Trump Is (Sort Of) Right About Yellen

Donald Trump this week said that Federal Reserve Board Chairman Janet Yellen won't raise rates because President Obama told her not to. Why he's (sort of) right. [Credit: CNBC]

Donald Trump this week said that Federal Reserve Board Chairman Janet Yellen won’t raise rates because President Obama told her not to. Why he’s (sort of) right. [Credit: CNBC]

The media just can’t keep up with The Donald.

Corporate news-gathering outlets do their best to repeat and amplify his every offbeat utterance.  His accusation that Marco Rubio is a “disaster with his credit cards” has rippled through the press and forced Rubio to respond.  Ditto for Trump’s mockery of Jeb’s energy, Carson’s religion, Carly’s face, Kasich’s poll numbers, Hillary’s marital relations  (“If Hillary Clinton can’t satisfy her husband what makes her think she can satisfy America?”), Bernie’s mental health and the menstrual cycles of debate moderators.

But as they were buzzing about his scheduled appearance on Saturday Night Live, the media largely overlooked what was perhaps Trump’s most heretical accusation of all. Continue reading

On Wind And Eagles

Citing potential damage to protected species, a federal judge recently put a crimp in the Administration's forced march toward wind energy. [Credit: Daily Mail]

Citing potential damage to protected species, a federal judge recently put a crimp in the Administration’s forced march toward wind energy. [Credit: Daily Mail]

Two strains of environmentalism collided in a federal courtroom this month, pitting protectors of bald and golden eagles against advocates of the Obama Administration’s forced march toward wind power.

The eagles won.

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If Obama Were President

The mammone -- a jobless man in his 20s, 30s or 40s who lives with mamma -- is an Italian tradition. But under President Obama, labor force participation rates of young men have plunged to Italian levels. [Credit: studenti.it]

The mammone — a jobless man in his 20s, 30s or 40s who lives with mamma — is an Italian tradition. Under President Obama, labor force participation rates of young American men have plunged to Italian levels. [Credit: studenti.it]

In Italy, they call him a mammone: an unemployed man in his 20s, 30s or 40s who still lives with mamma.

The prevalence of the mammone has long been thought to be a predominantly Italian phenomenon, with deep cultural roots.  It has grown more pronounced with the country’s recent economic distress.  Since 2008, a growing percentage of Italian men aged 25-54 have abandoned the labor force, no longer bothering even to look for work.

Italy’s workforce participation rate among men of prime working age is by far Europe’s lowest.  But it is not the lowest in the developed world.  Italy now shares that dubious distinction with the U.S.

That wouldn’t happen if Obama were President. Continue reading

Can Greece Slip The Austerity Trap?

Greek Prime Minister paid tribute to Greek patriots executed by Nazis during WWII. His message to the Germans was clear: we bailed you out, now it's our turn. [Credit: The Guardian]

Greek Prime Minister paid tribute to Greek patriots executed by Nazis during WWII. His message to the Germans was clear: we bailed you out, now it’s our turn. [Credit: The Guardian]

Shortly after his election last Sunday as Greece’s Prime Minister, Alexis Tsipras chose not lay a wreath on the Tomb of the Unknown Soldier in Athens’ Syntagma Square.  Instead, he went to a war memorial in the Athens suburb of Kessariani where Nazi soldiers executed hundreds of Greek Resistance fighters during the brutal German occupation.

Tsipras’s message was not lost on Angela Merkel and other European leaders: the world forgave most of Germany’s debt; now it’s Greece’s turn. Continue reading

Good News Coming On The Deficit. Well, Sort Of.

Syriza party leader Alexis  Tsipras hopes to prevail in today's Greek elections, which could mark a turning point in his nation's struggle against a crushing load of debt. Meanwhile, U.S. government deficits are improving. Sort of.

Syriza party leader Alexis Tsipras hopes to prevail in today’s Greek elections, which could provoke a showdown between European leaders and Greece, which struggles under a crushing load of debt. Meanwhile, U.S. government deficits are improving. Sort of. [Credit: BBC]

On Tuesday morning, the Congressional Budget Office will announce that the federal deficit continued to decline last year.

The announcement will trigger an orgy of self-congratulation in Washington.  The Administration will claim that its policies have been vindicated.  Republicans also will take a bow, touting spending constraints they’ve imposed since winning the House majority.

But you’ll hear nothing from the Washingtonians who most deserve credit for reduced deficits: the Federal Reserve Board of Governors.  By holding interest rates near zero and lending trillions in free money to the Treasury, the Fed has allowed the government to reduce deficits even as it gorged on debt. Continue reading

Debt And The New American Exceptionalism

Federal Reserve Chairman Janet Yellen plans to increase interest rates.  Can government and households survive the shock? [Credit: Huffington Post]

Federal Reserve Chairman Janet Yellen plans to increase interest rates. Can government and households survive the shock? [Credit: Huffington Post]

The American economy is back.  After years of tepid growth and a first quarter contraction, GDP grew by a robust 4.6 percent in the third quarter of last year.  The unemployment rate remained at 5.8 percent in November, and analysts expect the Labor Department to announce tomorrow that the economy added substantially more than 200,000 jobs in December.  Inflation is low, the dollar is strong, oil prices have tumbled, and federal deficits are lower.  Nearly six years after the recession ended, the long-awaited recovery appears at last to have arrived.

That recovery has in part been driven by a force that could be its undoing: debt.  Nearly $46 trillion of it, or more than 2-1/2 times our annual economic output. Continue reading

The Fed On The Road To Nowhere

Economic policymakers may have us, as the Talking Heads put it in their 1985 hit, on the road to nowhere. [Credit: qednet.biz]

Economic policymakers may have us, as the Talking Heads put it in their 1985 hit, on the road to nowhere. [Credit: qednet.biz]

Former Federal Reserve Chairman Ben Bernanke has been called the man who saved the world.  His extraordinary interventions in the fall of 2008 have almost universally been recognized as having prevented a second Great Depression.

But a new study by the Swiss-based Bank for International Settlements (BIS) suggests that Bernanke saved the world from a crisis that was at least partly of his own making.  Worse, it argues that the course he set and that his successor Janet Yellen and other central banks are following will produce another and perhaps graver crisis.

Government monetary and fiscal policymakers have lost their way, the BIS argues.  So badly that they don’t just need a new direction.  They need a new compass.

Continue reading

Paul Krugman and the Inequality Deniers

Recent criticism of Thomas Piketty's Capital in the 21st Centruy has drawn the ire of the splenetic Paul Krugman. [Credit: National Review]

Recent criticism of Thomas Piketty’s Capital in the 21st Century has drawn the ire of the splenetic Paul Krugman. [Credit: National Review]

There is growing concern among people on the Right and Left about income inequality. But you wouldn’t know that from reading Paul Krugman’s latest screed.

What stirred Krugman’s bile this week was criticism of economist Thomas Piketty’s book, Capital in the 21st Century, a work that has attained canonical status among the Left on both sides of the Atlantic. Continue reading

Vince Young And Economic Mobility

Vince Young in happier times. His rapid rise and sudden fall constitute a cautionary tale. But behind it all there is good news about economic opportunity and upward mobility. [Credit: Dallas Morning News]

Vince Young in happier times. His rapid rise and sudden fall tell a cautionary tale. But a new study provides welcome news about economic opportunity and upward mobility. [Credit: Dallas Morning News]

Vince Young is bankrupt.  The story of a star college quarterback who rose from humble circumstances to impossible wealth only to plunge into insolvency in the course of eight years is one marked by extravagant spending, foolish investments and, he has argued in court documents, exploitation by agents, business associates, family and friends.  His is an extreme example of economic mobility.

Reports of Young’s bankruptcy filing coincided with the release this week of a new study by a group of Harvard and Berkeley economists that reached an unexpected conclusion: upward economic mobility is not the exclusive province of entrepreneurs, entertainers and star athletes like Young. The National Bureau of Economic Research [NBER] report concluded that “children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s.” Continue reading

The Fed and the Consequences of Bad Predictions

South Africa's government in recent years voted to jail people who make unauthorized and inaccurate forecasts.  Good thing for the Federal Reserve that their bad predictions don't carry consequences.  [Credit: University of MN]

South Africa’s government in recent years voted to jail people for making unauthorized and inaccurate weather forecasts. Good thing for the Federal Reserve that their bad predictions don’t carry consequences. [Credit: University of MN]

The South African government in recent years considered a bill to jail people who published inaccurate and unauthorized forecasts of severe weather.

Holding people accountable for their predictions seems a bit harsh in this season of predictions. But the South Africans do have a point: predictions have consequences. That’s as true of predictions about the economy as about the weather, something that the Federal Reserve might do well to ponder. Continue reading