Mouthful of a title, huh? I read Sumner's piece first-my title is kind of inspired by his, "Beckworth on Taylor on Hetzel" where Sumner was pleased with comments Beckworth quotes Taylor of saying about Robert Hetzel's new book.
Hetzel's new book is meant to argue that 2008 was, yes, a "government failure" rather than a market failure. Sumner basically buys Taylor's argument here hook, line and sinker:
"I was glad to see that John Taylor likes Hetzel’s book. That suggests my views on monetary policy have not diverged from Taylor’s views as much as I had feared. I recently did a post pointing to a 2008 Taylor article that seemed to suggest money was too easy in 2008."
Taylor has mostly sounded pretty conservative lately and Sumner had commented that it seems that many like him and Anna Schwartz seem to have gotten a lot more conservative since Obama was elected. Sumner said he found this curious as he himself hasn't gotten more conservative. Now however he's ready to completely gloss over any difference. This is why I always think that the tea party extraordinaire commentator over at Money Illusion, Morgan Warstler may be right-that Sumner'/s a very clever Trojan Horse. To be sure in saying this it's always possible I'm giving him too much credit. In any case he deserves some-whether true or not-for being a pretty smart guy though one I never wholly trust.
He does seem ready to paper over differences with Right wing guys much quicker. During this whole crisis the obvious barrier to getting what he says is needed-NGDP targeting or anything like it, was Right wingers committed to austerity. Yet notice how he spends a lot more time hammering the Left by name because of his quibbling about fiscal stimulus.
Anyway here is the passage that wins Sumner back over to Taylor:
"In this regard Scott Sumner recently raised some good questions about the part of my analysis on the crisis, where I wrote that one possible unintended consequence of the Fed’s large unanticipated interest rate cut in early 2008 was the decline in the dollar and associated jump in oil and gasoline prices (which were clearly a factor in accelerating the downturn). There were many discretionary moves during this period, but in the part of my analysis Sumner refers to I was discussing interest rates. Recall that on January 22, 2008 the FOMC cut the federal funds rate by 75 basis points in one day, which was most unusual and certainly unanticipated. It was not on an FOMC meeting day, which made it particularly unusual."
"The Fed was apparently concerned about stock market turbulence which was later associated with a large trading loss and panic selling incident caused by a single trader Jérôme Kerviel at Société Générale. I was concerned that such a discretionary move tied to stock prices could have adversely affected the Fed’s credibility regarding the dollar and thereby affect oil prices. It was one of many discretionary moves I wrote about, emphasizing that “It is difficult to assess the full impact of this extra sharp easing, and more research is needed” Given that more than four years have transpired, more research is still needed, and I appreciate Scott Sumner raising the issue. In my view the issue is best viewed as only one part of a massive switch away from rules and toward discretion over a number of years, and, as Hetzel’s emphasizes in his book, this is the kind of monetary policy that generally leads to poor economic performance."
At this point it must be said that Taylor is certainly parsing things pretty tightly. He wants to argue that the problem is discretion-Fed policy got off the reservation in following his own Taylor Rule first in 2003-2005 in lowering the Fed rate to 1%. This in itself is not implausible that you can argue that they were too easy in that time and too tight in 2008. But to even argue that they were too tight in 2008 is tough to square with the idea that he and Sumner have been of one accord-Sumner and the MMers in general have always said Fed policy was too tight during this time.
Taylor now is really trying to have his cake and eat it too by saying it was too loose in 2008-not too tight as he seemed to be saying-yet the Fed was wrong to drop rates as fast as it did in January 2008 because this caused the huge rise in oil and other commodity prices at the start of 2008. So he tries to pin it all on "discretion." In any case, Bernanke, the man who was too discretionary in Taylor's mind has stated-years ago in a book he wrote about inflation targeting, that all monetary policy is by definition discretionary-the idea of wholly rule bound policy is a chimera.
Sumner's fellow MMer, David Glasner provides something of a reality check by being a little less credulous. Glasner often is a reality check even on Sumner who gets carried away with himself a lot of times.
As he pointed out Taylor was quite clearly not having it back in November when NKers like Krugman, Delong, and Romer gave it a nod:
"A more fundamental problem is that, as I said in 1985, “The actual instrument adjustments necessary to make a nominal GNP rule operational are not usually specified in the various proposals for nominal GNP targeting. This lack of specification makes the policies difficult to evaluate because the instrument adjustments affect the dynamics and thereby the influence of a nominal GNP rule on business-cycle fluctuations.” The same lack of specificity is found in recent proposals. It may be why those who propose the idea have been reluctant to show how it actually would work over a range of empirical models of the economy as I have been urging here. Christina Romer’s article, for instance, leaves the instrument decision completely unspecified, in a do-whatever-it-takes approach. More quantitative easing, promising low rates for longer periods, and depreciating the dollar are all on her list. NGDP targeting may seem like a policy rule, but it does not give much quantitative operational guidance about what the central bank should do with the instruments. It is highly discretionary. Like the wolf dressed up as a sheep, it is discretion in rules clothing."
Ah. NGDP a wolf in sheep's clothing.
Further, Glasner points out that Taylor's "flack", Amith Shales the yellow journalist of economics- who smeared FDR in "FDR's Folly" a few years back-also got her two cents in:
"For this reason, as Amity Shale's argues in her recent Bloomberg piece, NGDP targeting is not the kind of policy that Milton Friedman would advocate. In Capitalism and Freedom, he argued that this type of targeting procedure is stated in terms of “objectives that the monetary authorities do not have the clear and direct power to achieve by their own actions.” That is why he preferred instrument rules like keeping constant the growth rate of the money supply. It is also why I have preferred instrument rules, either for the money supply, or for the short term interest rate."
So there you go, Ms. Shales herself is divining What Milton Would Have Thought. However, here is Glasner's reality check:
"Taylor does not indicate whether, after reading Hetzel’s book, he is now willing to reassess either his view that monetary policy should be tightened or his negative view of NGDP. However, following Taylor post on Saturday, David Beckworth wrote an optimistic post suggesting that Taylor was coming round to Market Monetarism and NGDP targeting. Scott Sumner followed up Beckworth’s post with an optimistic one of his own, more or less welcoming Taylor to ranks of Market Monetarists. However, Marcus Nunes in his comment on Taylor’s post about Hetzel may have the more realistic view of what Taylor is thinking, observing that Taylor may have mischaracterized Hetzel’s view about the 2003-04 period, thereby allowing himself to continue to identify Fed easing in 2003 as the source of everything bad that happened subsequently. And Bill Woolsey also seems to think that Marcus’s take on Taylor is the right one."
See that my buddy, the MMer Marcus Nunes, who I'm grateful is a regular reader hear at Diary is clearly skeptical as is another major MMer, Bill Woolsley. I'm glad I'm not the only one who thought Sumner was laying it on a little thick here.
Please read Marcus' take here http://thefaintofheart.wordpress.com/2012/04/02/was-monetary-policy-easy-in-2003-2004-not-according-to-robert-hetzel/
Tuesday, April 3, 2012
Wage Growth, Sticky Wages, and the Politics of Inflation
Krugman was discussing analysis Mark Thoma was doing about a San Francisco Fed paper on wages. The question being asked is: why are wages so strong? Why is wage growth so strong?
http://krugman.blogs.nytimes.com/2012/04/03/screw-your-analysis-to-the-sticky-point/
http://economistsview.typepad.com/economistsview/2012/04/evidence-of-nominal-wage-rigidities.html
http://www.frbsf.org/publications/economics/letter/2012/el2012-10.html
In a way this is a strange question is it not? Or at least one can't help but notice that wage growth is generating perplexity-and not a happy kind. Implicit in the question is that this is not a happy situation. But shouldn't it be?
I mean if US wage growth is up, then don't we as Americans stand to gain from this? Well, this really depends. And this also points to why so many times many things that would help us tend to be politically problematic.
A major change that came with the rise of Keynesianism is the recognition that wages are sticky and so during depressions-with "liquidity traps"-the market can't clear to a lower level of equilibrium. Keynes showed that the economy can't be expected to come back via wage cuts.
Keynes also argued that workers are right to resist cuts to their nominal wages much more vigorously than real wage cuts via rising inflation. What happens in a recession is that employers seldom cut wages of current employees. They even continue to give their best employees moderate wages, while the rest remain the same. This is why wages are sticky as Mark Thomas tells us:
"Researchers generally point to asymmetries in the distribution of observed wage changes among individual workers as evidence of nominal wage rigidities. Figure 2 plots an example of this type of wage change distribution in 2011. The dashed black line shows a symmetric normal distribution. The blue bars plot the actual distribution of nominal wages."
"The figure’s most striking feature is the blue bar that spikes at zero, indicating the large number of workers who report no change in wages over a year. This spike stands out in the distribution of actual wage changes, suggesting that, rather than cutting pay, employers simply kept wages fixed over the year. This is supported by the large gap to the left of zero between the actual distribution of wage changes and the dashed black line representing the normal distribution. This gap suggests that the spike at zero is made up mostly of workers whose wages otherwise would have been cut."
In this recession, wages have been more sticky than usual even. Why is this? As the San Francisco Fed tells us:
"Real wage growth, that is, wage growth after accounting for inflation, has held up surprisingly well in the recent recession and recovery. Despite modest economic growth and persistently high unemployment, real wage growth has averaged 1.1% since 2008. As Figure 1 shows, this pattern contrasts notably with previous decades, when real wage growth slowed substantially in response to business cycle downturns. "
"One reason real wage growth has been so solid is that inflation has been low, with the personal consumption expenditures price index increasing at an average annual rate of 1.8% since the start of 2008. Low inflation means that employers cannot reduce real wages simply by letting inflation erode the value of worker pay. Instead, if they want to reduce real labor costs, they must cut the actual dollar value of wages. Employers generally avoid doing so because cuts to nominal wages can reduce morale and prompt resistance even in difficult economic times (Kahneman, Knetsch, and Thaler 1986)."
"The inability or unwillingness of employers to reduce nominal pay is known as downward wage rigidity. When economic conditions are poor, this rigidity can disrupt normal labor market functioning, especially in a low-inflation environment. If wages are downwardly rigid, workers may receive false signals about the value of remaining in a particular occupation or industry. For example, consider construction workers who are less productive now than they were five years ago because of the bursting of the housing bubble. If their wages fell, they might seek jobs in other industries. Because of downward wage rigidity, they may stay in construction instead. On the labor demand side, employers that can’t cut wages may delay expanding payrolls as conditions improve. Either way, downward nominal wage rigidities can result in misallocation of resources in the economy."
But this is why inflation can be politically divisive too, why the Fed or for that matter the President may be reluctant to say "We want more inflation." Remember that even though unemployment is high, most Americans are employed. Even when it was at 10.1% that meant most Americans were working. One reason why inflation is a good tool to fight recessions is that you can cut workers wages and get around the "stickiness."
However, it's easy for GOP politicians to demagogue this and say that this is to the dis-benefit for workers for the benefit of the "lazy" unemployed. Of course another benefit is that inflation reduces the real amount of debts we owe-so of course the creditors aren't enamoured of inflation either.
While I don't think it will work, in fact I haven't heard much about it lately, the GOP at one point was hammering away at high gas prices. While it's a total red herring policy wise-there is nothing President Obama can do short term about this(most of the long term things the GOP wouldn't want like building up alternative energy and higher fuel efficiency which Obama has already done)-it makes some political sense.
That correlation is not one and the same with causation would never occur to them. So it is with inflation and why the politically motivated attacks on it can prove quite effective.
Finally Krugman makes the point of just how brutal the policy choice that Germany and the EU would oppose on Greece-remember Greece and much of the periphery is truly in a depression at this point:
"The stickiness of wages even in the United States — which has one of the most “flexible”, aka brutal, labor markets in the advanced world, makes it clear just how huge the costs of the eurozone strategy of “internal devaluation” — getting wages down in peripheral economies, until competitiveness is regained — really is. By asking that Ireland, Spain, Portugal achieve double-digit falls in nominal wages, the Germans and the ECB are actually demanding something that basically never happens."
Nice touch-the way he points out that while the phrase, "flexible labor markets" sounds very nice and salutary, it's quite a brutal thing that is had in mind
http://krugman.blogs.nytimes.com/2012/04/03/screw-your-analysis-to-the-sticky-point/
http://economistsview.typepad.com/economistsview/2012/04/evidence-of-nominal-wage-rigidities.html
http://www.frbsf.org/publications/economics/letter/2012/el2012-10.html
In a way this is a strange question is it not? Or at least one can't help but notice that wage growth is generating perplexity-and not a happy kind. Implicit in the question is that this is not a happy situation. But shouldn't it be?
I mean if US wage growth is up, then don't we as Americans stand to gain from this? Well, this really depends. And this also points to why so many times many things that would help us tend to be politically problematic.
A major change that came with the rise of Keynesianism is the recognition that wages are sticky and so during depressions-with "liquidity traps"-the market can't clear to a lower level of equilibrium. Keynes showed that the economy can't be expected to come back via wage cuts.
Keynes also argued that workers are right to resist cuts to their nominal wages much more vigorously than real wage cuts via rising inflation. What happens in a recession is that employers seldom cut wages of current employees. They even continue to give their best employees moderate wages, while the rest remain the same. This is why wages are sticky as Mark Thomas tells us:
"Researchers generally point to asymmetries in the distribution of observed wage changes among individual workers as evidence of nominal wage rigidities. Figure 2 plots an example of this type of wage change distribution in 2011. The dashed black line shows a symmetric normal distribution. The blue bars plot the actual distribution of nominal wages."
"The figure’s most striking feature is the blue bar that spikes at zero, indicating the large number of workers who report no change in wages over a year. This spike stands out in the distribution of actual wage changes, suggesting that, rather than cutting pay, employers simply kept wages fixed over the year. This is supported by the large gap to the left of zero between the actual distribution of wage changes and the dashed black line representing the normal distribution. This gap suggests that the spike at zero is made up mostly of workers whose wages otherwise would have been cut."
In this recession, wages have been more sticky than usual even. Why is this? As the San Francisco Fed tells us:
"Real wage growth, that is, wage growth after accounting for inflation, has held up surprisingly well in the recent recession and recovery. Despite modest economic growth and persistently high unemployment, real wage growth has averaged 1.1% since 2008. As Figure 1 shows, this pattern contrasts notably with previous decades, when real wage growth slowed substantially in response to business cycle downturns. "
"One reason real wage growth has been so solid is that inflation has been low, with the personal consumption expenditures price index increasing at an average annual rate of 1.8% since the start of 2008. Low inflation means that employers cannot reduce real wages simply by letting inflation erode the value of worker pay. Instead, if they want to reduce real labor costs, they must cut the actual dollar value of wages. Employers generally avoid doing so because cuts to nominal wages can reduce morale and prompt resistance even in difficult economic times (Kahneman, Knetsch, and Thaler 1986)."
"The inability or unwillingness of employers to reduce nominal pay is known as downward wage rigidity. When economic conditions are poor, this rigidity can disrupt normal labor market functioning, especially in a low-inflation environment. If wages are downwardly rigid, workers may receive false signals about the value of remaining in a particular occupation or industry. For example, consider construction workers who are less productive now than they were five years ago because of the bursting of the housing bubble. If their wages fell, they might seek jobs in other industries. Because of downward wage rigidity, they may stay in construction instead. On the labor demand side, employers that can’t cut wages may delay expanding payrolls as conditions improve. Either way, downward nominal wage rigidities can result in misallocation of resources in the economy."
But this is why inflation can be politically divisive too, why the Fed or for that matter the President may be reluctant to say "We want more inflation." Remember that even though unemployment is high, most Americans are employed. Even when it was at 10.1% that meant most Americans were working. One reason why inflation is a good tool to fight recessions is that you can cut workers wages and get around the "stickiness."
However, it's easy for GOP politicians to demagogue this and say that this is to the dis-benefit for workers for the benefit of the "lazy" unemployed. Of course another benefit is that inflation reduces the real amount of debts we owe-so of course the creditors aren't enamoured of inflation either.
While I don't think it will work, in fact I haven't heard much about it lately, the GOP at one point was hammering away at high gas prices. While it's a total red herring policy wise-there is nothing President Obama can do short term about this(most of the long term things the GOP wouldn't want like building up alternative energy and higher fuel efficiency which Obama has already done)-it makes some political sense.
That correlation is not one and the same with causation would never occur to them. So it is with inflation and why the politically motivated attacks on it can prove quite effective.
Finally Krugman makes the point of just how brutal the policy choice that Germany and the EU would oppose on Greece-remember Greece and much of the periphery is truly in a depression at this point:
"The stickiness of wages even in the United States — which has one of the most “flexible”, aka brutal, labor markets in the advanced world, makes it clear just how huge the costs of the eurozone strategy of “internal devaluation” — getting wages down in peripheral economies, until competitiveness is regained — really is. By asking that Ireland, Spain, Portugal achieve double-digit falls in nominal wages, the Germans and the ECB are actually demanding something that basically never happens."
Nice touch-the way he points out that while the phrase, "flexible labor markets" sounds very nice and salutary, it's quite a brutal thing that is had in mind
Krugman, Keen, Fullwiler and MMT vs. MM
I've been keeping up with the debate between Krugman and Keen. Lately Fullwiler has also joined against Krugman. It's a very interesting debate that I've already written about a few times.
I got to admit I'm not always sure what the real punchline of the thing is-what is the policy implications of it though I do believe they are dramatic. The original difference centered around a paper Krugman had written with Eggertsson about Minsky and his theory of debt asset deflation during a major recession-depression.
For the original links please see http://diaryofarepublicanhater.blogspot.com/2012/03/krugman-stephen-keen-and-minsky.html
Keen had complained that Krugman new nothing about banking and that by leaving banks out of his model it was totally inadequate. Krugman replied that this was "banking mysticism."
Then leading MMTer Scott Fullwiler wrote a new post claiming that Krugman is wholly ignorant about this and just doesn't get it:
"Paul Krugman has posted a reply to this post that is a straw man. He and Nick Rowe are viewing this all through the lens of the old Monetarist/Keynesian debates in which there was a choice b/n interest rate targets and monetary aggregate targets; the Monetarist critique assumed the Keynesians were going to keep interest rates at the same level forever and not change them. Once John Taylor came up with his “rule,” everyone agreed an interest rate target could work."
"What we are talking about here is operational tactics–the CB can only target an interest rate. It cannot target a reserve balances or the monetary base directly. But that is different from strategy–that is, WHERE the CB puts its target and WHEN it chooses to change the target. There is NOTHING in anything I’ve ever said or anything any PK’er, MMT’er, etc., has ever said that suggests the CB can’t set the target wherever it wants whenever it wants. The point is that whatever the target is, THAT is what its daily operations defend directly, not a monetary aggregate, not the monetary base, not reserve balances. There is nothing in anything I’ve said that would preclude the CB from running a Taylor’s Rule type strategy, for instance, that responds at any point in time endogenously to the state of the economy. That is, the target rate is an exogenous control variable (i.e., it is necessarily set by the CB) that it sets endogenously in response to economic events."
http://neweconomicperspectives.org/2012/04/krugmans-flashing-neon-sign.html#comment-9429
What I actually found of interest is Fullwiler's link on what he has written about fiscal policy, where he says that "helicopter drops" are fiscal rather than monetary operations. This is totally at variance with MM. Indeed Lars Christensen went as far as to claim there is not such thing as fiscal policy-it's all monetary by another name. What really interests me more than anything is to finally get what the difference between fiscal and monetary policy truly is.
For the background of Christensen's argument and my intervention in this discussion please see the following links
http://marketmonetarist.com/2012/01/18/there-is-no-such-thing-as-fiscal-policy/
http://diaryofarepublicanhater.blogspot.com/2012/01/sumner-and-awesome-obfuscation.html
http://marketmonetarist.com/2012/01/31/christensens-postmodernist-mind-fuck/
http://diaryofarepublicanhater.blogspot.com/2012/01/market-monetarist-mmt-smackdown-20.html
http://diaryofarepublicanhater.blogspot.com/2012/01/lars-chistensen-writes-post-about-me.html
I did talk to an interesting commentator at Fullwiler's blog, Dan Herwick Yet when I questioned him he said this:
"I probably sometimes express my position in an extreme way because I am focusing on the role of the Fed in the recent recessionary times. In a more normal economy with higher interest rates, I believe the Fed can help stimulate lending by lowering rates, and help cool down lending in an overheated economy by raising rates."
Now, of course, Dan was not the one driving the argument-Stephen Keen and then Fullwiler were. But based on Dan's view how much do those going after Krugman right now really disagree with him? And if there is something, how much does it really matter to our understanding of the monetary system? What will it help us to understand/do that we can't right now?
I got to admit I'm not always sure what the real punchline of the thing is-what is the policy implications of it though I do believe they are dramatic. The original difference centered around a paper Krugman had written with Eggertsson about Minsky and his theory of debt asset deflation during a major recession-depression.
For the original links please see http://diaryofarepublicanhater.blogspot.com/2012/03/krugman-stephen-keen-and-minsky.html
Keen had complained that Krugman new nothing about banking and that by leaving banks out of his model it was totally inadequate. Krugman replied that this was "banking mysticism."
Then leading MMTer Scott Fullwiler wrote a new post claiming that Krugman is wholly ignorant about this and just doesn't get it:
"Paul Krugman has posted a reply to this post that is a straw man. He and Nick Rowe are viewing this all through the lens of the old Monetarist/Keynesian debates in which there was a choice b/n interest rate targets and monetary aggregate targets; the Monetarist critique assumed the Keynesians were going to keep interest rates at the same level forever and not change them. Once John Taylor came up with his “rule,” everyone agreed an interest rate target could work."
"What we are talking about here is operational tactics–the CB can only target an interest rate. It cannot target a reserve balances or the monetary base directly. But that is different from strategy–that is, WHERE the CB puts its target and WHEN it chooses to change the target. There is NOTHING in anything I’ve ever said or anything any PK’er, MMT’er, etc., has ever said that suggests the CB can’t set the target wherever it wants whenever it wants. The point is that whatever the target is, THAT is what its daily operations defend directly, not a monetary aggregate, not the monetary base, not reserve balances. There is nothing in anything I’ve said that would preclude the CB from running a Taylor’s Rule type strategy, for instance, that responds at any point in time endogenously to the state of the economy. That is, the target rate is an exogenous control variable (i.e., it is necessarily set by the CB) that it sets endogenously in response to economic events."
http://neweconomicperspectives.org/2012/04/krugmans-flashing-neon-sign.html#comment-9429
What I actually found of interest is Fullwiler's link on what he has written about fiscal policy, where he says that "helicopter drops" are fiscal rather than monetary operations. This is totally at variance with MM. Indeed Lars Christensen went as far as to claim there is not such thing as fiscal policy-it's all monetary by another name. What really interests me more than anything is to finally get what the difference between fiscal and monetary policy truly is.
For the background of Christensen's argument and my intervention in this discussion please see the following links
http://marketmonetarist.com/2012/01/18/there-is-no-such-thing-as-fiscal-policy/
http://diaryofarepublicanhater.blogspot.com/2012/01/sumner-and-awesome-obfuscation.html
http://marketmonetarist.com/2012/01/31/christensens-postmodernist-mind-fuck/
http://diaryofarepublicanhater.blogspot.com/2012/01/market-monetarist-mmt-smackdown-20.html
http://diaryofarepublicanhater.blogspot.com/2012/01/lars-chistensen-writes-post-about-me.html
I did talk to an interesting commentator at Fullwiler's blog, Dan Herwick Yet when I questioned him he said this:
"I probably sometimes express my position in an extreme way because I am focusing on the role of the Fed in the recent recessionary times. In a more normal economy with higher interest rates, I believe the Fed can help stimulate lending by lowering rates, and help cool down lending in an overheated economy by raising rates."
Now, of course, Dan was not the one driving the argument-Stephen Keen and then Fullwiler were. But based on Dan's view how much do those going after Krugman right now really disagree with him? And if there is something, how much does it really matter to our understanding of the monetary system? What will it help us to understand/do that we can't right now?
Monday, April 2, 2012
Ann Romney to Bail Out Mitt?
Talk about signs of desperation. The new ideology we're hearing about out of the Romney campaign is that Romney's wife is going to bail him out, that she will have the Democrats running scared. Sure. OK. I mean if she is his best asset is that no in anyway a concern for the Romney campaign that the campaign's only asset is someone not running for anything?
Part of it seems to be that women are going to vote for Romney based on his wife. This shows why the GOP fares so poorly with women. This is their thinking, that women will vote on the guy with a nicer wife-even if his politics are stridently anti-female-it doesn't get more strident than promising to end Planned Parenthood.
"She has, in fact, recently begun targeting women - a demographic Republicans desperately need - talking about the economy and jobs. "I wish Ann, my wife were here," Mitt Romney told a crowd in Wisconsin Sunday, flagging her efforts. "She’s going across the country and talking with women. We have work to do, to make sure we take our message to the women of America."
Read more: http://www.politico.com/news/stories/0412/74718.html#ixzz1qtTbhAO9
It's like when the GOP tries to promote Rubio to make up for their anti-Hispanic policies.
"The Romney inner circle is well aware of Ann Romney’s potential - but has long resisted any strategy that would separate the couple for extended periods because of the negative impact it has on the candidate."
So when he says things like "I love being back in my home state of Michigan where the trees are all the same height" or "The poor people have their welfare to take care of them" or "If you want free stuff vote for the other guy"these were all times Ann Romney was away from his side?
This Politico article tries to spin it as Ann Romney is the Romney the Democrats fear. To me, it's a testament of the weakness of Romney's campaign. He needs his wife because of his own deficiency. If Ann Romney's so spectacular fine. Put her on the ballot, then we'll talk. But it's Mitt who we'll be stuck with.
"Mitt Romney’s stilted personality, coupled with voter skepticism about his core beliefs, has proved to be a serious liability. Polls have shown that the more people get to know the former Massachusetts governor, the less they like him — the opposite dynamic of President Barack Obama. Even when Obama’s job approval numbers decline, people still say they like him personally."
"Ann Romney, in contrast, exudes empathy and authenticity and offers a window into her husband’s character. Just as urgently, Republicans say that she’s a living testament to skeptical conservatives that Mitt Romney is one of them."
That's the GOP for you, they won't change their women hating policies but they will let you meet their wives. The idea that women actually care about policies that benefit them rather than whether or not Ann Romney is a nice woman would never occur to them.
Part of it seems to be that women are going to vote for Romney based on his wife. This shows why the GOP fares so poorly with women. This is their thinking, that women will vote on the guy with a nicer wife-even if his politics are stridently anti-female-it doesn't get more strident than promising to end Planned Parenthood.
"She has, in fact, recently begun targeting women - a demographic Republicans desperately need - talking about the economy and jobs. "I wish Ann, my wife were here," Mitt Romney told a crowd in Wisconsin Sunday, flagging her efforts. "She’s going across the country and talking with women. We have work to do, to make sure we take our message to the women of America."
Read more: http://www.politico.com/news/stories/0412/74718.html#ixzz1qtTbhAO9
It's like when the GOP tries to promote Rubio to make up for their anti-Hispanic policies.
"The Romney inner circle is well aware of Ann Romney’s potential - but has long resisted any strategy that would separate the couple for extended periods because of the negative impact it has on the candidate."
So when he says things like "I love being back in my home state of Michigan where the trees are all the same height" or "The poor people have their welfare to take care of them" or "If you want free stuff vote for the other guy"these were all times Ann Romney was away from his side?
This Politico article tries to spin it as Ann Romney is the Romney the Democrats fear. To me, it's a testament of the weakness of Romney's campaign. He needs his wife because of his own deficiency. If Ann Romney's so spectacular fine. Put her on the ballot, then we'll talk. But it's Mitt who we'll be stuck with.
"Mitt Romney’s stilted personality, coupled with voter skepticism about his core beliefs, has proved to be a serious liability. Polls have shown that the more people get to know the former Massachusetts governor, the less they like him — the opposite dynamic of President Barack Obama. Even when Obama’s job approval numbers decline, people still say they like him personally."
"Ann Romney, in contrast, exudes empathy and authenticity and offers a window into her husband’s character. Just as urgently, Republicans say that she’s a living testament to skeptical conservatives that Mitt Romney is one of them."
That's the GOP for you, they won't change their women hating policies but they will let you meet their wives. The idea that women actually care about policies that benefit them rather than whether or not Ann Romney is a nice woman would never occur to them.
Dr. Doom Sounds More Dr. Out of His Mind
David Faber is out today with more alarmism about how there's about to be a "massive wealth destruction"
"Runaway government debts have triggered uncontrolled money printing that in turn will lead to inflation that will decimate portfolios, according to the latest forecast from "Dr. Doom" Marc Faber."
http://www.cnbc.com/id/46923999
Of course, Faber is famous for thinking the sky is falling at any particular, given moment, If he actually saw some reason for optimism, that would be news. Then we might believe we're living in a parallel universe.
Part of the trouble is that not only does he see doom, but the unlikely reasons. It's only rich guy investors who worry about "runaway government debts" and "uncontrolled money printing" that will lead to inflation that will decimate portfolios. Of course if that did happen, if bondholders saw their portfolios hit by inflation that would actually be good news for the rest of us borrowers. However, the fact is that we are far from inflation or "stagflation" or the 70s in general.
It's amazing how so many of these inflation phobes never forget the 70s, even though this time has been more like the Depression. And we keep hearing how "massive government debt" is about to make borrowing costs skyrocket, while the world has been paying us to borrow from them. You want to see government debt rise during a balance sheet recession. What got us here was not government debt but private debt.
" Investors, particularly those in the "well-to-do" category, could lose about half their total wealth in the next few years as the consequences pile up from global government debt problems, Faber, the author of the Gloom Boom & Doom Report, said on CNBC."
"Efforts to stem the debt problems have seen the Federal Reserve![[cnbc explains]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_vs2YDwZvE_ebdYih6rKVwvmGo_f_TomowwpSo3Wuf1AjcOOf-7aIIPUGOFVjjuohbtDuoSXNgGOzcYU2lZGq1mqjDlqqMVsYghOkEVqqDIzxF1kKJqcG6--ONnYRJ3xCMpkNvwwaH6Ovqzgg-Bo7MecIpoC7gLFp5DmzwS_o-pkaWhg7psr0rAA5SqyMkiww=s0-d)
expand its balance sheet to nearly $3 trillion and other central banks implement aggressive liquidity programs as well, which Faber sees producing devastating inflation as well as other consequences."
Yes, "devastating inflation" is right around the corner. It always is,, just never seems to get here. Still, Faber shows why inflation is such a fear for guys like him-inflation is a rich man's worry, especially for those in the creditor class.
"I think that people should own some gold and I think that people should own some equities, because before the collapse will happen, with Mr. Bernanke at the Fed, they're going to print money and print and print and print," he said. "So what you can get is a bad economy with rising equity prices."
I actually do think his investment picks may be right though-equities I think will continue to do well, gold may well too, though not because as Faber thinks,, it's the end of the world. Gold does well, partly because gold always does well or has done for the last 10 years, we're in a secular bull market for gold. It has nothing to do with what gold bugs like Faber think it does, ironically, however. Gold has been trading up with all the other commodities, like oil. What you see is that gold rises with the rest of the market and commodities,it's pro-cyclical these days.
As for Treasuries there have been some signs that the bull market might be slowing down finally. This would be good news for the overall market though, as higher interest rates, as Sumner is always saying are signs of loose money-and a bull market and economy. It would be interesting if, as some have suggested, the 30 year bull run in bonds is over, though it's too early of course to know for sure yet.
"Runaway government debts have triggered uncontrolled money printing that in turn will lead to inflation that will decimate portfolios, according to the latest forecast from "Dr. Doom" Marc Faber."
http://www.cnbc.com/id/46923999
Of course, Faber is famous for thinking the sky is falling at any particular, given moment, If he actually saw some reason for optimism, that would be news. Then we might believe we're living in a parallel universe.
Part of the trouble is that not only does he see doom, but the unlikely reasons. It's only rich guy investors who worry about "runaway government debts" and "uncontrolled money printing" that will lead to inflation that will decimate portfolios. Of course if that did happen, if bondholders saw their portfolios hit by inflation that would actually be good news for the rest of us borrowers. However, the fact is that we are far from inflation or "stagflation" or the 70s in general.
It's amazing how so many of these inflation phobes never forget the 70s, even though this time has been more like the Depression. And we keep hearing how "massive government debt" is about to make borrowing costs skyrocket, while the world has been paying us to borrow from them. You want to see government debt rise during a balance sheet recession. What got us here was not government debt but private debt.
" Investors, particularly those in the "well-to-do" category, could lose about half their total wealth in the next few years as the consequences pile up from global government debt problems, Faber, the author of the Gloom Boom & Doom Report, said on CNBC."
"Efforts to stem the debt problems have seen the Federal Reserve
expand its balance sheet to nearly $3 trillion and other central banks implement aggressive liquidity programs as well, which Faber sees producing devastating inflation as well as other consequences."Yes, "devastating inflation" is right around the corner. It always is,, just never seems to get here. Still, Faber shows why inflation is such a fear for guys like him-inflation is a rich man's worry, especially for those in the creditor class.
"I think that people should own some gold and I think that people should own some equities, because before the collapse will happen, with Mr. Bernanke at the Fed, they're going to print money and print and print and print," he said. "So what you can get is a bad economy with rising equity prices."
I actually do think his investment picks may be right though-equities I think will continue to do well, gold may well too, though not because as Faber thinks,, it's the end of the world. Gold does well, partly because gold always does well or has done for the last 10 years, we're in a secular bull market for gold. It has nothing to do with what gold bugs like Faber think it does, ironically, however. Gold has been trading up with all the other commodities, like oil. What you see is that gold rises with the rest of the market and commodities,it's pro-cyclical these days.
As for Treasuries there have been some signs that the bull market might be slowing down finally. This would be good news for the overall market though, as higher interest rates, as Sumner is always saying are signs of loose money-and a bull market and economy. It would be interesting if, as some have suggested, the 30 year bull run in bonds is over, though it's too early of course to know for sure yet.
Sunday, April 1, 2012
Are Hedge Fund Managers Really This Dense?
Just read the New Republic piece by Alec MacGillis (pg 10) about the relationship between hedge fund managers and Obama as one former Obama Administration official puts it, "They hate him now."
It's very interesting in explaining something hard to understand-why the hedge fund manager community-I know its a little funny referring to them as a community, but like any community they have gotten themselves very offended-have such a martyr complex about Obama's supposed abuse of them-some have gone as far as kvetching "Should we be like a battered wife and say though the President beats us that proves he loves us?"
In a CNBC interview Anthony Scaramucci head of Skybridge Capital, regular CNBC contributor-and former fellow classmates at Harvard-they used to play basketball together at Harvard complained that he and his friends in finance have felt like a pinata. Maybe you don't feel you're whacking us with a stick, but we certainly feel we've been whacked with a stick."
As Obama truly said in response is that there's probably a big chunk of the country that thinks I've been too soft on Wall Street. That's probably the majority not the minority."
It certainly is. I've never been able to get how these guys just don't get it. Do they not see that the country has been suffering, that while many of them continued to make record profits, there are all these Americans in desperate straits?
It turns out they really are clueless. A former Democratic fundraiser puts it this way:
"What Obama didn't understand was that he couldn't play an inside-outside game-tell them on the one had, 'We don't hate you but the politics are what the politics are'... These people really freaked out about being villianized.
Orin Kramer of Boston Provider-the fund manager that is still most loyal to Obama observes drily: "There are people in the world of finance who have a limited understanding of the national mood."
I never got how these guys, who are supposed to be so smart and so sophisticated can't get this, that they are really that offended because Obama once called them "fat cats" and a few other outrages like going after "carried interest."
To tell you the truth, I'm a big liberal Democrat of course but I really don't hate Wall St. per se-I never have. MacGriffin makes the point that these guys feel like what they do for society has been denigrated-they see themselves as good guys who benefit the economy. So they let their little feelings get hurt.
Many do hate them. I never have really-I'm a liberal not a populist, there's an important difference. Like for instance I saw the whole furor over the AIG bonuses as over the top and overdone But I got to say that this article has made me lose some respect for them. They should be able to understand an inside-outside game. As they can't they aren't nearly as sophisticated as they like to think they are.
It's very interesting in explaining something hard to understand-why the hedge fund manager community-I know its a little funny referring to them as a community, but like any community they have gotten themselves very offended-have such a martyr complex about Obama's supposed abuse of them-some have gone as far as kvetching "Should we be like a battered wife and say though the President beats us that proves he loves us?"
In a CNBC interview Anthony Scaramucci head of Skybridge Capital, regular CNBC contributor-and former fellow classmates at Harvard-they used to play basketball together at Harvard complained that he and his friends in finance have felt like a pinata. Maybe you don't feel you're whacking us with a stick, but we certainly feel we've been whacked with a stick."
As Obama truly said in response is that there's probably a big chunk of the country that thinks I've been too soft on Wall Street. That's probably the majority not the minority."
It certainly is. I've never been able to get how these guys just don't get it. Do they not see that the country has been suffering, that while many of them continued to make record profits, there are all these Americans in desperate straits?
It turns out they really are clueless. A former Democratic fundraiser puts it this way:
"What Obama didn't understand was that he couldn't play an inside-outside game-tell them on the one had, 'We don't hate you but the politics are what the politics are'... These people really freaked out about being villianized.
Orin Kramer of Boston Provider-the fund manager that is still most loyal to Obama observes drily: "There are people in the world of finance who have a limited understanding of the national mood."
I never got how these guys, who are supposed to be so smart and so sophisticated can't get this, that they are really that offended because Obama once called them "fat cats" and a few other outrages like going after "carried interest."
To tell you the truth, I'm a big liberal Democrat of course but I really don't hate Wall St. per se-I never have. MacGriffin makes the point that these guys feel like what they do for society has been denigrated-they see themselves as good guys who benefit the economy. So they let their little feelings get hurt.
Many do hate them. I never have really-I'm a liberal not a populist, there's an important difference. Like for instance I saw the whole furor over the AIG bonuses as over the top and overdone But I got to say that this article has made me lose some respect for them. They should be able to understand an inside-outside game. As they can't they aren't nearly as sophisticated as they like to think they are.
Is Mario Rubio a Serious Candidate for GOP VP?
The choice could have some appeal. The Florida Senator is a tea party sensation. He is also, yes, Hispanic which could be tempting for the GOP. After all, he could be a way for them to kill two birds with one stone.
Get the tea party someone they can be enthusiastic about-as they are less excited about Romney-and also at the same time get them in with Hispanics who they currently trail very badly with-recent polls have shown Obama's advantage with them as large as 70-14; and a 20 point lead with women to boot.
Of course this is not a fool proof strategy-far from. The GOP has tried this move before and it often doesn't work. In 2008 the nomination of the first female vice presidential candidate didn't save McCain's campaign.
One nasty thing Republicans sometimes say about blacks is that they will vote for anyone if he's black-or that their support for Obama is wholly based on race.
Yet their own history shows this is not so-African-Americans have shown they will not vote say for a black conservative, black or no. There's no reason to assume that Hispanics will totally look past the GOP's sorry record over the last 4 years with all these Republican states passing all these anti-Hispanic draconian laws and vote for someone who is in fact ultra conservative, simply because he is Hispanic.
Indeed, another failed gambit is the social conservative route. It's true that as a group black Americans are more conservative than other Americans-this is somewhat true of Hispanics as well. In the Black community, things like gay marriage are still very controversial-for an example of this try perusing The Black Agenda Report sometime.
Still GOP attempts to get Blacks to vote their prejudices against their own interests doesn't work. So Rubio is hardly a magic bullet. However, it may seem intriguing enough for a party with long odds with as unpopular candidate as Mitt Romney who completely lacks sex appeal.
Get the tea party someone they can be enthusiastic about-as they are less excited about Romney-and also at the same time get them in with Hispanics who they currently trail very badly with-recent polls have shown Obama's advantage with them as large as 70-14; and a 20 point lead with women to boot.
Of course this is not a fool proof strategy-far from. The GOP has tried this move before and it often doesn't work. In 2008 the nomination of the first female vice presidential candidate didn't save McCain's campaign.
One nasty thing Republicans sometimes say about blacks is that they will vote for anyone if he's black-or that their support for Obama is wholly based on race.
Yet their own history shows this is not so-African-Americans have shown they will not vote say for a black conservative, black or no. There's no reason to assume that Hispanics will totally look past the GOP's sorry record over the last 4 years with all these Republican states passing all these anti-Hispanic draconian laws and vote for someone who is in fact ultra conservative, simply because he is Hispanic.
Indeed, another failed gambit is the social conservative route. It's true that as a group black Americans are more conservative than other Americans-this is somewhat true of Hispanics as well. In the Black community, things like gay marriage are still very controversial-for an example of this try perusing The Black Agenda Report sometime.
Still GOP attempts to get Blacks to vote their prejudices against their own interests doesn't work. So Rubio is hardly a magic bullet. However, it may seem intriguing enough for a party with long odds with as unpopular candidate as Mitt Romney who completely lacks sex appeal.
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