J. Bradford DeLong's Blog, page 137

If you believe���as so many do���that one important sourc...

If you believe���as so many do���that one important source of the disaster of 2008-10 was that economies had too much potentially-insecure debt, you should be highly concerned today: John Authers and Lauren Leatherby: Financial Crisis: Decade of Deleveraging Debt Didn���t Quite Work Out: "This was the decade of de-leveraging that wasn���t. A decade ago... there was agreement... too much debt had caused the crisis, and so there must be a huge de-leveraging. It has not worked out like that.... Companies, particularly in the U.S., took advantage of the rock-bottom interest rates meant to bail out banks to go on their own borrowing spree. And the world found a new borrower of last resort. Ten years ago, China had been enjoying phenomenal economic growth for two decades, and largely avoided debt to fund it. No more. China���s debt has ballooned, transforming the geography of global debt in the process. It���s now bipolar, revolving around the U.S. and China...

#noted

Mike Fleming: Phil Lord & Christopher Miller Make Univers...

Mike Fleming: Phil Lord & Christopher Miller Make Universal Film Deal: "Universal Pictures has set in a first-look film production deal with Phil Lord and Christopher Miller, the franchise-launching duo who shared the Best Animated Film Oscar for Spider-Man: Into the Spider-Verse, and who hatched the Cloudy With a Chance of Meatballs, 21 Jump Street and The Lego Movie franchises. Their films have collectively grossed $3.3 billion.... This is a natural next step for Lord & Miller, which has been expanding its ambitions and recently brought in former Genre Films president Aditya Sood to head film for their Lord Miller banner. This is the first overall movie deal for the duo; they set their TV operations at Sony Pictures Television in an epic-sized five-year deal last April...

#noted

Scott Lemieux: The Wages of Shelby County: "It���s not ex...

Scott Lemieux: The Wages of Shelby County: "It���s not exactly news that Shelby County v. Holder not only did not have 'legal reasoning' in any meaningful sense but was based on absurd empirical assumptions. But it���s still worth pointing out: 'Using data released by the federal Election Assistance Commission (EAC) in June, a new Brennan Center analysis has found that between 2016 and 2018, counties with a history of voter discrimination have continued purging people from the rolls at much higher rates than other counties. This phenomenon began after the Supreme Court���s 2013 ruling in��Shelby County v. Holder, a decision that severely weakened the protections of the Voting Rights Act of 1965. The Brennan Center first identified this troubling voter purge trend in a��major report��released in July 2018.' The holding in Shelby County was that it was literally irrational for Congress to conclude that jurisdictions with a history of vote suppression were more likely to discriminate going forward. As the late Robert Cover once said about Warren Burger, there is no possible reason to have the slightest interest in what any of the five ridiculous hacks responsible for this atrocity have to say about the Constitution except that they have the power of life and death...

#noted

Dan Froomkin: Seeking Best Practices for Covering Trumpis...

Dan Froomkin: Seeking Best Practices for Covering Trumpism: "I���m looking for... examples.... The opinion pages of our newspapers feature a fair amount of Trump-related anguish, and some essayists have been particularly eloquent. Here, for instance, is Jamil Smith, writing for Rolling Stone...

...It may be easy for some to digest, but not for me. There is no getting used to this when you are in the crosshairs of this policy, when people who look like you sit patronized by a president who tells them all the time about how he got��a few more of us some jobs��and��few more of us out of jail, then acts as though we should be satisfied with that. ���What do we have to lose?��� he asks, while we sit in this systematically racist America. ���Why do we hate America?��� he wonders aloud....

I saw one great example a few days ago in the Los Angeles Times, headlined: "Trump is challenging what it means to be American, and naturalized citizens are unsettled".... Matt Pearce, Michael Finnegan, Tryone Beason and Melissa Gomez... an excellent diversity of sources. Here���s how it started:

On the day Donald Trump was inaugurated president, Sonora Jha was walking past a group of white men at a work site in downtown Seattle when one told her, ���Go home!��� Jha, shaken, didn���t know whether to confront the men or let it go: This was her home. After immigrating from India, the author became a naturalized American citizen in 2016. An equal, or so she thought.

When President Trump���s supporters chanted a new version of that threat against his critic U.S. Rep. Ilhan Omar, calling for Trump to ���send her back��� to Somalia, the familiar words jolted Jha and other naturalized citizens.���It does make us afraid,��� said Jha, 51. ���For immigrants who are naturalized citizens, there���s a sense of shame when something like this happens in the country that you call home.���

And when they explained the context, the reporters didn���t mince words:

Trump has stoked racial animosity unlike any other president in recent history, challenging what it means to be a U.S. citizen by transforming the nation���s immigration policies and accusing opponents of not belonging in America.

And this tweet, from PBS Newshour White House correspondent Yamiche Alcindor, was promising:

I���ve been on the road for most of the last week. And it���s so important to highlight just how much people feel the president���s attacks put them personally in danger. Most black and brown people I���ve interviewed tell me this isn���t just about politics but they���re ability to survive.

I look forward to her report.

I���ll keep an eye out for more...

#noted

Moral fault attaches to all those who fund or otherwise c...

Moral fault attaches to all those who fund or otherwise carry water for the New York Times:

Duncan Black: Garbage Newspaper: "/Saying @RashidaTlaib (D-Detroit) and @IlhanMN (D-Minneapolis) are from the Midwest is like saying @RepLloydDoggett (D-Austin) is from Texas or @repjohnlewis (D-Atlanta) is from the Deep South. C���mon.' JonathanWeisman... Deputy Washington Editor, New York Times. Cancel your f------ subscriptions...

#noted

Weekend Reading: Samuel Pepys: Diary: Friday 19 July 1667

Samuel Pepys: Friday 19 July 1667: "Up and comes the flageolet master, and brings me two new great Ivory pipes which cost me 32s., and so to play, and he being done, and Balty���s wife taking her leave of me, she going back to Lee to-day, I to Westminster and there did receive 15,000l orders out of the Exchequer in part of a bigger sum upon the eleven months tax for Tangier, part of which I presently delivered to Sir H. Cholmly, who was there, and thence with Mr. Gawden to Auditor Woods and Beales to examine some precedents in his business of the Victualling on his behalf, and so home, and in my way by coach down Marke Lane, mightily pleased and smitten to see, as I thought, in passing, the pretty woman, the line-maker���s wife that lived in Fenchurch Streete, and I had great mind to have gone back to have seen, but yet would correct my nature and would not...

...So to dinner with my wife, and then to sing, and so to the office, where busy all the afternoon late, and to Sir W. Batten���s and to Sir R. Ford���s, we all to consider about our great prize at Hull, being troubled at our being likely to be troubled with Prince Rupert, by reason of Hogg���s consorting himself with two privateers of the Prince���s, and so we study how to ease or secure ourselves.

So to walk in the garden with my wife, and then to supper and to bed.

One tells me that, by letter from Holland, the people there are made to believe that our condition in England is such as they may have whatever they will ask; and that so they are mighty high, and despise us, or a peace with us; and there is too much reason for them to do so.

The Dutch fleete are in great squadrons everywhere still about Harwich, and were lately at Portsmouth; and the last letters say at Plymouth, and now gone to Dartmouth to destroy our Streights��� fleete lately got in thither; but God knows whether they can do it any hurt, or no, but it was pretty news come the other day so fast, of the Dutch fleets being in so many places, that Sir W. Batten at table cried, ���By God,��� says he, ���I think the Devil shits Dutchmen���...

#history #strategy #weekendreading

August 2, 2019: Weekly Forecasting Update

Federal Reserve Bank of New York: Nowcasting Report: "The New York Fed Staff Nowcast stands at 1.6% for 2019:Q3. News from this week's data releases decreased the nowcast for 2019:Q3 by 0.6 percentage point. Negative surprises from ISM manufacturing data and lower than expected trade data drove most of the decrease...

These past two weeks have seen three pieces of real news that have altered the outlook: it is not true to say that little has changed:

A large twenty basis-point reduction in ten-year Treasury interest rates.
Trump's relaunching and intensification of his trade war.
New data pushing down out our estimate of the level of manufacturing production in the third quarter of 2019 by almost a full percentage point.

Nevertheless, the United States is not in or even likely to be on the verge of a recession. Germany, however, appears to be in recession.

 

Talking Points:


The Federal Reserve has, largely through jawboning, eased policy substantially over the past six months.
The trade wars that Trump is waging is a major source of uncertainty, and a possible recession risk.
U.S. potential economic growth continues to be a hair above 2%/year.
There are still no signs the U.S. has entered that phase of the recovery in which inflation is accelerating.
There are still no signs of interest rate normalization: secular stagnation continues to reign.
There are still no signs the the U.S. is at "overfull employment" in any meaningful sense.
The Trump-McConnell-Ryan tax cut has been a complete failure at boosting the American economy through increased investment in America.

But it has been a success in making the rich richer and thus America more unequal.
And it delivered a short-term demand-side Keynesian fiscal stimulus to growth that has now ebbed.
Those who beat the drum for it owe us an explanation for why they got it wrong.
They have not provided one: shame on them.

A change from one month ago: Trump has relaunched and intensified his trade war.

A change from one month ago: A no-deal Brexit is now not just a possibility, but more likely than not.

A change from three months ago: A no-deal Brexit is now not just a possibility, but more likely than not.

A change from six months ago: The Federal Reserve has, largely through jawboning, eased policy substantially over the past six months.

#macro #forecasting #highlighted


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Peng Dehuai: On the Great Leap Forward: "Grain scattered ...

Peng Dehuai: On the Great Leap Forward: "Grain scattered on the ground, potato leaves withered;/Strong young people have left to make steel;/Only children and old women reap the crops;/How can they pass the coming year?/Allow me to raise my voice for the people!...

#noted

A Smart Approach to China-U.S. Relations

Consider a country that is the global superpower.

Its military is best-of-breed. Its reach extends from Japan to the West Indies to the Indian Ocean, and beyond. Its industries of the most productive in the world. It Is predominate in world trade. It dominates global finance.

But, when this global superpower looks to the west, across the sea, it sees a rising power���a confident nation with a larger population, hungry for wealth, hungry for preeminence, seeing itself as possessing a manifest destiny to supersede the old superpower. And, unless something goes horribly wrong with the rising power to the west, its rise is indeed all but inevitable.

Thus the proper goal for the current superpower is to ensure a soft landing���ensure that the world will still be a comfortable place for it, once its preeminence as the global superpower is over.

There are, of course, sources of conflict: the rising superpower wants more access to markets and to intellectual property than the current superpower wishes to provide. And what the current superpower does not willingly provide, the rising superpower will seek to take. The rising superpower wants a weight in international councils corresponding to what its fundamental power will be a generation hence, nd is not satisfied with a weight corresponding to its fundamental power today.

These are all valid sources of conflict. They need to be managed. Interests need to be advanced, and defended. But they do not outweigh the joint interests in peace and prosperity.

So what should the superpower currently dominant do? How should it use its current preeminence?

And am I talking about the United States and China today, about Britain and the United States a century and a half ago, or about Holland and Britain 350 years ago?

In the case of Holland and Britain, a spate of cold trade and hot naval wars in the 1600s led to the infusion into the English language of a remarkably large number of derogatory phrases based on "Dutch": Dutch bargain, Dutch book, Dutch comfort, Dutch concert, Dutch courage, Dutch defence, Dutch leave, Dutch metal, Dutch nightingale, Dutch reckoning, Dutch treat, Dutch uncle, "if I do it not, I'm a Dutchman"���and, possibly, Dutch auction and Dutch oven. It led also to perhaps the most memorable line in British naval bureaucrat Samuel Pepys's diary, as the navy he had built and supplied faced superior numbers of Dutch at Harwich, Portsmouth, Plymouth, and Dartmouth: "By God! I think the Devil shits Dutchmen!"

But in the long run fundamentals told, and Britain rose to global hyperpower. Possibly decisive for the Dutch-British transition was the wind shift of 24 October 1688 to an east Protestant wind. That allowed the Dutch fleet to leave harbor. The following Dutch military intervention in support of the aristocratic-Whig coup against the Stuart dynasty that brought hereditary Dutch Stadthouder William III of Orange to the British throne.

Thereafter the common interests of both powers in limited government, mercantile prosperity, and anti-Catholicism created a durable alliance with the Dutch as junior partner around, in the words of the viral tweet of the 1700s, "no popery or wooden shoes!" Under Britain's aegis the Dutch remained independent rather than becoming involuntarily Francofied. It was a���largely���comfortable world for the Dutch, and for Holland.

In the case of Britain and the United States, after 1815 the British government followed a durable policy that was rather odd for 19th Century Britain, whose SOP was usually: "we burn your fleet, and perhaps your capital, first, and negotiate later".

Britain acceded to the Monroe Doctrine in 1823; accepted a line of demarcation in the Oregon Territory that left the British-settler majority region that is now the state of Washington in American hands; did not intervene on the side of free trade in 1862; accepted American mediation on the Venezuelan border; supported American annexation of the Philippines; relinquished rights and interests in what became the Panama Canal zone; and acquiesced to the American position on where the boundary between Alaska and the Yuko actually was.

Britain, instead, gave scholarships to American wannabe aristocrats who wanted to study at Oxford and Cambridge; gleefully married off its own aristocrats with titles to American heiresses���Winston Churchill's parents became engaged three days after meeting at a sailing regatta on the Isle of Wight���and stressed common lineage, cultural, and economic ties; and, as the young Harold Macmillan unwisely, because too publicly, put it when he was seconded to Eisenhower's staff in North Africa in late 1942, became "the Greeks to the American Romans".

The result was that the United States became Britain's wired aces in the hole in teh game of seven-card stud that was twentieth-century geopolitics.

The fundamentals tolled against Britain. One island cannot, they said, in the long run "Half a continent will, said economic historian J.H. Clapham speaking of the United States, in the end raise more coal and melt more steel than one small densely-populated island".

Yet perhaps Britain's supersession by America was not inevitable. In 1860 the United States had a full-citizen population of 25 million, and Britain and its dominions had a full-citizen population of 32 million. By 1940 the full-citizen numbers were 117 and 76 million. But the pro-rated descendents of the full citizens as of 1860 were 50 and 65 million, advantage Britain and the Dominions.

As the Financial Times's Martin Wolf points out, his ancestors were some of the very few who made the much cheaper migration from the Ashkenazi Pale of Settlement to London than to New York.

Up to 1924 New York welcomed all comers from Europe and the Middle East, while London and the Dominions were only welcoming to northern European Protestants.

A Britain more interested in turning Jews, Poles, Italians, Romanians, and even Turks who do not happen to be named Alexander Boris de Pfeffel Johnson���who bears Turkish Minister of the Interior Ali Kemal's Y and five other chromosomes, and hence is, by all the rules of conservative patriarchy, a Turk���at turning them into Britons or Australians or Canadians would have been much stronger throughout the twentieth century.

Perhaps it would not be in its current highly undignified position.

Compared to Holland and Britain when they were global hyperpowers pursuing soft landings, how are we doing?

The answer has to be: since January 2017, not well at all.

There is a lot of wisdom in George Kennan���s 1947 "Sources of Soviet Conduct". Three points stand out:

Do not panic, but recognize what the long game is, and play it.

Contain, but not unilaterally: assemble broad alliances to confront, resist, and sanction as a group.

Become your best self, because ultimately, as long as the struggle between systems can be kept peaceful, liberty and prosperity will be decisive.

Are we forming alliances���cough, TPP��� to contain?
Or are we making the random incoherent demands for things like immediate bilateral balance that can only be understood as the actions of a chaos monkey?
Are we not panicking?
Are we soberly playing the long game?





#aspen #globalization #highlighted #oranghairedbaboons #strategy

Why our economic system works as well and is as intellige...

Why our economic system works as well and is as intelligent as it is is a deep question, in need of much more thought. Michale Jordan thinks it noteworthy that the human brain is not the only system that looks capable of "intelligent behavior". I wonder if the things that have made our economy appear intelligent in the past may disappear in the future:

Michael I. Jordan: Dr. AI or: How I Learned to Stop Worrying and Love Economic: "I view the scientific study of the brain as one of the grandest challenges that science has ever undertaken, and the accompanying engineering discipline of ���human-imitative AI��� as equally grand and worthy.... [But] let us suppose that there is a fledgling Martian computer science industry, and suppose that the Martians look down at Earth to get inspiration for making their current clunky computers more ���intelligent.��� What do they see that is intelligent, and worth imitating, as they look down at Earth? They will surely take note of human brains and minds.... What else is intelligent on Earth? Perhaps the Martians will notice that in any given city on Earth, most every restaurant has at hand every ingredient it needs for every dish that it offers, day in and day out. They may also realize that, as in the case of neurons and brains, the essential ingredients underlying this capability are local decisions being made by small entities that each possess only a small sliver of the information being processed by the overall system. But, in contrast to brains, the underlying principles or algorithms may be seen to be not quite as mysterious as in the case of neuroscience. And they may also determine that this system is intelligent by any reasonable definition���it is adaptive (it works rain or shine), it is robust, it works at small scale and large scale, and it has been working for thousands of years (with no software updates needed). Moreover, not being anthropocentric creatures, the Martians may be happy to conceive of this system as an ���entity������just as much as a collection of neurons is an ���entity.��� Am I arguing that we should simply bring in microeconomics in place of computer science? And praise markets as the way forward for AI? No, I am instead arguing that we should bring microeconomics in as a first-class citizen into the blend of computer science and statistics that is currently being called ���AI.��� This blend was hinted at in my discussion piece; let me now elaborate...

#noted