Attention Economy


Thursday, April 30, 2020

US Equities - Return of Irrational Exuberance?

Crashing Economy, Rising Stocks: What’s Going On?

Chipotle and Tesla are back near all-time highs even as they're directly threatened by the coronavirus pandemic.

Warren Buffett's favorite stock-market indicator hits record high, signaling a crash could be coming

Stock Traders Should Heed the Lessons of the 1930s

Rise of Superstar Firms and the Decline in Labor Share of Income

Advice for the Class of 2020

Inspiring Words from Bill and Melinda Gates:

Hang in There, Graduates by Amy Chua (‘Tiger Mom’)
Amy Chua - https://www.amychua.com 

--
BLAST FROM THE PAST:
The Statute of Limitations on College Grades
http://conversableeconomist.blogspot.com/2019/04/the-statute-of-limitations-on-college.html
Calvin Trillin (1990):
“What I'm saying is that when it comes to college grades, there is a sort of statute of limitations.
It kicks in pretty early. By the time you're 28, nobody much cares whether or not you had to take Bonehead English or how you did in it. If you happen to be a pompous 28, wearing a Phi Beta Kappa key on your watch chain will make you seem more pompous. (If we're being absolutely truthful, the watch chain itself is a mistake.) Go ahead and tell that attractive young woman at the bar that you graduated magna cum laude. To employ a phrase I once heard from a country comedian in central Florida, `She just flat out do not care.' The statute of limitation has already run out.
This information about the statute of limitation ought to be comforting to the college seniors who are now limping toward commencement. In fact, it may be that commencement speakers -- some of whom, I regret to say, tend to wear Phi Beta Kappa keys on their watch chains -- ought to be telling the assembled degree recipients. Instead of saying 'life is a challenge' or ‘commencement means beginning,' maybe a truly considerate commencement speaker would say, 'Take this degree, and, as to the question of how close you came to not getting it, your secret is safe with us.'
It's probably a good thing that after a while nobody cares. On the occasion of my college class' 25th reunion, I did a survey, using my usual scientific controls, and came to the conclusion that we had finally reached the point at which income seemed to be precisely in inverse proportion to academic standing in the class. I think this is the sort of information that students cramming desperately for the history final are better off not having.” 

The Labor Market is in Distress

Politicization of US Intelligence Services

Trump Officials Are Said to Press Spies to Link Virus and Wuhan Labs

We know what happened the last time that politicians interfered with intelligence agencies:
Hubris: The Inside Story of Spin, Scandal, and the Selling of the Iraq War

Wednesday, April 29, 2020

Which Societies are Best Prepared to Deal with Pandemics?

Vietnam offers tough lessons for U.S. on coronavirus

How South Korea Stopped COVID-19 Early
https://www.project-syndicate.org/commentary/how-south-korea-stopped-covid19-early-by-myoung-hee-kim-2020-04

New York voices: Virus-wracked city split on safety versus liberty
Experts say pandemic reactions highlight US-Asia culture gap
“"A society like the U.S. is really not prepared to come together collectively and prioritize the collective good over the rights of the individual," Kanter continued. "We're just not built for this."
Kanter said more collectivist cultures, including Asian ones, appear to be better at handling a pandemic. He cited a 2008 study published by London's Royal Society that suggested dealing with past disease outbreaks may have helped shape collectivist cultures in the first place.”

Pathogen prevalence predicts human cross-cultural variability in individualism/collectivism
Abstract
Pathogenic diseases impose selection pressures on the social behaviour of host populations. In humans (Homo sapiens), many psychological phenomena appear to serve an antipathogen defence function. One broad implication is the existence of cross-cultural differences in human cognition and behaviour contingent upon the relative presence of pathogens in the local ecology. We focus specifically on one fundamental cultural variable: differences in individualistic versus collectivist values. We suggest that specific behavioural manifestations of collectivism (e.g. ethnocentrism, conformity) can inhibit the transmission of pathogens; and so we hypothesize that collectivism (compared with individualism) will more often characterize cultures in regions that have historically had higher prevalence of pathogens. Drawing on epidemiological data and the findings of worldwide cross-national surveys of individualism/collectivism, our results support this hypothesis: the regional prevalence of pathogens has a strong positive correlation with cultural indicators of collectivism and a strong negative correlation with individualism. The correlations remain significant even when controlling for potential confounding variables. These results help to explain the origin of a paradigmatic cross-cultural difference, and reveal previously undocumented consequences of pathogenic diseases on the variable nature of human societies. 

Do Pandemics Increase or Decrease Inequality?

Risk to America's Long Term Growth Potential

By turning away the world’s best talent, U.S. industrial and tech leadership might lose out to China and other nations.

A small sample of India-born CEOs:
  • IBM CEO Arvind Krishna
  • Microsoft CEO Satya Nadella
  • Google CEO Sundar Pichai
  • Adobe CEO Shantanu Narayen
  • Mastercard CEO Ajay Banga
  • Novartis CEO Vasant Narasimhan 

Emerging Markets - Important Trends

The Coronavirus Outbreak - Scientific/Policy Debates

U.S. Coronavirus Death Toll Is Far Higher Than Reported, C.D.C. Data Suggests
https://www.nytimes.com/interactive/2020/04/28/us/coronavirus-death-toll-total.html

Why the Coronavirus Is So Confusing: A guide to making sense of a problem that is now too big for any one person to fully comprehend

Ecuador’s coronavirus horror: bodies ‘stacked seven high’ in bathrooms as morgues fill up

Related:

US Economic and Financial Conditions: An Update

U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession
U.S. economy shrank 4.8 percent in first quarter, the biggest decline since the Great Recession
Worst Economy in a Decade. What’s Next? ‘Worst in Our Lifetime.’
City and state layoffs begin, threatening health, education, safety and sanitation
World’s Richest Are Waiting for New Dip in Stocks Before Buying
“The majority of the world’s wealthiest investors are waiting for stocks to drop further before buying again, on concerns about the pandemic’s impact on the global economy, according to a poll by UBS Global Wealth Management.
Among the surveyed investors and business owners with at least $1 million in investable assets or in annual revenue, 61% want to see equities fall another 5% to 20% before buying, while 23% say it’s already a good time to do so. Some 16% say that now is not the time to load up on stocks as it’s a bear market”.

When the Big Get Bigger, Active Stockpickers Feel Even More Pain

Investors Bet Giant Companies Will Dominate After Crisis

Who’s Profiting from the Coronavirus Crisis?

Tuesday, April 28, 2020

Melissa Dell Wins the 2020 John Bates Clark Award

Melissa Dell, Clark Medalist 2020
American Economic Association Honors and Awards Committee - April 2020
A central question in history, political economy and economic development is the role that institutions play in the development of different societies. Through her pioneering careful and creative data collection and empirical work, Melissa Dell has advanced our understanding of the role state and other institutions play in the daily lives of and economic outcomes of ordinary people. In doing so she has also given a new energy and direction to the entire field of political economy and development.
Historians (e.g., Engerman and Sokolov) have long argued for the persistence of institutions and the “long shadow” of historical events on developing countries. For example, cross-national studies have noted that Latin America and North America organized labor differently during colonial periods and used cross-country historical data to support the idea that these differences have had long-run impacts. More generally, Acemoglu, Johnson, and Robinson compare the experience of countries with different institutions set in place during colonial time for largely accidental reasons, showing that these early differences continue to matter today.
In her work, Dell goes beyond the cross-country evidence, using historical accidents or peculiarities to shed light on persistent effects of institutional differences, including different in the organization of the state. She exploits historical settings in which she is able to very convincingly establish the persistent impacts of specific institutions as well as explore specific channels through which these impacts occur.

Past Winners (2010-2019):
2019: Emi Nakamura
2018: Parag Pathak
2015: Roland Fryer
2013: Raj Chetty
2010: Esther Duflo

Financial Markets and the Federal Reserve

Stock market rebounds while unemployment spikes, showing reach and limits of Fed’s muscle

Investors Bet Giant Companies Will Dominate After Crisis

$500 billion bailout plan for large companies has no requirements to preserve jobs or limit executive pay
The Federal Reserve’s coronavirus aid program lacks restrictions Congress placed on companies seeking financial help under other programs. 

Latin America's Economic and Political Woes

Monday, April 27, 2020

Nigeria's Perfect Economic Storm

Coronavirus Crisis and American Medicine

Jill Lepore - Writings on American History

The Last Time Democracy Almost Died

Kent State and the War That Never Ended

Harvard Historian Jill Lepore notes:
“What is the liberal case for the nation? Nation-states are people with a common past, half-history, half-myth, who live under the rule of a government in the form of a state. Liberal nation-states are collections of individuals whose rights as citizens are guaranteed by the government. The United States is a liberal, democratic nation held together by the strength of our ideas and by the force of our disagreements.”

The Sharpened Quill: Was Thomas Paine too much of a freethinker for the country he helped free? By Jill Lepore

Famous Quotes of Thomas Paine (The Age of Reason):
·        “I have always strenuously supported the right of every man to his own opinion, however different that opinion might be to mine. He who denies to another this right, makes a slave of himself to his present opinion, because he precludes himself the right of changing it.”
·        “Whether we sleep or wake, the vast machinery of the universe still goes on.”
·        “Man cannot make principles, he can only discover them.”

These Truths by Jill Lepore – Review:



The Legend of Michael Jordan and 1990s Chicago Bulls

The Mythos of Michael Jordan Continues
“With The Last Dance, his patience has been rewarded, and so has the public’s. The series, which premiered last Sunday and is airing new episodes over the next month, serves as an education, a reintroduction, and a spiritual reunion for one of the great basketball teams of all time. It is as farcically self-involved as it sounds, but how else would one capture Jordan’s singular, single-minded essence? The hypnotic montages of Jordan dismantling defenders would be enough to placate the masses in these days of isolation”. 

The Need for ‘Impartial’ Media – Nick Hornby on the Importance of BBC

Famous novelist Nick Hornby on the significance of BBC
“Netflix can help us forget it, but it can’t explain, inform, illuminate. In the US, people have literally been made ill by the mendacity and wilful stupidity of a popular TV news channel of the type that the government seems to want to see in the UK; our national broadcaster, meanwhile, has tried to inform and educate us while entertaining us, as its remit has always been”.  

Houston, We have a Problem

It Calls Itself the Energy Capital. Now It Faces 2 ‘Horrifying’ Crises.

What Happens if America Does Not Want to Lead the World?

The pandemic and the waning of American prestige

The battle for humanity and solidarity in the post-American world.
https://www.nytimes.com/2020/04/24/opinion/coronavirus-democracy-europe.html

Stephen Roach notes:
“Although these tectonic shifts will leave most Americans worse off, the US seems to be shrugging its collective shoulders. America First has resonated with widespread wariness of globalization (now reinforced by concerns over supply-chain vulnerability). Many Americans are angry over allegedly unfair trade deals and practices, indignant at seemingly disproportionate US funding for institutions like the International Monetary Fund and the World Bank, and suspicious that the US security umbrella in Europe, Asia, and elsewhere encourages free riders and others not paying their fair share.
Paradoxically, this inward turn comes at precisely the moment when America’s already depressed domestic saving is likely to come under enormous pressure from an explosion of pandemic-related government deficits. Not only does that imply deepening current-account and trade deficits (the nemesis of the America First agenda), but it also poses a major challenge to longer-term economic growth”. 

The Post-Pandemic Economy - How Different Will Things Be?

Tech giants are profiting — and getting more powerful — even as the global economy tanks

The Pandemic Will Change American Retail Forever
https://www.theatlantic.com/ideas/archive/2020/04/how-pandemic-will-change-face-retail/610738/

The Scramble for Delivery Robots Is on and Startups Can Barely Keep Up
https://www.wsj.com/articles/the-scramble-for-delivery-robots-is-on-and-startups-can-barely-keep-up-11587787199

How robots contribute to easing coronovirus fallout


The coronavirus pandemic has exposed the overreliance of companies and governments on China for just about everything, from cars to medicines. But they will not be packing up and leaving China anytime soon.

There’s Really Only One Way to Reopen the Economy

Future of Higher Education

Coronavirus bursts the US college education bubble

College Campuses Must Reopen in the Fall. Here’s How We Do It.

A message from President Daniels (President of Purdue University and former Governor of Indiana) regarding fall semester

Durham University retracts controversial plan to provide online-only degrees

What If Colleges Don’t Reopen Until 2021?

Pricing Pressures Escalate

Will Parents Pay?

Sunday, April 26, 2020

Progress, Disruption and the Failure of Imagination

We should know by now that progress isn’t guaranteed — and often backfires
Robert Samuelson notes:
“We Americans are progress junkies, as I’ve written many times. We believe that tomorrow ought to be better than today, just as today was better than yesterday. This optimism, in part, defines us as a people. We assume that progress is the natural order of things. Problems are meant to be solved. History is an upward curve of well-being. But what if all this is a fantasy that, ironically, exposes us to more social and economic disruption?
If you look back on recent history, our most powerful disruptions shared one characteristic: They were not widely foreseen. This was true of the terrorism of 9/11; the financial crisis of 2008-2009 and the parallel Great Recession; and now the coronavirus pandemic — with all its destructive side effects on public health, the economy and our national psyche.
In each case, there was a failure of imagination, as Tom Friedman has noted. Warnings found little receptiveness among the public or government officials. We didn’t think what happened could happen. The presumption of progress bred complacency. To emphasize: There was a failure of imagination in each case.” 

Coronavirus Info for the Scientifically Minded

Bill Gates – The first modern pandemic

U.S. deaths soared in early weeks of pandemic, exceeding number attributed to covid-19

Global coronavirus death toll could be 60% higher than reported
Latin American gravediggers fear virus death toll higher than admitted
The Coronavirus Isn’t Just the Flu, Bro
Why the worst fears about Florida’s Covid-19 outbreak haven’t been realized (so far)

What the world can learn from Kerala about how to fight covid-19

Saturday, April 25, 2020

Why/When Did the American Economy/Society Become So Complicated?

This Pandemic Is an Opportunity for Radical Simplification
Andreas Kluth
“… Something similar was happening in the societies of rich countries. We kept adding layers of complication: new bureaucracies, legislation, divisions of labor, tax loopholes, and so forth. The European Union is one example, but the U.S. is arguably worse. According to one influential thesis proposed in 2013, America has become a “kludgeocracy.”
“Kludge” is a term from the software world for a clumsy patch that doesn’t solve the bigger issue, thereby creating even more complexity and future problems. This is easily observed in America’s contemporary governance, or in its systems of health care, education and taxation. Ask, for example, any new visitor to the U.S. what the following gibberish could be about: 401(k), IRA, Roth IRA, Keogh? Nobody would guess it has something to do with retirement saving”.

Why we can’t build
Ezra Klein notes:
“The result is a system biased toward inaction. The left can’t remake American health care. The right can’t voucherize American schools. The left can’t pass a climate bill. The right can’t privatize Social Security. Neither side can rewrite our immigration laws, hence the turn towards oscillating executive orders. Neither side can pass their infrastructure packages. Neither side can reform social insurance. …
You can see this if you attend a planning meeting in San Francisco and watch the line of people who assemble to oppose even the most modest development. You can see it in California’s inability to build high-speed rail, despite tens of billions of dollars in federal subsidies, because the state got so trapped in its own vetocracy it couldn’t just build the damn thing in a straight line. You can see it in the inability of American cities to build public transit at cost and quality levels that simply rival that of poorer, older European cities, to say nothing of leapfrogging the new development in Asia.”  

Should US States Default on their Debt?

McConnell’s rejection of federal aid for states risks causing a depression, analysts say

Why Mitch McConnell Wants States to Go Bankrupt
“The Senate majority leader is prioritizing the Republican Party rather than the American people during this crisis”.

U.S. State Bankruptcy Was a Farce Then and Now

Investment Risk

The 20 Minutes That Broke the U.S. Oil Market

Stock Fire Sales of the Crisis Era Haunt Equity Bulls

Yes, Stocks Have Rallied. Just Don’t Get Complacent.

Friday, April 24, 2020

Brazil - Increasing Political Risk

Political Risk – Brazil [REAL-TIME CASE STUDY]
“Sergio Moro, the former judge who rose to fame as the face of Brazil’s largest anti-corruption probe, resigned from his post as justice minister amid what he saw as political interference, dealing a blow to the government of President Jair Bolsonaro.
“It’s my duty to protect the federal police, and I tried to seek alternatives to avoid a political crisis amid a pandemic,” he said at a press conference in Brasilia to explain his decision. “I’ll start packing my things and tender my letter of resignation. I can’t go on without ensuring the federal police its autonomy.”
Brazilian markets sank amid concern the departure would exacerbate political risk in Latin America’s largest economy. The currency sank more than 3% to as low as 5.7106 per U.S. dollar, by far the worst performer among emerging markets on Friday. Stocks fell 7%.”

Brazil's Challenge: Flattening Not One Curve, But Three by LUCIANO SOBRAL

A Lesson in Statistics – Sampling Techniques and Extrapolation

How common is Covid-19? What 2 controversial antibody studies can and can’t tell us.

Feud over Stanford coronavirus study: ‘The authors owe us all an apology’

Concerns with that Stanford study of coronavirus prevalence

Do we Laugh or Do we Cry?

‘Stable genius’ or dangerous ignoramus?
President Trump actually stated the following:
““And then I see the disinfectant, where it knocks it out, in a minute. Is there a way we can do something like that? By injection, inside, or almost a cleaning, because you see it gets in the lungs and it does a tremendous number on the lungs. So it would be interesting to check that. You’re going to have to use medical doctors, right? But it sounds interesting to me.”

Makers of Lysol Warn Against Ingesting Disinfectants