equal to operating revenue, according to an analyst source.)
LinkedIn isn’t alone in this sort of crafty accounting–most companies in the S&P now do it. (This piece is a great primer on how the funny math works.) But recently, Facebook started including stock comp in its reporting, and there’s a big push within corporate governance circles to get more companies to do that in order to get back to a more realistic version of earnings. After all, employee compensation, whether paid in cash or stock, is obviously an expense that should go on the balance sheet.
It’s worth understanding just why, and how, stock-based compensation became such a huge deal to begin with. It marked a turning point toward short-term decision-making in corporate America. Key legislative changes that fueled the trend happened under Democratic president Bill Clinton, whose administration passed a 1993 provision on corporate pay. The measure limited corporate tax deductions for regular salaried income to $1 million but exempted “performance-related” pay above and beyond that—pay that was typically awarded in stock options. Joseph Stiglitz, a former head of Clinton’s Council of Economic Advisers, remembers this move as “one of the worst things that the Clinton administration did.”
That’s because it created a tremendous incentive for companies to pay more compensation in options. This further fed the cycle of short-termism since executives would from then on be focused primarily on boosting stock prices, by any means necessary. As Stiglitz puts it, “It just opened up this huge span of bonus pay which was not for performance. I had written a lot about this before, that it was largely phony. I argued very strongly during the nineties that the whole stock option pay trend caused a lot of incentives for non-transparency, and that it was directly responsible for what I call creative accounting.” It allowed firms not just to deceive the market but also to avoid paying the taxes that they should have paid.
Why does this matter so much now? Because it contributes to growing inequality and a lackluster economic recovery, by putting more and more tax-free compensation into the hands of the wealthy (who tend not to spend it after a certain point, which is a problem in an economy based mostly on consumer spending). What’s more, says Stiglitz, the performance exception didn’t really reward “performance” as much as any number of other factors, such as monetary policy that boosted stock prices. “If you’re really talking about performance, you should not get higher pay when your stock price goes up because the interest rate goes down,” he explains. “I mean, maybe Janet Yellen should get higher pay for that, but CEOs certainly shouldn’t.” He wrote in his searing memoir of the time, The Roaring Nineties, that “as the Clinton years came to a close, I wondered: What message had we in the end sent through the changes that had been brought about in our taxes?”
The Microsoft-LinkedIn deal brings all this to the fore once again. It’s a topic the next president should tackle head on, no matter the party.
Another good episode of HBO's After the Thrones, where they brought in expert Mallory Rubin early to discuss the epic penultimate episode of Season 6.
Rubin - who always sports a cool T-shirt - mentioned Daenerys's quote I have in my banner area about breaking the wheel. They had an interesting discussion of all aspects of the episode focusing on things that stood out for me as well: like the fact Rickon didn't follow a serpentine rout (like in the original In-Laws movie) when running from Ramsey's arrows; that Sansa didn't alert Jon Snow that the calvary might by coming; that Davos found Shireen's toy stag and he eyed Melisandre forbodingly. I wish they had done this show throughout the series. So good.
I enjoyed After the Thrones with Mallory Rubin, @chrisryan77, and @andygreenwald. Rubin mentioned Jorah Mormont's quote which I have on my bannner:
"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."
They discussed the different fanatics, the Sparrows and Faith Militant, the followers of the Lord of Light, even Jaime who is fanatical about Cersei if not his House. They forgot to mention mention Daenerys Targaryan: "I will take what is mine!"
Thee astonishing political emergence of Jeremy Corbyn, the left-wing leader of the British Labour Party, is the sort of thing that passes for normal in Western democracies these days. Since the economic crash in 2008, anti-establishment types have cropped up everywhere. Corbyn, a sixty-six-year-old socialist, had never held a position of authority in his party or in government before being elected last summer on a platform of benign economic populism. He is Syriza in Greece; he is Podemos in Spain; he is Sanders in America. His politics rebel against a Britain that is eager to join foreign wars and pallid in the face of social inequality. “There has to be some kind of a reckoning,” Corbyn told me recently. “You actually have to run an economy for the benefit of people, not run for the benefit of hedge-fund managers.”
...
McDonnell was Corbyn’s campaign manager last summer and is now the shadow Chancellor. (In British politics, the opposition creates a “shadow” cabinet to respond to the Government.) When I asked him if he could convey just how improbable it was that he and Corbyn were now in charge of Labour, McDonnell quoted Fredric Jameson, an American literary theorist and Marxist scholar. “It is easier for people to imagine the end of the earth than it is to imagine the end of capitalism,” he said. “And that is what we are about, aren’t we?”
Economic platitudes about how trade is always worthwhile as long as the winners can compensate the losers are an insult in the age of inequality, where the winners increasingly use their political power to claim ever more winnings.
If we don’t deal with these costs by creating real, substantive, remunerative opportunities for those hurt by trade, some demagogue is sure to come along Trumpeting a case for xenophobia, walls, tariffs and protectionism. If he’s not … um … here already.
The Progressive Era was one of general prosperity after the Panic of 1893—a severe depression—ended in 1897. The Panic of 1907 was short and mostly affected financiers. However, Campbell (2005) stresses the weak points of the economy in 1907–1914, linking them to public demands for more Progressive interventions. The Panic of 1907 was followed by a small decline in real wages and increased unemployment, with both trends continuing until World War I. Campbell emphasizes the resulting stress on public finance and the impact on the Wilson administration's policies. The weakened economy and persistent federal deficits led to changes in fiscal policy, including the imposition of federal income taxes on businesses and individuals and the creation of the Federal Reserve System.[80] Government agencies were also transformed in an effort to improve administrative efficiency.[81]
In the Gilded Age (late 19th century) the parties were reluctant to involve the federal government too heavily in the private sector, except in the area of railroads and tariffs. In general, they accepted the concept of laissez-faire, a doctrine opposing government interference in the economy except to maintain law and order. This attitude started to change during the depression of the 1890s when small business, farm, and labor movements began asking the government to intercede on their behalf.[81]
By the start of the 20th century, a middle class had developed that was leery of both the business elite and the radical political movements of farmers and laborers in the Midwest and West.
When Bernie Sanders started gaining in the polls, it was easy to place him in a long line of idealistic insurgents like Barack Obama, Howard Dean, Bill Bradley or Jerry Brown.
They built strong bases of support among white liberal voters, excelling in places like Boulder, Colo., and Vermont, but their chances of being nominated hinged on building a broader coalition that included nonwhite voters. Only Mr. Obama managed it.
Mr. Sanders, despite his success in Indiana this week, has effectively lost the Democratic nomination, and for a familiar reason: He didn’t do well enough among black voters. But he gained the enthusiasm of a subtly different — and potentially larger — coalition than his liberal predecessors.
His brand of progressivism played far better among white working-class voters than that of past liberal outsiders. At the same time, he fared far worse among the affluent Democrats who represented the core of Mr. Obama and Mr. Bradley’s coalitions.
Mr. Sanders’s weakness among affluent Democrats and his strength among working-class Democrats might seem unsurprising, given his class-focused message. Mr. Sanders himself anticipated it in an interview with The Upshot in July.
But in broader historical terms, it might be something of a turning point in Democratic politics: the moment when the party’s left no longer needs an alliance with wealthy liberals to compete in national elections.
Connecticut, which held its primary April 26, vividly illustrates the huge difference between Mr. Sanders’s coalition and that of past liberal challengers.
In 2000, a flagging Mr. Bradley lost the state by 13 percentage points to Al Gore. He lost badly among nonwhite voters — losing cities like Bridgeport and Hartford by more than 40 points. He lost by more modest margins in the rural, white, working-class eastern part of the state. But he won many of the state’s affluent areas — like Greenwich and New Canaan, along with much of the traditionally liberal western and northwestern part of the state near the border with New York and Massachusetts.
Mr. Obama won almost all of the same areas in 2008, but then added strong support from nonwhite voters — enough to give him a narrow victory over Mrs. Clinton in the state. He won places like Bridgeport and Hartford, even as he fared similarly to Mr. Bradley in places like Greenwich and New Canaan. He fared little or no better in the white, working-class parts of eastern and central Connecticut.
The Sanders-Clinton race reversed this map. Mrs. Clinton lost almost all of the white, working-class areas of rural eastern Connecticut to Mr. Sanders, even though she had won most of it in 2008, as Mr. Gore had in 2000. But she beat Mr. Sanders by huge margins in the affluent parts of western Connecticut where Mr. Obama and Mr. Bradley fared well. She won back the nonwhite voters she lost to Obama in 2008, giving her wins in Bridgeport and Hartford that nearly matched Mr. Gore’s victory in 2000. It was enough for a clear if modest 5.4-point victory.
It’s a pattern that has repeated itself across the country. Mr. Sanders was routed in the wealthy, liberal parts of New York where recent progressive heroes such as Bill de Blasio or Zephyr Teachout fared well — like the Upper West Side, Greenwich Village and parts of Brooklyn.
In Massachusetts, Mr. Sanders lost the affluent, liberal voters in the Boston area, and he might well lose the Bay Area, another enclave of the wealthy and liberal.
This is the first time since 1992 that there’s been a real split between the progressive left and affluent liberals in a Democratic primary. In that race, an iconoclastic outsider, Mr. Brown, excelled among liberals in places like Ann Arbor, Mich., with a progressive message (including opposition to trade agreements), while a more technocratic candidate, Paul Tsongas, won in wealthy liberal areas like Montgomery County, Md., which includes many suburbs northwest of Washington. Bill Clinton easily prevailed over a divided left-liberal wing of the party with strong support among working-class white Democrats and black voters.
Why did affluent liberals support Mrs. Clinton?
One possibility is simple class politics: Mr. Sanders’s class-oriented message didn’t resonate among this group. If true, a candidate of the progressive left would struggle to reunite the left-liberal coalition against an establishment challenger in future Democratic primaries. But the left might have a better opportunity to reassemble the left-liberal coalition with a different progressive candidate if the problem were Mr. Sanders, not his views. (Anecdotally, I run into a lot of Hillary Clinton supporters who supported Mr. Obama in 2008 and say they would have supported Elizabeth Warren, who’s more technocratic and policy-focused than Mr. Sanders.)
Equally important to the future of progressives in the Democratic Party is Mr. Sanders’s strength in the white working-class areas where Mr. Bradley, Mr. Obama, and both Mr. Brown and Mr. Tsongas faltered. It was Mr. Sanders’s strength among these voters that let him stay fairly competitive, even though he lost half of the traditional left-liberal coalition. Mr. Sanders won white voters without a college degree by a double-digit margin in Connecticut, as he did in Maryland, Wisconsin, North Carolina, New Hampshire, Illinois, Oklahoma, Indiana, Vermont and Michigan. He probably did so in Rhode Island as well (no exit polls were conducted there).
Outside the South, Mrs. Clinton probably won white voters without a college degree only in Ohio (the exit polls there show she prevailed with that group by one point).
One possible explanation, again, is policy. Income inequality has become a vastly more important issue to Democrats since the Great Recession, and it’s reasonable to assume that white working-class Democrats might be especially drawn to the issue. This is the best case for the progressive left; it would mean that a future progressive populist could count on similar levels of support with a strong, class-oriented message.
The evidence for this view is somewhat mixed. According a compilation of exit polls, around 40 percent of white voters without a college degree wanted more liberal policies than those of Mr. Obama, and Mr. Sanders won these voters handily. The highest number was in Vermont, where 46 percent of white voters without a degree wanted more liberal policies than Mr. Obama’s.
That’s a big bloc that progressives can count on in the future, but it’s not a majority and it’s less than Mr. Sanders’s share of white voters without a degree. That’s in part because Mr. Sanders also won among those white working-class voters who wanted less liberal policies than those of Mr. Obama, a fact that makes Mr. Sanders look as much like a protest vote against Mrs. Clinton as the harbinger of a new Democratic socialism.
But it is nonetheless striking that so many white Democrats without a degree wanted more liberal policies than Mr. Obama’s. In fact, white voters without a college degree were often more likely than either college-educated white voters or minorities to support more liberal policies.
That’s consistent with the notion that white working-class Democrats really have become more receptive to a progressive candidate over the last decade, in some cases even going from being the principal impediment to a left-liberal coalition to the strongest bloc in favor of a more progressive agenda.
According to exit poll data, liberals represented a majority of white Democrats without a college degree in nearly every primary contest. It’s a huge change from just a decade or two ago, when so many white working-class Democrats were conservative (check out this 1995 Pew Research typology of voters if you want to see what the Democratic base used to look like). Mrs. Clinton tended to win “moderate” white voters without college degrees in these states, but she lost among the self-described liberals.
A lot of this is a generational divide. Mrs. Clinton won among white voters without a college degree who were over age 30, but she was pummeled among those who were younger.
Whether Mrs. Clinton was so weak among young white voters because of her weaknesses or the appeal of Mr. Sanders’s policy message will probably decide whether the “Sanders Coalition” can be replicated in a future Democratic primary.
The exit polls, again, send a mixed message. Around half of young white voters didn’t think that Mrs. Clinton was liberal enough, or they wanted policies that were more liberal than Mr. Obama’s. But Mr. Sanders also won among those younger voters who thought Mrs. Clinton and Mr. Obama were liberal enough; her weakness might have had as much (or more) to do with questions about ethical governance as about policy.
Either way, Mr. Sanders’s success — in spite of weakness among wealthy Democrats — is important. There hasn’t been a viable candidate of the progressive left in a Democratic primary in a long time.
Elite Democrats in places like Manhattan; Cambridge, Mass.; and Santa Monica, Calif., have been anchors of liberal politics in the United States for decades. The ability to build a robust progressive coalition without these voters — or their donations — is a new phenomenon, and it could free candidates to pursue progressive policies in future Democratic primaries, and win.
The Democratic Party has moved far enough to the left where it’s possible to imagine a candidate of the progressive left cobbling together a majority without much support from affluent liberals. It isn’t easy — Democrats are basically satisfied with Mrs. Clinton and Mr. Obama’s positions — but it’s possible.
This fact has largely been missing from reporting on the issue. For example a Washington Post piece warning of the end of the world if Trump tried to negotiate on the debt, told readers that the government would pay roughly $255 billion this year in interest on the debt. This includes the $113 billion that the Federal Reserve Board will receive and refund back to the Treasury. That leaves a net interest burden of $142 billion, a bit less than 0.8 percent of GDP. By comparison, the interest burden was over 3.0 percent of GDP in the early 1990s.
“The fact that no responsible government would ever literally drop money from the sky should not prevent us from exploring the logic of Friedman’s thought experiment, which was designed to show—in admittedly extreme terms—why governments should never have to give in to deflation.”
The quote above is from a post by Ben Bernanke (who, in case anyone does not know, used to be in charge of US monetary policy). I put it up front because it expresses a macroeconomic truth that no one should ever forget: persistent recessions and deflation are never inevitable, and always represent the failure of policy makers to do the right thing.
There are many useful points in his post, but I just want to talk about one: Bernanke is in fact not talking about helicopter money in its traditional sense, but what I have called elsewhere ‘democratic helicopter money’.
When most people talk about HM, they imagine some scheme whereby the central bank sends ‘everyone’ a cheque in the post, or transmits some money to each individual some other way. It is what economists would call a reverse lump sum tax, or reverse poll tax: the amount you get is independent of your income. That makes it different from a normal tax cut.
In practice the central bank could only really do this with the cooperation of governments. It would not want to take the decision about what everyone means on its own. (Do we include children or not. How do we find everyone?) But once those details had been sorted out, a system would be in place that the central bank could operate whenever it needed to.
Bernanke suggests an alternative. The central bank sets aside a sum of newly created money, and the fiscal authorities then spend it as they wish. They could decide to use all the money to build bridges or schools rather than give it to individuals. There might be two reasons for doing HM this way. First, for some reason the fiscal authorities are reluctant to spend if they have to fund it by creating more debt, so it may allow them to get around this (normally self-imposed) ‘constraint’. Second, a money financed fiscal expansion could be more expansionary than a bond financed fiscal expansion. Lets leave the second advantage to one side, as the first is sufficient in a world obsessed by government debt.
I have talked about something similar in the past (first here, but later here and here), which I have called democratic helicopter money. This label also seems appropriate for Bernanke’s scheme, because the elected government decides on the form of fiscal expansion. The difference between what I had discussed earlier under this label and Bernanke’s suggestion is that in my scheme the fiscal authorities and the central bank talk to each other before deciding on how much money to create and what it will be spent on (although the initiative always comes from the central bank, and would only happen in a recession where interest rates were at their lower bound). The reason I think talking would be preferable is simply that it helps the central bank decide how much money it needs to create. [1]
Imagine, for example, you had a fiscal authority in one country that wanted to spend the money on ‘shovel ready’ public investment projects, and an authority in another country that wanted to spend it on some temporary tax cuts for the rich. The impact of the two different stimulus policies on demand and output are very different. If the two economies were in similar conjunctural positions, then the central bank with the tax cutting fiscal authorities would want to create a lot more money than would be required in the other economy.
In some countries it is easier for central banks to talk to the fiscal authorities than in others. When it is difficult, Bernanke’s scheme may appear attractive, but it leaves the central bank somewhat in the dark about how much money it needs to create. The big advantage of the more popular conception of HM (a cheque in the post) is that the impact of any money creation is much clearer. (As it is important to end recessions quickly, waiting to see what happens is not helpful advice.)
When central banks and governments do happily talk to each other (as in the UK, for example) then my version of democratic HM becomes an option. Arguments that this makes the central bank less independent are spurious in my view. The central bank initiates the discussion, in clearly defined circumstances. They simply ask what the government would spend any newly created money on. This question should be accompanied by the central bank’s current view on what the multipliers for various fiscal options are. The government then makes a choice, and the central bank then decides how much money to create.
While democratic HM is not talked about much among economists (Bernanke excepted), I think there are good political economy reasons why it may be the form of HM that is eventually tried. As I have said, conventional HM of the cheque in the post kind almost certainly requires the involvement of government. Once governments realise what is going on, they may naturally think why set up something new when they could decide how the money is spent themselves in a more traditional manner. Democratic HM is essentially a method of doing a money financed fiscal expansion in a world of independent central banks.
Which brings me back to the quote at the head of this post. The straight macroeconomics of most versions of HM is clear: all the discussion is about institutional and distributional details. If it is beyond us to manage to set in place any of them before the next recession that would be a huge indictment of our collective imagination, and is probably a testament to the power of imaginary fears and taboos created in very different circumstances.
[1] A sequential set-up of the kind Bernanke suggests is also more vulnerable to cheating: the government uses the money to finance something they were going to do anyway, and in effect largely offsets the money creation by reducing its own borrowing.
In January 2009, at the beginning of Obama’s first term, the nonpartisan Congressional Budget Office issued a 10-year forecast for the U.S. economy, including such indicators as unemployment, gross domestic product, the budget deficit, government debt and interest rates. Here’s a table comparing the CBO’s expectations for the year 2015 to what has actually happened:
NGDP forecast to grow 33 percent, actually grew 22 percent.
I really love the Night Manager on AMC. It's brilliant. The Onion and AV Club were purchased by Univision which is imposing their Clintonoid view on their subidiaries. So no more clicking there.
YANGON, Myanmar — Myanmar’s democracy leader, Daw Aung San Suu Kyi, foiled by military leaders in her bid to become president, would become “state counselor” under a measure approved on Tuesday by Parliament’s lower house. The newly created role could give her authority exceeding the president’s.
Military members of Parliament denounced the measure as an unconstitutional power grab, stood up in the chamber in protest and boycotted the vote.
The measure, approved last week by Parliament’s upper house, will now go to President Htin Kyaw for his signature. The president is a close ally of Ms. Aung San Suu Kyi whom she chose for the job.
While campaigning before elections in November, she pledged to be “above” the president if her party, the National League for Democracy, was victorious. It swept the elections and now controls both houses of Parliament with large majorities.
The military-drafted Constitution bars Ms. Aung San Suu Kyi, a Nobel Peace laureate, from becoming president because her children are British citizens.
The position of state counselor would allow her to coordinate the activities of Parliament and the executive branch. She also holds the positions of minister of the president’s office and foreign minister.
Last week, she took on two more ministerial positions — education and energy — but she gave up those posts this week.
The combination of jobs means that she will oversee the president’s office, determine foreign policy and coordinate decision-making between the executive branch and parliamentary leaders. It is unclear what responsibilities that will leave for the president.
U Yan Myo Thein, a political commentator in Yangon, the country’s major city, said that it was not surprising Ms. Aung San Suu Kyi’s party and the military would clash but that he had not expected a dispute so soon. He said it could jeopardize relations between the military and civilian leaders in the coming years.
But U Tun Tun Hein, a National League for Democracy parliamentary leader and chairman of the lower house’s bill drafting committee, played down the disagreement.
“I don’t see the discussion and debate from the bill as a problem between the N.L.D. and the military,” he said. “It is the beginning of democracy in practice. There will be agreement and disagreement.”
U Kyaw Win, a Yangon writer, said that he was disappointed by the dispute and that he feared it could slow progress in reducing the military’s role in politics.
“How could we hold dialogue with the military with this tension?” he asked. “Politicians should maneuver strategically in dealing with the military, since we can’t send them back to the barracks overnight.”
The military, known as the Tatmadaw, ruled the country for more than half a century, and only in the last few years has it allowed democracy to emerge.
The military dictatorship kept Ms. Aung San Suu Kyi under house arrest for 15 years and ensured that she could not serve as president by including the constitutional prohibition effectively disqualifying her.
The Constitution gives the military a quarter of the seats in Parliament and assigns it the role of protecting the Constitution.
Col. Aung Thiha, one of the military members of the lower house, objected to the bill giving Ms. Aung San Suu Kyi new authority, in part because it identified her by name.
“The bill goes against separation of powers and violates the Constitution,” he said. “Although this is a multiparty system, the bill is about a party leader. If our Tatmadaw’s voices are not considered and accepted, we won’t join in voting on the bill.”
The former president, U Thein Sein, who stepped down last week after paving the way for the historic change in power, shaved his head, put on a robe and became a monk on Monday for five days, according to the Ministry of Information. It is common in Myanmar for Buddhists to enter a monastery for short periods.
So what we are seeing already, in this campaign, is, we have received over six million individual campaign contributions. That's a political revolution, you know that? That's unprecedented, I believe, at this point in the campaign, in history. We are seeing...and when you talk about young people, please do not think that these are 23-year-olds or younger. In virtually every primary and caucus process, we have won the votes of people 45 years of age or younger. They're not just kids. And we're seeing, I think, a revitalization of American democracy.
Perhaps we can have a serious discussion of measures like paid family leave, paid vacations, and work sharing, both as measures that are good in their own right, but also have the potential to bring us closer to full employment. If the distinguished economists attacking Friedman’s analysis can stop their fuming and start thinking, perhaps we can go this route.
In less than 48 hours, the polls open in five large and delegate-rich states. After everything we’ve overcome together, there’s never been a more important two days for our campaign.
I want to tell you the truth about our job on Tuesday, and it’s something you may not hear a lot about from the corporate media. Our goal on Tuesday is simply this: do well and hold Hillary Clinton’s delegate lead to a minimum.
Because after Tuesday, the map shifts immediately and dramatically in our favor. With every vote cast after Tuesday’s primaries, her lead will only shrink. We will continue to make up delegates, week after week, in state after state, until we capture the lead on June 7th when California, New Jersey, New Mexico, Montana and the Dakotas vote.
That is our path to victory, but we need to [do] well on Tuesday. That’s the first step.
Recently, more radical proposals have surfaced, reflecting a sense of urgency and widespread disappointment with the impact of current monetary policy. Beyond advocating higher minimum wages, some are calling* for “reverse income policies,” with governments imposing across-the-board wage increases on private employers – a move that would drive up prices and defeat deflationary expectations. The fact that economists whose views typically fall nowhere near those of the far left are even thinking about such interventionism shows just how extreme circumstances have become.
I favor all of these proposals, in some form. The details of their implementation would obviously have to vary, depending on each economy’s circumstances. Germany, for example, is in a strong position to implement a reverse income policy, given its huge current-account surplus, though there would undoubtedly be major political barriers. More spending on education, skills upgrading, and infrastructure, however, is a no-brainer almost everywhere, and is politically more feasible.
The Labour Party has an instinctive urge to protect those left behind by the long years of uneven private-debt-fuelled growth and its austerian aftermath. This is good and proper. However, it would be a mistake to waste Labour’s energies on tirades against austerity. If I am right that austerity is a symptom of low investment (and of a government keen to push the inevitable burden on the weaker citizens), Labour should concentrate on policies that will shift idle savings into investment funding, engendering new technologies that produce green, sustainable development and high quality jobs. Such an economic program will require the creation of a public investment bank that issues its own bonds (to be supported by a non-inflationary Bank of England quantitative easing strategy targeting these bonds), but also a new alliance with enlightened industrialists and parts of the City keen to profit from sustainable recovery. Labour, I believe, will only overcome its infighting, and the toxic media campaign against its leader, by escaping into a Green, investment-led British Renaissance.
“As a veteran of two Middle East deployments, I know first hand the cost of war,” said Ms. Gabbard, one of the first female combat veterans to serve in Congress. “I know how important it is that our commander-in-chief has the sound judgment required to know when to use America’s military power and when not to use that power.
“As a vice chair of the D.N.C., I am required to stay neutral in democratic primaries, but I cannot remain neutral any longer,” she added. “The stakes are just too high. That’s why today I’m endorsing Senator Bernie Sanders to be our next president and commander in chief of the United States.”
Ms. Gabbard, while not mentioning Mrs. Clinton by name, went on to cast Mr. Sanders as being more interested in peace and as someone who would be better trusted with the lives of American troops. She also implied that Mr. Sanders had better foreign policy judgment than his rival.
“We need a commander in chief who has foresight, who exercises good judgment, and who understands the need for a robust foreign policy which defends the safety and security of the American people, and who will not waste precious lives and money on interventionist wars of regime change,” Ms. Gabbard said. “We can elect a president who will lead us into more interventionist wars of regime change, or we can elect a president who will usher in a new era of peace and prosperity.”
Ms. Gabbard, who was born in American Samoa and is the first Hindu elected to Congress, is seen as a young, rising star of the party but has publicly battled Democratic leadership. In October, Ms. Gabbard said she was uninvited from the first Democratic presidential primary debate by the chief of staff to Representative Debbie Wasserman Schultz of Florida, the chairwoman of the national committee, after Ms. Gabbard appeared on television and called for more debates.
At the time, the party’s leadership had been criticized for allowing only a limited number of debates, which some viewed as an effort to deny Mr. Sanders more time to confront Mrs. Clinton when she was ahead in polls. Ms. Wasserman Schultz has denied that Ms. Gabbard was uninvited from the debate.
Mr. Sanders welcomed Ms. Gabbard’s endorsement Sunday.
“Congresswoman Gabbard is one of the important voices of a new generation of leaders,” Mr. Sanders said in a statement. “As a veteran of the Iraq War she understands the cost of war and is fighting to create a foreign policy that not only protects America but keeps us out of perpetual wars that we should not be in.”
Ms. Wasserman Schultz praised Ms. Gabbard with a statement of her own. “As one of the first female combat veterans to serve in Congress and the first American Samoan and Hindu member of Congress, Congresswoman Gabbard is a role model who embodies the American ideal that anyone can dream big and make a difference,” Ms. Wasserman Schultz said. “She is also a colleague in Congress and a friend, and I look forward to continuing to work alongside her when our Party unites behind whoever emerges as our nominee.”
Must-Read: I want to endorse this line of thinking from Paul Krugman because I think it is completely right. My initial worries about Sanders-Friedman was that it made promises about where we could get as far as economic growth over the next decade that were very unlikely to be achievable. More important is the Romers' accurate critique that Sanders's plan would not even come close to getting us there even in the unlikely possibility that things do break the way that Sanders-Friedman. And that generates the corollary that is perhaps most important: Sanders's plans look seriously underpowered, and we should be trying to assemble a coalition to do even more than he envisions come 2017...
Must-Read: IMHO, Paul Krugman should have had not two but four parting observations:
Primaries are valuable testing grounds for candidates' ideas and teams, which is a point he makes.
It's dangerous to believe something because it is what you want to hear, which is a point he makes.
A point he doesn't make but should: If you believe that hysteresis is not a one-way ratchet--that it is as easy to boost potential via a high-pressure economy as to destroy it via prolonged depression--Sanders's stimulus plans are underpowered by a factor of four.
A point he doesn't make but should: If you believe--which I do--that so far hysteresis has only gobbled about two-thirds of the gap between current production and the pre-2008 trend, then Sanders's fiscal stimulus plans are about the right size--and HRC's are much too small.
Kudos, by the way, to the administration-in-waiting for providing this — it will be a joy to argue policy with an administration that provides comprehensible, honest reports, not case studies in how to lie with statistics.
That said, the report is written in such a way as to make it hard to figure out exactly what’s in the plan. This also makes it hard to evaluate the reasonableness of the assumed multipliers....
The world economy is slowing, both structurally and cyclically. How might policy respond? With desperate improvisations, no doubt. Negative interest rates have already moved from the unthinkable to reality (see charts). The next step is likely to include fiscal expansion. Indeed, this is what the OECD, long an enthusiast for fiscal austerity, recommends in its Interim Economic Outlook. But that is unlikely to be the end. With fiscal expansion might go direct monetary support, including the most radical policy of all: the “helicopter drops” of money recommended by the late Milton Friedman.
More recently, this is the policy foreseen by Ray Dalio, founder of Bridgewater, a hedge fund. The world economy is not just slowing, he argues, but “monetary policy 1” — lower interest rates — and “monetary policy 2” — quantitative easing — are largely exhausted. Thus, he says, the world will need a “monetary policy 3” directly targeted at encouraging spending. That we might need such a policy is also the recommendation of Adair Turner, former chairman of the Financial Services Authority, in his book Between Debt and the Devil .
Why might the world be driven to such expedients? The short answer is that the global economy is slowing durably. The OECD now forecasts growth of global output in 2016 “to be no higher than in 2015, itself the slowest pace in the past five years”. Behind this is a simple reality: the global savings glut — the tendency for desired savings to rise more than desired investment — is growing and so the “chronic demand deficiency syndrome” is worsening.
This stage of demand weakness must be seen in its historical context. The long-term real interest rate on safe securities has been declining for at least two decades. It has been near zero since the financial crisis of 2007-09. Before then, an unsustainable western credit boom offset the weakness of demand. Afterwards, fiscal deficits, zero interest rates and expansions of central bank balance sheets stabilised demand in the west, while a credit expansion funded massive investment in China. Loose western monetary policies and loose Chinese credit policies also drove the post-crisis commodity boom, though China’s exceptional growth was the most important single factor.
The end of these credit booms is an important cause of today’s weak demand. But demand is also weak relative to a slowing growth of supply. At the world level, growth of labour supply and labour productivity have fallen sharply since the middle of the last decade. Lower growth of potential output itself weakens demand, because it lowers investment, always a crucial driver of spending in a capitalist economy.
It is this background — slowing growth of supply, rising imbalances between desired savings and investment, the end of unsustainable credit booms and, not least, a legacy of huge debt overhangs and weakened financial systems — that explains the current predicament. It explains, too, why economies that cannot generate adequate demand at home are compelled towards beggar-my-neighbour, export-led growth via weakening exchange rates. Japan and the eurozone are in that club. So, too, are the emerging economies with collapsed exchange rates. China is resisting, but for how long? A weaker renminbi seems almost inevitable, whatever the authorities say.
[graph]
No simple solutions for the global economic imbalances of today exist, only palliatives. The current favourite flavour in monetary policy is negative interest rates. Mr Dalio argues that: “While negative interest rates will make cash a bit less attractive (but not much), it won’t drive . . . savers to buy the sort of assets that will finance spending.” I agree. I cannot imagine that businesses will rush to invest as a result. The same is true of conventional quantitative easing. The biggest effect of these policies is likely to be via exchange rates. In effect, other countries will be seeking export-led growth vis-Ã -vis over-borrowed US consumers. That is bound to blow up.
One alternative then is fiscal policy. The OECD argues, persuasively, that co-ordinated expansion of public investment, combined with appropriate structural reforms, could expand output and even lower the ratio of public debt to gross domestic product. This is particularly plausible nowadays, because the major governments are able to borrow at zero or even negative real interest rates, long term. The austerity obsession, even when borrowing costs are so low, is lunatic (see chart).
If the fiscal authorities are unwilling to behave so sensibly — and the signs, alas, are that they are not — central banks are the only players. They could be given the power to send money, ideally in electronic form, to every adult citizen. Would this add to demand? Absolutely. Under existing monetary arrangements, it would also generate a permanent rise in the reserves of commercial banks at the central bank. The easy way to contain any long-term monetary effects would be to raise reserve requirements. These could then become a desirable feature of our unstable banking systems.
The main point is this. The economic forces that have brought the world economy to zero real interest rates and, increasingly, negative central bank rates are, if anything, now strengthening. This is what the world economy is showing. This is what monetary policy is indicating. Increasingly, this is what asset prices are demonstrating.
Policymakers must prepare for a new “new normal” in which policy becomes more uncomfortable, more unconventional, or both. Can the world escape from the chronic demand weakness? Absolutely, yes. Will it? That demands greater boldness. When one has exhausted the just about possible, what remains, however improbable, must be the answer.
Lebowski: Well, not much to tell. I, um, was one of the authors of the Port Huron statement, the original statement not the compromise second draft. Did you ever hear of the Seattle Seven?
Maud: Hmmm.
Lebowski: That was me. There was six other guys. And then the music business briefly.
Maud: Oh.
Lebowski: Yeah. Roadie for Metallica. Speed of Sound tour. A little of this and little that. My career has slowed down lately.
Maud: What do you do for recreation?
Lebowski: Oh the usual. Bowl. Drive around. The occasional acid flashback.
What we need now is 1) debt relief to unwind the overhang and 2) much tighter financial regulation to prevent the growth of new fragilities. And if those prove inconsistent with full recovery, then we need massive government spending on infrastructure and other investments financed by money printing until full employment is reattained.
The recent decision by the Fed to raise interest rates is the latest example of the rigged economic system. Big bankers and their supporters in Congress have been telling us for years that runaway inflation is just around the corner. They have been dead wrong each time. Raising interest rates now is a disaster for small business owners who need loans to hire more workers and Americans who need more jobs and higher wages. As a rule, the Fed should not raise interest rates until unemployment is lower than 4 percent. Raising rates must be done only as a last resort — not to fight phantom inflation.
Janet L. Yellen, the Fed’s chairwoman, and her colleagues have concluded that the economy is finally strong enough to grow with a little less help from the central bank. Indeed, they worry inflation will rise too quickly if they do not start raising interest rates. The first rate increase will be small, then the Fed expects to raise rates about one percentage point a year for the next few years.
Paul Krugman and Larry Summers both have very good columns this morning noting the economy's continuing weakness and warning against excessive rate hikes by the Fed. While I fully agree with their assessment of the state of the economy and the dangers of Fed rate hikes, I think they are overly pessimistic about the Fed's scope for action if the economy weakens.
While the Fed did adopt unorthodox monetary policy in this recession in the form of quantitative easing, the buying of long-term debt, it has another tool at its disposal that it chose not to use. Specifically, instead of just targeting the overnight interest rate (now zero), the Fed could have targeted a longer term interest rate.
For example, it could set a target of 1.0 percent as the interest rate for the 5-year Treasury note, committing itself to buy more notes to push up the price, and push down the interest rate to keep it at 1.0 percent. It could even do the same with 10-year Treasury notes.
This is an idea that Joe Gagnon at the Peterson Institute for International Economics put forward at the depth of the recession, but for some reason there was little interest in policy circles. The only obvious risk of going the interest rate targeting route is that it could be inflationary if it led to too rapid an expansion, but excessively high inflation will not be our problem if the economy were to again weaken. Furthermore, if it turned out that targeting was prompting too much growth, the Fed could quickly reverse course and let the interest rate rise back to the market level.
Of course, it would be best if we could count on fiscal policy to play a role in getting us back to full employment (lowering supply through reduced workweeks and work years should also be on the agenda), but the Fed does have more ammunition buried away in the basement and we should be pressing them to use it if the need arises.
The episode "Red Faced" has Kara dealing with her anger issues. She's told that humans are terrified of what will happen if Supergirl loses her temper. Her boss advises her to find out what the anger is about behind the anger. By the end of the episode Supergirl concludes that she's angry about having being denied a normal life. Instead, her parents sent her away before her planet expoded and now she has to be a super hero.
Instead of being angry all the time she vows to channel that rage as she does here, channeling it into her heat ray vision.
