Linking ≠ endorsement.
⇧ The Taylor Rule: A benchmark for monetary policy? | Brookings Institution
Ben Bernanke’s writing is pretty accessible here considering the subject matter.
It’s an educational article.
Here’s what we want to focus on:
…negative funds rate, which of course is not feasible….
Within the Fed statutes, perhaps not. It is, however, an argument for helicopter money in the form of fiscal spending in the real economy.
We’d like to see Ben Bernanke make the case for it such that any Taylor Rule be expanded to include such fiscal stimulus.
Before we leave off here, we want to address Ben’s closing statement, “I don’t think we’ll be replacing the FOMC with robots anytime soon. I certainly hope not.”
Well, we hope the Fed itself will be replaced by debt-free currency, in which case, a computer could definitely increase and decrease the money in circulation and taking into account velocity in real-time.
⇧ The austerity delusion | Paul Krugman | Business | The Guardian
Paul Krugman channels Simon Wren-Lewis (still alive), Keynes, et al.:
… there were political reasons why many influential players opposed fiscal stimulus even in the face of a deeply depressed economy. Conservatives like to use the alleged dangers of debt and deficits as clubs with which to beat the welfare state and justify cuts in benefits; suggestions that higher spending might actually be beneficial are definitely not welcome. Meanwhile, centrist politicians and pundits often try to demonstrate how serious and statesmanlike they are by calling for hard choices and sacrifice (by other people). Even Barack Obama’s first inaugural address, given in the face of a plunging economy, largely consisted of hard-choices boilerplate. As a result, centrists were almost as uncomfortable with the notion of fiscal stimulus as the hard right.
… This has been transparently obvious in the United States, where many supposed deficit-reduction plans just happen to include sharp cuts in tax rates on corporations and the wealthy even as they take away healthcare and nutritional aid for the poor. But it’s also a fairly obvious motivation in the UK, if not so crudely expressed. The “primary purpose” of austerity, the Telegraph admitted in 2013, “is to shrink the size of government spending” — or, as Cameron put it in a speech later that year, to make the state “leaner … not just now, but permanently”.
You might be tempted to say that this is all water under the bridge, given that the coalition, whatever it may claim, effectively called a halt to fiscal tightening midway through its term. But this story isn’t over. Cameron is campaigning largely on a spurious claim to have “rescued” the British economy — and promising, if he stays in power, to continue making substantial cuts in the years ahead. Labour, sad to say, are echoing that position. So both major parties are in effect promising a new round of austerity that might well hold back a recovery that has, so far, come nowhere near to making up the ground lost during the recession and the initial phase of austerity.
For whatever the politics, the economics of austerity are no different in Britain from what they are in the rest of the advanced world. Harsh austerity in depressed economies isn’t necessary, and does major damage when it is imposed. That was true of Britain five years ago — and it’s still true today.
You will note that Paul Krugman stands right up and states the conspiracy theory that we too have stated several times on this blog and had encouraged Simon Wren-Lewis not to just speculate about but to embrace (which he did). Of course, it’s not really a theory. It’s a proven fact, as Paul Krugman appears to clearly see. “This has been transparently obvious in the United States, where many supposed deficit-reduction plans just happen to include sharp cuts in tax rates on corporations and the wealthy even as they take away healthcare and nutritional aid for the poor.”
They want to keep the middle class and poor down so they, the superrich, can reap the lion’s share, even though doing so really keeps the whole pie from truly growing as it would otherwise. It’s a very shortsighted policy, but the superrich get theirs while the getting is “good” (there to be had).
Thank you to Simon Wren-Lewis, Paul Krugman, and all the other economists out there who are standing up to the thoroughly discredited Austerians.
Now, would you please get Angela Merkel to see the light so the Greeks don’t have to keep needlessly starving, sleeping rough, and even dying from being driven into deep, deep poverty?
The more she helps Greece, the richer Germany will become. We guarantee it.
⇧ ECB Dominates Greece Saga as Dijsselbloem Rejects Tsipras Charge – Bloomberg Business
Tsipras said Dijsselbloem had offered reassurances that as soon as the country extended its bailout agreement beyond February — which it did — this ceiling would be eliminated.
Finance Minister Yanis Varoufakis received similar promises from his colleagues in the Eurogroup, Tsipras said. Those pledges were then not honored, he said.
“Our mistake was that we left these at oral promises and didn’t ask for a written commitment,” the premier said.
They claim not to like Varoufakis’s style; but Tsipras and Varoufakis see eye-to-eye, and Tsipras doesn’t mince his words there at all.
We think they want Greece out so Podemos will be weakened and to eliminate the Greek veto concerning continued economic sanctions against Russia.
⇧ Tsipras Bets on Referendum to Force ECB Bailout for Greece
Alexis Tsipras hinted he may have no choice but to consult the Greek population in a referendum if European officials insist on reinforcing the austerity measures that he claims are destabilizing the nation.
That’s exactly right. His party’s popularity ratings have been going down only because there are so many Greeks who want to stay in the EU and Eurozone but who should have to specifically agree to the needless austerity being demanded by the neoliberal/Austerian economists, bankers, and politicians, etc., to do it.
⇧ South end residents welcome city cleanup of properties
“I think a lot of it is rental properties,” Minyard said. “They don’t want to do the maintenance and upkeep. Code enforcement is doing better in getting them cleaned up. It’s getting a little better.”
⇧ Baker city officials’ attempt to condemn properties considered derelict runs into some opposition | News | The Advocate — Baton Rouge, Louisiana
The LeDuff house was added to the list because the couple’s building permit had expired and the inspector classified the house as condemnable. No one lives in the house, which has a partial roof and no walls.
The LeDuffs promised to return to the next council meeting with a plan for their house and will apply for a new permit. They expect to finish the house in 2017.
Yolanda Vessel, a resident, argued that another house on Chamberlain, owned by Lee Jones, also should not be on the list. Vessel, who said Jones is now in a nursing home, argued the home is historic and should be preserved.
“Come back with a plan of how you are going to restore the house,” Rideau said.
⇧ Greek Finance Minister in Anarchist Restaurant Showdown
When you have both the Austerians and anarchists hating you at the same time, should you take it as a badge of honor?
The anarchists think he’s caved in. They don’t understand him.
Greece’s maverick Finance Minister Yanis Varoufakis today said he had been involved in a tense showdown with anarchists who confronted him while dining at a restaurant.
⇧ 10 Insurance Tips for Risk Managers
Most companies will at one time or another face coverage issues and lawsuits. In order to identify and avoid insurance-related issues and disputes before they arise, risk managers should take advantage of proven strategies for resolving difficult claims….
⇧ As Much as a Third of Discouraged Workers Might Return – Real Time Economics – WSJ
The labor force participation rate—the share of adult civilians holding jobs or looking for work—was 62.7% last month, matching its lowest level in 36 years. The paper finds that between a quarter and a third of the post-2007 decline in participation, will likely be reversed. However, the long-term decline, due in part to demographic factors such as an aging population, will eventually resume, the research suggests.
⇧ U.S. home prices rise modestly, affordability a problem
Few Americans have listed their homes for sale, and the tight supply has kept prices higher. The increases have eclipsed earnings, making it more difficult for would-be buyers to afford homes. The modest wage gains have muted the boost that robust hiring and low mortgage rates should provide the housing market during the spring buying season.
“Home prices are rising roughly twice as fast as wages….
⇧ Home Solar Adoption and Utility Pushback | Sustainable Cities Collective
Unfortunately, it seems that, whenever there is progress, there’s opposition. Some fossil-fuel-based utilities are getting uptight about losing market share, according to an article written by Joby Warrick and published in The Washington Post. Determined to slow the growth of solar, the companies have persuaded authorities in Arizona and Wisconsin to slap a monthly surcharge on consumers for the practice of “net metering” described by Peter Murtha. They are targeting additional states and, Warrick reports, “in some states, industry officials have enlisted the help of minority groups in arguing that solar panels hurt the poor by driving up electricity rates for everyone else.”
That claim is vigorously disputed by analysts independent of the utilities as well as by Denise Fairchild, president and CEO of Emerald Cities Collaborative, a national nonprofit organization dedicated to climate-resilience strategies that produce environmental, economic and equity outcomes.
⇧ Why Keep Rental Property If I Cant Deduct Losses? | Bankrate.com
What is a passive activity?
A passive activity is a trade or business activity in which you do not materially participate during the year. You materially participate if you are substantially involved in the activity on a regular basis. Rental activities are considered passive, even if you do materially participate in them, unless you are a real estate professional.
⇧ The Obama administration is taking on agriculture’s role in climate change. Here’s why that’s a big deal – The Washington Post
…plants take in carbon dioxide in the process of photosynthesis, and release it again when they die. So if you clear large swaths of land, so that it does not contain as many trees, crops, or grasses as before, then you are also contributing to global warming. The same goes for other agriculture related emissions, ranging from nitrous oxide emissions from the use of fertilizers to methane emissions from “enteric fermentation” in cattle….
… The broad suite of policies includes targeting livestock related emissions — by increasing anaerobic digestion, making sure there are roofs to contain some methane emissions, and also changing grazing habits so as to preserve more carbon in soils — the reforestation of fire or pest-damaged areas, and much more.
Soils are a huge part of the equation. Done properly, soils could sequester enough carbon to completely offset all the carbon we are currently pumping into the atmosphere. Some of the techniques cover the issue of tillage, which is discussed here: “Secretary Vilsack Announces Partnerships with Farmers and Ranchers to Address Climate Change”: https://blogs.usda.gov/2015/04/23/secretary-vilsack-announces-partnerships-with-farmers-and-ranchers-to-address-climate-change/
See also: “A Carbon Sequestration Proposal for the World”: https://www.organicconsumers.org/news/carbon-sequestration-proposal-world
⇧ Federal Reserve blames ‘transitory factors’ for US economic slowdown | Business | The Guardian
“Transitory factors” are to blame for the recent slowdown on the US economy, the Federal Reserve said on Wednesday.
The Fed meeting ended as the Commerce Department announced that US gross domestic product (GDP) had slowed to a crawl in the first quarter. After growing at an annual rate of 2.2% in the last three months of 2014 it slowed to just 0.2% in the first three months of 2015.
There were transitory factors, but that doesn’t mean we are anywhere near the point where the Fed should move to slow things down or to even preempt heating. If the Fed had raised rates back when the hawks were first calling for it, we’d be all the slower now.
So much of our business today is conducted in one way or another via the Internet. That’s why we supported Net Neutrality and still do.
The FCC’s rules, approved in February and formally published earlier this month, bar Internet providers from blocking websites, selectively slowing down traffic, or creating any special “fast lanes” for sites that pay. The goal is to prevent Internet providers from acting as gatekeepers with control over what Internet users can access online.
Liberal advocacy groups are vowing to defend the rules from Paul’s attack.
“Senator Paul has no idea what Net Neutrality is,” Matt Wood, the policy director of Free Press, said in a statement. “His opposition to common-sense open Internet principles shows how little he knows or cares about the law and the overwhelming support these rules have from businesses, innovators, and individual Internet users.”
It’s too bad the “heavy hand of government” wasn’t there before the Wall Street banks’ toxic securitizations blew up the global economy. We’re still paying for that blunder, that governmental rollback championed by libertarians and those they duped.
⇧ mainly macro: Mediamacro myths: summing up
It is still commonplace to hear media commentators say that the economy is doing great, and ask why the government is not reaping the benefit in terms of political support. In truth the puzzle is the opposite – given how poor economic performance under the coalition has been, and that this poor performance has hit most people in their pockets, the real puzzle is why so many people think the government is economically competent. …
… If the media has been capable of distorting reality by so much for so long in this case, are there other areas where it has done the same, and what does that tell us about the health of our democracy?
At best, the health of our democracies is poor.
⇧ Will Rising Rents Affect Millennials? – YouTube
⇧ WSJ Editorial Page Watch: The Slow-Growth Fed? | Brookings Institution
It’s generous of the WSJ writers to note, as they do, that “economic forecasting isn’t easy.” They should know, since the Journal has been forecasting a breakout in inflation and a collapse in the dollar at least since 2006, when the FOMC decided not to raise the federal funds rate above 5-1/4 percent. [cue laughter]
The WSJ also argues that, because monetary policy has not been a panacea for our economic troubles, we should stop using it. I agree that monetary policy is no panacea, and as Fed chairman I frequently said so. With short-term interest rates pinned near zero, monetary policy is not as powerful or as predictable as at other times. But the right inference is not that we should stop using monetary policy, but rather that we should bring to bear other policy tools as well. I am waiting for the WSJ to argue for a well-structured program of public infrastructure development, which would support growth in the near term by creating jobs and in the longer term by making our economy more productive. We shouldn’t be giving up on monetary policy, which for the past few years has been pretty much the only game in town as far as economic policy goes. Instead, we should be looking for a better balance between monetary and other growth-promoting policies, including fiscal policy.
“I am waiting for the WSJ to argue for a well-structured program of public infrastructure development, which would support growth in the near term by creating jobs and in the longer term by making our economy more productive.” Right on! However, you’ve overstated the Fed’s positive impact upon employment. In addition, we’re still waiting for you to address the fact that US currency doesn’t need to be based upon issuing debt in the form of bonds or any other governmental borrowing and the payment of interest to creditors. We don’t need a national debt, Mr. Bernanke, and shouldn’t have one.
⇧ NBER 2015 Xiong Interview 4.28.15 Sequence.02 on Vimeo
This confirms what has been our view all along. The question simply remains as to whether China’s landing will be soft enough to avoid what would otherwise be termed a crash for obvious reasons. We still haven’t seen coming out of China the steps that would be necessary to avoid what we believe began some time ago: an overly hard downturn.
Is it too late? The longer they wait, the more dramatically rapid the needed reforms will have to be.
This is “NBER 2015 Xiong Interview 4.28.15 Sequence.02” by NBER….
⇧ A credit thaw is offering more mortgage options
… After the crash of the subprime mortgage market, lenders were hit with billions of dollars in lawsuits and loan buybacks by Fannie Mae, Freddie Mac and the federal government. Afraid of having to buy back future loans, even pristine ones, lenders shut the door to anyone without virtually pristine credit. That is finally changing.
New rules from the Consumer Financial Protection Bureau and the Federal Housing Finance Agency, conservator of Fannie Mae and Freddie Mac, have recently clarified which loans will be safe from repurchase risk.
Lenders must now verify a borrower’s ability to repay a loan, something that might sound intuitive but which was basically nonexistent during the heady days of the housing boom. They also have to verify income and assets.
“I wouldn’t try every crazy, new idea that comes along, but I certainly wouldn’t rule them out, because some place in there I think you’re going to see some ideas that are very good,” said David Blitzer,of S&P Dow Jones Indices, a partner in the S&P Case Shiller home price indexes.
⇧ Yanis Varoufakis – YouTube
Yanis Varoufakis instantly shows a way for capitalists to get behind a European New Deal: infrastructure bonds to be purchased by the central bank with the bond proceeds to be spent on the private sector. Why do they hate him? He then goes on to answer that question. He wants to start reforming the worst of the rent-seeking first.
By the way, if you consult the Wikipedia article on the subject of rent-seeking, you will be given a new interpretation of the term. The current introduction ends with the proper origin of the term (which we were taught in political science/economy). The supposedly new interpretation conflates rent-seeking with bureaucratic and governmental capture.
Yanis’s usage in the video will work regardless. His reforms would spoil the privatizers’ plans because the privatizers are among the worst case rent-seekers.
Note he said he is not looking for those who’ve extended loans to Greece to take haircuts (take losses). That’s remarkable.
Yanis thinks they are in denial. We, however, think they are being ideological and consistent in their determination to bleed the poor to keep them down to keep the rich up, relatively speaking.
On privatizations, Yanis says the Greek government is not opposed but simply wants a balance, with the state retaining benefits from any such public-private developments/cooperation. He’s not advocating socialism but social democracy (a strong welfare state/mixed economy and not democratic socialism, which is not a mixed economy).
The neoliberals (Austrian School-leaners) hate that Yanis is not speaking from within a radical context but from a macroeconomic perspective and continues to make sense such that the vast majority of the common public would agree with him if that public were to hear him. Therefore, the neoliberals in power are doing everything they can to silence and discredit Yanis Varoufakis.
⇧ The Real Looting of Baltimore… – YouTube
This is a series of excerpts from a much longer video (which longer video we did not endorse because it advocated a return to the gold standard, which by the way, many of the people featured in the longer video and this version also don’t want).
These excerpts are valuable though.
In addition, by linking to and embedding this video, we are not condoning any violence, arson, looting, or the like that occurred during the recent riots in Baltimore, though we certainly more than sympathize with the millions of law-abiding people who want fair and safe policing across the US and world.
⇧ Greece: How it got here and where it’s headed – YouTube
Nice follow-up timing what with the two videos immediately above:
Today’s episode is focused on Greece. The overarching questions are three-fold. What led Greece to the position it is now in? And where does Greece stand now relative to preferred outcomes? And finally, what should we expect going forward for Greece?
We feature a panel of guests including Marshall Auerback, Director of Institutional Partnerships and the Institute for New Economic Thinking; Steve Hanke, professor of applied economics at Johns Hopkins University; and Yannis Palaiologos, reporter at Kathimerini to answer these questions.
Marshall Auerback did a good thing by reminding Steve Hanke that the current government/administration of Greece is not the political class that caused the problems in Greece.
We think Yannis Palaiologos is mistaken that capital flight is the issue concerning a referendum in Greece. Tsipras must consider that the Greeks will opt to default and possibly go with a new currency, in which case such flight would be more than a bit moot and inconsequential if the new issuance were to be done correctly.
⇧ No to ‘Fast Track,’ No to Trade Treachery – YouTube
Okay, if Alan Grayson is wrong about the labor, safety, and environmental issues he stated, then all President Barack Obama needs to do is show us the 2,000 some pages of the planned trade deal that expressly state that the standards in the US will be the standards in every trading partner/member-state of the agreement and show us where it states in the deal that no corporation will be able to prevail in any claim against any such standard in the US whether that standard be federal, state, or local, meaning that laws against pollution, etc., will never be reason enough that any such corporation be awarded anticipatory or any other damages because of those standards or laws, etc. If he can’t or won’t do that, then we say “No” to his deal; and so should you.
Watch the video.
By the way, we opposed NAFTA and still do.
The President simply saying to just trust him isn’t good enough.
Lastly, upholding the highest standards isn’t bad for even the poorest nations of the world. Upholding such standards will cause those nations to get to those standards that much sooner.
This isn’t the only thing we can do to help our nation and the world, but this is an important part of it.
⇧ Investors spending millions buying up Buffalo properties | wivb.com [cached]
The Buffalo housing market is hot, especially for rental properties.
Readers who have scanned the real estate transactions lately will have seen Buffalo Student Housing LLC buying up houses all around UB’s Main Street campus. They’ve bought 42 houses on streets like Winspear, Highgate, and Lisbon, most of them just since last summer.
“They came out of basically nowhere,” said City Housing Court Liason, Fred Brace.
⇧ National real estate investor buys Orange City apartment complex for $30.3M – Orlando Business Journal
Over the past six months, Northland Investment has acquired six properties in Florida, Texas and New England. Grandeville on Saxon is Northland Investment’s 21st property in Florida, bringing its total nationwide portfolio to more than 21,000 apartment homes.
⇧ Houston Real Estate: Experts Predict What Happens Next | Houstonia Magazine
Not just oil?
Houston is far from the one-industry town it once was. The latest study from the Greater Houston Partnership reports that Houston created over 120,000 jobs last year in sectors as diverse as health care, education, engineering, construction, and manufacturing—not to mention the retail and service-industry jobs that have sprung up to support all of this new growth. And even with slumping oil prices, the GHP notes that Houston should expect to see an additional 60,000 to 70,000 jobs created each year for the next five years, in what it calls “an affirmation of Houston’s resilience after nearly three decades of diversification.”
Turner mentioned a second reason for hope: the impending expansion of the Panama Canal.
⇧ An Even More Dismal Science by J. Bradford DeLong – Project Syndicate
In Summers’s view, with which I concur, governments need to assume greater responsibility for risk-bearing, long-term planning, and investment. Indeed, those governments lucky enough to issue the world’s reserve currencies are able to take on this role without overloading future taxpayers with inordinate debt burdens.
But, although Summers and Krugman now believe that more expansionary fiscal policies could accomplish a great deal of good, Rogoff continues to adhere to the Minskyite position that has underpinned his thinking since at least 1998: successful macroeconomic performance requires regulating finance and curbing debt accumulation during boom times. Attempting to cure an overhang of private debt by issuing mountains of “safe” government debt is too dangerous. After all, when the private debt was issued, it, too, was considered safe.
You see there the problem. These economists refuse to even entertain a debt-free currency. There are very, very few exceptions to the rule that economists are not to consider debt-free currency.
We’ve only seen Adair Turner really take it on in the positive and L. Randall Wray give an offhanded nod to the possibility.
Information and analytics provider CoStar Group is bolstering its presence in the apartment rental marketplace with a definitive agreement to acquire Apartment Finder as part of ts acquisition of Network Communications Inc. The $170-million acquisition, at seven times Apartment Finder’s annual EBITDA, is expected to close in the next 90 days and follows CoStar’s April 2014 acquisition of Apartments.com for $585 million from Chicago-based Classified Ventures Inc.
⇧ How Much Did Your Economy Suffer in the First Quarter? | naked capitalism
Mr. Market had a swoon on Thursday because the data are coming in in a mixed picture, which always makes things confusing, and in a combination that does not look conducive to Fed friendliness. On Tuesday, the preliminary estimate for first quarter GDP was a mere 0.2%, well below consensus estimates. And even worse, when you backed out inventory increases, the economy contracted. The analyst community fingered one-time factors like the lousy weather and the port strike, but remember, they knew about that and their previous estimates were higher. The open question is how much of the downdraft was due to factors that are still in play, like the strong dollar.
By contrast, today we had much stronger news on the jobs front, with pay increasing in the first quarter by 2.8% and prior week jobless claims falling to their lowest point of the last 15 years. But Personal Income and Outlays for March showed “somewhat cautious” spending, which does a bit to reconcile the difference between what the GDP report said versus the later jobs data.