Saturday, September 30, 2017

A Graying Germany Complicates Merkel's Task - Bloomberg

A Graying Germany Complicates Merkel's Task - Bloomberg



...While the West is graying overall, Germany getting older faster, with the highest median age in Europe, and one of the lowest birth rates....



... Despite Germany’s reputation for fiscal rectitude, the country’s pensions are headed for a cliff. Close to 80 percent of pensions remain pay-as-you-go and therefore unsustainable given Germany’s graying. Company-sponsored private pensions are supposed to fill the gap, but they are reported to be 30 percent to 50 percent underfunded, and they are overwhelmingly defined-benefit schemes. Recent reforms to raise the retirement age slightly and introduce defined-contribution pensions schemes didn’t come close to putting the country’s liabilities on a sustainable path....



...For all the plaudits that its system of skilled-worker apprenticeships earns, this year was the first one on record when a majority of firms cited skilled-worker shortage as the biggest risk ...



...Young people naturally react to an unresponsive establishment by disengaging from the process or voting for extreme parties....



...Germany’s Federal Statistics Office forecasts that by 2050, Germany’s population will have shrunk to 63 to 72 million from 82 million today, with one-third of those aged 65 or above. By that time, fully half of the under-40 population could consist of immigrants of North African and Middle Eastern origin and their children, while the overwhelming majority of the elderly would be of native German background. This introduces an ethnic, cultural and religious dimension to a generational split...



...

Thursday, September 28, 2017

Low Inflation Is No “Mystery” - Maudlin

http://ggc-mauldin-images.s3.amazonaws.com/uploads/pdf/OTB_Sept_27_2017.pdf



...As for the lack of demand-side growth, the explanations are confusing. Yellen says low inflation is a
mystery, others say it’s because of new technologies, global trade, and rising productivity. Slow real GDP
growth is blamed on global trade, a Great Stagnation in productivity and the lack of investment by private
companies. QE gets credit for the things that went up, but things that didn’t are explained away, denied, or
determined to be mysteries.



We have promoted an alternative narrative that agrees with the 2008 Janet Yellen – QE didn’t work. It
flooded the banking system with cash. But instead of boosting Milton Friedman’s key money number
(M2), the excess monetary base growth went into “excess reserves” – money the banks hold as deposits,
but don’t lend out. Money in the warehouse (or in this case, credits on a computer) doesn’t boost demand!
This is why real GDP and inflation (nominal GDP) never accelerated in line with monetary base growth.



The Fed boosted bank reserves, but the banks never lent out and multiplied it like they had in previous
decades. In fact, the M2 money supply (bank deposits) grew at roughly 6% since 2008, which is the same
rate it grew in the second half of the 1990s.



So, why did stock prices rise and unemployment fall? Our answer: Once changes to mark-to-market
accounting brought the Panic of 2008 to an end, which was five months after QE started, entrepreneurial
activity accelerated. New technology (fracking, the cloud, Smartphones, Apps, the Genome, and 3-D
printing) boosted efficiency and productivity in the private sector. In fact, if we look back we are
astounded by the new technologies that have come of age in just the past decade. These new technologies
boosted corporate profits and stock prices and, yes, the economy grew too.



The one thing that did change from the 1990s was the size of the government. Tax rates, regulation and
redistribution all went up significantly.
This weighed on the economy and real GDP growth never got back
to 3.5% to 4%.



Occam’s Razor – a theory about problem solving – says, when there are competing hypothesis, the one
with the “fewest assumptions” is most likely the correct one.



...Our narrative is far simpler. It looks at M2 growth, gives credit to entrepreneurs, and blames big
government.
After all, the US economy grew rapidly before 1913 when there was no Fed, and during the
1980s and 90s, when Volcker and Greenspan were not doing QE. And history shows that inventions boost
growth, while big government and redistribution harm it. Because it has the fewest assumptions, Occam’s
Razor suggests this is the more likely hypothesis.




Tuesday, September 26, 2017

Today's WorldView: Iraqi Kurds voted in their independence referendum. Now what? - btbirkett@gmail.com - Gmail

Today's WorldView: Iraqi Kurds voted in their independence referendum. Now what? - btbirkett@gmail.com - Gmail





...“The Russian campaign — taking advantage of Facebook’s ability to simultaneously send contrary messages to different groups of users based on their political and demographic characteristics 

Monday, September 25, 2017

'Gaydar' Shows How Creepy Algorithms Can Get - Bloomberg

'Gaydar' Shows How Creepy Algorithms Can Get - Bloomberg



...We have algorithms that, although better than random guessing and sometimes more accurate than human judgment, are very far from perfect. Yet they’re being represented and marketed as if they’re scientific tools with mathematical precision, often by people who should know better.

This is an abuse of the public’s trust in science and in mathematics. Data scientists have an ethical duty to alert the public to the mistakes these algorithms inevitably make -- and the tragedies they can entail.
...Kosinski, who is also known for creating the “magic saucepsycho-profiling algorithm that Cambridge Analytica later adapted to campaign for both Brexit and Donald Trump.

Public Pensions

http://ggc-mauldin-images.s3.amazonaws.com/uploads/pdf/170923_TFTF.pdf



...Worse, it will be a local mess. Unlike the last financial crisis where one could direct anger at
faraway politicians and bankers seen only on TV, this one will play out close to home. We’ll see
families forced out of homes while neighbors collect six-figure pensions. Imagine local elections
that pit police officers and teachers against once-wealthy homeowners whose property values are
plummeting. All will want maximum protection for themselves, at minimum risk and cost.



They can’t all win. Compromises will be the only solution – but reaching those unhappy
compromises will be unbelievably ugly. ...



... Residents of Allen don’t have to worry about
legacy pension issues, because the town is growing faster than whatever pension issues they have... The big inner cities have these monstrous legacy
pension problems
; and the suburbs, which have prospered on the back of the growth that has come
from the big cities, feel no obligation to pitch in and help....



...What about subway service in New York City? The system is fraying under record
ridership, and trains are breaking down more frequently. There are now more than
70,000 delays every month, up from about 28,000 per month five years ago. The city’s
soaring pension costs are a big factor here as well. According to a Manhattan Institute
report by E.J. McMahon and Josh McGee issued in July, the city is spending over 11% of
its budget on pensions. This means that since 2014, New York City has spent more on
pensions that it has building and repairing schools, parks, bridges and subways,
combined.






Tech Digest - DARPA, Hurricanes, and the Zika Virus - btbirkett@gmail.com - Gmail

CORRECTION: Tech Digest - DARPA, Hurricanes, and the Zika Virus - btbirkett@gmail.com - Gmail



... 2017 marks the end of a record 12-year break during which no Category 3–5 hurricanes hit the US mainland. The longest previous record was an 8-year period between 1860 and 1869.
I think it’s unlikely that 2017 will be an anomaly. Hurricanes have historically come in cycles. Ten Category 4 or 5 storms made landfall on the US in the 50 years between 1920–1969. Only three have come onshore in the 46-year period since then. Clearly, we’re overdue for more.
...DARPA’s main function is only to identify and nurture scientific breakthroughs that offer solutions to natural and manmade threats. So it can fund early research and trials, but it can’t take a drug all the way through the costly clinical trial process.
For those interested in seeing cures for the big killers, DARPA is an important resource. If you’d like to follow some the agency’s work in biotech and other fields, much of DARPA’s research is online here.

Thursday, September 21, 2017

As the Fed Steps Back From Mortgage Market, REITs Gear Up to Buy - Bloomberg

As the Fed Steps Back From Mortgage Market, REITs Gear Up to Buy - Bloomberg



...The central bank’s current holdings are equal to around a quarter of the total agency mortgage bonds outstanding, according to data from the Securities Industry and Financial Markets Association.

Wednesday, September 20, 2017

The Latest Design Trend: Black and Burned Wood - The New York Times

The Latest Design Trend: Black and Burned Wood - The New York Times



ON THE WINDSWEPT southern side of Martha’s Vineyard, at the end of a rural road that emerges from a dark copse of oak trees, sit two austere, inky-black farmhouse-style buildings — a studio and a private residence — that compose Chilmark House. Designed by the New Haven, Conn., firm Gray Organschi Architecture with Aaron Schiller, founder of the New York City-based Schiller Projects, the home, which was built for Schiller’s family, is clad in approximately 80 charred louvers he torched entirely by hand. The striking ebony hue feels at once ancient and modern: Here is the enveloping matte darkness of Anish Kapoor’s Vantablack paint and the glittering primordial obsidian of lava rock. In the foggy early morning light, as the heavy marine layer rolls off the Atlantic, the house emerges dark and startling, as though it was dipped in oil. At other times of day, its opaque blackness, which seems to absorb all the light that surrounds it, acts as a kind of backdrop for the sky’s quicksilver mood changes.
Schiller, like an increasing number of Western architects and designers these days, created the house’s arresting exterior using a process known as shou sugi ban, a ­centuries-old Japanese ­technique for preserving and finishing wood by charring it with fire. The treatment — which leaves behind a dense, carbonized layer of blackness — has been around since at least the 18th century, though earlier examples exist. It began as a practical process used mostly for fencing and the facades of rural homes and storehouses, which held valuables, like rice, that families hoped to protect from blazes. Interestingly, while it is no longer as popular as it once was in Japan, it’s found new life in the West. ‘‘It’s become quite stylish,’’ says Marc Keane, a landscape architect and author who has lived and worked in Kyoto for 18 years, ‘‘but in the past, in Japan, it was considered countrified.’’
Shou sugi ban is the Westernized term for what is known in Japan as yaki sugi-ita (or just yakisugi), which translates loosely into ‘‘burned cedar board.’’ (Although in English ‘‘sugi’’ is colloquially defined as cedar, it’s actually Cryptomeria japonica, a Cypress-family species indigenous to Japan.) To achieve the effect, planks of wood are treated with heat on their outward faces only: Traditionally, three boards are tied together lengthwise to form a triangular tunnel. The interior is then set on fire and the scorched surface cooled with water.
Slide Show
SLIDE SHOW|5 Photos

Shou Sugi Ban, in Photos

Shou Sugi Ban, in Photos

CreditAdam Friedberg
It’s a counterintuitive but ingenious idea: heating wood to render it fireproof. If you’ve ever tried to rekindle a campfire using burnt logs, you get the idea. The combustion also neutralizes the cellulose in the wood — the carbohydrates that termites, fungus and bacteria love — making it undesirable to pests and resistant to rot. The resulting charcoal layer repels water and prevents sun damage as well. By some estimates, boards that have undergone this process can last 80 years or more, but Japan’s Buddhist Horyuji Temple in Nara prefecture, whose five-story pagoda is one of the world’s oldest extant wooden structures, has been around for much longer. Initially built in A.D. 607, the pagoda caught fire and was rebuilt in 711 using shou sugi ban.
Continue reading the main story
ALTHOUGH THESE practical aspects appeal to contemporary builders, the deeper roots of the trend no doubt lie in our current collective hunger for all things artisanal — for creations that aren’t sleek and mass-produced but contain the visible, sometimes-raw, but always original touch of the human hand. Like industrial lighting or reclaimed wood, shou sugi ban has a certain rustic, homespun appeal. The yearning for this aesthetic has led, over the past decade, to a general return to treating materials in traditional ways and, more specifically, to an adoption of principles that have long been fundamental to Japanese architecture: simplicity, the use of natural materials and a sensitivity to the surrounding environment.
But it’s arguably the elegant beauty of charred wood — elemental, enigmatic and modernist at its core — that is shou shugi ban’s greatest appeal. An impenetrable black surface lends a house an imposing aura of intrigue and depth: It’s like an antiquity set down on the landscape with no explanation. ‘‘I wanted to create a mysterious black box,’’ says Ronald Knappers, a Dutch architect who built Villa Meijendel, a monolithic rectangular structure with a shou sugi ban facade that juts out from a forested dune near The Hague like a ship’s prow. At night, its tarry exterior recedes into the surrounding darkness, so that only the glint of windows is visible — the effect, Knappers says, resembles ‘‘an eye of glass.’’
Continue reading the main story
Continue reading the main story
The unpolished, naturalistic quality of burnt wood also appeals to architects seeking to evoke a rough organic feel in tune with the surrounding landscape. It’s bituminous-black and scaly, like alligator skin that’s been singed. But such dark, reptilian wood is also startling and gorgeously eerie; a shou sugi ban house looks like it floated out of a dream. The Japanese architect Terunobu Fujimori frequently uses charred timber in his eccentric, fantastical creations: on the roof of his 2004 Too Tall Teahouse in the city of Chino, a tiny fairy-tale hut ­suspended high in the air on two spindly posts; and on the striped-shirt exterior of his aptly named 2007 Yakisugi House in Nagano City. Shou sugi ban, says Aaron Schiller, ‘‘lends a sense of the natural or the mystical to a piece of architecture.’’
OF COURSE, a house wrapped in a layer of jet-black charcoal is not everyone’s cup of tea. ‘‘The American architects who are using it often don’t go the full route. It’s a bit too extreme,’’ says James Steele, a professor at the University of Southern California and the author of ‘‘Contemporary Japanese Architecture.’’ Brushing the burned boards removes the char and lightens the hue, while oiling them brings out the natural grain. Two niche wood companies, Delta Millworks in Austin and ReSAWN Timber in Telford, Pa., sell ready-made shou sugi ban siding, flooring and decking in pale slate gray and rich sable-brown finishes, which cater to more moderate American tastes, with eco-friendly, chemically modified woods (Kebony or Accoya).
But traditionalists maintain this isn’t the real deal. ‘‘Note yakisugi is a product, not a burnishing technique applied to any lumber,’’ reads the website for Nakamoto Forestry, an 80-year-old Japanese company that in 2017 began to import authentic charred Cryptomeria japonica to the U.S.A. ‘‘People think you can just go down to the lumberyard, buy wood and burn it,’’ explains Bill Beleck, general manager at Nakamoto North America. You can’t, he says: Not all woods take heat the way Cryptomeria japonica does, and if the burn isn’t deep enough, the sooty layer will erode, taking the lovely black of your cladding, and its pragmatic fire- pest- and weather-resistant properties, along with it.
Photo
For a project on Martha’s Vineyard, the designer Aaron Schiller torched each plank of wood by hand. CreditCaroline Goddard
Yet even when shou sugi ban is executed traditionally, the sooty black char does eventually fade, leaving a chocolaty-brown or warm gray hue behind. This can be seen in Japan’s many historic examples of the treatment, like public municipal buildings in the downtown of Kurashiki in southern Japan, which are close to 100 years old.
‘‘A lot of people don’t think shou sugi ban is for them, because it has this impermanence to it,’’ says Anthony Esteves, a designer who learned about the method while studying in Japan and used it on the raven-colored rustic home he hand-built off the coast of Maine, burning all the siding himself in the time-­honored three-board method. But here, too, we might take a lesson from the Japanese, who view the patina that comes with age as desirable. The impermanence and its attendant imperfections are the point. ‘‘Over time, my house will weather in this soft way,’’ ­Esteves says. ‘‘It’s going to become more beautiful.’’

Merkel’s Problem: Booming German Economy Is So 20th Century - Bloomberg

Merkel’s Problem: Booming German Economy Is So 20th Century - Bloomberg

Monday, September 18, 2017

Today's WorldView: How far could the dangerous endgame in eastern Syria go? - btbirkett@gmail.com - Gmail

Today's WorldView: How far could the dangerous endgame in eastern Syria go? - btbirkett@gmail.com - Gmail



How far could the dangerous endgame in eastern Syria go?



The war against the Islamic State always promised to get messy in its final stages, as the militants retreat and rival forces converge from different directions. That moment has arrived.
World powers and their local allies are scrambling to control the remote desert province of Deir al-Zour in eastern Syria, in an accelerating racethat is being compared to the fall of Berlin in 1945.
Under Islamic State control since 2014, the province is three times the size of Lebanon and consists mostly of empty desert. It also happens to contain most of Syria’s oil resources. But much more is at stake: the future contours of postwar Syria; Kurdish aspirations to some form of autonomy; and the competition for influence in the Middle East among the United States, Iran and Russia.
Fighters from the U.S.-allied Syrian Democratic Forces on the northern outskirts of Deir al-Zour on Feb. 21. (Delil Souleiman/Agence France-Presse via Getty Images)

Fighters from the U.S.-allied Syrian Democratic Forces on the northern outskirts of Deir al-Zour on Feb. 21. (Delil Souleiman/Agence France-Presse via Getty Images)
On the ground the combatants fall into two camps: one backed by Russia and Iran, the other by the United States and its allies.
Advancing from the north are the U.S. backed Syrian Democratic Forces, or SDF, a Kurdish-led coalition of Kurdish and Arab forces that is expanding the boundaries of the autonomous area they have carved out farther north. They are accompanied by American Special Operations troops and backed by U.S. airstrikes.
Making rapid progress from the east are the Syrian government and its allies, accompanied by Russian and Iranian advisers and backed by Russian airstrikes. They're fulfilling President Bashar al-Assad’s goal of reasserting Syrian sovereignty over every inch of Syria — and also making sure the United States stays out.
The two forces came within three miles of one another last week in the city of Deir al-Zour, the provincial capital. After Syrian troops drove the Islamic State out of most of the southern portion of the city, the SDF made a dash south through the desert and is positioned at the city’s northern edge.
The potential for deadly miscalculation has been made clear: As The Washington Post’s Louisa Loveluck reported, Russian warplanes allegedly bombed an SDF position on Saturday and wounded one of the group's fighters. Russia has denied the strike, and the United States says it is investigating what appeared to be the first Russian challenge to its presence in the province.
But the city of Deir al-Zour is not the real focus of the race. A far bigger prize lies farther south, in the towns strung out along the Euphrates Valley. They include Mayadin, where it is thought that many senior Islamic State leaders have relocated, and Bukamal, which controls the main border crossing to Iraq. Those towns, according to Col. Ryan Dillon, the U.S. military spokesman in Baghdad, are the next objectives for the U.S.-led coalition.


Dillon denied there is any kind of “race” underway with the Syrian army and its allies. “We’re there just to defeat ISIS and to set the conditions for follow-on stability in the region,” he said, using another name for the Islamic State.
But Syria and its allies also are aiming to take these towns, which control access to the Iraqi border and would enable Iran to reopen the Tehran-Baghdad-Damascus land route it maintained before the Syrian war.
Syria and Iran have made no secret of their intent to stop the United States and its allies from taking the area. One of Assad’s closest advisers, Bouthaina Shaaban, told Hezbollah’s Al-Manar TV station on Friday that it was Syria’s “strategic intent” to block the United States and its allies, equating their presence to that of the Islamic State.
“Whether it’s the Syrian Democratic Forces or [the Islamic State] or any illegitimate foreign force in the country ... we will fight and work against them so our land is freed completely from any aggressor,” she added, according to comments quoted by Iran’s Press TV.
Experts also aren't buying American denials of a race for territory. Nicholas Heras of the Center for a New American Security thinks it is a race the United States probably will win. Syrian government forces lack the capacity to retake large areas from the Islamic State, he said, and may struggle to make gains.
“Assad is playing a game of chicken with a superpower. Even with Russia’s backing, his forces’ position is still just now being reestablished in eastern Syria,” he said. “If Assad pushes the U.S. military, it can push back, and much harder.”
But Aron Lund, a Syria analyst who writes for the Century Foundation, questioned whether the United States has the appetite for a war with the Assad regime, Iran and Russia that could perhaps spill across the region. Much will depend on whether the Trump administration’s pledges to roll back Iranian influence in the region extend that far, he said.
Until now, encounters between the two sides — including one near Raqqa and another at the U.S. outpost at Tanf on the Syrian-Iraqi border — have been settled through deconfliction agreements that draw lines delineating where rival armies may operate. “They do seem to get pretty far with these talks,” Lund said.
A Russian soldier looking through the scope of a sniper rifle during a Russian Defense Ministry media tour on the outskirts of Deir al-Zour on Sept. 17. (Dominique Derda/Agence France-Presse via Getty Images)

A Russian soldier looking through the scope of a sniper rifle during a Russian Defense Ministry media tour on the outskirts of Deir al-Zour on Sept. 17. (Dominique Derda/Agence France-Presse via Getty Images)
But those agreements are ad hoc affairs, crafted only after an area has been seized and a clash seems imminent, giving both sides an incentive to snatch territory. And with the Islamic State so far putting up little resistance in the province, there is a risk that events on the ground will outpace the drawing of lines.
All eyes now are on the Euphrates River, which serves as an informal demarcation line. Both sides will have to cross the river, in opposite directions, if they are to fulfill their goals — and both say they are planning to do so. Unverified photographs posted on social media last week purportedly showed Russian pontoon bridges being positioned in preparation for Syrian troops to cross over.
Once the river is breached, the race will be on in earnest for control of the eastern Syrian desert. Whether that race will prompt a wider war is still an open question.

Friday, September 15, 2017

More on the Housing Subprime 2007 Government Responsibility

http://ggc-mauldin-images.s3.amazonaws.com/uploads/pdf/OTB_Sept_13_2017.pdf



...Without going too much in depth, one thing no one talks about is that Fannie Mae and Freddie Mac, at the direction of HUD, were forced to buy subprime loans in order to meet politically-driven, social policy objectives. In 2007, they owned 76% of all subprime paper (See Peter Wallison: Hidden in Plain Sight).



...The Fed, and supporters of government intervention, ignore all these facts. They never address them. Why? First, institutions protect themselves even if it’s at the expense of the truth. Second, human nature doesn’t like to admit mistakes. Third, Washington DC always uses crises to grow. Admitting that their policies haven’t worked would lead to a smaller government with less power.

Thursday, September 14, 2017

Coal Seeks New Life as Carbon Fiber for Submarines - Bloomberg

Coal Seeks New Life as Carbon Fiber for Submarines - Bloomberg



...At the Oak Ridge lab, the 3D printing techniques for the carbon-fiber sub hull helped reduce production costs by 90 percent and shortened manufacturing time from months to days,...

Where to Seek Safe Harbor in an Overheated Stock Market

Where to Seek Safe Harbor in an Overheated Stock Market



Yale knows something about money. The university’s endowment, ... has outperformed ... reallocating the other 90 percent to nontraditional asset classes such as foreign and private equity and real estate.



...Fundrise responded by turning directly to individual investors through online investments, and ultimately ended up creating the first ever “eREIT” — a tech-enabled hybrid of both public and private commercial real estate investment trusts. The company’s investment vehicles promote lower fees and provide a more accessible entry point — as low as $500 though a “starter portfolio”.



...Because eREITs aren’t publicly traded, and thus are less correlated to overall stock market performance, they are priced at the assumed value of the underlying assets and provide a potential buffer against downturns in public markets. ...



note: sponsored content so some blah blah

Wednesday, September 13, 2017

The Future of the Global Economy - Maudlin

http://ggc-mauldin-images.s3.amazonaws.com/uploads/pdf/170910_TFTF.pdf



...This level of labor transformation is nothing that we haven’t done in the past. Many of you will recall that 80% of Americans toiled on farms in 1800. Today that number is less than 2%, who produce massively more per capita in much better conditions. But that change played out over more than 10 full generations. The changes I am talking about are going to happen in less than one generation. The transformation of employment will be one of the most difficult social and political problems that societies all over the developed world will face. It’s not just that there won’t be jobs, but that many of the new jobs will require different sets of skills and be in a different locations from where many of us live today. And while our ancestors may have set out boldly from other corners of the world to give America a try, never to see their home-countries and loved ones again, that propensity for relocation seems to have diminished in present-day culture. How many Americans relish the notion of moving from region to region anymore?


... let’s survey the main forces that will drive the future of the economy...


...Right up front, I’m going to utter the four most dangerous words in economics: This time is different. Oh, I admit a lot of things will be the same, but anyone who expects the future to look like the past is in for a rude awakening.


There are three main economic forces that are imposing themselves upon the world, whether we like it or not. Two of them are the largest bubbles in the history of man.

1. The bubble of global debt
2. The bubble of government promises
3. The shifting of the supply curve

....total US government debt is 115% of GDP. That is certainly less than the 250% of debt-to-GDP that Japan finds itself saddled with, but Japan does offer us a clue as to how we are going to have to deal with our burgeoning government debt in the future. If you had told me 10 years ago that Japan could essentially monetize well over 100% of their GDP and not have their currency fall through the floor, I would have laughed at you....

...in the United States, .... The imposition of a VAT seems almost guaranteed, as that is the only real way to boost revenues to offset the increases in entitlement spending. ...

...The Bubble of Government Promises

The US government balance sheet features unfunded liabilities in the range of $80 trillion to $200 trillion, stemming from future entitlement program burdens that are, in effect, government promises of future largess. No constituency is going to vote to reduce their entitlements. (Well, other than the very well–off, who don’t actually need those entitlements.)

(skip the States mess)

...his next chart depicts an extreme example of what is happening around the world. Scary levels of junk-bond debt with covenant-lite options – coupled with the Frank Dodd rules that don’t allow banks to operate in the corporate bond market as market makers – are going to mean that corporate debt, from the worst right on up to the best, will take a massive yield hit, as the flight for cash rhymes with what we saw in 2009.

...Remember, in a crisis you don’t sell what you want to sell; you sell what you can sell. And at a bargain-basement price.

It’s All About Supply, Not Demand

... the classic supply and demand equilibrium price graph.
If you push the supply curve to the right, i.e., you provide more of a particular good, then the price of that good is going to go down to find a new equilibrium.

...John Deere ... touring their factory, they pointed that they were making the same parts for 40% less today than they did just a few years ago. Improved quality and lower prices....

...real wages haven’t risen all that much in 40 years. Well, if you look just at the standard economic numbers, that is true. But compare what you could get 40 years ago to what you can buy today (assuming equivalent purchasing power)....

... in the next 20 years the amount of high-quality goods that are going to be supplied to the world is going to drive the prices of almost everything down ...

...he ever-increasing amount of supply is going to be massively deflationary over time and will offset the massive needs for quantitative easing and debt relief,...




Tuesday, September 12, 2017

The Fed Will be Vindicated on Wage Inflation - Bloomberg

The Fed Will be Vindicated on Wage Inflation - Bloomberg



...Had the improvement in the workings of the labor market [via the internet] not happened, employers would have a much tougher time filling openings, wage pressures and inflation would be higher, and the Fed would probably have needed to raise rates faster.

Sunday, September 10, 2017

Surmounting the German Surplus by Fabrizio Coricelli - Project Syndicate

Surmounting the German Surplus by Fabrizio Coricelli - Project Syndicate



...In recent decades, says Sinn, the US financial industry has offered “international investors a potpourri of alluring products” that have pushed up the value of the dollar relative to the euro, making it harder for US manufacturers to compete. Or, as Wyplosz observes, “it takes two to tango. For every risky borrower, there is a careless lender ready to dip and twirl.”...



... “The introduction of the euro,” Sinn writes, “dramatically improved the creditworthiness of southern European countries.” But it also created a false “sense of security,” which allowed for capital – much of it from Germany – to flood into southern Europe. That capital sustained a deficit-fueled economic boom in those countries prior to 2008; and now that it has disappeared, so have those countries’ current-account deficits...



...n fact, according to Gros, “All northern European countries with a Germanic language are running a current-account surplus,” including the Netherlands, Switzerland, Sweden, and Norway, each of whose surpluses, relative to GDP, exceeded that of Germany at the time.