From The Wichita Eagle:
George Tiller, the Wichita doctor who became a national lightning rod in the debate over abortion, was shot to death Sunday morning as he walked into church services.
Sunday, May 31, 2009
Thursday, May 21, 2009
Good Point
The excellent Felix Salmon has a good point here, and one that's worth remembering.
"Bill Gross seems to have caused a bit of an uproar with his off-the-cuff comment to Reuters:
Asked what is driving the market declines, Gross told Reuters via email that investors fear the U.S. is “going the way of the U.K. — losing AAA rating which affects all financial assets and the dollar.”
On the one hand, as ex post explanations for market declines go, this one’s quite good: if true, it helps explains why both stocks and bonds are going down on the same day. What’s more, it tidily fits in to a news story — that S&P has downgraded the UK’s triple-A outlook — and journalists love any explanation for a market move which makes it seem that it’s some predictable result of an event in the news.
But let’s get some perspective here. The Dow and the S&P 500 closed down 1.5% and 1.9% respectively, which by recent standards is a perfectly normal move, well within the range of what you’d expect on any given day. What’s more, S&P putting the UK on watch for a possible downgrade is a decision prompted by economic fundamentals. Any such move with the US, by contrast, would be entirely political, and in any event would say much more about S&P than it did about Treasuries.
The most important thing to remember here, however, is that ratings agencies don’t matter any more. They lost their credibility when structured finance blew up, and the number of people buying Treasuries because S&P says that they’re triple-A rated is exactly zero.
There are lots of triple-A rated securities; people buy Treasuries because they’re liquid. The US triple-A may or may not disappear at some point, but if and when that happens it’ll be a lagging indicator, and there will already be a select group of alternative securities which are trading at lower yields in dollars. So long as Treasuries have the lowest yields in the dollar-denominated world, they will retain their triple-A, and there are much more important things to worry about."
"Bill Gross seems to have caused a bit of an uproar with his off-the-cuff comment to Reuters:
Asked what is driving the market declines, Gross told Reuters via email that investors fear the U.S. is “going the way of the U.K. — losing AAA rating which affects all financial assets and the dollar.”
On the one hand, as ex post explanations for market declines go, this one’s quite good: if true, it helps explains why both stocks and bonds are going down on the same day. What’s more, it tidily fits in to a news story — that S&P has downgraded the UK’s triple-A outlook — and journalists love any explanation for a market move which makes it seem that it’s some predictable result of an event in the news.
But let’s get some perspective here. The Dow and the S&P 500 closed down 1.5% and 1.9% respectively, which by recent standards is a perfectly normal move, well within the range of what you’d expect on any given day. What’s more, S&P putting the UK on watch for a possible downgrade is a decision prompted by economic fundamentals. Any such move with the US, by contrast, would be entirely political, and in any event would say much more about S&P than it did about Treasuries.
The most important thing to remember here, however, is that ratings agencies don’t matter any more. They lost their credibility when structured finance blew up, and the number of people buying Treasuries because S&P says that they’re triple-A rated is exactly zero.
There are lots of triple-A rated securities; people buy Treasuries because they’re liquid. The US triple-A may or may not disappear at some point, but if and when that happens it’ll be a lagging indicator, and there will already be a select group of alternative securities which are trading at lower yields in dollars. So long as Treasuries have the lowest yields in the dollar-denominated world, they will retain their triple-A, and there are much more important things to worry about."
Monday, May 18, 2009
Obama Fu
Re: Obama's Notre Dame commencement address and its attendant "controversy."
Another way to describe this appearance would be to say that BO wiped the floor with these assholes, enjoyed doing it, and came off looking better than they ever could. Once again, this guy proves to me that he knows more about what he's doing than I do. Remarkable.
Another way to describe this appearance would be to say that BO wiped the floor with these assholes, enjoyed doing it, and came off looking better than they ever could. Once again, this guy proves to me that he knows more about what he's doing than I do. Remarkable.
Thursday, May 14, 2009
Good Read
This from Ryan Avent is worth posting in its entirety.
So, the economic news today hasn’t been all that great — retail sales were off a bit in April, foreclosures filings were at a record in April for a second straight month, and Chinese industrial production and export figures disappointed. This has led every clever pundit to say something clever like “the green shoots are turning brown,” or “the green shoots are withering,” etc. This has annoyed me.
It occurs to me that the problem may be in the vagueness of the phrase “green shoots” — that we’re all thinking about different things. Picture the path of economic output as a sine wave tilted slightly upward, after each peak, the path begins to decline. Initially, it is declining at an increasing rate. Then an inflection point is hit and it begins declining at a decreasing rate. Eventually, the rate of decline hits zero, a trough is reached, and output begins to increase but remains well below the level of the previous peak. Finally, output surpasses the long run trendline and begins heading toward yet another peak. So what part of this curve is green shootish?
For some people, only a return to previous output levels will count as green shoots. For others, only an end to actual contraction — where the rate of decline hits zero — is a marker of the greening of various shoots. Still others might herald the inflection point at which contraction slows as green, a harbinger of better times to come. When I speak about green shoots in the economy, I’m using this last interpretation. This is quickly dismissed by pessimists who say things like, “Things are just getting worse more slowly!” Quite so. That is exactly how one moves from things getting worse more quickly to things getting better. And I think it’s quite difficult to argue that we have not hit and passed the inflection point. The economy being a big, complex, unwieldy thing, we shouldn’t expect every datapoint to describe a perfect curve; we’re going to have good months and bad months in the data all the way through the recovery. But the trends in the data seem clear — a bottom is approaching.
Now others have voiced different complaints vis-a-vis green shoots, namely, that they’ll be rather stumpy for a long time to come. This is an argument over the shape of recession: V-shaped (a recovery as steep as the decline), U-shaped (a bit more laggardly), or L-shaped (very weak growth and a stubbornly high unemployment rate). I have some thoughts about this that I’ll get to later, but insofar as the green shoot debate concerns whether a bottom is near or not, the shape of the upslope is irrelevant.
And we ought to expect that the end of contraction is near. Megan makes some points about the Great Depression here, writing:
"I don’t want to push the Great Depression analogy too far, but what’s surprising when you go back to primary sources from 1930 is the optimism. I don’t mean to imply that everyone thinks things are just swell. But while you know that they are facing the worst economic decade of the twentieth century, they don’t. They’re expecting something more like the recession that followed World War I. People are cutting back, but they’re still spending, particularly because companies are slashing prices to move inventory. It was the long grind of the years that followed, and the catastrophe of the second banking crisis, that scarred them permanently. And this shows up in the economics stats and the stock market, which did not, as we like to imagine, simply decline in a straight line."
Two important things to note. First, we give the Depression the modifier “great” because it was so remarkably unusual in its depth and length. Second, policymakers worked extremely hard to make the Depression long and deep. The lesson there, to me, is that only very rarely do economies contract longer and deeper than the current downturn, and when they do it is generally because policymakers are actively pursuing pro-cyclical policies. Otherwise, they pull themselves out of their nosedives long before they get into Depression-like levels of output and unemployment.
So when Matt says:
"I will say that I think the greatest objective economic risk at this point is policymaker over-optimism. We need the European Central bank to continue loosening monetary policy, and it wouldn’t hurt if some of the world’s lesser central banks followed suit. We could use more stimulus in the United States and elsewhere in the developed world. We need corporate executives to understand the main risk to their interests to be coming from a lack of adequate economic recovery efforts rather than from losing small-bore political arguments with congressional Democrats. We need smart growth policy in terms of tax reform and trade. We need, in short, policymakers to continue to be worried. If they’re worried, and if they act on those worries, then more likely than not things won’t stay too bad for too long. But if they feel confident, then we might really be in trouble."
I say that an outright reversal of countercyclical policies — monetary tightening and deficit slashing — would kick us back into an accelerating downturn situation, but merely holding steady will at most delay a bottom for a few months and flatten the recovery. And even if policymakers hold steady, policy will continue to improve. As financial markets relax — and credit indicators do continue to improve — loose monetary policy will increase in potency. And of course, fiscal stimulus has only begun to trickle out (and simply by dint of the broader downturn, the federal deficit is growing, which is stimulative).
Caveats apply — some new shoe could drop or Congress could lose its mind and enact a spending freeze. But I don’t really see how people can avoid concluding that the worst declines are behind us.
http://www.ryanavent.com/blog/?p=2039
So, the economic news today hasn’t been all that great — retail sales were off a bit in April, foreclosures filings were at a record in April for a second straight month, and Chinese industrial production and export figures disappointed. This has led every clever pundit to say something clever like “the green shoots are turning brown,” or “the green shoots are withering,” etc. This has annoyed me.
It occurs to me that the problem may be in the vagueness of the phrase “green shoots” — that we’re all thinking about different things. Picture the path of economic output as a sine wave tilted slightly upward, after each peak, the path begins to decline. Initially, it is declining at an increasing rate. Then an inflection point is hit and it begins declining at a decreasing rate. Eventually, the rate of decline hits zero, a trough is reached, and output begins to increase but remains well below the level of the previous peak. Finally, output surpasses the long run trendline and begins heading toward yet another peak. So what part of this curve is green shootish?
For some people, only a return to previous output levels will count as green shoots. For others, only an end to actual contraction — where the rate of decline hits zero — is a marker of the greening of various shoots. Still others might herald the inflection point at which contraction slows as green, a harbinger of better times to come. When I speak about green shoots in the economy, I’m using this last interpretation. This is quickly dismissed by pessimists who say things like, “Things are just getting worse more slowly!” Quite so. That is exactly how one moves from things getting worse more quickly to things getting better. And I think it’s quite difficult to argue that we have not hit and passed the inflection point. The economy being a big, complex, unwieldy thing, we shouldn’t expect every datapoint to describe a perfect curve; we’re going to have good months and bad months in the data all the way through the recovery. But the trends in the data seem clear — a bottom is approaching.
Now others have voiced different complaints vis-a-vis green shoots, namely, that they’ll be rather stumpy for a long time to come. This is an argument over the shape of recession: V-shaped (a recovery as steep as the decline), U-shaped (a bit more laggardly), or L-shaped (very weak growth and a stubbornly high unemployment rate). I have some thoughts about this that I’ll get to later, but insofar as the green shoot debate concerns whether a bottom is near or not, the shape of the upslope is irrelevant.
And we ought to expect that the end of contraction is near. Megan makes some points about the Great Depression here, writing:
"I don’t want to push the Great Depression analogy too far, but what’s surprising when you go back to primary sources from 1930 is the optimism. I don’t mean to imply that everyone thinks things are just swell. But while you know that they are facing the worst economic decade of the twentieth century, they don’t. They’re expecting something more like the recession that followed World War I. People are cutting back, but they’re still spending, particularly because companies are slashing prices to move inventory. It was the long grind of the years that followed, and the catastrophe of the second banking crisis, that scarred them permanently. And this shows up in the economics stats and the stock market, which did not, as we like to imagine, simply decline in a straight line."
Two important things to note. First, we give the Depression the modifier “great” because it was so remarkably unusual in its depth and length. Second, policymakers worked extremely hard to make the Depression long and deep. The lesson there, to me, is that only very rarely do economies contract longer and deeper than the current downturn, and when they do it is generally because policymakers are actively pursuing pro-cyclical policies. Otherwise, they pull themselves out of their nosedives long before they get into Depression-like levels of output and unemployment.
So when Matt says:
"I will say that I think the greatest objective economic risk at this point is policymaker over-optimism. We need the European Central bank to continue loosening monetary policy, and it wouldn’t hurt if some of the world’s lesser central banks followed suit. We could use more stimulus in the United States and elsewhere in the developed world. We need corporate executives to understand the main risk to their interests to be coming from a lack of adequate economic recovery efforts rather than from losing small-bore political arguments with congressional Democrats. We need smart growth policy in terms of tax reform and trade. We need, in short, policymakers to continue to be worried. If they’re worried, and if they act on those worries, then more likely than not things won’t stay too bad for too long. But if they feel confident, then we might really be in trouble."
I say that an outright reversal of countercyclical policies — monetary tightening and deficit slashing — would kick us back into an accelerating downturn situation, but merely holding steady will at most delay a bottom for a few months and flatten the recovery. And even if policymakers hold steady, policy will continue to improve. As financial markets relax — and credit indicators do continue to improve — loose monetary policy will increase in potency. And of course, fiscal stimulus has only begun to trickle out (and simply by dint of the broader downturn, the federal deficit is growing, which is stimulative).
Caveats apply — some new shoe could drop or Congress could lose its mind and enact a spending freeze. But I don’t really see how people can avoid concluding that the worst declines are behind us.
http://www.ryanavent.com/blog/?p=2039
Wednesday, May 13, 2009
Good Advice
From Ryan Avent:
If every piece of bad news is definitive evidence that the economy is not moving toward recovery, then surely every piece of good news is definitive evidence that it is.
http://www.ryanavent.com/blog/?p=2037
If every piece of bad news is definitive evidence that the economy is not moving toward recovery, then surely every piece of good news is definitive evidence that it is.
http://www.ryanavent.com/blog/?p=2037
Monday, May 11, 2009
Rooms to Let, Fifty Cents
Dallas voters will rue the day they followed their exuberantly mendacious mayor down the path of his ambition. But at least the voters in District 13 had the good sense to send Tom Hicks sock puppet Brint Ryan home to look for his speeding tickets (I'll bet he got there before anybody else did). So the day wasn't a total loss.
Friday, May 1, 2009
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