–But there are two notable tailwinds: gas prices and housing. The average price at the pump is down about 20 cents over the past few months. That’s big, and if it sticks, it will continue to help to offset the euro-drag.I've read stories that say Iraq has been pumping a lot of oil, making up for Iran.
Conceivably, Germany learned three things from the 1992 experience, and mapped out a course with those lessons in mind. First, absent fixed exchange rates, its export-oriented companies faced the risk of periodic competitive devaluations from the rest of Europe.
German exports had peaked in 1990, and did not fully recover until 1994. They would not fall again for an entire year until 2010, after the credit crisis devastated world trade.
Second, a currency union could help German exports if the euro’s value were held down by less competitive economies.
Italy had been forced repeatedly to devalue the lira as rising costs made its exports too expensive. A common currency would not stop the rising costs, but it would prevent a new devaluation.
Germany, China and the Republicans are the Axis of Fools.Finally, if Germany adopted a low-interest-rate policy, and superlow rates arrived in European nations accustomed to high rates, banks could open the credit spigot and create a debt-financed boom in much of Europe. That would invite a mushrooming of imbalances. Ultimately, deeply indebted countries would face a crisis, one that they could solve only if they acquiesced to German policies and surrendered a large part of national sovereignty.
To be fair, I and other have been surprised by the stubborn persistence of low core inflation; if you’d asked me three years ago, I would have predicted slight deflation by now. My current interpretation is that downward nominal wage rigidity is a bigger issue than we realized. But this is a relatively small failure of prediction compared with the dire forecasts of soaring interest and inflation rates.
Finally, I just want to flag this for the record:Regardless of what the triumphant Keynesians would have you believe, my analysis continues to be that the current combination of monetary and fiscal stimulus is driving us toward disaster. Instead of a real recovery, the US will experience an inflationary depression. Europe, on the other hand, will suffer much less, precisely because it was not seduced by the short-term appeal of stimulus.Yep.
According to Freud, who no one cares about anymore, we underestimate how much sadism and masochism underlies the average personality (because it is taboo in a 'civilization' and because it is a fundamentally infantile dichotomy of desire). I'm not crazy about Freud, but I think something like the popularity of '50 Shades of Grey', which gets pretty explicit in its descriptions of S&M sex, amongst the most normative demographic (Soccer Moms) is arguing for the possibility that Freud was right.)
and
Psychologists attribute anger to the feeling of being wronged by someone or something, internally or externally. Ironically, pop culture provides an unusual number of opportunities for such anger. Two specific cases come to mind.
First is the narcissism of small differences. That is to say, we often get very angry when someone very similar to us disagrees strongly with us about something that is very similar to our own tastes. The brutal competition in sports fandom is an example of this, as is Jezebel complaining more about the Daily Show than the Taliban.)
I think the right way to think about this is that inflation and employment aren't two separate levers that the Federal Reserve addresses separately. Rather, the Fed impacts both inflation and employment by influencing aggregate demand. A years-long span of 8+% unemployment helps keep prices low. People who are broke or unemployed curtail their own consumption and thus alleviate scarcity. A tradeoff needs to be made in the short-term. If gas prices spike, people will be upset and many families' bottom lines will suffer. But is keeping the labor market weak in order to keep millions of people unemployed rather than commuting really a sound way of coping with the moderate scarcity of oil? I say no. Ben Bernanke seems to say yes. But he's getting away with not putting the issue squarely before the public.
Will the Keynesian principles that have guided economic policy for generations be affirmed or replaced by a belief that smaller government will make room for a more vibrant private sector?
Should Social Security, under pressure from the ever-growing costs of an aging population, remain a government-run, taxpayer-financed, guaranteed-benefit program? Or should it be reinvented to allow workers to invest in, and assume some of the risk for, their own retirements?
Is it necessary for government to reshape the private health care system in order to bring insurance coverage to those who do not have it, or can tax incentives and other free-market principles take care of the problem?
Are banks and investment firms being stifled by over-regulation as they try to finance economic growth, or are they irresponsibly reverting back to the casino-like culture that brought us the last financial crisis?
Are we heating our planet at a rate that demands substantial and immediate changes in the way we use energy, or is the evidence still insufficient to require that we assume the costs of altering the way we live?
The list goes on, amounting to a huge ideological front in the combat over a long series of issues. And on many of those issues, time is fast running out for the nation to make up its mind about how to proceed, giving additional urgency to outcome this time around.
...
“American politics sees this kind of dynamic happen every few generations, and it seems to sneak up on us,” said Anthony R. Dolan, who was Reagan’s chief speechwriter and served as an adviser this political season to Newt Gingrich. “A president governs in an unexpected manner, and it becomes a defining moment in our political history.”
The stakes for conservatives this year could be greater than in 1980, Mr. Dolan said, if only because much of the case against President Jimmy Carter back then was about competence, whereas with Mr. Obama the case is about fundamental philosophy.
lolwut?“He’s decided he’s going to start a mission to change America and its bourgeois consciousness,” Mr. Dolan said of Mr. Obama.
New data this week from the Federal Reserve shows that in the first quarter of this year, American businesses were taking on new debt at the fastest rate since the financial crisis in 2008. American households, though, were heading in the opposite direction, increasingly shedding debt.
Twitter / mccarthyryanj:
It just occurred to me that I've been reading/editing "Bernanke calls on Congress to spend" stories for more than 3 years…(via DeLong)
Instead, the policy-making committee could adopt the proposal of Charles Evans, the president of the Federal Reserve Bank of Chicago, that the Fed pledge to keep rates near zero until unemployment is down to 7 percent or inflation has risen to 3 percent. Such conditional guidance assures people that the Fed will keep at the job until unemployment is down or the toll on inflation becomes unacceptable.(via DeLong)
