Saturday, February 13, 2016

Some weekend news


Market is still being silly. It's so silly that people all of a sudden are buying gold! How silly is that?

Here's some news:

CEPR - the pent-up demand for quits. The argument is that the high quits being reported in the US is actually a crap number, because there should be a massive backlog of quits from the past 7 years of economic weakness. Interesting point.

Calculated Risk - retail sales are fine. What? Sales ex-gas are up 4.5% yoy? OMG it must be a recession! Sell sell sell!

Tim Duy - Fed must embrace a new policy path. OK, he's supposed to be the world's greatest Fed watcher, but I really think Tim Duy is just piddling his panties at the 15% drop in his 401K.


Noah Smith - the thing about financial markets. Basically presents some research that confirms that the minute everyone figures out a way to score beta, the information becomes useless because it gets arbed away. Everyone knows this except economists, apparently. Gee, you'd think they'd have clued in already, what with their fucking fetish for "supply and demand", eh?


FT Alphaville - yen goes up on aggressive money-printing and negative interest rates. By the way, do you know what you do for a country when you hoard its currency? You are providing them an interest-free loan. Every currency is a zero-coupon bond, you see.

Bespoke - gold on the cusp of a new bull market. Damn, I thought I'd have to wait a couple more years before getting back in! Oh well. Let's see what happens to gold after PDAC and the inevitable end to US market panty-piddling, eh? I rather doubt that you can build a base for a new secular bull market on the backs of panicking cokehead honkies.

David Glasner - there is no such thing as an intertemporal budget constraint. My god. I keep coming across economists' blog posts asserting that nobody's working with disequilibrium models. This is fucking 3rd-year undergraduate calculus, people!


WSEG - an interview with Larry Summers. Basically, when governments can borrow at zero percent, they should be investing in any infrastructure that has a positive return:
The reality is that it’s government’s responsibility to be countercyclical—that when private saving is substantially exceeding private investment, that is precisely when government should be borrowing and investing.

This is a moment when the United States can borrow money at less than 3 percent for 30 years, in a currency we print ourselves. It is a moment when materials costs are extraordinarily low. It is a moment when construction unemployment rates remain high.

Has there ever been a better moment to fix LaGuardia or Kennedy Airport? It is crazy that at a moment like this, the United States has the lowest rate of federal infrastructure investment, relative to the economy, than we’ve had since 1947. And on a net basis—that is, taking into account depreciation—we’re essentially not investing at all.

So there is a compelling case, in my view, for expanded public investment. Even the International Monetary Fund, hardly a group of radical socialists, has recognized that in situations like the present one, where the economy is close to being in a liquidity trap, the likelihood is that increased public investments will, over time, reduce rather than increase debt-to-GDP ratios, as they call forth increased economic growth.

I yield to no one, not Pete Peterson, not the Concord Coalition, in my concern for the well-being of my children’s generation and future generations. It’s just that I think a deferred maintenance liability of trillions of dollars compounds at a far higher rate than the interest rate at which the United States is now able to borrow. So addressing that deferred maintenance liability is actually reducing the financial burden that we will place on future generations.
And if you think there's no such thing as a government investment with a positive return, you obviously never worked in engineering and thus you're a fucking peon who should keep their fucking mouth shut.

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