Linking ≠ endorsement.
⇧ Russia’s Economy Is Tanking, So Why Is Putin Smiling? – Bloomberg Business
Officials have said both the wealth funds could be fully depleted by 2018 unless oil prices recover or the government finds other ways to cover the deficit, such as selling state assets or raising debt. Once the funds are empty, the Kremlin will be forced to make painful cuts in spending or hike taxes in order to keep the budget gap under control.
I don’t understand why a nation that issues its own currency, as Russia does, doesn’t realize that it does not have to borrow.
This is the most fundamental aspect of economics that has been deliberately flushed down the memory hole by the international-banking industry.
Russia could operate just as well now and in future without one Ruble (or any other currency) or ounce of gold in so-called reserves. In fact, Russia is self-shackled to governmental borrowing and would be vastly better off completely dropping all such borrowing forever.
⇧ Bugatti Chiron makes $2.6 million debut at Geneva Motor Show (+video) – CSMonitor.com
Yes, but what kind of mileage does it get?
I don’t even want to think about the insurance.
⇧ In Social Media Battle, Real Estate Mogul Takes On Chinese Government : Parallels : NPR
Yep, a new cult-of-personality figure leading China — just what the world doesn’t need.
What an amazing situation this is. You have a mixed-economy country moving quickly to neoclassical capitalism but insisting it’s socialist and that everyone nod in affirmation or else.
It’s not sane in my book.
Just when China needed some super sanity, it gets this instead.
⇧ How a Less-Skilled American Workforce May Be Holding Back Growth – Real Time Economics – WSJ
… labor quality tends to rise, as the job market sheds the least-productive and least-educated workers first. As the economy expands, those laid off return to work, sometime with more education, but often with skill sets that have deteriorated in the interim.
⇧ Brooklyn Bridge Park’s Controversial Pier 6 Housing Plan Put On Hold – Curbed NY
The current standstill came about when the city tried to get approval for the creation of the affordable units at the site. At first the state was on board too, but as it began hearing continued opposition from local residents and several elected officials representing the area, the state decided that there was a need for greater discussion before the project moved forward.
Oh yes, buy all means, have a greater discussion before letting un-rich people live in the area. Great.
⇧ Numb and number: where The Big Short falls short — Prime Economics
Encouraged by the fact that little has changed and virtually no financier has been jailed, swaggering bankers and shadow bankers are as bumptious and arrogant as ever. HSBC’s bosses have just strong-armed (or bribed?) Britain’s elected Conservative government to capitulate to their demands. These include the retraction of fiercer regulation, and the sacking of a particularly troublesome regulator. The explanation for this ongoing arrogance is straightforward: the Wall St. and European banks that were bailed out now find themselves backed and protected by taxpayers and central bankers in the US, Germany and Japan. Today’s financial markets are no longer ‘free markets’ (if they ever were) – risky for doughty financiers. Instead these marketeers are Too Big To Fail, Bail and Jail and Too Big to Prosecute. Their losses were largely socialized in the aftermath of the crisis. Since then central bank largesse (guarantees against losses, QE and low interest rates) and political fear of another systemic crash, means that their institutions are now effectively nationalized, even while they continue to privatise gains for shareholders and executives.
⇧ mainly macro: Two related confusions about helicopter money
… anything that raises demand (as a fiscal expansion will) will tend to raise inflation ….
However, there have been economies that have grown at double digits for years without high inflation or high interest rates. Have they all been emerging? The US wasn’t emerging leading up to WWII. Was it because of the high unemployment rate that the US was allowed to grow again at such a high rate? The question remains, however, just how much technological advancements played a part (I think a great deal) and the extent to which they could now. Public money could be, and should be, pumped into research and development for that very purpose. The speed-to-market could be radically shortened to reduce inflationary pressures. Goods and services upstream could be funded in anticipation of more costly items, etc., that would be needed later for larger projects downstream.
I just don’t see the problems as insurmountable. Neither do I see credit as the only avenue for growth or interest rates the only “monetary” control mechanism.
Gerald Friedman, Response to the Romers. This is an exclusive to D&S; he’ll have more to say soon, I’m sure.
[Gerald Friedman:]… is capacity set or is it endogenous with respect to output levels; does it rise when the economy approaches capacity? If the Romers were right that the economy is at full employment at capacity utilization, and capacity utilization grows independently of the level of output, then there cannot be a lasting stimulus effect at a fully employed economy. In the Romer case, a stimulus can raise output only temporarily because output depends on capacity and the economy is always at or moving towards capacity. But, if the economy can be stuck at an unemployment equilibrium, if it does not move to a full employment equilibrium, or if a higher employment and output level can trigger a higher growth rate, then a Keynesian-style government stimulus can have lasting effects. Even a one year stimulus can push employment and output to a permanently higher level, and at that higher level it can generate faster growth by pulling more into the labor force and stimulating higher productivity growth.
I agree with him.
⇧ The Critics of Sanders’s Health Plan Understate Benefits and Overstate Costs [cached]
Health-care spending has increased faster in the United States than in countries with single-payer plans, and faster for private insurance than for Medicare, not because Americans use more health care but because health-care prices have risen faster in the United States than elsewhere. To be sure, we do use more specialists and technology, but those have not been the cost-drivers. Over the last 35 years, health-care prices in the United States have risen 1.5 percent a year faster than other prices; in Canada, by contrast, they have risen only 0.2 percent a year faster. This difference is enough to account for virtually all the excess growth in health-care spending in this country, compared with Canada and its single-payer system.
Between rising prices to cover a growing administrative burden and rising monopoly prices for drugs and for elite providers, we have been paying more and more for less health care. Bernie Sanders has a realistic and well-thought-out program to fix our health care and save lives. Now it is time for Paul Starr to join us in supporting it.
Gerald Friedman is growing on me. You go, Gerald.
⇧ Many Hispanics View Homeownership as Key to the American Dream | Zillow Porchlight
Zillow’s latest survey, co-sponsored by Pulsenomics LLC, also found that 65 percent of millennials associate homeownership with the American Dream – more than any other generation. They also expect home values to appreciate 5 percent annually over the next decade, more than any other age group.
Yes, but at what rate do they expect to obtain that home?
⇧ Fundur um samfélagsbanka [Introduction to Puplic Banking] – YouTube
Ellen Brown speaks on Public Banking. Her talk runs from minute 12:45 to 43:00 in the video. She’s a very low-key speaker, no razzle-dazzle, just the facts.
The title of the video is Icelandic, but Ellen gives her presentation in English.
Deng Xiaoping was considered great in China and the US until China started bumping up against reality. I was never impressed by his choices. I always thought they’d lead to the current situation.
Xi has distanced himself from Deng because Xi doesn’t want to be painted with the failure-brush. He’s going to seek to lay the blame on Deng, even though Xi thought Deng was just great until quite recently.
Truth be told though, what Xi is doing now is worse than the crazy moves made by Deng.
When will China ever have truly decent leadership? When the people rise up, take power, and create a real democracy, not crony in any way.
And of course, Xi is cracking down on the press and probably all forms of communication because he doesn’t want people hearing it or being able to plan and execute the greatly needed overthrow of the one-party dictatorship with its new, soon to be if he’s not stopped, totalitarian leader, Xi.
If you think I’m rough on the bankers, politicians, pundits, and self-described wonks:
When we have unemployed men and unemployed plant and more savings than we are using at home, it is utterly imbecile to say that we cannot afford these things. For it is with the unemployed men and the unemployed plant, and with nothing else, that these things are done.
To have labour and cement and steel and machinery and transport lying by, and to say that you cannot afford to embark on harbour works or whatever it may be is the delirium of mental confusion. [Keynes]
Keynes warning was prescient at the time and remains a robust understanding of the causes of mass unemployment and the best policy cures.
He was fighting against ‘sound finance’ then and by the end of the Second World War had won the battle and the world entered a marvelous period of full employment and income growth with diminishing inequality and poverty.
But the conservative ideology is like a cockroach — hard to get rid of. And for the last three or so decades the world has been mired in its imbecilic nostrums that culminated into the GFC.
Rising poverty, mass unemployment and all the related ills are back — and we are too stupid to see these leaders for the imbeciles that they are!
That is enough for today!
That was Billy Mitchell, a leading MMT economist.
⇧ Fighting Wall Street Predators with Game Theory – Evonomics
David Sloan Wilson:
Some are misled by free market ideology to think that the system is actually good.
⇧ 7 NY properties make ‘at risk’ list
The Dennis-Newton House in Ithaca is among the seven most threatened historic resources in the state and needs preservation, a group said Wednesday.
I wonder what kind of shape it’s in on the inside: dry, etc.
⇧ New York City real estate sluggish – Business Insider
… there are too many high-end, luxury apartments, and people are having a hard time filling them.
As predicted on this blog, the Russians are staying away. Some people mistakenly thought that sanctions against Russia would cause a flight of hundreds of billions of dollars from there to here.
⇧ Real estate agent to admit fraud in helping Trustee ‘ghost employee’
Sanders, who owned a title company in Clinton and also sold real estate, created fake forged documents in … scams, Assistant U.S. Attorney Matthew Morris wrote in court records.
⇧ Real estate agents being blocked from helping with closing documents – Chicago Tribune
… under the new federal real estate settlement procedures that took effect late last year, an unexpected problem is taking shape: Many lenders and title companies are refusing to provide copies of the final closing documents to real estate agents representing homebuyers. That, in turn, is threatening to jeopardize one of the traditional services agents perform for their clients — scrutinizing closing statements for inaccuracies that could cost them money or delay the settlement unnecessarily.
… short circuit the whole controversy by handing over a copy of the final settlement disclosure to your agent immediately after you receive it from the lender. Ask for a thorough walk-through of the closing items and their accuracy.
Get the most out of that extra pair of eyes.
Took the words right out of my head.
⇧ Bringing Young Blood to the Construction Labor Force | Builder Magazine | Labor Burden, Construction Contracts, Concrete Construction, Construction, Residential Construction
… how to woo young workers? The report gives out four suggestions to builders:
Rebuilding the image of construction works. …
Offering alternative educational opportunities. …
Bringing back mentorships and apprenticeships. …
Inspiring entrepreneurship. …
⇧ The 4 Challenges First-Time Buyers Face in 2016
While home prices have been rising at a staggering rate (up 60.6 since the early 1970s), the median income for first-time buyers has stagnated over the same period, rising 2.9 percent since the early ’70s. Paired with the stagnant wages is an alarming amount of student loan debt, which 41 percent of first-time buyers had in 2015. According to NAR, 31 percent had over $50,000 in debt, and 58 percent delayed a home purchase because of student loans. Student debt creates a significant barrier to entry not seen with previous generations, and has clearly depressed first-time homebuying.
⇧ It Just Got Even Harder to Trust Financial Advisers – Bloomberg Business
A new working paper by business school professors at the University of Chicago and University of Minnesota found that 7 percent of financial advisers have been disciplined for misconduct that ranges from putting clients in unsuitable investments to trading on client accounts without permission. That’s a troubling mark for an industry that relies on the trust of clients.
⇧ S&P: Large Japan economic stimulus would raise concerns | Reuters
Japan plans to increase its sales tax in April 2017 and that would lift government revenue and lower its outstanding debt burden. Speculation has lingered among some market players, however, that Japan could postpone hiking taxes amid worsening demand.
“It really depends on the economic situation at that time. If you introduce a consumption tax hike when the economy is already weak or heading downwards, you are worsening the economic trend. You may not bring in that much revenue,” Tan said.
They already increased it once with disastrous results. They were warned. I even said it on this blog. If they do it again, they should be removed from office and replaced with people who understand the fundamentals.
⇧ China Credit Outlook Cut to Negative From Stable by Moody’s – Bloomberg Business
All these ratings agencies call for is neoliberal “reforms” rather than what China really needs: democracy.
⇧ PNC Bank – PNC POV What China’s Economy Means to US
The Chinese markets are different compared to the U.S. in that they’re more like casinos, with large fluctuations and lots of uncertainty around the rules. It remains very difficult to accurately predict how policymakers might change the rules of the game in China. Investors deal better with knowing about specific bad news rather than uncertainty, and that’s what we’re seeing play out now.
⇧ American Homes 4 Rent, American Residential Properties complete merger | HousingWire
With the merger complete, American Homes 4 Rent now owns more than 47,000 homes in 22 states with at least 1,000 homes in each of 17 markets across the country, representing approximately 81% of the homes in all markets, and at least 2,000 homes in each of eight markets, the company said.
⇧ Cathedral of Transport – YouTube
The new World Trade Center transportation hub is undoubtedly impressive, Robert Wright discovers. But that might not justify the vast $4bn price tag.
And they can’t build affordable housing?
⇧ February continues streak of record low Arctic sea ice extent | Arctic Sea Ice News and Analysis
Arctic sea ice was at a satellite-record low for the second month in a row. The first three weeks of February saw little ice growth, but extent rose during the last week of the month. Arctic sea ice typically reaches its maximum extent for the year in mid to late March.
⇧ The Daily Shot; March 2 – Global Macro Currents
… the Texas service sector is struggling. It took some time for analysts to appreciate just how dependent Texas has been on energy production and investment. Property markets are likely to be impacted next.
It sure did take a long time. I had begun to think I didn’t know what I was talking about concerning Texas. It looks more and more that I was right but premature in terms of how soon the “negatives” would come home to roost.
⇧ mainly macro: Understanding the austerity obsession
As for Swabian syndrome, our best hope may be that the public gradually develop an immunity to the disease as its consequences become clear.
Looks that way.
⇧ Nearly half of American children living near poverty line | EurekAlert! Science News
Nearly half of children in the United States live dangerously close to the poverty line, according to new research from the National Center for Children in Poverty (NCCP) at Columbia University’s Mailman School of Public Health. …
“These data challenge the prevailing beliefs that many still hold about what poverty looks like and which children in this country are most likely to be at risk,” said Renée Wilson-Simmons, DrPH, NCCP director. “The fact is, despite the significant gains we’ve made in expanding nutrition and health insurance programs to reach the children most in need, millions of children are living in families still struggling to make ends meet in our low-growth, low-wage economy.”
According to NCCP researchers, the number of poor children in the U.S. grew by 18 percent from 2008 to 2014 (the latest available data), and the number of children living in low-income households grew by 10 percent.
⇧ The case for infrastructure spending — now – CBS News
Mark Thoma [The heart of a progressive]:
The nation has considerable needs for bolstering its infrastructure, interest rates remain ultralow but are expected to rise in the future, and the costs for labor and raw materials are below normal due to the slow recovery from the Great Recession but are likely to increase over time.
… investment in infrastructure can improve productive capacity and increase America’s economic growth rate, which has been slow in recent years due to falling productivity. …
… wages have been stagnant, and labor markets haven’t yet fully recovered from the recession. Government spending on infrastructure will put people to work, and as labor markets begin to tighten it will put upward pressure on wages.
… what if the Fed is wrong? The recent debate over University of Massachusetts professor Gerald Friedman’s assertion that Bernie Sanders’ economic plan could increase economic growth by as much as 5.3 percent over the next eight years is in large part a debate about how close we are to full employment.
This debate has revealed considerable disagreement among economists about the country’s capacity for growth over the next few years. Kocherlakota, for example, argues that “with appropriate stimulus, it would be possible to achieve growth outcomes of around 5-6% per year for the next four years.”
⇧ Deflation Defeats Impotent Central Banks – Bloomberg View
A. Gary Shilling:
… the remedies central bankers are using aren’t working. First, in reaction to the financial crisis, they knocked their short-term reference rates down to essentially zero, and bailed out their stricken banks and other financial institutions. That may have forestalled financial collapse but it did little to stimulate borrowing, spending, capital investment and economic activity. Creditworthy borrowers already had ample liquidity and few attractive spending and investment outlets; slashing borrowing costs to record lows stimulated asset prices such as equities, with little economic benefit.
At the very least, it’s time for the government to do the Keynesian thing (massive fiscal spending).