The central banker's bogeyman by Ryan Avent

Then yesterday, Mr Altig (blogger at Atlanta Fed) addressed an argument made by economist Simon Wren-Lewis:

In another recent blog item (also with a pointer from Mark Thoma), Simon Wren-Lewis offers the opinion that acknowledging uncertainty about size of the output gap actually argues in favor of being "less cautious" about taking an aggressive policy course. The basic idea is familiar. It is a simple matter to raise rates should the Fed overestimate the magnitude of the output gap. But with the short-term policy rates already at zero, it is not so easy to go in the opposite direction should we underestimate the gap.

...
All of recent history, in other words, suggests that Mr Wren-Lewis is exactly right: it's much easier for central banks to go in one direction than in the other. Now one could, as Mr Altig says, come up with a "plausible argument" in which things don't work like that. Given the very large and ongoing costs of labour-market weakness, I would certainly expect America's central bankers to do better than that. I would like to see some very clear evidence that a year or two of 4% inflation poses more of a threat than at least a year or two more of unemployment well above the natural rate. What we're getting instead is little more than hand-waving.

A Man Without Honor (for newbies) Onion recap

A Man Without Honor (for experts) Onion recap

Good comment sections for both.

The Human Disaster of Unemployment by Dean Baker and Kevin Hassett

Thankfully, there is some effort to learn from this model. The recent bill that extended the payroll tax cut included a provision that covered the cost of work-sharing programs in the 23 states that already had them as part of their unemployment insurance systems, and it helped other states start such programs. This should slow job destruction in those states, which will improve chances for all workers seeking employment. From now on, the first line of defense during a recession should be to expand work sharing rather than simply extend unemployment benefits.

Joe Weisenthal vs. the 24-Hour News Cycle by Binyamin Appelbaum

Unemployment Rate Without Government Cuts: 7.1% by Justin Lahart

The Labor Department’s establishment survey of employers — the jobs count that it bases its payroll figures on — shows that the government has been steadily shedding workers since the crisis struck, with 586,000 fewer jobs than in December 2008. Friday’s employment report showed the cuts continued in April, with 15,000 government jobs lost.

But the survey of households that the unemployment rate is based on suggests the government job cuts have been much, much worse.
In April the household survey showed that that there were 442,000 fewer people working in government than in March. The household survey has a much smaller sample size than the establishment survey, and so is prone to volatility, but the magnitude of the drop is striking: It marks the largest decline on both an absolute and a percentage basis on record going back to 1948.

Moreover, the household survey has consistently showed bigger drops in government employment than the establishment survey has.
The unemployment rate would be far lower if it hadn’t been for those cuts: If there were as many people working in government as there were in December 2008, the unemployment rate in April would have been 7.1%, not 8.1%.

Ceteris is rarely paribus, of course: If there were more government jobs now, for example, it’s likely that not as many people would have left the labor force, and so the actual unemployment rate would be north of 7.1%.

It's regressive tax on the middle and lower classes as bargaining power is reduced because of a weak labor market. Cyclical unemployment is transformed into long-term unemployment as the nation's human capital and productive capacity is degraded. It's effective class warfare in the wake of a financial crisis caused by the finanical-system-casino being left to its own devices sans regulation.

Dean Baker reduces uncertainty

Spanish Debt, the European Central Bank, and the Maginot Line by Dean Baker

Problems arise due to the distribution of the debt. If every third household borrowed $600,000, which was lent by the other two households, then this third household is getting deep in debt, with the other two are appearing to build up large amounts of assets.

This is what happened to Spain, the United States and other countries with serious housing bubbles. The other two households were willing to lend money to the third household because they thought it held an asset (a house) of great value. When this turned out not to be true, the third household found itself with an unsustainable debt burden and the other two households found themselves with assets of questionable value. If the third household can't repay its debt, then the loans are no longer worth their face value.

Central banks should be paying attention to the buildup of such unsustainable debt burdens. Unfortunately, the European Central Bank (ECB) was focused on building up its Maginot Line, being vigilant in its fight against inflation.

The problem now is to try to correct the imbalances created by growth of the housing bubble. Spain and the rest of Europe is getting little help from ECB which is still focused on reinforcing the Maginot Line rather than promoting growth in the euro zone.

The problem I have with the MMT/Monetary Mystics is that they believe all debt its bad.

Econoblog commenters like Troy at DeLong's blog, Dan Kervick, noncents, etc.

Question:

Which actor has appeared or is appearing on two of the best television shows ever?

Answer:

Aiden Gillen who plays Littlefinger on Game of Thones and played Councilman Carcetti on The Wire.

I am liking the Hound especially after this past episode. He cut his way through those rioting peasants pretty easily to save Sansa. "Put the bird back in her cage."

As someone said it's not that he doesn't like Tyrion Lannister in particular, he hates everybody.

R.I.P. Adam Yauch of the Beastie Boys (1964-2012) by Nathan Rabin

Was Paul’s Boutique Illegal? How dumb court decisions and bad laws have made it all but impossible for musicians to sample the way the Beastie Boys used to. by Yglesias

Another excerpt from Krugman's End This Depression Now

Game of Thrones Week 6: You can’t control wild creatures, and you can’t own people by Charlie Jane Anders

David Vitter Is Trying To Crush the Economy by Yglesias

Those Revolting Europeans by Krugman

A glimmer of hope. And of course the NYTimes runs a piece in the business section that is complete wrong. It couldn't be more wrong if had been written by that Triumvirate of Dumb - Amity Schlaes, John Cochrane, and Casey Mulligan.


Markets to Give France A Grace Period, Analysts Say by Liz Alderman

Also:

Robert Samuleson Gets Serious About Inflation by Dean Baker

Game of Thrones

The Old Gods and The New (for experts) Onion recap

The Old Gods and The New (for newbies) Onion recap

Official and unofficial Game of Thrones cookbooks. The eels at the King's Landing market last episode made me think of Game of Thrones cuisine.

Ex-president bling bling by Krugman

For as I emphasized in that post earlier today, that German success story was based on a (modestly) inflationary boom in much of the rest of Europe. Give the peripheral countries a comparably favorable external environment — or actually a more favorable one, since they’re much deeper in the hole — and maybe there is a way to make this work. Let Spain regain competitiveness by inflating more slowly than Germany, rather than by deflating, and this whole thing might, might, become feasible.

But this means, yes, overall inflation in the euro area significantly higher than the less than 2 % target. It certainly means a lot higher than the 1.5% the market currently expects.

Don’t like that? OK, so no euro. It’s that stark.

Greta Gerwig has a new movie.

He was struck by her combination of “über-intellectual” and “every-girl connectivity,” he said, “which I find is very rare.”

“She intellectually understands what a lot of her problems are, as her characters, and yet is still incapable of overcoming those problems, which is something we all share and understand,” he said, “and she embodies that very naturally.”         ...

But Ms. Gerwig’s real style is not overtly sexy; she was carrying a backpack and wearing penny loafers, her favorite shoes, with the pennies. (She has three pairs: red, black and “businesswoman brown.”) She has been quietly dating Mr. Baumbach since September and likes NPR and reading the personals in The New York Review of Books.         

Chris Hughes, a Renly for our times as in an admirable gay leader who is interested in public service. The article says he follows Olivia Wilde on Twitter. She was(is?) in the popular show House, played the hottie in Tron: Legacy and Alexander Cockburn is her uncle. From the piece:

The evening was his debut in New York’s clubby literary society. Robert Silvers, the longtime editor of The New York Review of Books being honored that night, offered Mr. Hughes a warm hello. Ken Auletta, an author and New Yorker writer, nodded approvingly as he passed Mr. Hughes on the way out.

Krugman's new book excerpted in the New York Review of Books.

Adam Yauch, 1964-2012

Game of Thrones Week 5: What wins wars: magic, money or manpower? by Charlie Jane Anders

"The Ghost of Harrenhal" (for newbies) Onion recap

"The Ghost of Harrenhal" (for experts) Onion recap

That was fast.

Austan Goolsbee's blog

Where the Productivity Went by Krugman

The Secret of Our Non Success by Krugman

The corporate media really is in large part corrupt. Mostly it's the he said/she said non-partisan convention. We don't want to offend anyone, since we have ads to sell.