Wednesday, September 9, 2015

Back to school news

So I'm back at university, thus posting will be less obsessive at least til I get my footing.

My polisci prof seems good though he's just a kid. It's hilarious hearing him talk about "The Cold War" - I was actually there, one of the many teenagers who was a mite pissed off that the US and Russia were (still) threatening worldwide nuclear annihilation and there was nothing we could do about it. The prof, meanwhile, was born after Gorbachev was deposed.

My stats prof is hilarious, which is great motivation for first-year kiddies to go to class... but the room seats about 400 and there's no way I want to go there. No problem, the first month is just sets, Boolean algebra and permutations & combinations - I know all that already so I won't bother going for the next few weeks.

Anyway, enough about me, here's the news:

New Deal Demoncrat - five graphs for 2015, Labour Day update. Continued watching of mortgage refi, hourly wages vs gas prices, underemployment, NILFWAJN, and nominal wage growth. And still over all this time, the only things benefiting the consumer are the gross macro trends (interest rate collapse and oil price collapse). As opposed to, say, wage growth and employment, which are obviously sociamalism and therefore must be stopped at all costs.

Mark Thoma - Fed flying blind into September. Let Tim Duy add some colour and analysis.

Krugginator - Trump is right on economics. Haha! Epic troll!:
Mr. Bush hasn’t focused on what’s truly vicious and absurd — viciously absurd? — about Mr. Trump’s platform, his implicit racism and his insistence that he would somehow round up 11 million undocumented immigrants and remove them from our soil.

Instead, Mr. Bush has chosen to attack Mr. Trump as a false conservative, a proposition that is supposedly demonstrated by his deviations from current Republican economic orthodoxy: his willingness to raise taxes on the rich, his positive words about universal health care. And that tells you a lot about the dire state of the G.O.P. For the issues the Bush campaign is using to attack its unexpected nemesis are precisely the issues on which Mr. Trump happens to be right, and the Republican establishment has been proved utterly wrong.
What's that? You say the Krugginator must have come down with the hydrophoby? Trust me, read the rest of the article and he'll explain himself.

Jeffrey Frankel - misinterpreting Chinese intervention in financial markets. Let him explain the recent "OMG yuan devaluation":
China in August gave American politicians an instance of the adage, “Be careful what you wish for, because you might get it.” The widely decried 3% “devaluation” of the yuan was the result of a change by the People’s Bank of China in the arrangement for setting the exchange rate, a change that constituted a step in the direction of letting the market decide. This is what US congressmen have long claimed they wanted and, even now, confusedly still claim they want.

The change sounds technical, but is easily described. China’s central bank has for some time allowed the value of the yuan to fluctuate each day within a two per cent band, but has not routinely allowed the movements to cumulate from one day to the next. The change on August 11 was to allow the day’s depreciation to carry over fully to the next day. Thus market forces can play a greater role in determining the exchange rate.
And why are Americans piddling themselves anyway?:
In truth, a 3 percent change in the exchange rate – the size of the so-called “devaluation” against the dollar – is negligible. For example the euro and Japan’s yen have each depreciated far more than this over the last year, against both the dollar and the yuan.
There is something to be said though for the fear that China has spent far too much money fighting a trend toward devaluation, thus putting their reserves in danger; and something to be said for the fear that a currency drop, if allowed to continue, would result in a late-90s style capital flight and economic collapse. Then again, the 50,000 economists working for the Communist Party have probably studied the Asian Crisis, y'think? And maybe they know that Malaysia avoided the worst through capital controls that the CP is well empowered to replicate.

Anyway, read that article, it's good.

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