Monday, January 26, 2015

HOFBRÄUHAUS Munich Menu Prices

Getting there in USD terms...  imagine these prices at a 1:1 EUR/USD exchange rate:

They would not be too bad at 1:1 in fact a bit of a bargain.   Similar then to what one would pay at a Cracker Barrel restaurant here in the USA.

They would not be a very good value at EUR/USD = 1.50   Then you would be looking at $12 for a 1 litre beer and $17.25 for half a chicken.

So we can see how the exchange rate reflects the real terms of trade between the nations.  Europe is moving back towards a more reasonable exchange rate with the USD after spending many years at an increased level of real terms in favor of the Eurozone.

Austerity foisted upon a currency zone that prefers to export seems to work well if your goal is to lower the real terms of trade for your currency zone and make local industry "more competitive".

New Greek Finance Minister said, "Greece will neither want to leave the euro nor threaten to do so."

Oh well, this thing's going nowhere. It's got the liberal disease of big talk, no action, written all over it.

The new Finance Minister is this guy, Yanis Varoufakis. He once said, "Greece will neither want to leave the euro nor threaten to do so."

Done. Finished. Toast.

There is  no way that Tsipras and Syriza can deliver what they say they will deliver while in the euro. NO. WAY.

The sad thing is, this guy Varoufakis taught at University of Texas. That's where MMTer and economic liberal, James K. Galbraith teaches. Too bad he didn't learn a thing or two while he was there.

Lars P. Syll — NAIRU — more religion than science

Lars P. Syll’s Blog
NAIRU — more religion than science
Lars P. Syll | Professor, Malmo University

The reasons for the opposition of the 'industrial leaders' to full employment achieved by government spending may be subdivided into three categories: (i) dislike of government interference in the problem of employment as such; (ii) dislike of the direction of government spending (public investment and subsidizing consumption); (iii) dislike of the social and political changes resulting from the maintenance of full employment. We shall examine each of these three categories of objections to the government expansion policy in detail.

Bill Mitchell — Smart Austerity – its just the same dumb austerity

“In its current form, EMU is not viable in the long run”. That quote comes from a Report – Repair and Prepare – Strengthening Europe’s Economies after the Crisis – jointly published by the – Jacques Delors Institut (located in Berlin) – and the Bertelsmann Stiftung – (located in Gütersloh, Germany). The Report purports to lay out a blueprint to prepare Europe for the “next potential threat to its very existence”. It proposes a “path towards renovation” to create an “ever closer union”. They claim that they have taken up this task because there is “extensive ‘crisis fatigue’ and ‘euro area debate fatigue’ in “in governmental circles and the media”. I would call it adherence to ideological Groupthink rather than fatigue. There has been a major failure yet none of those who created the failure have put their hands up to take responsibility. Once they dismissed the problem as being caused by “profligate and fat Greeks (insert vilified nationality as to your preference)”, various policy makers and media commentators resorted to the even more amorphous “structural problems” to explain the on-going crisis. The media has been full of captive writers who just reiterate press releases from neo-liberal politicians and/or mainstream economists. So is this new Report different? Is their plan viable?

Before you get too excited, you might also like to know that the former organisation was founderd by the French politician after he finished his time as European President.
Delors will be remembered as the French neo-liberal (despite his socialist affiliation) who oversaw the disastrous Delors Report that informed the Treaty of Maastricht. It is clearly pro-Eurozone.
The German outfit is an off-shoot of the Paris-based – Notre Europe – Jacques Delors Institute. It is run by one Henrik Enderlein who is pro-Eurozone. 
Meanwhile, the Bertelsmann Stiftung has a history of advocating neo-liberal changes to public education and labour market reform in Germany. 
So you might expect my answers to the initial questions are No and No.…
Regrouping for a counterattack after an electoral defeat in Greece.

Bill Mitchell — billy blog
Smart Austerity – its just the same dumb austerity
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

Greece can't abandon austerity and stay with the euro. Period.

Alexis Tsipras and his party, Syriza, can talk all they want about ending austerity, but they simply can't do it without their own currency.

When all the cheering and celebration dies down Greece will be left with a choice: they can move forward on the path to self determination, sovereignty and dignity, but only if they bring back the drachma.

Or, they can stick with the euro and naively believe they will be able to end austerity, rehire fired public workers, raise salaries and do all those other things that they promised to do, but can't.

This is the classic problem of the modern day left wing. They talk big about all these progressive ideals--help the middle class, workers, safety nets, education, etc, but they simply don't understand or, don't buy into the economics necessary to do these things.

Same problem everywhere. Here, too, in the U.S. (Although there's some hope with Kelton.)

By the far this morning the euro is trading in the classic, buy the rumor sell the news pattern.

Sunday, January 25, 2015

We Can't Have Our Evolution And Centrally Plan It Too

   (Commentary posted by Roger Erickson.)
(Too bad financial liquidity isn't included in that plot!)

The image above drives home the ancient lesson that increasing capabilities always rest upon increasingly distributed foundations. That's true for weight in architecture, inter-relationships in resilient networks, and education in human populations.

As evidence, Bill Mitchell recently reiterated an idea that recurs periodically, but never quite often enough.

“A massive boost to public education is required."

Yet clearly, “more” education alone won’t necessarily help. “Different” education is also required.

For example, something along the lines of OBT&E, which is a method, and also a reiteration of Natural Selection.

It's also clear that each and every one of our methods is necessary but not sufficient without ongoing adaptive intent - which becomes a method for coordinating all other methods. The utility of all methods still depends upon slowly molding a human culture with a collective focus on Cultural Adaptive Rate as the common guiding light - for all the milestone, Desired Outcomes we pursue as we continuously muddle on.

We have countless options, and they are usually increasing. Increasing our cultural Adaptive Rate reduces to collectively sensing, on any given day, what permutations of our ongoing choices will actually optimally INCREASE rather than reduce our net options.

That’s a practical math problem. In fact, it's a constantly changing, massively multi-variate, adaptive cultural calculus task which we can only pursue via brute-force group calculation (utilizing massively parallel feedback, i.e., by Democracy). By definition, our survival challenges can never be modeled as fast as they change. We have to calculate them, via distributed, organized trial and error. That, plainly and simply, requires complete focus on re-connecting everyone to everyone, and summarizing all available feedback soon enough to matter.

No predictive power, but seemingly limitless adaptive power.

In other words, you can't have your evolution and Centrally Plan it too.

It seems that the baseline for all evolving organizations - of any sort whatsoever - is to have 80% of the components (whether cells, humans or even whole nations) enslaved & poorly managed by a minority still operating by yesterday's methodologies. Some things are always, briefly, the "keystone" species which both enforce existing structure & constrain Adaptive Change in every ecosystem. There are no clear lines separating phenotypic persistence, Institutional Momentum, and hegemony. Yet we must manage those distinctions as best we can.

That's our burden, as an evolving, growing aggregate. You better embrace & enjoy that task, 'cuz it's not going away.

That's the reality of organic growth. Central Planning is always fighting a staged retreat while racing to stay relevant to the expanding numbers who are escaping their comprehension.

On a personal level, it's not so different from what grandparents observe, as first their kids and then their grandchildren spiral out into the future.

It's up to us to make OUR continuous AND INCREASINGLY DISTRIBUTED transitions either relatively graceful, or rather tumultuous. How? Equally clearly, that depends on how we prepare our future citizens, by managing distributed education.

I’ll liberally paraphrase Joshua Chamberlain, circa 1865

“We have zero predictive power, but through training and education, we can determine what aggregate adaptive rate we can generate, when each novel group challenge appears.” 

What's that old saying? If you really love something - even the future for you, your kids and your nation - then set it free? No, not unprepared in the middle of the road, figuratively, but in a somewhat protected practice field, and then make the sacrifices necessary to protect it as it learns how to be free from your constraints.

That seems to be what human evolution is all about. We can't have our aggregate evolution and Centrally Plan it too.

No, 2 + 2 (+ something unexpected) never equals just 4. Yet our electorate has to keep making that calculation on a national level, every day, and adjust to the continuous surprises. Human cultures compete on the basis of their aggregate cultural-CPU designs.

What's that mean for citizens? Probably the following message.
If you can't stand the physical math, get out of the evolution!

The alternative is already apparent.

(Right now, we're not using our brains in any organized way, either.)

Saturday, January 24, 2015

Do "The police exist to maintain the divide between the upper class and everyone else. Nothing more." ?

   (Commentary posted by Roger Erickson)

You can't blame some citizens for considering the overall validity of the title conjecture, given our current context.

I wonder how long it takes, on average, for the average local cop on the beat - fresh out of a police academy - to become aware of, let alone come to grips with, the default institutional lobbying that comes from perennial class competition, whether overt or "Innocent Fraud".

With current education practices, the bulk of our citizens seem to remain politically naive for most of their lives, so there's no reason to expect the bulk of police officers to catch on much faster, if ever.

Progress requires much more organizational effort to get all citizens on the same page, and realizing that we're all in this together.

There's so much to gain from social coordination (teamwork), and each year we've less to lose.

Meanwhile, it's still true that adversarial approaches are unlikely to work. In fact, they'll play into classic methods for confusing, dividing & conquering electorates by default, i.e., narrow business lobbies & politics as usual. Here's yet another example.

How FBI Illegally Stole Ross Ulbricht's Laptop & Brought Down The Silk Road

In response, a contact wrote:
"The police exist to maintain the divide between the upper class and everyone else. Nothing more."
I'm not the only one wondering why the FBI action against Ross Ulbricht & Silk Road was such a priority.

Especially given persistent unemployment levels, student loan debt, poor K-12 schools*, white collar crime, blue collar crime, etc, etc.

Not to mention money laundering & other financial terrorism by Wall St. banks


* Compare schools today with Sam Adam's early education, 200+ years ago. Read it and weep.
"Sam Adams, like five of the fifty-six signers of the Declarations of Independence, attended Boston Latin School [at ~age 7]. Required reading at the Boston Latin School for a student's first four years included Aesop's Fables, one of the first of which is a tale of a wolf who devoured a lamb despite the lamb's refutation of all the wolf's accusations against him. The moral of the story, according to Aesop, is that 'The tyrant will always find a pretext for his tyranny.' ...

In years five through seven of the school, students progressed to reading letters, essays and orations of the Roman politician Marcus Tullius Cicero.  ...
[Subsequently,] Sam Adams entered Harvard in 1736 at age 14." 

Which was normal for that day, at least for motivated families in and around Boston. So why isn't a similar educational rate "normal" today? After all, a human mind is a terrible thing to waste, and so is a national group mind.

Some info on my Forex class

Important note:

In every single one of my prior classes I always told students NEVER to trade "pegged" currencies. So the whole blowout related to the Swiss National Bank ending the EUR/CHF peg was avoided.
The platform that I teach on and the one I have been using to trade is Oanda. Oanda did not experience any problems with customer accounts in the aftermath of the SNB decision. I have been trading on Oanda for 14 years. It is a great platform. 
The course is taught online using Cisco's Webex meeting platform. No special software is needed. All you need is a computer and internet connection.You will receive with a link to "join the meeting" at the appropriate time. You don't have to join or sign up to Webex.

Course hours are 8am - 4pm NY time.

All sessions are recorded so you will be able to download them to review at your convenience.

No prior Forex trading experience is needed. I have taught many beginners as well as seasoned traders.

The first two days cover Forex theory and fundamentals, MMT and how to use the Oanda trading platform. The next three days are LIVE trading. You see exactly what I am doing and how to execute my trading system.

During the live trading sessions I talk a lot about the "Mental Game." That's where I explain to you how to achieve the proper mindset to ensure success. I often say that trading success is 100% mental and I am not exaggerating. I give you a specific set of exercises and techniques to help you develop your mental game.

The course teaches great "defense." That means, how not to lose. I also explain how everything ever taught with respect to successful trading is wrong.

In one part of the course I ask students to give me a totally unplanned, spontaneous trade that I had not time to analyze. It could be in any currency pair, long, short...doesn't matter. I will trade that to a profit every time or worst case, a break even.

My course fee is normally $2995, however I have lowered the price to $995 this one time.

I truly feel that you will emerge from this course with the necessary skills to make money as a currency trader. The level you take it is up to you and will depend a lot on your ability to master the mental and behavioral traits. The actual buying and selling strategies and tactics I am certain everyone will master without a problem. I guarantee it.

To enroll, please go here:

Andrea Terzi — Is QE forever?

The point of Draghi’s QE is not the amount. It is the principle.

This is the really big news in the Eurozone where, until last week, the ECB’s monetary operations did not include the possibility of trading in the government securities market in the same way the Fed, the Bank of England, or the Bank of Japan do.
With QE, the ECB has become an actor in the government securities market and, as happens in the U.S,, the U.K., or Japan, this provides continuous liquidity to the bonds being traded, removing default risk.
The ECB is now acting like a central bank.
QE will not last forever. But the new attribute of the ECB as a dealer in government bonds is here to stay. 
Money and the Real Economy
Is QE forever?
Andrea Terzi, Professor of Economics, Franklin College, Switzerland

Michael McAuliff — Bernie Sanders Got Republicans To Make His Argument For Universal Health Care

Hit them on competitiveness, they don't understand compassion.

But Bernie hasn't yet brought out the big guns — the MMT principles showing that "affordability" is never the issue when real resources are available.

The Huffington Post
Bernie Sanders Got Republicans To Make His Argument For Universal Health Care
Michael McAuliff

CHF 3-month rate

They keep lowering this policy rate by about 0.1% every day.  The lower bound of the current policy range is -1.25% so they should be there in another 2 or 3 days.

Let's watch to see if there is a reaction in the CHF exchange rate vs. EUR or USD when they stop lowering this rate next week.

While this rate lowering has been going on the CHF has been pretty steady vs. those two currencies. I'd assume they are looking for a weakening in the CHF vs. the EUR and USD as they continue to lower this policy rate.  If so they have not been getting the response they are looking for.

Friday, January 23, 2015

Ambrose Evans-Pritchard — Kremlin hard-liner: Russians would 'rather starve' than surrender Putin to Western aggressors

Strong words.

The Telegraph
Kremlin hard-liner: Russians would 'rather starve' than surrender Putin to Western aggressors
Ambrose Evans-Pritchard, in Davos

Also, Mario Draghi's QE blitz may save southern Europe, but at the risk of losing Germany
The decision amounts to an act of political defiance by a majority bloc in the Governing Council - unmistakably a debtors' cartel of Latin states and like-minded states - and therefore opens an entirely new chapter of the EMU story. 
This Latin revolt is to violate the sacred contract of EMU: that Germany gave up the D-Mark and bequeathed the Bundesbank's legacy to the ECB on the one condition that Germany would never be out-voted on monetary issues of critical importance. 
Nor is the irritation confined to Germany. The Tweede Kamer of the Dutch parliament was up in arms today, the scene of fulminating protests from across the party spectrum. "Dutch taxpayers should not be made liable for the debts of the Italian state," said the liberal VVD party.…
Yet this is a thin shield. Prior rulings of the court have made it clear that scale matters. The bigger it is, the more clearly it leaks into fiscal policy and violates the budgetary prerogatives of the German parliament. This is a sensitive matter. The court has ruled that no supranational body may usurp the budgetary powers of the Bundestag, for to do so would be to rip the heart out of Germany's post-War democracy. This legal battle will drag on. 
Let me be clear: I have argued for at least three years that the Latin bloc should seize control of the ECB's machinery and call the German bluff, and this is exactly what has just happened. 
They have perfect right to do so. The ECB's policy has been far too tight even for Euroland as a whole. For them it has been disastrous. The slide towards deflation - and contracting nominal GDP - has caused their debt trajectories to spiral upwards even faster. 
Yet nobody should have any illusions about the implications of such defiance. What is at stake is German political consent for the euro project. 
With the crisis is the EZ, the dispute between the UK and the rest of the EU about open borders, and the civil war in Ukraine along with sanctions on Russia, Europe is in the worst state its been since the lead up to WWI and WWII. Fractious.

Chris Dillow — Real wages & inflation

It's true in the sense that lower oil prices raise the real incomes of oil consumers. It's also true that a surprise drop in inflation of the sort we've seen can temporarily raise real wages. 
However, in the longer-run, real wages aren't affected by inflation. If they were, we could achieve higher wages by (credibly) reducing the inflation target - but nobody believes this. 
Instead, real wages depend upon real things like productivity growth and workers' bargaining power, and these aren't much affected by inflation: at moderate levels of inflation, there's no link between inflation and GDP growth, for example.…
Stumbling and Mumbling
Real wages & inflation
Chris Dillow | Investors Chronicle

Dirk Ehnts — IMF’s Blanchard: fiscal policy part of the solution against stagnation

In a modern economy with a sovereign currency, both banks and the government can create additional deposits for the private sector. Banks achieve that through lending, and the government through bond issuance. A third way, which doesn’t work for everybody, is to have exports higher than imports, which must result in a net inflow of net financial assets, among them deposits (ex-post). In the euro zone, the private sector does not want to borrow even though interest rates are at zero. If you want a cause, then name it confidence: the firms and households are pretty confident that in this situation of weak demand, high unemployment and falling prices they do not want to more borrow. 
It seems like the only way to get the monetary circuit going in Europe is through the creation of private sector deposits by a) cutting taxes (for those who can reasonable expected to use the additional deposits for spending) or b) increasing government spending (which directly creates deposits for the private sector). What this does not mean is a) government has to be bigger (let them hire private companies to do public jobs if you think that it is welfare-improving) or b) that this will become a permanent feature of the economy. As long as the private sector does not spend, government jumps in. When aggregate demand runs hot, taxes can be increased and the central bank’s interest rate hiked up. This would constitute a return to normal. No mass unemployment, the usual bickering about higher taxes, and savers getting money for nothing.
The problem lies in the insistence on "structural reform" (lower public spending and instituting wages "flexibility") in order to become "more competitive" globally, which is a race to the bottom that is deflationary.

econoblog 101
IMF’s Blanchard: fiscal policy part of the solution against stagnation
Dirk Ehnts | Berlin School for Economics and Law

Warren Mosler — The latest QE policy removes ECB ‘conditionality’

This time it’s different. As part of this broad based fight to reverse the current deflationary forces, the national CB’s will now be buying their own nation’s debt, thereby, for all practical purposes, eliminating default risk. And with no mention of fiscal conditionality. Taken at its word, this means the latest QE policy has removed the ECB’s leverage over national govt fiscal policy, as the ECB did not tie it’s securities purchases to fiscal compliance. 
Therefore Greece and Italy, the two members desiring fiscal expansion, are operationally free to do so without the threat of default driving up their interest rates. They may face EU penalties, etc. but those are a very different matter than the prior default risk. 
So the door is now open to anyone bold enough to step through. However they probably don’t know it and probably wouldn’t go there if they did…
The Center of the Universe
The latest QE policy removes ECB ‘conditionality’
Warren Mosler

Yves Smith — Announcing (Actually, Confirming) Our Focus on the CBO’s Dubious Models and Political Bias

We've been writing about abuses of power and process at the Congressional Budget Office and will be ramping up our coverage further now that ranking member Bernie Sanders has a new team at the Budget Committee, which among other things supervises the CBO. And the CBO is going to be the subject of a major political fight over how it prepares its estimates of the economic and fiscal impact of pending legislation. As we'll discuss below, Republicans plan to mandate that the CBO use something called dynamic scoring, which has the effect of making tax cuts look far more beneficial to the economy than they are, by effectively claiming that tax cuts boost growth, which then boosts tax receipts. It would effectively institutionalize the Laffer curve, which has been widely and repeatedly debunked. As troubling as this development is, there's already a lot not to like in how the CBO operates.…
The reason that the CBO matters so much is that its estimates are taken as gospel, as unbiased, accurate, fair, and “nonpartisan”. But as we’ve demonstrated in previously posts, the CBO has repeatedly taken what amount to partisan positions and has skewed its analysis in gross violation of its own procedures to produce results that have had enormous impact on policy debates. The CBO is firmly neoliberal, which in and of itself represents a considerable bias.…
The fundamental beef of Follette and Sheiner with the CBO model is that it naively assumes past growth in health care spending as the basis for its long-term projections. The result is that it shows that trees will grow to the sky. One of the things anyone who has built forecasting models will tell you is you come up with assumptions that look reasonable and then sanity check the output (for instance, does your model say in year 10 that your revenues will be 3x what you can produce given your forecast level in plant and investment? If so, you need to make some revisions). The Fed economists point out numerous ways that the model output flies in the face of what amounts to common sense in the world of long term budget forecasting.…
Jeff Madrick notes:
The problems with the CBO are bigger than this latest brouhaha. First, they have structural and institutional problems.… 
Second, the CBO regularly makes ideological assumptions that take neo-classical propositions at face value.…
And, frankly, they often make preposterous assumptions.…
The CBO, much like the Fed, are bastions of hidden power that lie outside democratic accountability. But the CBO’s and OMB’s clout is even less visible than that of the central bank. CBO forecasts are treated by Congress and media as gospel. The CBO is assumed to be above partisan influence. But it is partisan in a manner that is not widely understood. It is deeply neoliberal in its orientation, and often acts as a lobbyist rather than an analyst, for instance, issuing
One of the big reasons that the CBO manages to avoid criticism is that, like the private equity industry and the Fed, it shrouds itself in secrecy. It seldom makes its models public,…
The CBO also too acts too often an advocate rather than the dispassionate analyst that it is mandated to be via statute.…
Naked Capitalism
Announcing (Actually, Confirming) Our Focus on the CBO’s Dubious Models and Political Bias
Yves Smith

Bill Mitchell — Neo-liberalism has compromised the concept of a citizen

This is the key failing of neoliberal capitalism, as well as any social, political and economic system based on individualism. The assumption of homo economicus as rational utility maximizer by nature is wrong. This assumption underlies the so-called "laws of economics" that are supposedly similar to the laws of (19th century) physics based on atomism. Human being are not like atoms and don't behave like atoms.

The more correct conception is homo socialis, in the Greek of Aristotle, zoon politikon, that was developed millennia ago. For Aristotle the end or goal (telos) of humans is living a good life in a good society. Then question becomes what is a good life and what is a good society, and how do they relate to each other to result in a full human life.

The rule of law and rights are fundamental to this, along with the recognition of universality along with individuality, that is, all people share the same nature as human persons even through each is unique as an individual.

Bill Mitchell – billy blog
Neo-liberalism has compromised the concept of a citizen
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

My next Forex course is on sale!

I'm putting my Forex trading course 


That's right. For my upcoming Feb 2-6 Forex trading course I will only be charging $995.

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  • Market Composition
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  • Mental Game
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Mike Norman   

Online currency trading course

Alwaleed: No more $100 oil

Kinda seems like Boone Pickens' famous, "You'll never see natural gas with a $2 handle again in my lifetime."

Well, Boone's still kicking and, what...we've seen a $2 handle on gas a couple of times now?

Alwaleed may be right, but I've been around markets long enough to know that when making predictions, never say never.

EIA: US Oil inventories at 80 year high

Coverage of EIA's weekly petroleum report here at HSN.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.1 million barrels from the previous week. 
At 397.9 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. 
Total motor gasoline inventories increased by 0.6 million barrels last week, and are well above the upper limit of the average range.

Probably fair to say that inventories are up...  ;)

Valerie Ramey and Sarah Zubairy — Government spending multipliers in good times and in bad: Evidence from US historical data

There is no consensus among economists about the size of the multiplier of government purchases. It is not clear either how multipliers vary with the state of the economy. This column presents new evidence on this issue using large historical data set from the US. The findings suggest that there is no evidence that fiscal multipliers differ by the amount of unemployment or the degree of monetary accommodation.… 
Our findings suggest that there is no evidence that fiscal multipliers differ by the amount of slack in the economy or the degree of monetary accommodation. These results imply that, contrary to recent conjecture, government spending multipliers were not necessarily higher than average during the Great Recession. Our estimates imply that government spending during WWII lifted the economy out of the Great Depression, not because multipliers were so large, but because the amount of government spending was so great.
Government spending multipliers in good times and in bad: Evidence from US historical data
Valerie Ramey, Professor in the Department of Economics, University of California, San Diego, and Sarah Zubairy, Assistant Professor in the Department of Economics, Texas A&M University

Thursday, January 22, 2015

Francis P. Sempa — Is China Bidding for the Heartland?

Beijing doesn’t have to choose between land and sea predominance. It could have both.

The Diplomat
Is China Bidding for the Heartland?
Francis P. Sempa | Assistant U.S. Attorney for the Middle District of Pennsylvania, an adjunct professor of political science at Wilkes University, and a contributing editor to American Diplomacy

Thomas Piketty — How To Make The Eurozone Sustainable

In this interview with Italian newspaper La Repubblica, French economist Thomas Piketty explains why the Fiscal Compact was a mistake, what the ECB can do with a Quantitative Easing (QE) programme, and how the Eurozone needs to be reformed in order to make it sustainable in the long run. (The video is in English but sometimes there is an Italian video ad).

Social Europe
How To Make The Eurozone Sustainable
Thomas Piketty | Professor of Economics at the Paris School of Economics

Gaius Publius — "Yes Virginia, all that money printing did show up as inflation"

"They" have already anticipated that. Assets don't "inflate," they "appreciate." Over-appreciation with respect to underlying value is a "bubble" rather than "inflation," and asset bubbles are self-correcting in markets.

It's all in getting the terminology right.

Actually, an intention of QE was for risky assets to appreciate, thereby creating a wealth effect that was supposed to increase spending and demand for goods and services, leading to increased investment and hiring. Didn't happen that way.

Robert Skidelsky — The Fall of the House of Samuelson

Samuelson bastardizes Keynes, and Friedman buries Samuelson. Result? Another global depression that the world is still in the firm grip of as deflation becomes ascendant.

Project Syndicate
The Fall of the House of Samuelson
Robert Skidelsky | Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords

Adair Turner — Have We Become Too Flexible?

Oh, well.

Project Syndicate
Have We Become Too Flexible?
Adair Turner | former chairman of the United Kingdom's Financial Services Authority and former member of the UK's Financial Policy Committee, is a senior fellow at the Institute for New Economic Thinking and at the Center for Financial Studies in Frankfurt

Wanker of the day.

The ECB’s New Macroeconomic Realism
Jeffrey D. Sachs | Professor of Sustainable Development, Professor of Health Policy and Management, and Director of the Earth Institute at Columbia University, is also Special Adviser to the United Nations Secretary-General on the Millennium Development Goals.

Dirk Ehnts — De Grauwe on QE@ECB – since when are we all monetarist?

I value Paul DeGrauwe as an economist, but here I would argue that he cannot be serious.…
econoblog 101
De Grauwe on QE@ECB – since when are we all monetarist?
Dirk Ehnts | Berlin School for Economics and Law

Michael Stephens — Looking Beyond the Tax System To Fight Inequality

In the context of last Tuesday’s State of the Union, Pavlina Tcherneva was interviewed by Wall Street Journal Live‘s Sara Murray on the issue of the effectiveness of policies to combat widening income inequality.
MMT at the WSJ.

Multiplier Effect
Looking Beyond the Tax System To Fight Inequality
Michael Stephens


Perhaps a less bearish report on the price situation in the European steel industry from MEPS in the UK at the beginning of the new calendar year.

Many German buyers feel that there are no supporting arguments to justify the proposed flat product basis rise, given the mills’ lower raw material and energy expenditure.  Moreover, despite the fact that there are few attractive third country import offers, due to developments in the euro/dollar exchange rate, supply is still in excess of demand. The majority of first quarter business has already been finalised at the old levels. 
The French market remained quiet in early January, following the long Christmas/New Year break. It was still too early to measure the true level of activity. Some end-users partially filled their order requirements before the holiday, while others did not. 
MEPS has noted no significant changes in flat product basis values in the Italian market, where most companies did not return from the holidays until January 7, at the earliest. At this stage, it is difficult for the steel producers to judge the true level of demand, particularly with the uncertainty surrounding the oil price and the continually dropping value of the euro. 
UK buyers are dubious about the successful implementation of the first quarter increase proposed by ArcelorMittal, since they have received much cheaper offers from Nordic suppliers. The exchange rate is making Chinese quotations unworkable at present. Service centres had good sales in December and January has also started well. Overall, both mill and resale values are holding up. 
The situation in Belgium is virtually unchanged from December 2014. The market is described as “sleeping”.  With raw material costs low, as well as demand, buyers question why steel prices should go up. A number of service centres placed orders just before Christmas and, therefore, are not in any particular hurry to conclude new deals. Resale business is very competitive. Third country imports are virtually non-existent as the euro is weak against the US dollar. 
Basis figures have hardly changed in Spain. Buyers explain that, although they are aware of ArcelorMittal’s desire to lift prices, other suppliers have not yet made their intentions known. The general opinion is that the announcement will, at least, halt the downwards tendency that was prevalent in December 2014. Real consumption is stable. However, distributors report that resale values are under renewed pressure.
I would say that this report is less bearish than the December reports, but perhaps not even neutral, and certainly not bullish.

Bill McBride — Draghi: "There must be a statute of limitations for those who say there will be inflation"

This buys more time for policymakers in Germany to change their approach (I doubt they will, there is no "statute of limitations" for bad ideas).
Calculated Risk
Draghi: "There must be a statute of limitations for those who say there will be inflation"
Bill McBride