Dean Baker's Blog, page 240

Robert Samuelson Wants Us to Worry Based on New BIS Report

The Bank of International Settlements (BIS) issued a new report warning of the dangers of low interest rates. Robert Samuelson wants us to take these warnings very seriously, effectively saying that another crisis could be around the corner due to the recent build up of debt.

First, it is worth noting that warning of disaster due to expansionary monetary policy is what they do at the BIS, sort of like basketball players play basketball. The BIS has been warning for years that inflation was ab...

Throwing Greece Out of the Euro

In response to questions from people everywhere, I will share a couple of quick thoughts on the possible departure of Greece from the euro. First, several people have raised the possibility of Greece being thrown out of the euro.

There is no way that Greece can literally be thrown out of the euro in the sense of being prohibited from using the euro. Any country has the option to use any currency it chooses. This was an issue that came up in the referendum over Scottish independence. The indep...

The Warnings from the Bank of International Settlements Have Been Ignored Because They Have Been Wrong

The Wall Street Journal passed along warnings from the Bank of International Settlements (BIS) that central banks should start to curtail monetary expansion and that governments need to reduce their debt levels. The piece tells readers:

"The BIS has issued similar warnings in recent years concerning an overreliance on monetary policy, but its advice has gone largely unheeded."

It is worth noting that the BIS has been consistently wrong in prior years, warning as early as 2011 about the prospe...

Who's Afraid of Grexit?

The NYT finished a piece on the status of negotiations on Greece's debt with the comment:

"The bigger fear is that a Greek default could force the country eventually to be the first to leave the 19-nation euro currency union and threaten the regional integrity of the broader European Union."

It would have been helpful to tell readers who has these fears. After all, the current policies being imposed by the European Central Bank and the EU have cost the region millions of jobs and trillions of...

Has Ohio Seen Higher Insurance Cost Growth than the Rest of the Country or Is Governor Kasich Just Making Stuff Up?

That's what readers are asking after seeing a NYT piece on reactions to the Supreme Court's ruling upholding the insurance subsidies in the Affordable Care Act (ACA). The piece gives comments from a number of people including John Kasich, the governor of Ohio and a likely candidate for the Republican presidential nomination.

"More typical was the response from Gov. John Kasich of Ohio, a likely Republican presidential candidate.

"'The law has driven up Ohio’s health insurance costs significan...

Greece and the Euro

James Stewart has a piece in the NYT telling readers that if Greece were to leave the euro it would face a disaster. The headline warns readers, "imagine Argentina, but much worse." The article includes several assertions that are misleading or false.

First, it is difficult to describe the default in Argentina as a disaster. The economy had been plummeting prior to the default, which occurred at the end of the year in 2001. The country's GDP had actually fallen more before the default than it...

NYT Reports that I.M.F. Imposed Budget Cuts Stifle Greek Business

Okay, that may not have been the headline, but careful readers would see this is the case. The NYT ran a piece complaining that plans by the Greek government to raise business taxes, as opposed to further cuts to pensions and other spending, could hurt business.

The poster child for this argument is Thanos Tziritis, the owner of a family business that produces and exports a wide range of construction materials. The piece goes through the various complaints of Mr. Tziritis, at one point tellin...

The Rehabilitation of Glenn Hubbard, Economic Adviser to Bush II and Bush III (see Addendum)

The Washington Post ran a piece on Glenn Hubbard, the chief economic adviser to President George W. Bush and now an adviser to Jeb Bush, which ignored much of Mr. Hubbard's history. For example, it told readers:

"Hubbard believes that for too long, the United States has only experienced rapid growth in the midst of what he calls 'bubble economies,' which don't deliver broadly shared prosperity to workers. For example, he blames the Federal Reserve for stoking a bubble in the mid-2000s by keep...

The Rehabilitation of Glenn Hubbard, Economic Adviser to Bush II and Bush III

The Washington Post ran a piece on Glenn Hubbard, the chief economic adviser to President George W. Bush and now an adviser to Jeb Bush, which ignored much of Mr. Hubbard's history. For example, it told readers:

"Hubbard believes that for too long, the United States has only experienced rapid growth in the midst of what he calls 'bubble economies,' which don't deliver broadly shared prosperity to workers. For example, he blames the Federal Reserve for stoking a bubble in the mid-2000s by keep...

The Shift to Renting Probably Makes Sense in the Uber Economy

Emily Badger had an interesting discussion of the decline of homeownership in Wonkblog. However the piece neglected to mention one of the most important reasons why people might opt to rent rather than own: the insecurity of their employment situation.

It is usually not a good idea to spend the large overhead costs associated with buying a home unless you have a secure job where you can expect to stay many years into the future. As stable jobs become rarer in the economy (median job tenure ha...