Some Interesting Items on the Web (October 17, 2014)

Since I have not done this for a while, there are a lot of items, some of which I hope are of interest to readers of this blog.

Climate:

“Global Oceans Break All-Time Heat Record; World on Pace for Warmest Year Ever.” Slate.

“Errors and Emissions: Could Fighting Global Warming Be Cheap and Free?” Paul Krguman article in The New York Times.

“Google: We’re parting with the climate change skeptics at ALEC.” Washington Post.

“Florida Goes Down the Drain: The Politics of Climate Change.” Gail Collins of The New York Times.

“Scientists Trace Extreme Heat in Australia to Climate Change.” New York Times article.

“Climate Science Is Settled Enough: The Wall Street Journal’s fresh face of climate inaction.” Raymond T. Pierrehumbert writing for Slate.

“Are walrus at risk from climate change?” Karl Mathiesen writing for The Guardian.  

Economic Policy:

“Stuck on Inflation.”  Jeff Madrick writing for The New York Review of Books blog.

“Why inequality is such a drag on economies.” Martin Wolf of the Financial Times.

“How the Jobless Rate Underestimates the Economy’s Problems.” Jared Bernstein writing for The New York Times.

“Securing Social Security.” Gail Collins of The New York Times.

“When Trade Treaties Pose a Sovereign Threat.” Jared Bernstein blog post.

“The trade clause that overrules governments.” Harold Meyerson writing for The Washington Post.

“Why Weren’t Alarm Bells Ringing?” Paul Krugman reviews a new book by Martin Wolf for The New York Review of Books.

“IMF recommends overhaul of sovereign bonds.” Financial Times article.

“Labour must expose the fallacy of George Osborne’s ‘recovery’.” Robert Skidelsky writing for The Guardian.

“Secret Deficit Lovers.” Paul Krugman New York Times column.

“Dam breaks in Europe as deflation fears wash over ECB rhetoric.” Ambrose Evans-Pritchard of The Telegraph.

“Global Signs of Slowdown Ripple Across Markets, Vex Policy Makers: Governments, Central Bankers Have Fewer Tools Left to Revive Economies After Years of Sluggish Growth.” Wall Street Journal article.

“Germany on defensive as criticism of economic course mounts.” Reuters article in The Globe and Mail. I attended some of the IMF events. There was an amazing consensus that most countries should spend more on infrastructure and that Germany, in particular, should do more to stimulate its economy. The Germans are resisting, though some think that the German slowdown along with international pressure may cause Angela Merkel's government to reconsider. In answer to a question about how to get Germany to arrive at a political consensus that its government needs to spend more, Larry Summers answered that he had enough trouble with American politics to get into advising about German politics. Then he went on to say that, if German Finance Minister Wolfgang Schaeuble, who was on the same panel, could manage to convince himself of the need to spend more, the finance minister could figure out how to accomplish this politically.

“Germany's Austerity Obsession Could Take Down the Global Economy.” Mark Gongloff writing for The Huffington Post.

“Fed’s Evans: Biggest Risk to U.S. Now is Premature Rate Hikes.” Article on The Wall Street Journal website. At an IMF event last week, Fed Vice Chair Stanley Fischer was asked for the definition of “a considerable time.” To my surprise, he answered with some specificity, saying that it was anywhere between 2 months and one year. However, Fischer said at this particular event and others (he appeared at many IMF events) that the decision would be dictated by the data. If the economy grows slower than the Fed expects, a rate rise would take place later. In other words, the Fed reserves the right to reevaluate its policies at any time in reaction to economic data. That is appropriate.

“Germany, France Tap Economists for Advice to Avoid ‘Lost Decade’: In Bid to Mend Rift, Economy Ministers Seek Joint Help in Countering Eurozone’s Economic Stagnation.” Wall Street Journal article.

 “E.U. and France on Collision Course Over Budget.” New York Times article.

“Eurozone woes boost anti-austerity camp.” Article posted on the Deutsche Welle website.

“Summers, Schäuble go head to head on ailing Europe.” Video of and article on this IMF event at the CNBC website.

“Monetary policy: When will they learn?” Ryan Avent of The Economist.

“Economically, Germany is a threat to itself.” Harold Meyerson op-ed in The Washington Post. He writes:

“But I’m no fan of Germany’s macroeconomics, which are more destructive and dangerous than those of any other nation. By using its power as the dominant nation in the European Union to impose austerity on the struggling economies of Southern Europe, Germany has condemned young people in Spain and Greece to unemployment rates in excess of 50 percent, shaken the social fabric of every nation on the Mediterranean and contributed to the rise of such far-right parties as France’s National Front and Greece’s neo-Nazi Golden Dawn. Unlike other nations, Germany hasn’t offshored its best industrial jobs, but it has relentlessly offshored to its Southern neighbors conditions conducive to the rise of a xenophobic extremism that one would think Germany, of all nations, wouldn’t wish to nourish.”

“What Markets Will.” Paul Krugman column. He writes:

“I’m not mainly talking about plunging stock prices, although that’s surely telling us something (but as the late Paul Samuelson famously pointed out, stocks are not a reliable indicator of economic prospects: ‘Wall Street indexes predicted nine out of the last five recessions!’) Instead, I’m talking about interest rates, which are flashing warnings, not of fiscal crisis and inflation, but of depression and deflation.

“Most obviously, interest rates on long-term U.S. government debt — the rates that the usual suspects keep telling us will shoot up any day now unless we slash spending — have fallen sharply. This tells us that markets aren’t worried about default, but that they are worried about persistent economic weakness, which will keep the Fed from raising the short-term interest rates it controls…

“It’s also instructive to look at interest rates on ‘inflation-protected’ or ‘index’ bonds, which are telling us two things. First, markets are practically begging governments to borrow and spend, say on infrastructure; interest rates on index bonds are barely above zero, so that financing for roads, bridges, and sewers would be almost free. Second, the difference between interest rates on index and ordinary bonds tells us how much inflation the market expects, and it turns out that expected inflation has fallen sharply over the past few months, so that it’s now far below the Fed’s target. In effect, the market is saying that the Fed isn’t printing nearly enough money.”

Financial Regulation and Related Issues:

“Wall St. Bankrolls Ex-Executive as He Sues Over A.I.G. Bailout.” The New York Times.

“The Secret Recordings of Carmen Segarra.” This American Life (audio).

“Inside the New York Fed: Secret Recordings and a Culture Clash.” Jake Bernstein article for ProPublica.

“The Secret Goldman Sachs Tapes.” Michael Lewis writing for BloombergView.

“Goldman Sachs Said to Prohibit Bankers From Buying Stocks.” Bloomberg article.

“Finally, the Truth About the A.I.G. Bailout.” Noam Scheiber op-ed for The New York Times.

“The Fed Is Even Afraid To Ask Goldman Sachs The Easy Questions.” Ben Walsh writing for The Huffington Post.

“A.I.G. Trial Witnesses Will Be Central Cast From 2008 Crisis.” New York Times article.

“The A.I.G. Trial is a Comedy.” John Cassidy of The New Yorker.

“Now as Provocateur, Summers Says Treasury Undermined Fed.” Binyamin Appelbaum of The New York Times. Also, see my comments on this.

“Secret Goldman Sachs Tapes Put Pressure on New York Fed.” New York Times article.

“N.Y. Fed Lawyer Says AIG Got Billions Without Paperwork.” Bloomberg article.

“Hank Paulson says AIG bailout terms needed to be ‘harsh’.” Financial Times article.

“Hank Paulson’s Telling Admission.” John Cassidy of The New Yorker.

“Fears That Pimco and Other Big Firms Could Be Unable to Unload Risky Bonds.” New York Times article.

Miscellaneous

“Hong Kong used to be 18 percent of China's GDP. Now it's 3 percent.” Timothy B. Lee writing for Vox.

“Nobody Could Have Predicted, Bill Gross Edition.” Paul Krugman blog post.

“Why Ben Bernanke Can’t Refinance His Mortgage.” Neil Irwin of The New York Times.

“Depression Denial Syndrome.” Paul Krugman.

“Golden Rule: Why Beijing Is Buying.” Alan Greenspan writing for Foreign Affairs. Greenspan has long been attracted to the idea of returning to the gold standard. In fact, at the beginning of the Reagan Administration, he wrote a WSJ op-ed and submitted a comment to the government gold commission that the Treasury should issue gold-backed or linked debt securities. He not only made an unconvincing argument that this would save the government money but also made an argument that it would be the first step to a gold standard, which he favored. (I was tasked with reviewing the gold securities idea as a Treasury employee at the time.) He became quiet on this subject as Fed Chairman, though I remember reading once that he thought he might be the only person at the Fed who thought a gold standard would be a good idea.  

In this article is that Greenspan can't seem to limit it to China and gold. At the end of the article, he makes an unrelated comment about China's political system and the possible effects of that going forward. What he has to say about this is sensible, but there is no clear link between these comments and gold policy.

“After a Dreary Summer, Autumn Chill in France.” Mira Kamdar writing for The New York Times.

“In Defense of Obama.” Paul Krugman article for Rolling Stone.

“The Unhealthy Politics of Ebola.” Brendan Nyhan writing for The New York Times.

“The Nightmarish Politics of Ebola.” John Cassidy of The New Yorker.

“From the Tea Party to UKIP, the Right Is Rising.” John Cassidy of The New Yorker.

“Calculating the Grim Economic Costs of Ebola Outbreak.” Andrew Ross Sorkin writing for The New York Times.

“Obama Should End the Embargo on Cuba.” New York Times editorial.

“No, budget cuts aren't the reason we don't have an Ebola vaccine.” Sarah Kliff writing for Vox. She writes:

“NIH funding definitely matters. “It’s fair to say that, without the budget cuts, we would be closer to a cure than we are right now,’ says Benjamin Corb at the American Society for Biochemistry and Molecular Biology. ‘We would have understood the virus and perhaps understood how to counteract the virus if we didn't have budget cuts.’
“But as Corb pointed out to me, there's a long space between being closer to a vaccine — and ‘probably’ having one (which is what [NIH director Francis] Collins claimed).”

“The Nightmarish Politics of Ebola, Part 2.” John Cassidy of The New Yorker.

“Here’s What to Say When You Don’t Know Why the Stock Market Fell.” Josh Barro writing for The New York Times.