Photo Credit: Steve Rotman || As Simon and Garfunkel sang, “The words of the prophets are written on the subway walls…”Debt-based economies are unstable. Economies with a lot of short-term debt are more unstable. The Fed is like Johnny One-Note, or Fat Freddie with a hammer. They only know one tool, and it will solve all problems.Are there problems from too much debt? More debt will solve the problem. Shift debts from the private to the public sector. Don’t let the private market solve this on its own.Though the bed debt is not in the same place as the last crisis, we are once again trying to play favorites through the Federal Reserve and rescue entities that took … [Read More...]
Following the Science or a National Scandal
We can see in the United States right now the dangers of having a populist [1] president running the country during a serious pandemic. Incredibly 90% of Republicans trustthe president to give them accurate information about the outbreak. A president who first called the pandemic a Democrat hoax, and then said it was under control and now wants to end social distancing to celebrate Easter. Some of those people will be paying with their lives for this misplaced trust, but by the nature of pandemics plenty of those who are not Republicans will also share this fate. The UK also has a populist government. Johnson and his cabinet are where they are now because they championed a cause that pitted the elite and experts, who thought … [Read More...]
Coronavirus dashboard for April 4: with lockdowns in place, testing still far behind, no action on necessary “test, track, quarantine” plan
Coronavirus dashboard for April 4: with lockdowns in place, testing still far behind, no action on necessary “test, track, quarantine” plan – by New Deal democrat Here is the update through yesterday (April 3) I’ve changed the format, moving the “just the facts, ma’am” data to the top, and comments at the end. The four […] [Read More...]
The economic (and political) effects of this coronavirus pandemic
This is an update of an earlier postwhere I described the results of a study I did with others on a flu pandemic. (It also appeared in a VoxEU ebook.) I have had a lot of enquiries from journalists in Europe about this blog and the paper, and of course what everyone wants to know is how similar is our modelling to the impact of this coronavirus. The features of this pandemic are now clearer than when I wrote the post, so I can say a few things on this issue. Our study looked at two cases: a base case and a severe case. The key parameters were the attack rate (how many get the virus) and the fatality rate (how many who get the virus … [Read More...]
An Optimistic Assessment of COVID-19
PIcture credit: Aleph Blog, and the same for all the graphs and charts in this post. All liability for mistakes here is mine.This post is different than any other I have done at Aleph Blog. I will try to write this in a nice way even though it is a strong and out-of-consensus opinion on a topic that many are edgy about.I realize I might be wrong here, but I will present to you what I think, along with what I think are the limitations of my analysis. Part of my reason for writing this is that I think that most of the reporting on COVID-19 is subject to a bias common in our culture among politicians, lawyers, bureaucrats, and the media: an … [Read More...]
Panama Redux
The latest U.S. arrogance: Charging Venezuelan Maduro with Narco-Terrorism. The U.S. answers to no international court, but believes it has the privilege levying charges against anyone or any state it wishes to over-throw. Of course the charges are all about oil. What else is new? Meanwhile, the U.S. sanctions whomever it pleases. Meanwhile, Dick Cheney […] [Read More...]
The Rules, Part LXV
Photo Credit: vldd || Relative to a complete bridge, what’s the value of a bridge that will never be completed?Here’s number 65 in this irregular series:The second-best plan that you can execute is better than the best plan that you can’t execute.Rule LXVIt takes more than the right ideas to be an investor. It also takes the courage to make the hard decisions at the time when it hurts to do so.Will you make more money if you allocate at least 80% of your assets to stocks and other risk assets? Yes. How will you hold on during a gut-wrenching bear market that gives you the feeling that you are losing everything?You could just refuse to look at … [Read More...]
Coronavirus and the consequences of a compliant media
This hasn’t been the new government’s first nationwide crisis. That was widespread flooding hitting many regions of the UK. As I explained here, that was partly a disaster created by the Conservative party (with a little help from their coalition partners). Journalists had their chance to make a story out of this by using the hook of Johnson’s non-appearance at any of the flooded towns, but it didn’t happen, just it didn’t happen on all the previous occasions we have had widespread flooding. Which is why spending on flood defences continues to be inadequate. Lack of criticism encourages a certain laziness, but also gives politicians the courage to do things that those in democracies with more accountability would not do. I think we can see both … [Read More...]
Hydroxychloroquine, Anthony Fauci and Kevin Drum
This is a comment on “Is Anthony Fauci Really Our Truthteller-in-Chief?” by Kevin Drum. I will briefly summarize. Drum quotes from the latest press conference “Is there any evidence to suggest that, as with malaria, it might be used as a prophylaxis against COVID-19? DR. FAUCI: No. The answer is no.” Later after Trump says […] [Read More...]
Fiscal rules: a primer for the budget
Do you want to know why fiscal rules should never involve targets for the debt/GDP ratio, or debt interest, or any stock measure, and why public investment should not be part of a fiscal rule? Read on, but first we have to establish two key principles. Principle 1: what are fiscal rules for? The way some economists are tempted to think about fiscal rules is in terms of economic optimality. What is the optimum debt to GDP ratio and what is the best way to get there? This misunderstands what fiscal rules are for. If every government was benevolent (always did the right thing for society) they would follow the optimal policy without the need for fiscal rules. Governments would just consult experts and do the right … [Read More...]
Coronavirus Treatment Case Report
“First Case of 2019 Novel Coronavirus in the United States” Holshue et al 2020 I quote Treatment with intravenous remdesivir (a novel nucleotide analogue prodrug in development10,11) was initiated on the evening of day 7, and no adverse events were observed in association with the infusion. Vancomycin was discontinued on the evening of day 7, […] [Read More...]
Low paid jobs for British born workers
I have always had a problem with those who focus on the need to reduce low skilled immigration. Skilled migrants are OK, so the argument goes, because the UK needs their skills, but we don’t need low skilled immigrants because British workers can do those jobs. At a microeconomic level it makes sense, and in a world where there is widespread unskilled unemployment it may make sense. But in a high employment economy like the UK today, it makes no sense at the macro level. To see this, let’s think about a stylised example. Suppose there are a fixed number of jobs at each skill level. You will always need the same number of engineers, care workers and so on. To make things easy suppose 50% of … [Read More...]
Squawk: “Risk onâ€? theme into today’s US GDP and Personal Consumption…
“Risk onâ€? theme into today’s US GDP and Personal Consumption data by Steve Miley Today Wednesday 29th August we get the US Gross Domestic Product (GDP) and also the Personal Consumption Expenditure… [Read More...]
The Tail Can’t Wag the Dog
Photo Credit: theilr || Cute dog, huh? There are a pair of articles regarding the efforts of a few people posting at Reddit to make money in stocks as part of a perpetual motion machine. The articles are here: Businessweek, Matt Levine.The idea is for a bunch of people to buy calls in the morning, which forces market makers to hedge by buying the underlying stock, which pushes the price up, giving automatic gains. Now, real hedgers hedge options using options, but the net effect should be the same regardless.What the speculators mentioned in these articles don’t get is that they are violating rule XXXII:Dynamic hedging only has the potential of working on deep markets.Arbitrage pricing can reveal proper prices in smaller … [Read More...]
Atlanta and downstream friends
(Dan here…another of David Zetland’s students Johanna writes on groundwater…a reminder of what also matters during this heated political climate, and from a younger generation. The first mention of water wars at AB was 2007 I believe.) Atlanta and downstream friends Johanna writes* This post offers some insight into the problems of water management in […] [Read More...]
The UK’s place in the world
As an economist, I naturally focus on the economic aspects of the EU. The EU is mostly about economics. To counterpoise sovereignty as an alternative perspective to economics misses an important point: most EU rules stem from the economics of free trade within the EU. The EU wants common regulations to make it easier to trade. The EU wants restrictions on state aid to prevent countries giving their own firms an advantage over others in the union. Much the same applies to labour market and environmental standards. Economics is also involved in another aspect of being in or out of the EU, and that is how the UK sees its place in the world. Is the UK’s identity partly a European identity, or does the UK ‘stand … [Read More...]
Squawk: Equities stay firm into US Employment report A positive “risk…
Equities stay firm into US Employment report A positive “risk onâ€? tone across global equity markets this week has been reinforced by US equity averages again moving to new 2019 highs at yesterday’s… [Read More...]
What Is “Democratic Socialism�?
What Is “Democratic Socialism”? Probably the best answer is whatever Bernie Sanders says it is as he is by far the most famous person ever to adopt this term as a label for his beliefs. There is a group in the US bearing that name, the Democratic Socialists of America (DSA), which has been in […] [Read More...]
The left needs to campaign for social liberalism
The continuingexpulsion of the Windrush generation from their home country to a country they hardly know, splitting up families in the process, is just a deliberateact of state cruelty. Why did the government go ahead with these deportations despite sitting on a report suggesting they should stop? Their pretext was that these individuals had at some stage in their lives committed a ‘serious’ crime, yet all had served their time for these offences. This act of cruelty is part of the Conservatives attempt to appeal to socially conservative voters, both traditional Tories and one time Labour voters. What do we call splitting up families just to make a political point? As Paula Surridge shows here, voters who were thinking of leaving Labour for the Conservatives in June 2019 … [Read More...]
Squawk: EUR/USD – Speculators Increasingly Dollar Bullish by Stephen Pope Dollar…
EUR/USD – Speculators Increasingly Dollar Bullish by Stephen Pope Dollar bulls are in full cry The strength of the Dollar will continue even after mixed jobs data There was no Euro gain on Friday… [Read More...]
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