Tag: Economy

Promoted from the Ricochet Member Feed by Editors Created with Sketch. Power Without Production

 

shutterstock_217626877About 33 minutes into the last Ricochet Podcast, Bret Stephens added his voice to the chorus suggesting we shouldn’t overly fret about China because their economic numbers are rigged and their production levels are nowhere close to our own, however quickly they are improving. Alright, let’s suppose that China’s economy is truly lackluster. Does that make it less of a diplomatic and military threat?

The Soviet Union was doomed from the start for the simple reason that communism doesn’t work. The USSR survived by claiming territories and sucking the life out of its members, which it could only do for so long. It’s economy never had a chance in the long run.

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People tend to find economic discussions to be a bit of a bore, but the price of my replacement tin foil hats is getting to be more than I can take. One of the problems I have with reported inflation numbers is we often act as if the statistics came carved on a stone tablet […]

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Contributor Post Created with Sketch. Are Happy Days Here Again?

 

The Commerce Department released a revision of the third quarter GDP data this morning, saying it rose 3.9% versus an advanced estimate of 3.5% a few weeks ago. Those results combine with the previous quarter to give us a 4.25% increase for the last six months, which the Wall Street Journal notes is the best six month reading since 2003.

Of course, some of that is due to the dreary first quarter numbers. GDP was down 2.1% in Q1, and, as part of that was due to weather concerns, some snap back in Q2 was to be expected. Still, any quarter around 4% is to be celebrated and if another revision puts the 4 handle in front of Q3 growth it will be the first time in 11 years that we have seen that. (The last two times we had growth over 5% two consecutive quarters? 1999.)

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Contributor Post Created with Sketch. Celebrity Chef Frets about Obama’s Economy

 

Before Emeril Lagasse became a TV star, he was the executive chef of New Orleans’ legendary Commander’s Palace. He left the dream gig in 1990 to create his own popular restaurant, building a new clientele and winning numerous awards. But in a recent interview to promote his new reality show on TNT, Lagasse worried that success is harder to attain in the age of Obama.

“It’s becoming a very challenging industry to become a very successful average restaurateur,” continued Lagasse. “I can’t charge $300 a person in my restaurant or I would not be in business. Am I using any different ingredients? Not really. Am I using any caliber of service staff? I don’t think so. I think our service is as good or better than most places.”

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Contributor Post Created with Sketch. Member Post

 

You can tell there’s a Democrat in the White House, because now it’s OK for the administration to question Americans’ patriotism. Decrying an “abuse of our tax system”, Treasury Secretary Jack Lew wrote to Congress last month: “What we need as a nation is a new sense of economic patriotism, where we all rise or […]

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Promoted from the Ricochet Member Feed by Editors Created with Sketch. The Unsung Victims of Ferguson

 

140814091734-restricted-15-ferguson-0814-horizontal-galleryThere’s much discussion circulating around the protesters rallying on account of the death of Michael Brown.

Since the time of the incident, we’ve seen a dramatic shift from the original narrative of an innocent, unarmed teen ruthlessly gunned down in the street for no reason other than the color of his skin; to an outright assault on an officer leading him to a self-defense response. More details continue to emerge as time goes on, but that seems to be the gist.

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Contributor Post Created with Sketch. Dead on Payday

 

I have no idea why this captivates me, but apparently it’s true. People die on payday. A lot. From the Marginal Revolution blog, which posted the summary of a study that can be found here:

In this paper, we study the short-run effect of salary receipt on mortality among Swedish public sector employees…We find a dramatic increase in mortality on the day salaries arrive. The increase is especially pronounced for younger workers and for deaths due to activity-related causes such as heart conditions and strokes. Additionally, the effect is entirely driven by an increase in mortality among low income individuals, who are more likely to experience liquidity constraints. All things considered, our results suggest that an increase in general economic activity upon salary receipt is an important cause of the excess mortality. 

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Contributor Post Created with Sketch. How Broke Are We?

 

There are signs, some say, that an economic recovery is here. No one is really enthusiastic about it — except, predictably, some people in the Obama administration — but it’s hard to argue that there are small signs that the economy is picking up.

On the other hand, Americans are broke. And they know it. From USA Today:

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After the closing of my little construction company at the end of 2013, I was fortunate to find work as the CFO of a local, private group of companies. It was a typically messy situation, run on checkbook balances, accounting and finances unreliable, inaccurate, misleading and chronically behind. There was some nominal book-cooking going on, […]

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Contributor Post Created with Sketch. Do We No Longer Care if the Megabanks Are Too Big to Fail?

 

There’s a fantastic bit in the 1987 film Moonstruck where New York City plumbing contractor Cosmo Castorini explains the economic of his profession to a yuppie couple:

There are three kinds of pipe. There is what you have, which is garbage and you can see where that’s gotten you. Then there’s bronze, which is very good unless something goes wrong. And something always goes wrong. And then there’s copper, which is the only pipe I use. It costs money. It costs money because it saves money.

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Maybe it’s just that in my area unemployment is actually quite low, but I’m having a dickens of a time filling 2 production positions. I’ve had a run of applications from janitors, bartenders, warehouse pickers, and criminal justice majors, none of whom actually seem to read the job description. I need someone who can build […]

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How much time does government take from you each week, month, or year? How much time is wasted by paperwork and by unnecessary processes (undue regulations)?  More

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Contributor Post Created with Sketch. Down Is Up and Up Is Too

 

shutterstock_132270326Today the Obama Administration drastically lowered its already dismal estimate of first quarter GDP. At the end of April, the Commerce Department claimed the GDP fell at a 1.0 percent pace. The agency has now revised that to a 2.9 percent annual rate, which is the economy’s worst performance in five years.

In the heady days of -1.0% growth, Democrats blamed the bad numbers on an unusually cold winter, but maintained there was one bright spot. The only reason the number wasn’t worse, they claimed, was because healthcare spending had drastically increased. Ignoring that Obama promised his health care reform would “bend the cost curve down,” the left praised the jump in spending — Obamacare saved the economy!

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Recall that the Department of Commerce, last month, said that our economy as measured by GDP had contracted in the first quarter of this year by 1%. Commerce is out with an updated estimate of our economy’s performance for that first quarter: GDP shrank by 2.9%. Tyler Durden at Zero Hedge has a graph that’s […]

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Contributor Post Created with Sketch. The Sun Will Come Out Tomorrow at the Fed

 

YellenThe Federal Reserve’s latest two-day meeting of its policymaking committee wrapped up this afternoon with few surprises. Its statement on policy generally displayed a belief that the economy is stronger; notably, the Federal Open Market Committee statement did not change at all on the question of inflation, even though the latest CPI figures showed an uptick.

More telling was the summary of economic projections the Fed provided to the markets at the same time. GDP growth for 2014 was revised sharply downward, while unemployment forecasts dropped slightly. I suspect that this reflects the increasing view within the Fed that unemployment rates are being driven down by low labor force participation than it does some brightening of job prospects. The Wall Street Journal interpreted the optimism as the Fed’s way of saying the economy is doing fine … and you’ll all see it in 2015. The market reacted with a nice 98 point gain on the Dow, almost all of which came after the announcement.

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Promoted from the Ricochet Member Feed by Editors Created with Sketch. Still More on the Piketty Wars

 

Piketty_in_CambridgeResponding to Thomas Piketty’s response (linked here) to the charges raised by the Financial Times, Chris Giles notes that there remain concerns with Piketty’s presentation:

There are a few things on which we agree. First, the source data on wealth inequality is poor. I have written that it is “sketchy” and Prof Piketty says it is “much less systematic than we have for income inequality”. Second, it would have been preferable for Prof Piketty to have used a more sophisticated averaging technique than a simple average of Britain, France and Sweden to derive an estimate for European wealth inequality. Third, the available data suggests a broad trend of reduction in wealth inequality during most of the 20th Century.

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Promoted from the Ricochet Member Feed by Editors Created with Sketch. What the Piketty Errors Mean

 

PikettyRemember the Reinhart/Rogoff spreadsheet error? In the event that you do not, here is a summary. Those who follow debates between economists will recall that the spreadsheet error led to all kinds of excoriations of Carmen Reinhart and Kenneth Rogoff on the part of liberal economists, who claimed that they were responsible for austerity policies that killed off economic growth. Even Stephen Colbert got in on the act. Their spreadsheet error was considered to be the worst tragedy that befell the planet since that one time when Oedipus and Jocasta had a super-awesome first date.

Of course, the excoriations were vastly overstated, but that didn’t stop intellectual opponents of Reinhart and Rogoff from engaging in hyperbole on a grand scale. Now that Thomas Piketty has been caught making his own significant errors, comparisons have naturally been made between Piketty on the one hand, and Reinhart and Rogoff on the other.

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Promoted from the Ricochet Member Feed by Editors Created with Sketch. Facts Are Stubborn Things . . . As Thomas Piketty Is Beginning to Find Out

 

I have bought Thomas Piketty’s book Capital in the Twenty-First Century, and while I have posted many an item that takes issue with the books claims and conclusions concerning wealth inequality, I do plan on reading Piketty; his book has made quite the intellectual and cultural impact, and although I know what his basic arguments are, I want to be sure that I read the whole of the book to be fully aware of his claims.

But even before reading the book, one can conclude certain things about Piketty, as my previous blog posts indicate. And today, we learn that we may well be able to conclude one more thing still about Piketty, his research, and his arguments: They may be completely wrong. And yes, those words were worth emphasizing.

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Contributor Post Created with Sketch. Was Not Helping Underwater Homeowners a Massive Mistake?

 

091813housing-600x353In their much-praised new book, House of Debt, economists Atif Mian and Amir Sufi argue the 2000s housing crash caused a much worse recession than the tech-stock crash because asset losses were more heavily concentrated among the 99% — who then stopped spending. The burst Internet stock bubble, on the other hand, “concentrated losses on the rich, but the rich had almost no debt and didn’t need to cut back their spending.”

Which raises the following counterfactual: what if Washington had pushed massive relief for underwater homeowners?

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This story popped up on Facebook this morning and it features jaw dropping images of allegedly millions of unsold brand new cars parked all over the planet by their manufacturers to rust and remain unsold. If this is true, why don’t manufacturers push the big red “STOP” button on the assembly line until they can […]

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