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.

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)

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

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.

Minsky

Minsky on the Non-Neutrality of Money by J.W. Mason

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."

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

Rooseveltian Resolve

Four Questions about Fiscal Policy by JW Mason

The Nearly Forgotten Dearly Beloved 1920-21 Depression Yet Again; Or, Never Reason from a Quantity Change by David Glasner

‘Battle of the beards’: Paul Krugman vs. Ben Bernanke by Robert J. Samuelson (May 6, 2012)

Ben Bernanke (1999): "Rooseveltian Resolve" by DeLong  (March 02, 2013)

Japanese Monetary Policy: A Case of Self-Induced Paralysis? by Ben Bernanke (December 1999)

Earth to Ben Bernanke: Chairman Bernanke Should Listen to Professor Bernanke by Krugman (April 24, 2012)

Mason on Konczal and monetary policy

Five Thoughts on Monetary Policy by JW Mason

misc. macro and growth policies

Hitting the sweet spot with PGEPs: Pro-growth, equalizing policies by Jared Bernstein

Why India Trails China by Amartya Sen

Q. and A. With Charles Evans of the Fed: Low Inflation Is the Primary Concern by Binyamin Appelbaum

Virtual Office Hours: Asset Prices, Monetary Policy, Secular Stagnation, Inequality, and Pikettyism by DeLong

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.

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.

corporate buy backs

Still Disgorging by J.W. Mason

Disgorge the Cash by J.W. Mason

DeLong on Wolf

Over at Equitable Growth: Night Thoughts on Martin Wolf's Shocking Shifts: Daily Focus by DeLong

Thoma on Piketty

When Piketty Argued for Income Redistribution, He Changed Economics by Mark Thoma