Jon Snow and Stannis are dead, an inquiring Obama is told

A Game of Thrones director told President Obama, "[Someone] is deader than dead."

Greece, competitiveness, adjustment and excess unemployment

Austerity is an integral part of the Greek tragedy by Simon Wren-Lewis

Under flexible exchange rates this competitiveness adjustment could happen immediately. Things are not quite so simple in a monetary union: competitiveness cannot immediately adjust because of wage and price rigidities. A period of ‘excess unemployment’ will be required to push wages and prices down if the country is uncompetitive in relation to required primary surpluses. However the excess unemployment can be relatively modest. In fact, because of the structure of the standard Phillips curve, it is much more efficient to achieve gains in competitiveness gradually through a measured increase in unemployment than quickly through a rapid rise in unemployment, for reasons I outlined here when talking about Latvia. 

To achieve this efficient outcome may well require the government to reduce its primary deficits gradually, because without this fiscal support while competitiveness adjusts output could fall rapidly. This in turn will require more government borrowing, and if the government cannot do this from the markets, the IMF or other governments should step in to ensure this efficient adjustment can take place and avoid the waste and suffering of unnecessary unemployment. 

This is what failed to happen in the case of Greece.

Needed: Large Greek Devaluation or Large-Scale Transfers to Greece. With Bonus Godwin's Law Violation! by Brad DeLong

Austerity and the Greek Depression by Paul Krugman

humans and synths

AV Club reviews Humans: “Episode 2”

Greece and Mason

More of 

What Greece Could Do by JW Mason

I liked these bits:

"And with respect to the external balance, the evidence, both historical and contemporary, suggests that financial markets do not in fact punish defaulters. (And why should they? — the extinction of unserviceable debt almost by definition makes a government a better credit risk post-default, and capitalists are no more capable of putting principle ahead of profit in this case than in others). The costs of default, rather, are the punishment imposed by the creditors, in this case by the ECB. The actual cost of default is being paid already — in the form of shuttered Greek banks, the result of the refusal of the Bank of Greece to extend them the liquidity they need to honor depositors’ withdrawal requests."

and

"1. The Greek government takes control of the Bank of Greece. It replaces the BoG’s current leadership — holdovers from the old conservative government, appointed at the 11th hour when Syriza was on the brink of power — with suitably qualified people who support the program of Greece’s elected government. The argument is made that the central bank has abused its mandate, and failed in its fundamental duty to maintain the integrity of the banking system, in order to advance a political agenda. 

Either legislation could be passed explicitly subordinating the BoG to the elected government, or use could be made of existing provisions for removal of central bank officials for cause. The latter may not be feasible and we don’t want to get bogged down in formalities. Central bankers have critical public function and if they won’t do it, they must be replaced with others who will. Whatever the law may say.

2. The new Bank of Greece leadership commit publicly to maintain the integrity of the Greek payments system, to protect deposits in Greek banks and to prevent bank runs — the same commitment the ECB has repeatedly made for banks elsewhere in Europe. The Greek government asserts its rights to license banks and resolve bank failures. Capital controls are imposed. Greek banks reopen.

3. If necessary, the BoG resumes Emergency Liquidity Assistance (ELA) or equivalent loans to Greek banks. While the promise to do this is important, it probably won’t be necessary to actually resume ELA on any significant scale because: 

– removing the previous threats to withdraw support from Greek banks will end the bank run and probably lead to the voluntary return of deposits to Greek banks.
– capital controls and, if necessary, continued limits on cash withdrawals, block any channels for deposits to leave the Greek banking system.
– resumption of Greek payments to public employees, pensioners, etc., to be soon followed by resumed economic growth, will automatically increase the deposit base of Greek banks."

Oxi: Mason and Waldman on Greece

What Greece Could Do by J.W. Mason

Waldman and I were born the same year.

Greece by Steve Randy Waldman

post-work

The Hard Work of Taking Apart Post-Work Fantasy by Mike Konczal

AV Club reviews Humans: Episode I

Greece and Oxi

Washington Post and New York Times on the Greek Crisis by Robert Waldmann

Obama on Marc Maron's podcast

Obama on WTF with Marc Maron

I'm a longtime fan. (Same with Galifiainakis.)

Blogpost about Maron from back in 2008.

Great how Obama said he liked Pryor, Gregory, Seinfeld and talked about Louis CK.

No Dave Chapelle? George Carlin? Lenny Bruce? Bill Hicks? That would be too comedy nerdish.

Duda and Market-guided NGDPLT

Kenneth Duda's comment at Jason Smith's blog.

Jason, my name is Ken Duda. I'm a computer programmer who supports Sumner's program at Mercatus.

I am not going to defend Sumner's specific analysis. However I would ask you to think carefully about whether it's possible for a central bank to increase economic activity when there's rising unemployment, falling NGDP (or at least falling NGDP growth), low inflation, and the short-term risk-free nominal interest rate is zero. Krugman, Delong, and Wren-Lewis basically say no, or probably not, maybe the central bank should try, but there's not much it can do. I think they're wrong and the market monetarists are right. The idea that the monopoly issuer of a fiat currency can't induce more nominal spending seems nuts. Sure, the interest rate channel may be dead, but what about the expectations channel? If the central bank tells the market that it will hit its NGDP target come hell or high water, it's just a matter of time, and by the way, the target is rising constantly at say 5% a year, and all this money we're creating will absolutely not be sucked right back out of the economy until NGDP hits that target (or, more precisely, until a prediction market tells us that we'll overshoot our target if we fail to suck the money back out of the economy), then people expect more spending in the future, and that expectation of future spending stimulates spending today, either investment spending to build in anticipation of the future spending, or simply "getting while the getting is good", i.e., buying before prices rise significantly (inflation). 

Again, I am not here to defend Sumner and Sadowski's analysis in this case. However, it breaks my heart to see good intelligent people arguing about style or argument types etc when we just went through 8 years of 10 million people needlessly unemployed, lives shattered, savings lost, when the whole thing could have been averted with better monetary policy. Why can't you, me, Scott, Paul, Simon, Brad all get together, set aside the debate over fiscal stimulus, and demand better monetary policy? Market-guided NGDPLT seems like such a dramatic improvement over high-priest-guided inflation targeting, let's make it happen.

Thanks,
-Ken

Kenneth Duda
Menlo Park, CA
kjd@duda.org

SyFy goes SciFi

Hyperion comes on the heels of several high-profile scripted projects announced by Syfy, including the series pickup of The Magicians, based on Lev Grossman’s best-selling books; the 10-part series The Expanse, airing December 2015 and starring Thomas Jane; Arthur C. Clarke’s epic mini-series Childhood’s End, also set to premiere this December; Aldous Huxley’s classic novel Brave New World with Amblin Television; Gale Anne Hurd’s 13-episode thriller Hunters; David Goyer’s Superman prequel, Krypton; and Incorporated, a futuristic espionage drama from Matt Damon and Ben Affleck.

"Any advice for an old comrade?" - Game of Thrones

Varoufakis on Piketty

Varoufakis on Piketty

In summary, Varoufakis (2011, 2nd edition 2013) hypothesises that, having already run the war economy successfully, the New Dealers feared, with excellent cause, a post-war recession. In charge of the only major surplus economy left after the war had demolished most of Europe, they understood that the sole alternative to a global recession, which might have threatened an already weakened western capitalism, would be to strengthen aggregate demand within the United States by (a) boosting real wages and (b) recycling America’s aggregate surpluses to Europe and to Japan so as to create the demand that would keep American factories going. If anything, Bretton Woods was the global framework within which this project was embedded. Its fixed exchange rates, capital controls and an underlying international consensus on labour market policies that would keep the wage share above a certain level, were all aspects of the same struggle to prevent the post-war world from slipping back into depression.

Naturally, the resulting wealth and income dynamics reduced inequality, increased the availability of decent jobs, and produced capitalism’s golden age. Was this an aberration? Of course it was not! The Marshall Plan, the Bretton Woods institutions, the strict regulation of banks etc. would not have been politically feasible had capitalism not threatened to commit suicide in the late 1940s, as it does once in a while (the last episode having occurred in 2008). Were these policies and new institutions inevitable? Of course they were not! While the political interventions that had the by-product of reducing income inequality were fully endogenous to the period’s capitalist dynamics, the latter are always indeterminate both in terms of the politics that they engender as well as of their economic outcomes.

Alas, Bretton Woods and the institutions the New Dealers had established in the 1940s could not survive the end of the 1960s. Why? Because they were predicated upon the recycling of American surpluses to Europe and to Asia (see above). Once the United States slipped into a deficit position, some time in 1968, this was no longer possible. America would have either to abandon its hegemonic position, together with the dollar’s ‘exorbitant privilege’, or it would have to find another way of remaining at the centre of global surplus recycling. Or, to quote a phrase coined by Paul Volcker, “if we cannot recycle our surpluses, we might as well recycle other people’s surpluses”.

This is, according to my book’s narrative, why the early 1970s, and the end of Bretton Woods, proved so pivotal: The United States, through its twin deficits, began to absorb from the rest of the world both net exports and surplus capital, therefore ‘closing’ the recycling loop. It provided net exporters (e.g. Germany, Japan and later China) with the aggregate demand they so desperately needed in return for a tsunami of foreign capital (generated in the surplus economies by their net exports to America, and to other economies energised by the United States’ trade deficit).

However, for this tsunami to materialise capital controls had to go, wage inflation in the United States had to drop below that of its competitors, incomes policies had to be jettisoned, and financialisation had to be afforded its foothold. From this perspective, inequality’s resurgence in the 1970s, the never-ending rise of finance at the expense of industry, and the diminution of collective agency around the world, were all symptoms of the reversal in the direction and nature of global surplus recycling. The manner in which by-product ‘inequality’ and by-product ‘financialisation’ coalesced to destabilise capitalism, until it hit the wall in 2008, is a process that several studies have thrown light on in recent times (e.g. see Galbraith, 2012). Professor Piketty’s single-minded effort to construct, at any cost, a simple deterministic argument is, unfortunately, not one of them.

Big Trouble remake

Dwayne Johnson wants John Carpenter for his Big Trouble In Little China remake

Brüning and Weimar

Weimar Republic

Brüning expected that the policy of deflation would temporarily worsen the economic situation before it began to improve, quickly increasing the German economy's competitiveness and then restoring its creditworthiness. His long-term view was that deflation would, in any case, be the best way to help the economy. His primary goal was to remove Germany's reparation payments by convincing the Allies that they could no longer be paid.[44] Anton Erkelenz, chairman of the German Democratic Party and a contemporary critic of Brüning, famously said that the policy of deflation is a:

rightful attempt to release Germany from the grip of reparation payments, but in reality it meant nothing else than committing suicide because of fearing death. The deflation policy causes much more damage than the reparation payments of 20 years ... Fighting against Hitler is fighting against deflation, the enormous destruction of production factors.[45] 

In 1933, the American economist Irving Fisher developed the theory of debt deflation. He explained that a deflation causes a decline of profits, asset prices and a still greater decline in the net worth of businesses. Even healthy companies, therefore, may appear over-indebted and facing bankruptcy.[43] The consensus today is that Brüning's policies exacerbated the German economic crisis and the population's growing frustration with democracy, contributing enormously to the increase in support for Hitler's NSDAP.[1]

monetary policy

Bernanke on monetary policy and inequality by Steve Randy Waldman

James Bullard came out for NGDP path level targeting.

Clive Crook came out for helicopter drops.

Game of Thrones

Game Of Thrones (experts): “Hardhome”

Game Of Thrones (newbies): “Hardhome”

Karsi the wildling mother was on Borgen!

Game of Thrones

Is Game of Thrones all about the war between Varys and Littlefinger? Charlie Jane Anders

"Welcome to the lefthand path."

AV Club reviews Silicon Valley, "Adult Content."

Podemos

Spain’s Local Election Results Reshape Political Landscape

MADRID — Ada Colau, 41, was not even born when Manuela Carmena, 71, joined Spain’s underground Communist party and started her legal career by attacking labor restrictions imposed by Francisco Franco, the Spanish dictator. 

But even if separated by a generation, Ms. Colau and Ms. Carmena both found themselves claiming similar left-wing victories by upstart candidates over Spain’s political establishment, after Sunday’s regional and municipal elections.

Mathiness

Mathiness in the Theory of Economic Growth by Paul M. Rome

Protecting the Norms of Science in Economics by Paul Romer

Tony Yates's thoughts

How 'Mathiness' Made Me Jaded About Economics by Noah Smith

Beating dead horses by Ryan Decker