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Economics: “The direction of travel is clear” is a considerably stronger signal than I had expected. An explicit announcement of an easing phase to the cycle was not on my bingo card. It shook the intertemporal price system a bit: wealth ten years in the future is now worth 0.5% more relative to wealth in the present than it was three hours ago:
Jay Powell: Review and Outlook:‘The upside risks to inflation have diminished. And the downside risks to employment have increased…. The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks. We will do everything we can to support a strong labor market as we make further progress toward price stability…. The current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions… <https://www.federalreserve.gov/newsevents/speech/powell20240823a.htm>
Cybergrifters: One of the most puzzling things about Silicon Valley is how many of the people who are the extraordinary beneficiaries of the most complicated coöperative technological division of labor ever created think of themselves as self reliant “pioneers”. Most of it, I think, is that they spend most of their time, interacting with symbols rather than people, and so they think that they are manipulating nature rather than engaging in coöperative human enterprise:
Henry Farrell: No Exit Opportunities: Business Models and Political Thought in Silicon Valley: ‘Silicon Valley entrepreneurs genuinely have a great amount to be proud of—some of their technological innovations have become cornerstones of modern society. Yet business plans and contemporary political spats are insecure foundations for grand theories of the deep future of human civilization and politics…. Actual free markets require a state that is both powerful and constrained. Real technological progress is not solely generated by risk-taking entrepreneur-heroes… [but is] the contingent by-product of a fragile set of common social and political arrangements…. The trick of creating a vibrant open order is not to try to escape the sordid bargains of politics, or to eliminate your enemies, but to channel disagreement usefully…. You have to figure out ways to live with those who oppose you and whom you oppose, and ideally to derive collective benefit from your mutual vexations…. An open society is a very good thing, so long as you can keep it. But understanding how to keep it requires the intellectual rigor to understand where your business model and your broader politics reinforce each other and where they are in violent contradiction.…. “Open access orders” required… the creative destruction of democratic processes… peaceful and predictable system for election transitions… <americanaffairsjournal.org/2024/08/no-e…>
Neoliberalism: Matt Y. has been writing about “neoliberalism” and the Obama administration. Relitigating things fifteen years gone is not something one shouldl do full-time. But one should do it occasionally: George Santayana was on to something when he said “those who do not remember the past are condemned to repeat it”. Here I think Matt’s claim that under Obama “stimulus measures required bipartisan deals” is simply wrong. The first stage of the ARRA could have had a second stage to be implemented only if recovery stalled. As Matt acknowledges, Reconciliation was an unused vehicle. Obama could have tried to convince people rather than jumping onto the austerity train in his January 2010 State of the Union speech. The Obama administration had lots of unused ability to use the housing agencies for stimulus. The Obama administration could have leveraged up the ARRA money it had. The Obama administration could have given Bernanke a left wing of Keynesian economists on his Board of Governors to offset the relatively clueless right-wing regional bank presidents. Et cetera. Et cetera. Et cetera. The extraordinary botch of Obama recovery policy was a “misjudgement”. But there were powerful—I would say hegemonic neoliberal ideology—reasons for that botch:
Matt Yglesias: Neoliberalism & Its Enemies IV: 10-15 years ago, left intellectuals… offered scathing criticisms of my commentary about the need to use monetary policy to aggressively boost the labor market…. When American public policy was causing millions of person-years of unnecessary unemployment due to austerity, the left’s main policy idea was that we needed even more austerity…. The big problem with Obama-era economic policy was that there was too much joblessness… the original ARRA was too small…. I would have used the reconciliation instructions for the Affordable Care Act as a vehicle to do more stimulus. But beyond that, all stimulus measures required bipartisan deals…. Policymakers in the Obama era undershot the mark on full employment. That was a bad mistake…. The bulk of post-neoliberalism, I think, is not really any coherent idea at all so much as an over-learning of the peculiar lessons of that particular point in time. It’s the idea that on top of remedying the real failures of Obama’s macroeconomic policies, you can also conduct politics without needing to do the tedious work of setting priorities or acknowledging tradeoffs… <
Economics: This really should tip the Fed into an 0.5%-point interest rate cut at its September meeting. Of course, the early data should have tipped the Fed into a July cut. Indeed, a January cut. To wait fourteen months after soft landing is achieved to start cutting is truly bizarre. Yes, you want to wait to be sure the soft landing has happened. Yes, you get egg on your fact if you start cutting and then have to reverse. But egg on your face is a much lower-cost thing than an unnecessary recession:
Augusta Saraiva: How Wonky US Payroll Revisions Became Controversial: ‘The US created 818,000 fewer jobs in the year through March than initially estimated… the Bureau of Labor Statistics said on Aug. 21…. The monthly payrolls data… comes from an establishment survey <bls.gov/bls/empsitquickguide.htm> of some 119,000 employers…. This sample of employers is benchmarked once a year primarily to information from the Quarterly Census of Employment and Wages program that collects data from states’ unemployment insurance tax records…. While the QCEW represents more than 95% of US employers, the drawbacks are that it is a less timely data source and subject to revisions itself… <bloomberg.com/news/articles/2024-08-22/…>
Economics: Bloomberg has the wrong headline here: “Trump tells more lies” is the proper headline. Shame on you guys—you know how to do your job, so do it:
Augusta Saraiva: How Wonky US Payroll Revisions Became Controversial: ‘The US created 818,000 fewer jobs in the year through March than initially estimated… the Bureau of Labor Statistics said on Aug. 21. While those adjustments usually fly under the radar, the recent figures have caused a commotion…. Trump… has claimed that the early estimates were fabricated and the Biden administration “defrauded the people of our country.” But… the revisions are part of a[n]… exercise aimed at achieving a more accurate picture of the labor market… <https://www.bloomberg.com/news/articles/2024-08-22/us-payroll-revisions-how-a-jobs-discrepancy-stirred-controversy>
Journamalism: I pay for the FT because it is usually much better than this. Full employment and a sectoral reconfiguration that is in accord with post-plague demand patterns are the other 2/3 of the temporary Biden inflation, and are much more valuable to Americans than the inflation was costly. U.S. inflation has been lower than in other North Atlantic economies, and the strength of the post-plague recovery has been much stronger:
Antonio Fatas: One can be critical of Bidenomics, but writing about it without mentioning the strength of the US recovery is not right. First time ever the economy is back to trend after a recession. And much stronger than most advanced economies: Janen Ganesh: Kamala Harris should distance herself from Bidenomics: ‘Biden[’s]… spending bills implicate him in price rises far more than other world leaders over the period. That is reason enough for Harris to detach herself from them…. Industrial workers, if Democrats are sincere about their plight, are also price-sensitive consumers, often of imported goods….If I understand it correctly, the Democratic attitude is… [that] Bidenomics, which voters greatly dislike, is sacrosanct… <threads.net/@antoniofatas/post/C-5Hj-uN…>
Economics: The August 5-6 financial earthquake was felt but only as a temporary disturbance in the broader markets. But it was a big deal for those who had been picking up the nickles of the dollar-yen interest-rate differential in front of the steamroller:
Robin Wigglesworth: The yenmageddon short squeeze: ‘Bloomberg’s take on this is that hedge funds have “turned bullish” on the Japanese yen, which is a bit like saying they turned bullish on GameStop in January 2021. People are definitely more bullish on the Japanese yen now, but this more like a primal scream of margin calls, short-covering, and wrecked P&Ls to us. That’s a near-200,000 contract swing in a matter of weeks, leaving non-commercial traders net long yen futures for the first time since 2021… <https://www.ft.com/content/4d9e55ef-bc49-4401-97b8-3f66af42617e>
This reminds me of a John Maynard Keynes quote:
Organised investment markets, under the influence of purchasers largely ignorant of what they are buying and of speculators who are more concerned with forecasting the next shift of market sentiment than with a reasonable estimate of the future yield of capital-assets… [are such] that, when disillusion falls upon an over-optimistic and over-bought market, it… fall[s] with sudden and even catastrophic force… <https://www.synapse9.com/ref/Keynes-ebook-TheGeneralTheory.pdf>
War: A very interesting but quite obtuse review of Ukraine-Muscovy diplomacy in the first half of 2022. Charap and Radchenko claim “a final reason the talks failed is that the negotiators put the cart of a postwar security order before the horse of ending the war”, not groking that a ceasefire was merely an opportunity for Putin to back off and try again at a more opportune time. Ukraine wanted a real security guarantee—Muscovite acknowledgement that other powers had the right and obligation to intervene militarily on Ukraine’s side if Muscovy attacked again. Putin was unwilling to provide that. Full stop. Other issues could be compromised. Borders can be compromised. Crimea and future NATO membership possibilities could be traded away for EU membership and a real security guarantee. But Ukraine would have been very foolish to give up its demand for a real security guarantee:
Samuel Charap & Sergey Radchenko: The Talks That Could Have Ended the War in Ukraine: ‘On March 29 [2022]… the sides announced they had agreed to a joint communiqué [that was never released]…. Proclaim Ukraine as a permanently neutral, nonnuclear state. Ukraine would renounce any intention to join military alliances or allow foreign military bases or troops…. If Ukraine came under attack… all guarantor states would be obliged, following consultations… to provide assistance… spelled out with much greater precision than NATO’s Article 5: imposing a no-fly zone, supplying weapons, or directly intervening with the guarantor state’s own military force…. Kyiv’s path to EU membership would be left open, and the guarantor states (including Russia) would explicitly “confirm their intention to facilitate Ukraine’s membership in the European Union.”… The communiqué suggests… Putin was willing to accept [this]. We can only conjecture as to why. Putin’s blitzkrieg had failed…. Perhaps he was now willing to cut his losses if he got his longest-standing demand: that Ukraine renounce its NATO aspirations and never host NATO forces… [and thus] ensure his most basic security interests, stem the hemorrhaging of Russia’s economy, and restore the country’s international reputation…. April 15… was the last [draft] exchanged…. The Russians attempted to subvert this crucial article by insisting that such action would occur only “on the basis of a decision agreed to by all guarantor states”—giving the likely invader, Russia, a veto…. The Ukrainians rejected that amendment, insisting on the original formula, under which all the guarantors had an individual obligation to act…. A final reason the talks failed is that the negotiators put the cart of a postwar security order before the horse of ending the war… <https://www.foreignaffairs.com/ukraine/talks-could-have-ended-war-ukraine>
Poetry: In the life of a Deputy Assistant Secretary, much has remained unchanged since the Tang Dynasty:
Du Fu: A Spring Night in the Chancellery, Attached to the Palace
In the palace annexe, as dusk falls, the flowers discreetly fade, And the roosting birds, as they pass, whistle sweetly. Here are ten thousand rooves, and above them, stars are stirring, The highest circle of heaven catches a flood of moonlight. I can’t sleep. Every sound is the rattle of the morning shift’s gold key chains, Blame the wind, but I imagine the jingle of jade on fancy reins. This file must be presented to His Highness at first light, I ask in darkness, ask again: What time? What time of night? <https://tangpoetry.substack.com/p/back-with-a-du-fu-whimsy>
Journamalism: I have swung around to the belief that the most likely cause is that the owners and the top editors really, really like their tax cuts, and are in enough of a bubble that they do not understand how people are reacting to them:
Walt Mossberg: I am not gleeful about pointing out the strangely biased news judgment by the New York Times. For 43 years, as a reporter, editor and columnist for the straight news pages of the Wall Street Journal,I competed against the Times every day. I got to know and respect the journalists who were my competitors. They were generally excellent. And the paper itself and later its website tried to tell the truth - sometimes at great risk. But what is happening there now is a violation of that history & is inexplicable to me… <threads.net/@mossbergwalt/post/C-vacBzP…>
Neofascism: And I think that JD Vance had an immigrant living in his house for a year, providing free childcare for his firstborn during his wife’s legal clerkship year:
Paul Waldmann: The Best Thing About the Olympics Is What Trump and Vance Can't Stand: ‘Athletes of all backgrounds, including immigrants? Hell yes…. First Trump condemned the opening ceremony as “a disgrace” because right-wing morons thought… Dionysus… was actually a mockery of da Vinci’s “The Last Supper”…. Then both Trump and Vance lied about Algerian boxer Imane Khelif, claiming both that she is a man (she’s not) and that she is transgender (she’s not). That was about all the Republican ticket had to say about the Olympics…. The U.S. Olympic team has a little too much diversity for… Trump and Vance, who lead a party so committed to re-whitening America that they printed up signs reading “MASS DEPORTATION NOW” for delegates to wave at their convention. The Olympics are a nearly perfect meritocracy… the variety of ethnic backgrounds… full of immigrants and the children of immigrants. In other words, it looks like America…. It’s not at all surprising that so many immigrants and children of immigrants become Olympians. The qualities necessary to achieve that level of athletic excellence—drive, focus, commitment, the ability to recover from setbacks, a strong work ethic—are often found in people willing to pick up from the place of their birth and make a fresh start in a new country…. What comes to my mind [is]: That is what America ought to be, right there. Look at what we show the world: all these different kinds of people who came from everywhere, and they all wear “USA” on their shirts. That’s what makes me proud to be an American. But that’s not how some people react. When J.D. Vance talks about immigrants, it’s not about how they make America better; he sneers with contempt at the very idea…. Vance often brings up Springfield, Ohio… [which] received a recent influx of immigrants from Haiti, as a cautionary tale. “Go to Springfield,” he says, “and ask the people there whether they have been ‘enriched’ by 20,000 newcomers”… <https://paulwaldman.substack.com/p/the-best-thing-about-the-olympics>
Economics: Given that the shelter inflation number is still a substantial overstatement of what is actually going on right now, how is this not a soft-landing accomplished? And what does the Fed think it is doing with policy substantially restrictive even as the inflation rate is at its target? Do they want to guarantee stop-go cycles as a thing?:
BLS: Consumer Price Index Summary: ‘The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis…. Over the last 12 months, the all items index increased 2.9 percent…. The index for shelter rose 0.4 percent in July, accounting for nearly 90 percent of the monthly increase in the all items index…. The index for all items less food and energy rose 0.2 percent in July… <bls.gov/news.release/cpi.nr0.htm>
Grifters: Why am I not surprised to learn that, as Tim Burke says, it very strongly looks like former Republican Nebraska Senator Ben Sasse is a crook?:
Garrett Shanley: Sasse’s spending spree: Former UF president channeled millions to GOP allies, secretive contracts: ‘The former UF president tripled his office’s spending compared to predecessor: In his 17-month stint as UF president… Sasse ballooned spending under the president’s office to $17.3 million in his first year in office—up from $5.6 million in former UF President Kent Fuchs’ last year…. The spending surge was driven by lucrative contracts with big-name consulting firms and high-salaried, remote positions for Sasse’s former U.S. Senate staff and Republican officials…. The university… declined to clarify specific duties carried out by Sasse’s ex-Senate staff, several of whom were salaried as presidential advisers…. Two of his former Senate staffers—Raymond Sass and James Wegmann—were among the highest-ranking and highest-paid officials at UF. Both worked remotely from the D.C. area… 800 miles from UF’s main campus in Gainesville. Sass… was UF’s vice president for innovation and partnerships — a position which didn’t exist under previous administrations. His starting salary at UF was $396,000…. Wegmann, Sasse’s former Senate communications director, is UF’s vice president of communications, a position he works remotely from his $725,000 home in Washington, D.C. Salaried at $432,000, Wegmann replaced Steve Orlando, who made $270,000 a year in the position and had nearly 30 years of experience in media relations at UF before he was demoted to be Wegmann’s deputy…. Sasse raised his former Senate staffs’ salaries at UF by an average of 44%…. Sasse also tapped former Republican Tennessee Commissioner of Education Penny Schwinn as UF’s inaugural vice president of PK-12 and pre-bachelors programs… with a starting salary of $367,500, work[ing]… from her $1 million home in Nashville, Tennessee… <https://www.alligator.org/article/2024/08/sasse-s-spending-spree-former-uf-president-channeled-millions-to-gop-allies-secretive-contracts>
15 years ago Yglesias was pushing the idea that all health and safety regulation [1] was social-wealth-destroying and should be repealed so poor people would have more opportunity to build steel mills in their backyards. Then he went off on people who criticized Bill Clinton and neoliberalism, using the then-popular tactic of claiming their was no such thing as neoliberalism and that it was just "a slur" that the "the left" used to criticize anyone or any policy it didn't like.
Neither of those takes held up very well. So I'm surprised he's doing a retrospective.
[1] particularly those he had neither the technical education nor practical field experience to understand, such as plumbing and sewer regulations.
JD Vance is one of those Republicans who likes to live like a Democrat. This includes a working spouse in a profession that demands long hours. This has certain child-care implications that I'm not sure he would want to admit to.
15 years ago Yglesias was pushing the idea that all health and safety regulation [1] was social-wealth-destroying and should be repealed so poor people would have more opportunity to build steel mills in their backyards. Then he went off on people who criticized Bill Clinton and neoliberalism, using the then-popular tactic of claiming their was no such thing as neoliberalism and that it was just "a slur" that the "the left" used to criticize anyone or any policy it didn't like.
Neither of those takes held up very well. So I'm surprised he's doing a retrospective.
[1] particularly those he had neither the technical education nor practical field experience to understand, such as plumbing and sewer regulations.
JD Vance is one of those Republicans who likes to live like a Democrat. This includes a working spouse in a profession that demands long hours. This has certain child-care implications that I'm not sure he would want to admit to.