Fascinating piece in the New Yorker - The Planning Machine: Project Cybersyn and the origins of the Big Data
nation:
http://www.newyorker.com/magazine/2014/10/13/planning-machineAttention Economy
Friday, October 31, 2014
BOJ Springs a Surprise
While the Fed may have ended QE3, Bank of Japan is nowhere near being done with its version of quantitative easing. Today, BOJ announced that it is taking
asset purchase programs to a whole new level:
“The BOJ will triple
the pace of its buying of stock and property funds, extend the average maturity
of its bondholding by three years to 10, and raise the ceiling of its annual
Japanese government bond purchases by ¥30 trillion to ¥80 trillion. As a
result, the BOJ’s target amount of annual asset purchases will rise to around
¥80 trillion ($730 billion) from the previous ¥60 trillion-¥70 trillion range.
Mr. Kuroda also appears to have pushed back the two-year target for achieving
2% inflation effectively to three years, saying he sees prices rising to that
level in the latter half of fiscal year 2015, which ends March 2016.”
Related,
http://www.nytimes.com/2014/11/01/upshot/what-the-bank-of-japans-surprise-move-means-for-the-global-economy.html
Deflationary Risk
Japan’s Economic Travails – Lessons for the West
Paul Krugman’s interesting column on Japan:
http://www.nytimes.com/2014/10/31/opinion/paul-krugman-apologizing-to-japan.htmlDeflationary Risk
Thursday, October 30, 2014
Simple Math – China and Relative Economic Size
Canadian born economist Noah Smith sets some journalists straight on basic mathematics involving population size and GDP –
“China’s population in
2013 was 1.357 billion while the U. S.'s was 316 million. That’s a ratio of
4.29 to 1.
Just to help the
reader understand this size disparity, imagine that the U.S. was an average
American man, weighing 191 pounds. If population were weight, then China would
weigh the same as an 819-pound adult male grizzly bear.
…
Here is a fact: If
every Chinese person of working age had a job for 40 hours a week, 50 weeks a
year, those workers would only need to make $9.15 an hour for the Chinese
economy to be larger than that of the U.S.”
See my previous post on a related topic:
Wednesday, October 29, 2014
Goodbye to QE3
The Fed has decided to end its QE3 program:
“The Committee judges
that there has been a substantial improvement in the outlook for the labor
market since the inception of its current asset purchase program. Moreover, the
Committee continues to see sufficient underlying strength in the broader economy
to support ongoing progress toward maximum employment in a context of price
stability. Accordingly, the Committee decided to conclude its asset purchase
program this month”.
Regarding the future direction of short-term policy rates, the FOMC statement noted:
“The Committee anticipates,
based on its current assessment, that it likely will be appropriate to maintain
the 0 to 1/4 percent target range for the federal funds rate for a considerable
time following the end of its asset purchase program this month, especially if
projected inflation continues to run below the Committee's 2 percent longer-run
goal, and provided that longer-term inflation expectations remain well
anchored. However, if incoming information indicates faster progress toward the
Committee's employment and inflation objectives than the Committee now expects,
then increases in the target range for the federal funds rate are likely to
occur sooner than currently anticipated. Conversely, if progress proves slower
than expected, then increases in the target range are likely to occur later
than currently anticipated.”
Update:
Impact of QE (lots of nice charts):
http://www.nytimes.com/2014/10/30/upshot/quantitative-easing-is-about-to-end-heres-what-it-did-in-seven-charts.html
Law of Unintended Consequences and International Affairs
Extraordinary program (PBS Frontline) on the mess in the Middle East:
http://www.pbs.org/wgbh/pages/frontline/rise-of-isis/
http://www.pbs.org/wgbh/pages/frontline/rise-of-isis/
Tuesday, October 28, 2014
US News and World Report - Global University Rankings
US News and World Report releases its first global university rankings:
http://www.usnews.com/education/best-global-universities/rankings
http://www.usnews.com/education/best-global-universities/rankings
Healthcare Expenditure - Cross-Country Comparisons
Interesting charts comparing healthcare expenditure in advanced economies:
http://theconversation.com/infographic-how-uk-health-spending-compares-to-other-countries-31184
http://theconversation.com/infographic-how-uk-health-spending-compares-to-other-countries-31184
Monday, October 27, 2014
Technology and Obsolescence
An interesting piece in the New Yorker that highlights the rapid churn in the business world wrought by technology:
http://www.newyorker.com/business/currency/duracell-age-iphone
http://www.newyorker.com/business/currency/duracell-age-iphone
Obsessing Over China's Short-Term Economic Fluctuations
Reports on China in the Western press these days suggests a certain level of ‘schadenfreude’ (pleasure derived from the misfortunes of others).
An exception is the following piece by Bloomberg’s William Pesek –
http://www.bloombergview.com/articles/2014-10-27/it-s-time-to-give-china-some-time
Pesek wisely notes:
Pesek wisely notes:
“For now, the best
strategy for outsiders may be to look the other way, as best they can. Instead
of obsessing over every tick up or down in China’s GDP growth rate, the
investment world needs to give Chinese leaders time and space to implement the
reforms they’ve pledged thus far.
…
Xi's challenge was
clear last week when the global media convulsed over news China had grown the
slowest in five years in the third quarter. Editors and bankers tripped over
themselves to urge Beijing to do more to spur growth. This is what’s truly
hypocritical: Even though everyone acknowledges that China must stop
artificially pumping up its economy, markets panic at the slightest hint GDP is
losing altitude -- as if China were some giant company that must constantly
impress us.”
For those suspicious of China’s GDP figures, see research findings
of economists at the Federal Reserve Bank at San Francisco:
On the Reliability of Chinese Output Figures by JOHN FERNALD,
ISRAEL MALKIN, AND MARK SPIEGEL
Living Wages – US versus Europe
Complex issues associated with paying workers a living wage:
The NYTIMES piece notes:
“On a recent
afternoon, Hampus Elofsson ended his 40-hour workweek at a Burger King and
prepared for a movie and beer with friends. He had paid his rent and all his
bills, stashed away some savings, yet still had money for nights out.
That is because he
earns the equivalent of $20 an hour — the base wage for fast-food workers
throughout Denmark and two and a half times what many fast-food workers earn in
the United States
…
Many American
economists and business groups say the comparison is deeply flawed because of
fundamental differences between Denmark and the United States, including
Denmark’s high living costs and taxes, a generous social safety net that
includes universal health care and a collective bargaining system in which
employer associations and unions work together. The fast-food restaurants here
are also less profitable than their American counterparts”.Dilma Gets Reelected in Brazil
Dilma Rousseff narrowly wins the Brazilian presidential race:
http://www.cnbc.com/id/102122398
The markets don't seem to be too pleased with the verdict.
Related,
India versus Brazil – Policymakers and Effective Economic Management
http://www.cnbc.com/id/102122398
The markets don't seem to be too pleased with the verdict.
Related,
India versus Brazil – Policymakers and Effective Economic Management
Saturday, October 25, 2014
Scientific Research and the General Public
What Scientists Really Do - An interesting piece in NY Review of Books by Priyamvada
Natarajan, Professor in the Departments of Astronomy and Physics at Yale
University.
In the article, she notes:
“… In a word, the
general public has trouble understanding the provisionality of science.
Provisionality refers to the state of knowledge at a given time. Newton’s laws
of gravity, which we all learn in school, were once thought to be complete and
comprehensive. Now we know that while those laws offer an accurate
understanding of how fast an apple falls from a tree or how friction helps us
take a curve in the road, they are inadequate to describe the motion of
subatomic particles or the flight of satellites in space. For these we needed
Einstein’s new conceptions.”
Friday, October 24, 2014
Africa – Long-Term Growth Prospects
During the past decade, many countries on the African
continent achieved impressive economic growth rates. Can they sustain it in
the coming decades?
Noted development economist Dani Rodrik appears skeptical of
an “African Growth Miracle”:
Interestingly, financial market participants are still aggressively
seeking higher yields in Africa:
Thursday, October 23, 2014
Monday, October 20, 2014
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