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Gene Ellis

Robert Samuelson: A dishonest budget debate - The Washington Post - 0 views

www.washingtonpost.com/...2-9f54-f3fdd70acad2_story.html

budget debate washington

shared by Gene Ellis on 18 Mar 13 - No Cached
  • t’s the math: In fiscal 2012, Social Security, Medicare, Medicaid and civil service and military retirement cost $1.7 trillion, about half the budget.
  • As a share of national income, defense spending ($670 billion in 2012) is headed toward its lowest level since 1940.
  • States’ Medicaid costs will increase with the number of aged and disabled, which represent two-thirds of Medicaid spending. All this will force higher taxes or reduce traditional state and local spending on schools, police, roads and parks.
  • ...5 more annotations...
  • Almost everything is being subordinated to protect retirees.
  • “for how long will we continue to sacrifice investments in our nation’s children and youth ... to spend more and more on the aged?”
  • In a Pew poll, 87 percent of respondents favored present or greater Social Security spending; only 10 percent backed cuts. Results were similar for 18 of 19 programs, foreign aid being the exception.
  • an aging America needs a new social compact: one recognizing that longer life expectancies justify gradual increases in Social Security’s and Medicare’s eligibility ages; one accepting that sizable numbers of well-off retirees can afford to pay more for their benefits or receive less; one that improves generational fairness by concentrating help for the elderly more on the needy and poor to lighten the burdens — in higher taxes and fewer public services — on workers; and one that limits health costs.
  • Government is being slowly transformed into a vast old-age home, with everything else devalued and degraded.
Gene Ellis

Europe's Eyes on the Prize by Robert Cooper - Project Syndicate - 0 views

www.project-syndicate.org/...l-peace-prize-by-robert-cooper

shared by Gene Ellis on 19 Dec 12 - No Cached
  • Gene Ellis on 19 Dec 12
     
    Three of the main players behind the beginnings of the EU
Gene Ellis

The Morality of Amorality in Foreign Policy by Robert Cooper - Project Syndicate - 0 views

www.project-syndicate.org/...of-amorality-in-foreign-policy

morality foreign policy policy robert cooper project syndicate

shared by Gene Ellis on 19 Dec 12 - No Cached
  • Foreign policy is about war and peace. If wars are fought on moral or religious grounds, no basis for restraint exists. After all, to call something evil is to invoke a moral duty to destroy it.
  • The Thirty Years War, fought over religion, laid waste to the Continent, killing one-third of Germany's population.
  • As the Romanian philosopher E. M. Cioran says: "Once man loses his faculty of indifference he becomes a potential murderer; once he transforms his idea into a God the consequences are incalculable."
  • ...1 more annotation...
  • The objective of amoral foreign policy is to sustain order in an anarchic international system by ensuring tolerance and pluralism among a number of independent actors.
Gene Ellis

Models Behaving Badly by Robert Skidelsky - Project Syndicate - 0 views

www.project-syndicate.org/...been-wrong-by-robert-skidelsky

prediction

shared by Gene Ellis on 19 Dec 12 - No Cached
  • Gene Ellis on 19 Dec 12
     
    Why can't we predict?
Gene Ellis

Efforts to Revive the Economy Lead to Worries of a Bubble - NYTimes.com - 0 views

dealbook.nytimes.com/...my-lead-to-worries-of-a-bubble

shared by Gene Ellis on 18 Apr 13 - No Cached
  • The Federal Reserve is well into its third round of “quantitative easing,” in which it buys longer-term assets to bring down long-term lending rates.
  • In March, a smaller percentage of working-age people were actually working than at any other time since 1979.
  • In March, a smaller percentage of working-age people were actually working than at any other time since 1979.
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  • Ben S. Bernanke and company would also like to kindle inflation expectations, spurring people to buy and companies to invest today instead of waiting until tomorrow. Supposedly, all of this will drive a self-sustaining economic recovery.
  • Instead, the Fed has kindled speculation.
  • Investors are desperate for yield and are paying up for riskier assets.
  • There are more reliable measures of stock market value, and they look frothy. One gauge, the price of stocks based on the past decade of earnings, is named after the Yale economist Robert J. Shiller. Using that, stocks are too expensive by 65 percent.
  • Alternatively, many investors look at something called the Q, devised by the economist James Tobin, which compares stock prices with corporate net worth. The nonfinancial companies are overpriced by 57 percent.
  • Last month, investors were paying more for such loans than at any time in the last five years. They are snapping up billions of dollars in securities made up of subprime auto loans.
Gene Ellis

Robert J. Shiller attributes Japan's incipient recovery - and weak growth elsewhere - to prevailing economic narratives. - Project Syndicate - 0 views

www.project-syndicate.org/...prevailing-economic-narratives

shared by Gene Ellis on 23 Mar 14 - No Cached
  • The Global Economy’s Tale Risks
  • Fluctuations in the world’s economies are largely due to the stories we hear and tell about them. These popular, emotionally relevant narratives sometimes inspire us to go out and spend, start businesses, build new factories and office buildings, and hire employees; at other times, they put fear in our hearts and impel us to sit tight, save our resources, curtail spending, and reduce risk. They either stimulate our “animal spirits” or muffle them.
  • The output gap for the world’s major advanced economies, as calculated by the IMF, remains disappointing, at -3.2% in 2013, which is less than half-way back to normal from 2009, the worst year of the global financial crisis, when the gap was -5.3%.
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  • Think of the story of the real-estate boom in the United States and other countries in the first half of the 2000’s. This was a story not of a “bubble”; rather, the boom was a triumph of capitalist enterprise in a new millennium.
  • These stories were so powerful because a huge number of people were psychologically – and financially – invested in them
  • With the abrupt end of the boom in 2006, that ego-boosting story also ended.
  • To understand why economic recovery (if not that of the stock market) has remained so weak since 2009, we need to identify which stories have been affecting popular psychology.
Gene Ellis

Kenen on the euro | vox - 0 views

www.voxeu.org/kenen-euro

shared by Gene Ellis on 26 Jan 13 - No Cached
  • Early work on optimum currency areas by Robert Mundell had emphasised the symmetry or asymmetry of disturbances hitting different regional economies as a key criterion on which to gauge their suitability for sharing a common currency.
  • Peter took this insight further by arguing that disturbances were often sector specific and that the diversification of regional economies was therefore a key consideration in gauging their suitability for monetary union (the better diversified an economy was, the less likely it was to be badly destabilised by a sector-specific shock). (Kenen 1969).
  • We now know that Kenen flagged a problem for which the Eurozone could have been better prepared. With an outsized capital-goods producing sector, Germany benefitted from a strong positive shock as a result of China’s emergence onto the global stage, given the Chinese economy’s voracious appetite for capital goods.
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  • Portugal and Italy, on the other hand, specialised much more heavily in consumer-goods producing sectors and felt the brunt of Chinese competition. No Eurozone member was sufficiently well diversified to shrug off this kind of shock, something that should have made the euro’s architects think twice.
  • Specifically, they should have thought again, Kenen argued, about the coordination of national fiscal policies, the need for a common Eurozone budget, and mechanisms for transferring fiscal resources from booming to depressed regions.
  • More than any other economist, Peter understood that monetary union was a legal as well as an economic construct. His careful parsing of the Maastricht Treaty explained to the economics profession exactly what the treaty did and did not allow (Kenen 1992).
  • Peter even anticipated the debate over TARGET2 imbalances, observing in 1999 that it was possible to “easily conceive of conditions…in which one [national central bank] would be reluctant to build up claims indefinitely on some other national central bank.” (Kenen 1999).
  • Finally, Peter observed that the possibility of a member state exiting from the Eurozone could not be ruled out but warned that European officials should be cautious in bandying about the idea (Kenen 1999). “The costs of defecting,” he wrote back in 1999, “could be very high.”
  • Gene Ellis on 26 Jan 13
     
    Good Eichengreen, Wyplosz EUVox article on Peter Kenen and insights on why the Euro might have difficuties.
Gene Ellis

"A Centerless Euro Cannot Hold" by Kenneth Rogoff | Project Syndicate - 0 views

www.project-syndicate.org/...a-centerless-euro-cannot-hold

euro hold kenneth project syndicate GDP

shared by Gene Ellis on 05 Apr 12 - No Cached
  • The bad news is that it has become increasingly clear that, at least for large countries, currency areas will be highly unstable unless they follow national borders.
  • With youth unemployment touching 50% in eurozone countries such as Spain and Greece, is a generation being sacrificed for the sake of a single currency that encompasses too diverse a group of countries to be sustainable?
  • What of Nobel Prize winner Robert Mundell’s famous 1961 conjecture that national and currency borders need not significantly overlap? In his provocative American Economic Review paper “A Theory of Optimum Currency Areas,” Mundell argued that as long as workers could move within a currency region to where the jobs were, the region could afford to forgo the equilibrating mechanism of exchange-rate adjustment.
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  • if intra-eurozone mobility were anything like Mundell’s ideal, today we would not be seeing 25% unemployment in Spain while Germany’s unemployment rate is below 7%.CommentsView/Create comment on this paragraph
  • Peter Kenen argued in the late 1960’s that without exchange-rate movements as a shock absorber, a currency union requires fiscal transfers as a way to share risk.
  • Europe, of course, has no significant centralized tax authority, so this key automatic stabilizer is essentially absent.
  • Many Germans today rightly feel that any system of fiscal transfers will morph into a permanent feeding tube, much the way that northern Italy has been propping up southern Italy for the last century. Indeed, more than 20 years on, Western Germans still see no end in sight for the bills from German unification.
  • Later, Maurice Obstfeld pointed out that, in addition to fiscal transfers, a currency union needs clearly defined rules for the lender of last resort. Otherwise, bank runs and debt panics will be rampant. Obstfeld had in mind a bailout mechanism for banks, but it is now abundantly clear that one also needs a lender of last resort and a bankruptcy mechanism for states and municipalities.
  • A logical corollary of the criteria set forth by Kenen and Obstfeld, and even of Mundell’s labor-mobility criterion, is that currency unions cannot survive without political legitimacy,
  • European policymakers today often complain that, were it not for the US financial crisis, the eurozone would be doing just fine. Perhaps they are right. But any financial system must be able to withstand shocks, including big ones.
Gene Ellis

U.S. Ports Seek to Lure Big Ships After Panama Canal Expands - NYTimes.com - 0 views

www.nytimes.com/...fter-panama-canal-expands.html

u s ports ships panama canal nytimes nytimes com com

shared by Gene Ellis on 21 Aug 12 - No Cached
  • But, he said, containers loaded on the West Coast, which has built up its container yards and highway and rail infrastructure, can outrun those that travel to the East Coast by water, and that can make the difference when speed and dependability are more important than cost alone
  • Besides, he added, costs and fees can shift; Panama can be expected to raise rates for canal passage, and “the railroads are not going to sit idly by” and let the water route undercut their business.
  • After Hurricane Katrina, Gov. Haley Barbour of Mississippi trumpeted plans for a “port of the future” at Gulfport with a 50-foot-deep channel, redirecting some $600 million in federal housing disaster funds on a project he pledged would spur the economy and create bountiful jobs.
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  • To Robert Puentes, a transportation expert at the Brookings Institution, the problem of whether the ports are overbuilding for a Panama payoff is one of planning. “We are the only industrialized country on the planet that doesn’t have a comprehensive freight policy,” he said.
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