Tuesday, February 24, 2015

Two newsreadings for Tuesday

Here's a couple things:

FT Alphaville - no, Japan's not in danger of a fiscal crisis. Quote:
About 20 years ago or so, it started becoming fashionable to conclude that the Japanese government’s borrowing costs were going to go up a lot.

Demographic changes were going to dramatically increase the share of retirees dependent on the state for income and healthcare at the same time as the working population — and therefore the tax base — would be shrinking. Add in alleged economic stagnation and the result would be a rapidly widening gap between inflows and outflows. The ratio of government debt to GDP would skyrocket.

Eventually, investors would refuse to continue lending to a government that was becoming ever-more indebted, which would lead to some kind of crisis: interest rates would spike, the currency would collapse, and politicians would have to choose between the Scylla of default and the Charybdis of hyperinflation.

One popular way to bet on this outcome was to short-sell Japanese government bonds. Back in the beginning of 1995, the benchmark 10-year was yielding about 4.6 per cent. By the beginning of 1998 the yield had plunged below 2 per cent and has basically never crossed that threshold since. If you’d been long over those three years you would have made well over 20 per cent just on price appreciation. Nowadays the yield on a 10-year JGB is just shy of 0.4 per cent. No wonder old macro hands refer to the short JGB trade as “the widowmaker.”
Does that sound familiar? Say, any sort of commonality with what certain people were blathering regarding the USA's debt situation of the past couple years?

Here comes the economics:
Japan’s public debt is denominated in yen and mostly held by Japanese residents. To the extent that these bonds pay interest, they’re merely a mechanism for transferring wealth from one set of Japanese to another, and the level of interest rates merely determines the size of this transfer. While that may have important macroeconomic effects depending on how the winners and losers tend to spend and invest their income, it’s hard to see why these transfer payments would spiral up or down in a way that harms growth.
All public debt is also a private asset. Get that? Cos if you don't, you should probably fucking read Piketty. Also,
Japan’s government debt is often overstated. We were surprised that Ito repeatedly cited the gross public debt figure of 245 per cent of GDP. That’s correct, but a bit misleading, since much of the debt is held by other branches of government and because the government owns many valuable assets. Net all this out and the debt burden plunges below 140 per cent of GDP, according to the International Monetary Fund. And that doesn’t even include the 210 trillion in JGBs held by the Bank of Japan. Cut that out and the actual debt burden is closer to 50 per cent of GDP.
Public debt is also often a public asset, and public debt is also offset by other public assets.

With that in mind,
Takatoshi Ito, an economist who has advised several Japanese governments and was rumoured to have been on prime minister Shinzo Abe’s shortlist to run the Bank of Japan, argued that the consumption tax needed to be raised to at least 15 per cent to prevent what he called a “fiscal crisis.”
In other words, Ito's real strategy is to destroy the working class through crushing taxation in order to transfer as much wealth as possible to the creditor class. Which, really, is just what you'd expect from any right-wing economist out there today.

Minneapolis Star Tribune - Idaho lawmaker thinks the vagina is connected to the digestive tract. Apparently the Idaho legislature has solved all the rest of the world's problems, so now they're drafting a law to ensure telemedicine isn't used for abortions. Quote:
An Idaho lawmaker received a brief lesson on female anatomy after asking if a woman can swallow a small camera for doctors to conduct a remote gynecological exam.

The question Monday from Republican state Rep. Vito Barbieri came as the House State Affairs Committee heard nearly three hours of testimony on a bill that would ban doctors from prescribing abortion-inducing medication through telemedicine.


Dr. Julie Madsen, a physician who said she has provided various telemedicine services in Idaho, was testifying in opposition to the bill. She said some colonoscopy patients may swallow a small device to give doctors a closer look at parts of their colon.

"Can this same procedure then be done in a pregnancy? Swallowing a camera and helping the doctor determine what the situation is?" Barbieri asked.

Madsen replied that would be impossible because swallowed pills do not end up in the vagina.
Unless misplaced, of course.

My god, this is the world's greatest economy?
Under HB154, abortion-inducing medication could not be administered through telemedicine — which does not currently happen in Idaho — and requires doctors to make "all reasonable efforts" to schedule a follow-up visit. The bill is backed by the anti-abortion group Idaho Choose Life.

Anti-abortion advocates argue that the bill will protect women who may have an adverse reaction to abortion medication. Those opposed counter that the bill is an attempt to restrict abortions, pointing to women living in rural areas where access to clinics is already limited.
My god, they really have solved all the rest of Idaho's problems. Fantastic small government you've got there, boys!

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