There will certainly be a recession this year. Unless there won’t. That is the consensus view of economists. The bad news is that even the optimists are having difficulty explaining away the reams of incoming data, and that even the cheeriest of the bunch are predicting a no-to-low-growth outlook for the rest of this year.
Earlier this week the Federal Reserve chair Janet Yellen, speaking for the bank's monetary policy committee, gave some not-very subtle hints that the policymakers view of things is gloomier than it was in mid-December when Yellen announced the committee's "confidence that the economy will continue to strengthen." Now, that confidence, which stirred the Fed to raise interest rates, has been shaken byRead more
Asign of what might be called “progress" jogged some memories of battles fought. In reporting Governor Andrew Cuomo's nomination of a new chief to a state regulatory agency, the New York Times identified the appointee as being a litigator in "the white-shoe law firm Paul, Weiss, Rifkind," et al. The reporter seemingly did not know that the designation "white-shoe law firm" was invented to describe firms at the pinnacle of the WASP establishment, no Jews allowed, named apparently for the shoes these WASPs favored in the summer at their restricted country clubs.
In the 1960s, my partners and I were attempting to establish an economic consulting firm that marketed its services to law firms and public utilities. TheRead more
The final State of the Union address of any president evokes thoughts that vary with his success while in office. For the successful, such as Dwight Eisenhower, Ronald Reagan and Bill Clinton, it is a moment on which to look back with some satisfaction. For President Obama, with only 27 percent of his countrymen believing he leaves a nation that is on the right track, last week’s must evoke in his supporters thoughts of what might have been, if only….
For both the successful and less so it is goodbye to the walk down the aisle to the podium, shaking hands and air kissing admirers, hello to irrelevance as the lame duck president lays out his vision of a future about which he will have little to say.Read more
The Chinese are wrong to overlook North Korea’s broken promise not to test nuclear weapons, in the interests of "trying to warm long-strained relations." So they are told by John Kerry. But I, the Secretary of State of the United States of America, am right to overlook Iran's repeated provocations in the interests of, er, of trying to warm long-strained relations. China is wrong to continue providing Kim Jong-un with vital oil and other supplies worth billions even though the Supreme Leader ordered the testing of a nuclear weapon.Read more
Ntokozo Qwabe, the student at Oriel College, Oxford, co-founder of Rhodes Must Fall, wants the statue of Cecil Rhodes removed from the campus because Rhodes was a "racist, genocidal maniac … as bad as Hitler." Mr. Qwabe is attending Oxford on a Rhodes scholarship.
Politicians, or at least some, can't imagine life without the trappings of office. A former Labour MP in the UK, after losing his seat, says "All I could see was darkness," as he could not imagine how he would support his family. And a former Liberal Democrat minister in David Cameron's coalition government had to learn how to send e-mails when he left office and no longer had an "army of people" to do things for him.Read more
Guilty as charged. That's my response to anyone who accuses me of having spilled too much ink writing about what Janet Yellen might do, has done, and will do now that she has raised the Fed funds rate for the first time in a decade. By way of expiation, here is a look at some less-heralded developments in the American economy that may well determine its performance in 2016 and beyond.
Top of the list for immediate impact is the end of austerity. One effect of political stalemate was a "sequester", something of a freeze on the growth of government spending, a consequence of which was a decline in the federal deficit as a portion of GDP.Read more
Monday's editorial would be hilarious if it were not that so many liberals fail to see the humor. The Old Grey Lady is concerned about "A New Cuban Exodus," driven by "hopelessness at home …and fear that the unique treatment Cuban immigrants receive from Washington could end, now that diplomatic relations have been restored." Under existing law, Cubans who reach our shores have an automatic right to settle here and in short order to apply for citizenship.
Bad policy, and should be reversed, say the editors. First, the Castros don't like it, so it is "hindering the normalization of relations" with Cuba.Read more
If it were done when 'tis done, then 'twere well it were done slowly. That is official Federal Reserve Board going-forward policy. The announcement of the Fed's first interest rate increase in almost a decade, an upward move of 0.25 percent from near zero, says, and twice, that future increases will be "gradual". That was chairwoman Janet Yellen's main message – abrupt is bad, "gradual adjustment in the stance of monetary policy" is the way to go to avoid past central bank errors by waiting so long that it has to jack rates up abruptly, throwing the economy back into recession. The mid-range forecast of Fed policymakers is that the federal funds rate – an important tool in the Fed's policy kit – will rise toRead more
At minimum it is unseemly, at maximum an example of chutzpah as practiced in Silicon Valley. Having shot themselves in the foot, some prominent tech billionaires want the president to bypass Congress and minister to their wound. They have poured cash into his campaign coffers, and now is payback time. They want him to increase the number of H-1B visas that allow them to hire high-skilled foreign tech workers. Which he has promised to do, never mind that Microsoft has just laid off thousands of workers.Read more
The international conference on climate change attracted thousands of delegates from almost 200 nations. The Conference of the Parties21, so named for the parties that signed the UN Framework Convention on Climate Change in 1992 and had come to Paris for what was their 21st conference, came to an end with the obligatory self-congratulatory photo op, linked arms raised in victory, cheers from some, tears of joy from others, applause for Al Gore, and a promise by Secretary of State John Kerry that we have seen the end of the age of fossil fuels.Read more
"I'll build a stairway to Paradise," promised songwriter George Gershwin decades ago. Fed chairwoman Janet Yellen is about to try to do the same, taking interest rates up that stairway, from the zero level set during the hellish days of the financial crisis to the Paradise of normality or near-normality. There is almost unanimous agreement – an 85 percent probability according to markets -- that next week the Federal Reserve Board's monetary policy committee will raise interest rates by 0.25 percent, bringing the era of zero interest rates to an end. Unless, of course, Yellen & Co. belie the hints its chair has been dropping and double-cross the markets.
Yawn if you will, and with reason: There is unlikely to beRead more
To understand Donald Trump's surprising ability to remain at the top of the polls, it is necessary to understand why the attacks of his critics misfire. The best place to start is with the continually uncomprehending New York Times. A story on page 1 et seq. levels what its authors must consider devastating criticism of Trump's "95,000 Words, Many of Them Ominous, From Trump's Tongue." Trump, says the NYT, has a "particular habit" of using ominous words that include the "divisive … harsh … violent … 'you' and 'we' as he inveighs against a dangerous 'them.Read more
Christmas came early this year for Janet Yellen and those of her monetary policy committee colleagues eager to begin raising interest rates. Just a tiny bit, but enough to show that they remember how to do that after eight years of holding rates to just about zero. First gift: Santa, disguised as a European Central Banker with a decidedly Italian accent, misjudged the markets. His plan to drive down the euro and thereby drive up European exports fell so short of expectations that the euro actually rose, to the wailing of traders who shorted it in anticipation of Mario Draghi's announcement. That allowed the dollar, already at a 12-year high and by Fed estimates knocking 0.Read more
There are lots of good reasons for conservatives to cheer when various Republican candidates propose a consumption tax, or a tax on spending as some call it, or, in one of its most used forms, a value-added tax (VAT).
Such a tax would, or potentially could, replace some of the taxes now borne by work and risk-taking. Exports could be exempt, providing them with the same subsidy European and other nations provide their exports. Some consumption taxes are cost-effective for society, such as those that reduce health care costs by inhibiting smoking or reduce costly regulations by taxing pollutants. And it can produce real money for the Treasury (not a virtue say some, who would reduce in tandem taxes now levied on incomes).Read more
California is reeling from a drought, rather like the one suffered by Israel in 1998-2002. California, with an 840-mile coastline on the world's largest ocean, has a water shortage; Israel, with a mere 170-mile coast line, does not. Israel invests in desalinization; California is building a high-speed train at a cost of somewhere between $68 billion and $90 billion, the most expensive public works project in the nation's history with no completion date in sight, but finds the $1 billion price tag on its first desalinization plant too high to bear, even though its 50 million gallon per day output would meet the daily requirements of something like 280,000 of the modest-income consumers now the hardest hit by the rationing systemRead more
On the surface, little seems to have changed as the opening bell rang for the retailers’ battle that is the holiday shopping season. On Thanksgiving day we carved some 46 million turkeys and downed 50 million pumpkin pies despite a shortage of pecans created by Chinese consumers who imported the best quality nuts and bid the price too high for many bakers and American families to match. We watched some 12-15 hours of football, with 250-pound behemoths considered too light for many positions.Read more
It is not for an economist to adjudicate between the president of the United States, who feels he is appealing to our better angels by asking our blessing for his plan to grant 10,000 refugees from the Syrian wars entry into our country, and his critics who fear that the wave might include immigrants coming not for refuge but to do us harm, not here to assimilate but to retain the customs and laws that have brought their homelands chaos and penury. The dispute, in short, is between Barack Obama who contends he is following a long-standing, humane American tradition of accepting the world’s tired, poor, huddled masses, and equally well-intentioned congressmen and governors who respond that he is ignoring his first obligation – to keep America and its citizens safe from harm. They add that it is inappropriate to argue that America must not repeat the moral error of turning away Jews who sought to escape Hitler’s death camps by turning away Syrians, among them some pledged to destroy the values fleeing Jews were attempting to come here to enjoy.Read more
Retailers are having difficulty moving apparel these days. One analyst attributes the groaning shelves and racks to two successive years of warm weather. So retailers’ worries will soon be over: the world’s leaders are about to assemble in Paris to end the trend to global warming, a bigger threat than terror, says Barack Obama.Read more
The Wall Street Journal reports that those assembled at the American Bar Association meeting are urging lawyers throughout the nation “to celebrate ‘Love Your Lawyer Day’ to help promote a positive and more respected image of lawyers and their contribution to society.” Alas, we missed the celebration – the first Friday in November – but note that it coincided with an uptick of those who think lawyers have very high or high ethical standards.Read more
At the end of this month representatives of some 200 nations will gather in Paris for the opening of a United Nations-sponsored conclave to prevent the cataclysm that President Barack Obama, backed by the moral authority of Pope Francis, believes will befall the world if we do not slow the pace of climate change. There will be no treaty to enshrine the deal, for the very good reason that such a treaty would not receive the consent of the U.S. Senate.Read more
From Hong Kong to Harvard, erasing history has become a necessity. In the Chinese territory, it is the authorities in Beijing who want to eliminate any memory of the past; in Harvard Square, it is the Law School students.Read more
The Germans are angry with the Greeks for retiring at age 50 and counting on Germans to keep working until they are 65 so as to have enough cash to lend to Greece. The French are angry with the Germans for demanding such harsh and humiliating terms from the Greeks in return for a few billion more euros. The Greeks are angry with the Germans for once again in effect telling them how to levy taxes and to organize their economy.Read more
At last, a debate that lived up to its billing. The Fox Business Network promised this would be about economic policy, and not about fantasy football, or personalities, and its panelists delivered. Despite an occasional barb, including a neat put-down of Donald Trump by Carly Fiorina, we actually learned where the candidates stand on important issues.Read more
Lift-off. That’s the conclusion to which observers jumped when the government announced on Friday that the economy added 271,000 jobs in October. And that the August and September figures have been revised upward by 12,000. And that the unemployment rate fell to 5 percent. And that discouraged workers and those looking for fuller-time jobs fell to 9.8 percent of the work force, the lowest level since May 2008. And that average hourly earnings in the private sector were up by 2.5 percent from October of last year, the strongest reading since July 2009.Read more
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