Links: 2013-10-23
Economics
An outbreak of communication – Steve Keen’s Debtwatch | Steve Keen’s Debtwatch
We should follow this because it shows Steve Keen’s post-Keynesian world view translated accurately into neoclassical terms. Perhaps something will come of it. Keen hopes so.
United States
The 10-Years Falls Below 2.5% Crossing Wall Street
It took a while but the markets have finally come around to the view have always had, that the Fed is not hiking anytime soon. And that means rates will remain at zero for a long time. See here from August: Why the rise in US interest rates is capped
Fed won’t raise U.S. rates until well into 2015, traders bet | Reuters
“Traders are betting the Federal Reserve will wait well into 2015 to raise interest rates after a U.S. government report showed the labor market lost steam even before this month’s government shutdown.”
The downsides of quantitative easing, Cardiff Garcia smackdown watch | FT Alphaville
The argument that is most obvious – and one I have made – is that QE has no transmission channel except through asset prices. As such, it depends on artificially suppressing risk premia and re-allocating assets in a potentially non-optimal fashion. With fiscal policy shut down, the Fed feels it has no choice but to do QE despite the downside risk.
“here is an attempt to sketch out some of the non-trivial downsides to QE, along with a discussion of countervailing arguments that explain why the downsides haven’t convinced me that QE should stop or be slowed.”
Utah Senator Pays Price Back Home for Shutdown – WSJ.com
Obamacare Polls: Faith in Health Care Exchanges Eroding | TIME.com
“Forty-six percent of Americans polled on Oct. 9 to 13, while the shutdown was in full swing, said the Affordable Care Act’s online insurance exchanges were working “not too well” or “not working at all.””
Approval of Affordable Care Act Inches Up
“Despite the highly publicized technical issues that have plagued the government’s health insurance exchange website that went live on Oct. 1, Americans’ views of the Affordable Care Act are slightly more positive now than they were in August. Forty-five percent now approve of the law, while 50% disapprove, for a net approval score of -5. In June and August, net approval was slightly lower, at -8.”
Pomboy: Can’t Handle the Truth | The Big Picture
“Stephanie Pomboy argues that the record profits being enjoyed by corporations are caused not by economic recovery, but by the government stimulus programs, and likely to be short-lived”
Bloated Government? Federal Employment at 47-Year Low – NYTimes.com
“In September, before the government shutdown, the government had 2,723,000 employees, according to the latest job report, on a seasonally adjusted basis. That is the lowest figure since 1966. Until now, the lowest figure for the current century had been 2,724,000 federal employees in October 2004, when George W. Bush was seeking a second term in the White House.
Now, the federal government employs exactly 2 percent of the people with jobs in this country. In 1966, the figure was more than twice that, 4.3 percent. “
Labor Market Spider Chart – Federal Reserve Bank of Atlanta
“The spider chart is designed to allow real-time tracking or monitoring of broad labor market developments by comparing current conditions to those in the fourth quarters of 2007 (prerecession peak) and 2009 (postrecession trough in employment). Indicators of labor market status are broken up into four groups: Employer Behavior, Confidence, Utilization, and Leading Indicators. The data will be updated twice monthly.”
The reality of America’s fiscal future – FT.com
“It is not about the debt. It is about whether Americans will pay the taxes needed to fund the government they have legislated. The US has created major social programmes. But it seems unable to agree on the taxes needed to pay for them, while sustaining essential state functions at a reasonable level. This struggle is disguised behind the rhetoric on unsustainable debt and disincentive effects of modest rises in taxation.
If the US does create a huge fiscal problem for itself, it will be because agreement on the balance between what government does and how it is financed is impossible. But, first, the factitious crises of recent weeks simply have to stop.”
Europe
La crisis y el rescate hace que los griegos sean un 40% más pobres que en 2008 | Economía | EL PAÍS
This Spanish article notes that official Greek statistics now show Greeks as 40% poorer than they were in 2008.
ekathimerini.com | Greek household disposable income dropped by 9.3 pct in Q2
“The 9.3 percent year-on-year drop in disposal income from 33.2 billion euros to 30.1 billion euros from the second quarter in 2012 to the same period this year is attributed mainly to the 13.9 percent average reduction in salaries and a 12.4 percent drop in social benefits.”
ekathimerini.com | Greek public debt rises in second quarter of 2013
“Greece’s public debt reached 169.1 percent of the country’s GDP in the second quarter of 2013, compared to 160.5 percent in the year’s first quarter, according to figures released by Eurostat on Wednesday.
The report pointed to Greece showing the European Union’s highest debt to GDP, followed by Italy (133.3 percent), Portugal (131.3 percent) and Ireland (125.7 percent). The lowest figures were recorded in Estonia (9.8 percent), Bulgaria (18 percent) and Luxembourg (23.1 percent).
The agency noted that at the end of the second quarter of 2013 the government debt to GDP ratio in the eurozone stood at 93.4 percent compared to 92.3 percent at the end of the first quarter.”
ekathimerini.com | Tourism driving Greece’s economy
“report by McKinsey for SETE, which forecast that tourism will be the driving force behind the Greek economy for at least the next eight to 10 years, representing over 35 percent of the country’s growth and 38 percent of its employment increase.”
ekathimerini.com | Primary surplus target edges closer after September figures
“The government is increasingly optimistic that it will meet its target for a primary surplus of 344 million euros by the end of the year, as the data for the budget’s execution in the first nine months show a primary surplus of 1.1 billion euros. This is attributed to a reduction in expenditure rather than an increase in tax revenues, which missed the target by 455 million euros.”
BBC News – Spain out of recession, central bank says
“Spain’s gross domestic product (GDP) grew by 0.1% between July and September, the bank said.
However, GDP was still 1.2% lower in the quarter compared with the same period last year.”
Paper by EU Economist Backs Austerity’s Critics – Real Time Economics – WSJ
“Coordinated austerity in euro-area countries has stifled economic recovery and deepened the crisis across the currency bloc, according to a new technical paper prepared by an economist at the European Commission.
Spending cuts in Germany in particular have made things worse for the weaker members of the euro area through “spillovers” – the economic impact on economies connected to Germany’s– the paper says, adding that limited stimulus programs in richer countries could help the whole of the currency bloc.”
Asia-Pacific
“A number of my colleagues are buying in towns over 50km outside of Melbourne like Woodend, Castlemaine or Ballarat – since they love the smalltown lifestyle, but also because that is where they can afford to raise their young families. But in the current housing market, these are the lucky few.”
Treasurer Joe Hockey announces debt limit to increase to $500 billion
“The Abbott government will significantly increase the debt ceiling from $300 billion to $500 billion, with Treasurer Joe Hockey saying he wanted a higher limit to prevent a situation like in the United States where the government was brought to a near standstill.”
China Housing Prices Rise for Ninth Straight Month, as Pace Accelerates – WSJ.com
“Average new-home prices in 70 Chinese cities rose to another fresh high in September, amid signs of panic buying driven by fears that prices will rise further. “
China central bank may tighten cash supply as home prices fuel inflation fears | Reuters
“On the one hand, policymakers want to avoid a buildup of market and economic imbalances, such as a debt-fuelled property bubble.
On the other hand, they are reluctant to use more potent instruments to control the imbalances in case they also blunt a modest economic recovery ahead of a crucial policy meeting next month.
China’s house prices in September rose 9.1 percent from a year earlier, the sharpest rise since January 2011, calculations of official data by Reuters shows. The CSI300 .CSI300 of leading Shanghai and Shenzhen A-share listings fell 1 percent as investors braced for possible measures to calm the property market.”
Top China Banks Triple Debt Write-Offs as Defaults Loom – Bloomberg
“China’s biggest banks tripled the amount of bad loans written off in the first half, cleaning up their books ahead of what may be a fresh wave of defaults.
Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, and its four largest rivals expunged in the first six months 22.1 billion yuan ($3.65 billion) of debt that couldn’t be collected, up from 7.65 billion yuan a year earlier, filings showed. That didn’t pare first-half profits, which climbed to a record $76 billion, as provisions were set aside in earlier periods when the loans began souring. “
Technology
How a Free OS Will Pay Off for Apple – John Paczkowski – News – AllThingsD
“Back in the day, the company regularly issued OS updates at no charge, allowing them to be freely redistributed. Apple ended that practice in 1997 with the launch of Mac OS 8*. Now, some 16 years later, it is embracing it again, and for a very good, very simple reason.
As Craig Federighi, Apple’s SVP of software engineering, said during Apple’s Tuesday media event, “What’s most important to us is seeing Mavericks in as many hands as possible.” CEO Tim Cook echoed this remark later, and refined it: “We want everyone to have access to all our best features.””
Apple Unveils New iPads – WSJ.com
The price/market share trade-off will ontinue to force down prices and margins at Apple. The question is whether the volume offset is sufficient to maintain growth.
“Apple’s new holiday lineup lowers the entry price for the cheapest iPads to below $300 for the first time. Apple said it will sell a range of tablets starting with last year’s iPad Mini for $299, up to the new iPad Air, which starts at $499. That brings Apple closer in line with competitors like Amazon.com Inc., who have pushed tablet prices down as far as $229.”
Civil Liberties
Security Check Now Starts Long Before You Fly – NYTimes.com
“It is unclear precisely what information the agency is relying upon to make these risk assessments, given the extensive range of records it can access, including tax identification number, past travel itineraries, property records, physical characteristics, and law enforcement or intelligence information.
The measures go beyond the background check the government has conducted for years, called Secure Flight, in which a passenger’s name, gender and date of birth are compared with terrorist watch lists. Now, the search includes using a traveler’s passport number, which is already used to screen people at the border, and other identifiers to access a system of databases maintained by the Department of Homeland Security.
Privacy groups contacted by The New York Times expressed concern over the security agency’s widening reach. “
U.S. drones’ civilian casualties detailed by rights groups | Toronto Star
“Aerial strikes, a cornerstone of national security policy, are needlessly killing hundreds of civilians, say Human Rights Watch and Amnesty International.”
Rights Groups Say Some U.S. Drone Strikes May Be War Crimes | Danger Room | Wired.com
“Two prominent human rights groups today blasted America’s drone wars in Pakistan and Yemen, painting a grim picture of massive civilian deaths and potentially grave violations of international law.”
Court Rules Probable-Cause Warrant Required for GPS Trackers | Threat Level | Wired.com
“An appellate court has finally supplied an answer to an open question left dangling by the Supreme Court in 2012: Do law enforcement agencies need a probable-cause warrant to affix a GPS tracker to a target’s vehicle?
The Third Circuit Court of Appeals gave a resounding yes to that question today in a 2 to 1 decision.”
For First Time, Americans Favor Legalizing Marijuana
“For marijuana advocates, the last 12 months have been a period of unprecedented success as Washington and Colorado became the first states to legalize recreational use of marijuana. And now for the first time, a clear majority of Americans (58%) say the drug should be legalized. This is in sharp contrast to the time Gallup first asked the question in 1969, when only 12% favored legalization.”
Uruguay to sell legal marijuana for $1 a gram | World news | theguardian.com
“Uruguay’s drug tsar says the country plans to sell legal marijuana for $1 a gram to combat drug-trafficking, according to a local newspaper.”
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