Strange to learn that a favorite author is currently teaching at my alma mater.
Saturday, February 14, 2015
Greece
Greece’s Excess Burden by Krugman
What’s the state of the Greek crisis? I have no idea, or at any rate no idea beyond what any diligent reader of press reports might glean. I do, however, have a pretty good idea of what Greece is asking for on the fiscal side, and it might be useful to talk about the arithmetic behind that position.
Here’s the basic point: Greece has, through incredible sacrifice, managed to achieve a primary budget surplus — a surplus excluding interest payments — despite a depression-level slump. That surplus is believed to be currently running at about 1.5 percent of GDP. The Greek government is not calling for a return to primary deficits; as I understand it, it is merely proposing that it be allowed to stabilize the surplus at that level, as opposed to raising it to 4.5 percent of GDP, a number that has few precedents in history.
Now, you might think that 3 percent of GDP is not that big a deal (although try finding $500 billion a year of spending cuts in the United States!) Given the macroeconomics, however, it is much bigger than it looks. Much like the reparations the Allies tried to extract from Germany after World War I — although for somewhat different reasons — forcing Greece to run huge primary surpluses at this point would impose a very large “excess burden” over and above the direct cost of the surpluses themselves.
First, austerity has a very negative effect on output in a country that does not have its own currency, and therefore cannot offset the fall in demand with monetary policy. The attached figure shows what was supposed to happen to Greek GDP according to the original 2010 request for a stand-by arrangement – that is, the original austerity-and-internal-devaluation plan — compared with what actually happened. There’s little question that the huge shortfall reflects the adverse effects of austerity, which the IMF admits it greatly understated. At this point a reasonable estimate for the Greek multiplier is on the order of 1.3.
This multiplier effect has immediate fiscal implications. Suppose that Greece were to spend somewhat more than contemplated under the current agreement; the primary surplus would surely be less than would otherwise be the case, but the effect would be much less than one-for-one. We can summarize the actual effect of higher government spending (ΔG) on the primary surplus (ΔPS) as follows:
ΔPS = -ΔG*(1-μτ)
where μ is the multiplier and τ is the marginal effect of a one-euro rise in GDP on revenues and/or cyclically linked spending like unemployment benefits. Say μ = 1.3 and τ=0.4, both more or less in the middle of the evidence; then higher spending would reduce the primary surplus by less than half the initial spending rise.
Or to turn this around, to achieve the extra three points of surplus the troika is demanding, Greece would actually have to find more than 6 points of GDP in spending cuts or tax hikes. And note that the multiplier is almost surely greater than one; this means that the fall in government spending would induce a fall in private spending too, which is an additional excess burden from the austerity.
The point, then, is that by demanding that Greece run even bigger primary surpluses, the troika is in effect demanding that Greece make sacrifices on the order of an additional 7.5 or 8 percent of GDP as compared with the standstill the Greek government proposes.
Here’s the basic point: Greece has, through incredible sacrifice, managed to achieve a primary budget surplus — a surplus excluding interest payments — despite a depression-level slump. That surplus is believed to be currently running at about 1.5 percent of GDP. The Greek government is not calling for a return to primary deficits; as I understand it, it is merely proposing that it be allowed to stabilize the surplus at that level, as opposed to raising it to 4.5 percent of GDP, a number that has few precedents in history.
Now, you might think that 3 percent of GDP is not that big a deal (although try finding $500 billion a year of spending cuts in the United States!) Given the macroeconomics, however, it is much bigger than it looks. Much like the reparations the Allies tried to extract from Germany after World War I — although for somewhat different reasons — forcing Greece to run huge primary surpluses at this point would impose a very large “excess burden” over and above the direct cost of the surpluses themselves.
First, austerity has a very negative effect on output in a country that does not have its own currency, and therefore cannot offset the fall in demand with monetary policy. The attached figure shows what was supposed to happen to Greek GDP according to the original 2010 request for a stand-by arrangement – that is, the original austerity-and-internal-devaluation plan — compared with what actually happened. There’s little question that the huge shortfall reflects the adverse effects of austerity, which the IMF admits it greatly understated. At this point a reasonable estimate for the Greek multiplier is on the order of 1.3.
This multiplier effect has immediate fiscal implications. Suppose that Greece were to spend somewhat more than contemplated under the current agreement; the primary surplus would surely be less than would otherwise be the case, but the effect would be much less than one-for-one. We can summarize the actual effect of higher government spending (ΔG) on the primary surplus (ΔPS) as follows:
ΔPS = -ΔG*(1-μτ)
where μ is the multiplier and τ is the marginal effect of a one-euro rise in GDP on revenues and/or cyclically linked spending like unemployment benefits. Say μ = 1.3 and τ=0.4, both more or less in the middle of the evidence; then higher spending would reduce the primary surplus by less than half the initial spending rise.
Or to turn this around, to achieve the extra three points of surplus the troika is demanding, Greece would actually have to find more than 6 points of GDP in spending cuts or tax hikes. And note that the multiplier is almost surely greater than one; this means that the fall in government spending would induce a fall in private spending too, which is an additional excess burden from the austerity.
The point, then, is that by demanding that Greece run even bigger primary surpluses, the troika is in effect demanding that Greece make sacrifices on the order of an additional 7.5 or 8 percent of GDP as compared with the standstill the Greek government proposes.
Thursday, February 12, 2015
Greece
Greece agrees to negotiate with the Troika on Friday.
The procedural step forward came after the ECB's Governing Council extended a cash lifeline for Greek banks for another week, authorizing an extra 5 billion euros in emergency lending assistance (ELA) by the Greek central bank. The council decided in a telephone conference to review the program on Feb. 18.Monday was the deadline for the bridge deal, but apparently that's pushed until Wednesday. Euro zone finance ministers will meet Monday.
Wednesday, February 11, 2015
Daenerys Targaryen and Syriza
Khaleesi:
The landslide winner's curse by Daniel Davies
I imagine Dsquared looks and sounds like the Spice Trader of Qarth in this video who is mildly trolling Khaleesi. He's very eloquent in his writing and thinking!
The - strained - analogy is this. Magic is coming back into the world with Dany's dragons. The red comet was a sign of this. With Dany's dragons, the Warlocks' power is increasing as well. They symbolize the fascists. And the increase in magic is the failure of austerity in Europe and increasing economic distress. This increases the appeal of the xenophobes and neo-fascists. The Warlocks team up with the King of Qarth to depose the Spice Trader and the Thirteen, but Dany's magic is too strong for them as she escapes the House of the Undying.
Tuesday, February 10, 2015
Monday, February 09, 2015
Stannis
...Theon's laugh was half a titter, half a whimper. "Lord Ramsay is the one Your Grace should fear."
Stannis bristled at that. "I defeated your uncle Victarion and his Iron Fleet off Fair Isle, the first time your father crowned himself. I held Storm's End against the power of the Reach for a year, and took Dragonstone from the Targaryens. I smashed Mance Rayder at the Wall, though he had twenty times my numbers. Tell me, turncloak, what battles has the Bastard of Bolton ever won that I should fear him?"The link no longer works. Maybe Martin changed his mind.
Saturday, February 07, 2015
Friday, February 06, 2015
If you tolerate this your children will be next
The song's theme is taken from the Spanish Civil War, and the idealism of Welsh volunteers who joined the left-wing International Brigades fighting for the Spanish Republic against Francisco Franco's military rebels. The song takes its name from a Republican poster of the time, displaying a photograph of a young child killed by the Nationalists under a sky of bombers with the stark warning "If you tolerate this, your children will be next" written at the bottom.[2]
Various works on the Spanish Civil War were the inspiration for this song, and certain lyrics pertain directly to these works. For example, the line "If I can shoot rabbits/then I can shoot fascists" is attributed to a remark made by a man who signed up with the Republican fighters to his brother in an interview years later. This was originally quoted in the book Miners Against Fascism by Hywel Francis. Another work George Orwell's first-hand account, "Homage to Catalonia". "I've walked Las Ramblas/but not with real intent" brings to mind the account in Orwell's book of fighting on the Ramblas, with the various factions seemingly getting nowhere, with the fighting and often a sense of camaraderie overriding the vaunted principles each side was supposed to be fighting for. Nicky Wire has also acknowledged that he was also inspired by a song by The Clash, "Spanish Bombs", which has a similar subject.
Release
The recording was issued as two CD singles: the first included versions of "Prologue to History" and "Montana/Autumn/78", and the second featured a remix by Massive Attack and a mix by David Holmes.
It became the first of the band's two number one singles in the UK Singles Chart. [1] It also became the group's biggest success on the Irish Singles Chart (where it reached number 3), and is the only Manic Street Preachers track to be released as a single in the United States.
In March 2009, it was discovered that the song was used on the website of the British National Party as the soundtrack of an article describing "the violence, hatred, fragmentation and despair" wrought on London by the "great multicultural experiment".[3] The choice of this song was considered ironic by many, considering the song contains lyrics such as "So if I can shoot rabbits/Then I can shoot fascists". Record company Sony successfully had the song removed from the site on the grounds of unauthorised use.[3] The BNP later released a press statement claiming that "the song had mistakenly been automatically streamed on to its site and had nothing to do with the official party", and that "you can interpret the lyrics any way you want".[3]
Sunday, February 01, 2015
Game of Thrones Season 5
Tywin Lannister is dead. Cersei, Littlefinger, Jaime, Sansa. Is that Bronn with the sword? Someone escorted by the Knights of the Eyrie and Vale. The three Sand sisters, daughters of the Red Viper of Dorne. Tommen and Margaery Tyrell marry. Tyrion and Lord Varys in Pentos. Jon Snow. Daenerys Targaryen. Jorah Mormont in the fighting pits. Olenna Tyrell. Melisandre the Red Priestess.
The Kingsguard sent to protect the Princess Myrcella in Dorne? Theon Greyjoy. Arya Stark in Braavos. The Flayed Man of the Dreadfort pawns on a map of the North. Selmy, Grey Worm, Daario Naharis with Daenerys still.
No Stannis or Davos? Brienne and Podrick Payne?
Saturday, January 31, 2015
Germany is the problem
I Do Not Think That Number Means What You Think It Means by Krugman
"What we see is that Italy is somewhat out of line — but the real standout is Germany, which has had much too little wage growth. And this in turn suggests that if we’re looking for the key to European problems, it lies in Germany’s beggar-they-neighbor relative wage deflation — which is indeed a point made by economists like Francesco Saraceno."Labour Costs: Who is the Outlier? by Francesco Saraceno
Friday, January 30, 2015
Democrats, Rattner and financiers
I Do Not Think That Number Means What You Think It Means by Krugman
Arithmetic Is Very Simple, But It's Still True by Dean Baker
What we see is that Italy is somewhat out of line — but the real standout is Germany, which has had much too little wage growth. And this in turn suggests that if we’re looking for the key to European problems, it lies in Germany’s beggar-they-neighbor relative wage deflation — which is indeed a point made by economists like Francesco Saraceno.
Arithmetic Is Very Simple, But It's Still True by Dean Baker
Greece and Rosser
I disagree with Rosser's prediction.
from the NYTimes:
from the NYTimes:
""Creditors are demanding that Greece run a primary surplus of 4.5 percent of gross domestic product. Mr. Varoufakis, however, said Athens would propose to hold the level to 1 percent to 1.5 percent of G.D.P.""
Greece
Europe’s Greek Test by Krugman
Greece’s Feisty Finance Minister Tries a More Moderate Message by Liz Alderman
Sunday, January 25, 2015
Wolf Hall
Wolf Hall on Masterpiece Theater starts on April 5th, a week before Game of Thrones.
Tony® Award-winning actor Mark Rylance (Twelfth Night) and Emmy® and Golden Globe® Award-winner Damian Lewis (Homeland) star in the six-hour television miniseries adapted from Hilary Mantel’s best-selling Booker Prize-winning novels: Wolf Hall and its sequel, Bring Up the Bodies. The television event presents an intimate and provocative portrait of Thomas Cromwell, the brilliant and enigmatic consigliere to King Henry VIII, as he maneuvers the corridors of power at the Tudor court. MASTERPIECE brings both of these works to life in Wolf Hall, airing on Sundays, April 5-May 10, 2015 at the special time of 9:55pm on PBS.
Mark Rylance is Thomas Cromwell, a brutal blacksmith’s son who rises from the ashes of personal disaster, and deftly picks his way through a court where ‘man is wolf to man.’ Damian Lewis is King Henry VIII, haunted by his brother’s premature death and obsessed with protecting the Tudor dynasty by securing his succession with a male heir to the throne.
Told from Cromwell’s perspective, Wolf Hall follows the complex machinations and back room dealings of this pragmatic and accomplished power broker – from humble beginnings and with an enigmatic past – who must serve king and country while dealing with deadly political intrigue, Henry VIII’s tempestuous relationship with Anne Boleyn and the religious upheavals of the Protestant reformation.
A historical drama for a modern audience, this unromanticized re-telling lifts the veil on the Tudor middle class and the internal struggles England faced on the brink of Reformation. At the center of it all is Cromwell, navigating the moral complexities that accompany the exercise of power, trapped between his desire to do what is right and his instinct to survive.
The cast also includes Claire Foy (Little Dorrit) as the future queen Anne Boleyn, Bernard Hill (Five Days) as the king's military commander the Duke of Norfolk, Anton Lesser (Endeavour) as Thomas More, Mark Gatiss (Sherlock) as Cromwell’s rival advisor Stephen Gardiner, Joanne Whalley (The Borgias) as Henry’s spurned first wife, Katherine of Aragon, and Jonathan Pryce (Cranford) as Cardinal Wolsey, the powerful Lord Chancellor who recognized Cromwell’s potential.
Saturday, January 24, 2015
Kyle Kinane
A ‘Scumbag’ Story: Kyle Kinane is the cult hero of stand-up comedy by JUSTIN HECKERT ON JANUARY 22, 2015
From my neck of the woods, western suburbs of Chicago then Chicago. Then he moved to Los Angeles eleven years ago when he was twenty-six.
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