Dean Baker's Blog, page 260

Mark Cuban Does the Bubble Beat

Mark Cuban should know something about bubbles. After all, he became a billionaire in the 1990s stock bubble selling his start-up to Yahoo for what almost certainly was a grossly inflated price. But just as winning the lottery doesn't make someone an expert on probabilities and statistics, hitting the jackpot once doesn't mean someone knows much about bubbles.

Cuban demonstrated this point in a blogpost headlined, "Why This Tech Bubble is Worse than the Tech Bubble of 2000." The gist of his a...

The WaPo Inadvertently Tells Readers Why the Government Never Takes Action Against an Over-valued Dollar

Regular readers of BTP know that the over-valuation of the dollar is one of my pet themes. There are two big issues with the over-valuation.

The first is macro economic. An over-valued dollar makes U.S. goods and services less competitive internationally. If the dollar is over-valued by 20 percent against other currencies then it has the same impact as if we were to impose a 20 percent tariff on all our exports and give a 20 percent subsidy on imported goods. Needless to say, this leads to a...

NYT Misses the Story on the Fed and African American Unemployment

The NYT examined the impact the Fed has on unemployment among African Americans and came up with the bizarre conclusion that the Fed can't do much:

"The Fed has a hammer, and, as the saying goes, not all problems are nails."

This conclusion is bizarre, because the data are very clear; efforts to reduce the overall unemployment rate disproportionately help African Americans and Hispanics. As a rule of thumb, the African American unemployment rate is roughly twice the unemployment rate and the...

What Happened to the Great American Boom?

With a string of strong jobs reports (the most recent coming with good hourly wage growth) the business section has been filled with reports of America once again being a booming economy, which contrasted with weak growth elsewhere in the world. With a bit more data, it's not clear that reporters will still be writing these stories.

First, the fourth quarter growth rate was revised down to 2.2 percent, giving a 2.4 percent growth rate over the prior year. This is almost exactly the same as th...

Robert Samuelson Complains that the Good Fortune of Government Bond Holders Is Partially Paid by the Taxes of Struggling Millennials

Okay, Robert Samuelson would never see any injustice in rich people like Pete Peterson getting the interest on their government bonds. If that means that "struggling millennials" have to pay more taxes, so be it. The rich are entitled to the interest on the bonds they purchased.

No, Robert Samuelson is upset that workers are getting the Social Security and Medicare benefits they paid for. As an analysis from the Urban Institute shows, middle income baby boomers will get somewhat less back in...

Greek Austerity Does Not Protect Europe's Taxpayers

The NYT described Germany's insistence that Greece adhere to an austerity plan as being derived from a desire to protect taxpayers. It's not clear that this is the case. Most of the debt is owed to official lenders who have no need to make demands on Germany's taxpayers to get funding. (The European Central Bank prints its money.)

Furthermore, more rapid growth in the euro zone will both allow Greece to repay a larger portion of its debt and also improve Germany's budget situation as well. Fo...

"Holdouts" On Argentine Bonds, Did Not Own the Bonds at Time of Default

A NYT piece on the ongoing legal battle between hedge funds that own a portion of Argentina's debt and the Argentine government likely misled many readers. It referred to the hedge funds as "holdouts," saying that they had refused to accept the terms offered by Argentina to bondholders at the time the country defaulted in 2001.

In fact, these funds did not hold Argentine debt at the time of the default. They bought the debt up after the default at a small fraction of its face value. Their ho...

Conservative Economics Has Not Produced Rapid Growth

The Post had an interesting piece on the debate within the Republican party over economic policy. At one point the piece notes the stagnation in middle class incomes and then tells readers:

"There is a growing sense among many conservative economists that faster growth by itself will not suffice to lift those incomes at the rate middle-class workers came to expect a generation ago ."

This comment may mislead readers into believing that conservative policies of tax cuts and deregulation have b...

NYT Fact Checkers Go On Strike as Column on Greece Gets Submitted (see correction)

That is the only possible explanation for the appearance of a column on Greece's economy by venture capitalist Aristos Doxiadis. The column's central premise is that Greece's severe downturn cannot be explained by its macroeconomic policies. It claims that other countries had similar austerity but had no comparable decline in output. It instead blames Greece's problems on structural problems that have blocked the growth of exports. Both claims are untrue.

Doxiadis told readers:

"Greece has fa...

NYT Fact Checkers Go On Strike as Column on Greece Gets Submitted

That is the only possible explanation for the appearance of a column on Greece's economy by venture capitalist Aristos Doxiadis. The column's central premise is that Greece's severe downturn cannot be explained by its macroeconomic policies. It claims that other countries had similar austerity but had no comparable decline in output. It instead blames Greece's problems on structural problems that have blocked the growth of exports. Both claims are untrue.

Doxiadis told readers:

"Greece has fa...