According to an October 2015 report released by Credit Suisse Bank, China's middle-class, estimated to include 109 million adults, has surpassed the US middle-class and became the largest in the world.Sputnik
“One, we want to take a very clear worldview in our foreign policy, dealing with the national interest, and let that be our organizing principles. Two is that we want to make sure that we engage in free markets, but we want those markets to be fairer as well. And three, if we do not have strong economic recovery, we can’t do the other two,” said Clovis. “If that’s not a Trump doctrine, I don’t know what is.”Bloomberg View
China manufacturing PMI signalled another month of deterioration in operating conditions for January 2016. Per Markit, “with both output and employment declining at slightly faster rates than in December. Total new business meanwhile fell at the weakest rate in seven months, and despite a faster decline in new export work.’
Overall, PMI index came in tat 48.4 in January, marginally up on 48.2 in December 2015, marking 11th consecutive month of sub-50 readings. 3mo average through January 2016 is now at 48.4 against 3mo average through October 2015 at 47.6. Current 3mo average is down significantly on 49.8 3mo average through January 2015. Last time Chinese Manufacturing posted statistically significant expansion (as measured by PMI reading above 51.46 - the statistically significant growth marker - was back in July 2014….True Economics
When @ChrisChristie & @JohnKasich were expanding Medicaid, I fought alongside the FL House to prevent expansion.https://t.co/S2cNJNQFfA
— Jeb Bush (@JebBush) January 31, 2016
It's probably hubris for a physicist to say what is or isn't economics, but I'll have a go anyway.Information Transfer Economics
The reaction to Elinor Ostrom as the recipient of the 2009 Nobel Prize in economics (along with Oliver Williamson, who also studies how decisions are made outside markets) spoke volumes about the field of economics.…Evonomics
Carl Bildt was Sweden’s foreign minister from 2006 to October 2014 and Prime Minister from 1991 to 1994, when he negotiated Sweden’s EU accession. A renowned international diplomat, he served as EU Special Envoy to the Former Yugoslavia, High Representative for Bosnia and Herzegovina, UN Special Envoy to the Balkans, and Co-Chairman of the Dayton Peace Conference. He is Chair of the Global Commission on Internet Governance and a member of the World Economic Forum’s Global Agenda Council on Europe
Some of the biggest names in the hedge-fund industry are piling up bets against China’s currency, setting up a showdown between Wall Street and the leaders of the world’s second-largest economy.
Kyle Bass’s Hayman Capital Management has sold off the bulk of its investments in stocks, commodities and bonds so it can focus on shorting Asian currencies, including the yuan and the Hong Kong dollar.
It is the biggest concentrated wager that the Dallas-based firm has made since its profitable bet years ago against the U.S. housing market. About 85% of Hayman Capital’s portfolio is now invested in trades that are expected to pay off if the yuan and Hong Kong dollar depreciate over the next three years—a bet with billions of dollars on the line, including borrowed money.…Across the Curve
My recent post on RWER Blog asks if there is a “CORE of heterodox economics” which we can all believe in? From the responses to my previous post on whether or not there was a core set of heterodox beliefs, it became clear to me that I have started in the wrong place. Before starting the task of constructing an alternative paradigm, we must clear away the debris of the ruins of the conventional paradigm. Frederic Lee & Steve Keen remarked in the introduction to their article on the “The incoherent emperor: a heterodox critique of neoclassical microeconomic theory” that heterodox economists often come to the defense of conventional economics, because they are ignorant of the vast range of devastating critiques against these theories. To create a revolution, we must change from lukewarm heterodoxy (a partial rejection combined with a partial acceptance of the errors of conventional theories) to a genuinely radical approach requiring a complete rejection. When the errors of the conventional approach become as obvious as the error in “2+2=5”. we will not waste time coming up with new proofs that this is a fallacious calculation.
I would like to put forth a few propositions which provide a clear demonstration of the errors of conventional economic theory. I am hoping that disagreements about these central propositions can be cleared away by discussion, so that we can create consensus about complete rejection of conventional economic theories. After this step is completed, we could move forward to thinking about how to construct alternative foundations.…Real-World Economics Review Blog
It’s amazing how the landscape of book publishing has been transformed in the last ten (or even five) years. Not only it’s now possible for authors to reach readers directly, as I did with Ultrasociety, without the intermediaries of literary agents, publishers, and printers, but the reverse communication channel is also wide open. And fast—I started getting feedback from readers within a week of publication.….Cliodynamica — A Blog about the Evolution of Civilizations
My interest was caught by this Quartz article about a new database of the set texts at top US colleges, revealing which texts are the most-frequently set for different universities and subjects.…
What ten books would you absolutely want a young person to read – whatever their subject – to be well-rounded? The idea is a kind of summer reading list for someone about to go to university – what kind of broad mental hinterland should they have before arriving to start a social science degree?…The Enlightened Economist
This gives one the most elementary version of the profit law: profit is positive if the households dissave (increase debt/decrease financial assets) and negative if the households save. So profit for the economy as a whole has nothing to do with productivity, the wage rate, or risk or any other of the usual explanations which stem from the observation of a single firm. In fact, exactly here is where error/mistake comes in because what is true for a single firm is not true for the economy as a whole. This logical blunder is well-known as fallacy of composition.…AXEC: New Foundations of Economics
Foreign direct investment (FDI) has grown markedly in the world economy since the 1970s. However, the underlying growth has occasionally been punctuated by relatively short-lived reductions in FDI, giving rise to the ‘wave-like’ pattern exhibited in Figure 1. In explaining the motives driving FDI, economists have typically distinguished between horizontal and vertical strategies, the former being driven by market-seeking considerations, and the latter by the desire to access inputs such as cheap labour. Understanding the different motives of FDI is important for addressing policy issues, identifying how FDI and international trade are potentially related, as well as assessing the spillovers that might be associated with FDI. Yet, attempts to uncover the distribution of the different FDI strategies have long been hindered by access to suitable data....Vox.eu
I know what liberal ideology in economics is all about. I’ve encountered it at every turn, even before I began my formal studies in economics. The same is true about liberal ideology in politics, which has shown its ugly face once again in the current electoral campaign.
In both cases, liberal ideology is the based on the idea that the existing system, while perhaps imperfect, is the only game in town. It is a conception both of what is and of how change can and should take place—gradually and without major disruption. According to liberals, the biggest threat is populism, when the masses of people challenge the existing common sense and seek radical change. It therefore works with conservative ideology, as two bookends of mainstream discourse, to limit the theoretical and policy debate to a narrow set of options.…Occasional Links & Commentary
Rent Is Too Damn High Party founder endorses Trump https://t.co/ObEw4EcdcD pic.twitter.com/lB9kMFfmpc
— The Hill (@thehill) January 30, 2016
Support for her conservative bloc has slipped as concerns mount about how Germany will integrate the 1.1 million migrants who arrived last year, while crime and security are also in the spotlight after a wave of assaults on women in Cologne at New Year by men of north African and Arab appearance.
The influx has played into the hands of the right-wing Alternative for Germany (AfD), whose support is now in the double digits, and whose leader was quoted on Saturday saying that migrants entering illegally should, if necessary, be shot.
Germany's Merkel says refugees must return home once war is over https://t.co/k1T7gmGiKP pic.twitter.com/pPrJaHeBu6
— The Fiscal Times (@TheFiscalTimes) January 30, 2016
I am writing to announce the formation of a new pro bono group and a policy initiative that we hope many of our readers will support and help publicize. Gary Aguirre, Bill Black, Richard Bowen, and Michael Winston are the founding members of the Bank Whistleblowers United. We are all from the general field of finance and we are all whistleblowers who are unemployable in finance and financial regulation because we spoke truth to power and committed the one unforgivable sin in finance and in Washington, D.C. – being repeatedly proved correct when the powerful are repeatedly proved wrong.…New Economic Perspectives
Recognising the challenge, the US intensively lobbied allied states in Asia and Europe to stay out of the AIIB, arguing that it would not meet IMF and World Bank standards of transparency, environmental and social responsibility, and democratic governance. The argument would have been more convincing had the IMF not been the arm of coercive Euro-Atlantic discipline for the South. With the exception of Japan, the US proved unable to sway its closest partners.…
The decision to found the NDB and AIIB is the outcome of a movement building since the 1990s in East Asia and Latin America in reaction to IMF mismanagement of regional financial crises. The 1997-8 Asian crisis convinced many East Asian policy makers that it was time to take the future into their own hands and seek greater autonomy. The creation of the new system has huge implications: the ability to set policy frameworks and maintain international regimes through multilateral institutions is an essential dimension of power in world politics. Former Treasury Secretary Lawrence Summers wrote that October 2014 (when the AIIB was formed) “may be remembered as the moment the United States lost its role as the underwriter of the global economic system….Multipolar geopolitical political systems based on national sovereignty are potentially much less stable than unipolar systems, but only if the unipolar system is run in the interest of all instead of a hegemon. The US blew this opportunity badly. Now the future is uncertain as power blocs and spheres of interest again form.
Profit 2014: $5.8 billion 2015: $6.3 billion, up 8% Microsoft's adjusted profit (including deferrals), soared, thanks in large part to growing cloud sales.
Microsoft's cloud business is booming at the perfect time. Earnings boost $MSFT up 4% https://t.co/qpiCiozA8I pic.twitter.com/hRRSEWQgKj
— CNNMoney (@CNNMoney) January 28, 2016
How a robot-run indoor #farm can grow 10m heads of lettuce a year: https://t.co/FntZF0e91X #FutureofFood #Ag pic.twitter.com/EY6cCmniNt
— Syngenta (@Syngenta) January 30, 2016In the past I have speculated that the point when the rouble will start to decouple from oil prices will be when the total foreign debt that is actually due falls below the amount of Russia’s foreign exchange reserves held by the Central Bank (currently roughly $370 billion).
All the evidence suggests that that point is fast approaching, and if is true that only half of the nominal amount of $515 billion of foreign debt is debt that is actually due, then that point may already have been passed - even it is not yet visible in the published figures.
Given that that is so, since it is very much in Russia’s interests to keep the rouble low in line with oil prices - to choke off imports to support to agriculture and industry and to keep the external trade balance in surplus at a time of low oil prices - I have come round to Jon Hellevig’s view that the Central Bank should cut interest rates without further delay.
Inflation is falling fast and - as Jon Hellevig says - in Russia it is not primarily a monetary phenomenon anyway.
Since inflation is falling fast and since there is no need to support the rouble - on the contrary an excessive rise in the rouble like the one last spring would actually do harm - there is no reason to keep interest rates high. All the high interest rates are now doing is prolonging the recession.
Unfortunately, if recent history is a guide, the Central Bank will once again err on the side of caution, and - spooked by the recent fall in the rouble and worries about further interest rate rises in the US - will decide to keep interest rates high at its next scheduled meeting at the end of January.Russia Insider
The day when interest rates are cut cannot however now be far off. Beyond a certain point not just economic logic but political pressure from business, the Duma and the government will make an interest rate cut inevitable.
The more I learned about economics, the more I discovered a landscape that is surpassingly strange. Like the land of Mordor, it is dominated by a single theoretical edifice that arose like a volcano early in the 20th century and still dominates the landscape. The edifice is based upon a conception of human nature that is profoundly false, defying the dictates of common sense, before we even get to the more refined dictates of psychology and evolutionary theory. Yet, efforts to move the theory in the direction of common sense are stubbornly resisted.
There is plenty of dissent among economists, and some of the best are working the hardest for change. The folks who award the Nobel Prize in economics don’t like the edifice that much either, and often add their weight by awarding the prize to the contrarians. Yet, even with all that talent, effort, and the prestige associated with the Nobel Prize, the edifice remains standing in one spot like a volcano adding to its own height and spewing out toxic policies. Why does it resist change? One reason is ideological, as we shall see, but another reason involves path dependence. Neoclassical economics provides an outstanding example of the “you can’t get there from here” principle in academic cultural evolution. It will never move if we try to change it incrementally. It must be replaced wholesale with a more realistic conception of human nature.…Evonomics
The standard definition of income makes much of rich people’s income invisible.
If your home or stock-portfolio value goes up over a decade or three, have you received “income”? It sure as heck feels like income. It increases your asset holdings and net worth. It’s new money in your pocket that you can spend now and in your retirement.
Maybe you have to sell things or borrow against them. Whatever.) How is that not income?
But in economics — actually right down to the core of national accounting methods — capital gains aren’t counted as income. And they don’t contribute to “saving.” Those gains are completely invisible to a huge bulk of the economics work (both empirical and theoretical) that is built on income and saving concepts and measures.
Even Piketty and company, who importantly include capital gains income in their income data, don’t include it in their theorizing about income and saving. Ditto most Modern Monetary Theory (MMT) work, despite (or because of?) that group’s rigorous accounting-based approach.…Evonomics
The ‘haves’ of the world are always convinced that they deserve their wealth. That their gargantuan income reflects their ingenuity, ‘human capital’, the risks they (or their parents) took, their work ethic, their acumen, their application, their good luck even. The economists (especially members of the so-called Chicago School. e.g. Gary Becker) aid and abet the self-serving beliefs of the powerful by arguing that arbitrary discrimination in the distribution of wealth and social roles cannot survive for long the pressures of competition (i.e. that, sooner or later, people will be rewarded in proportion to their contribution to society). Most of the rest of us suspect that this is plainly false. That the distribution of power and wealth can be, and usually is, highly arbitrary and independent of ‘marginal productivity’, ‘risk taking’ or, indeed, any personal characteristic of those who rise to the top. In this post I present a body of experimental work that argues the latter point: Arbitrary distributions of roles and wealth are not only sustainable in competitive environments but, indeed, they are unavoidable until and unless there are political interventions to keep them in check.…Evonomics
After complaining that economic soul searching taking place since 2008 ignores evolutionary theory, I was made aware of Paul Krugman’s 1996 address to the European Association for Evolutionary Political Economy. I had read it before but upon refreshing my memory I see that it provides an excellent opportunity to reflect upon changes that have taken place in my own field of evolutionary science during the last two decades.…
In short, all of the components of economic theory that made Krugman regard evolutionary theory as a “sister field” in 1996 require foundational changes in economic theory in 2016.Updating Paul Krugman, “Evolution Groupie”
A new paper by economist Lance Taylor for the Institute For New Economic Thinking’s Working Group on the Political Economy of Distribution takes on the way economists have looked at wealth and income inequality. Taylor’s research challenges some conclusions about what’s driving inequality made by Thomas Piketty and Joseph Stiglitz. What’s really causing the growing gap between haves and have-nots? Is it mechanical market forces? Outsourcing? Real estate? As Taylor sees it, economists have gotten the answer wrong. Worker exploitation and outsized business profits are factors, but even more key are the unjustified payments to the wealthy generated by our outsized financial sector. This hasn’t just “happened.” Flawed economic theory and politicians beholden to the rich lead to policies that make it happen. We can fix the problem, but it will take bold steps.…INET
In the fourth quarter, Under Armour revenue rose 31%, thanks largely to shoe sales https://t.co/zRMvUPQHIR pic.twitter.com/1yuITPjCrU
— Forbes (@Forbes) January 28, 2016
Los Angeles #LAX to New York #JFK $197 round-trip, nonstop, on @JetBlue for February travel https://t.co/EFagnt3yPK pic.twitter.com/FHm6hlcuUs
— airfarewatchdog (@airfarewatchdog) January 26, 2016
EARNINGS ALERT: JetBlue Airways Q4 EPS $0.56 vs. $0.51 Est.; Q4 Revs. $1.594B vs. $1.575B Est. • $JBLU
— CNBC Now (@CNBCnow) January 28, 2016
As part of an impressive campaign to discredit the Athens Spring, and those of us who continue to honour and propagate its spirit, a cabal of journalists and ‘analysts’ have joined forces to depict me as the “destroyer of the Greek economy.” The purpose? To demonise the Greek people’s audacity to elect us with a mandate to oppose the Troika in the Spring and early summer of 2015, when they backed our stance with that magnificent 62% NO vote.
Their hideous campaign was summed up recently in the so called ‘Varoufakis Effect’ argument, by Berenberg’s Chief Economist, a Mr Schmieding. Using a chart that ‘shows’ business confidence to have collapsed during the days of my tenure in the ministry of finance (first half of 2015), he pinned on me Greece’s woes. Naturally, the troika’s Greek cheerleaders, with newspaper TO VIMA at the forefront, grabbed the opportunity to jeer and snarl. Except that they were caught with the smoking gun in their hands…Count on the Right to blame the disasters it creates on the Left.
I came across the UN Global Policy Model document with lots of equations and written by Francis Cripps and Alex Izurieta.…
UK GDP +0.5% in Q4, but driven (once again) entirely by services according to ONS pic.twitter.com/dxJHKsitv5
— Chris Williamson (@WilliamsonChris) January 28, 2016
#business #retail Alibaba crushes earnings expectations, shares soar (BABA) https://t.co/O7j6QJmGyo
— Laurie Brown (@brolaurie) January 28, 2016In early 2014, after nearly a decade of trying to curb expectations of continued currency appreciation, the People's Bank of China finally succeeded, thanks to forceful market intervention. Unfortunately, the PBOC was pushing on an open door and is now facing an even more difficult challenge: strong depreciation expectations.…When Yu Yongding speaks the world listens. He says to float the RMB.
Since the beginning of the Global Crisis, illicit capital flows out of China have been in decline. This column argues that a key factor behind this is the relative money supply between China and the US. China’s rapidly increasing money supply, combined with the Fed’s expansionary monetary policy, prompted investors to reallocate their portfolios between the two countries. Another contributing factor is China’s gradual process of capital account liberalisation. The Fed’s interest rate hike in December may see a resurgence in China’s capital flight.Explains the technical meaning of "capital flight" in terms of balance of payments.
Iran signs oil supply deal with Greek refiner, Hellenic Petroleum https://t.co/IIVGsnnab9 @HELPE_Group
— Lloyd's List (@LloydsList) January 26, 2016"Here's one more reason to take Bernie Sanders's candidacy seriously: He has put forward statements and arguments on what is by far the most powerful lever a president has on the American economy — the chronically neglected subject of monetary policy."
"Politicians rarely talk about the Federal Reserve even though it's the main agency that regulates the pace of job creation."
"Sanders's core insight, which he laid out in a New York Times op-ed that ran on December 23, is that if you want to talk about jobs and the economy, you need to talk about the Fed. And if you want to understand sluggish wage growth over the past 15 years, it's important to note the Fed's structural biases in favor of Wall Street preoccupations with financial stability and inflation control."Do you fucking believe this shit?
What follows is a long and very detailed 11,000 word expert legal analysis of the Litvinenko inquiry by Russia Insider's International Affairs Editor, who was a practicing lawyer for 12 years at the Royal Courts of Justice, the venue of Litvinenko inquiry.Russia Insider
It is the most comprehensive and definitive analysis to date. The author's conclusions are summarized in the first few paragraphs of the article.
According to data released Monday, general business activity for the state of Texas fell -34.6 in January, which constitutes a worse forecast than analyst expectations, according to Business Insider. The Texas economy has suffered immensely due to the fall of low oil prices, including new regulations that hamper economic output. Experts believe a crude price correction waits on the horizon in 2016, but such a forecast remains uncertain.Economy Watch
In previous post, I covered the drawdowns on Russian SWFs over 2015. As promised, here is the capital outflows / debt redemptions part of the equation.True Economics
.@yanisvaroufakis: "God and his angels could not fix Greece based on this loan agreement" https://t.co/0ha3ulQ9en pic.twitter.com/J06aHdIkBb
— Bloomberg TV (@BloombergTV) January 26, 2016Shock Poll: Ted Cruz Plummets with White Evangelicals; Trails Donald Trump by 17 Points https://t.co/MKx5hrEQAR
— Breitbart News (@BreitbartNews) January 26, 2016Fed giving government bonds as collateral for reverse repos? Hilarious. https://t.co/qxrxPG0o9w pic.twitter.com/kpbx7zYA32
— Ramanan (@Ramanan_V) January 24, 2016Western Europe’s biggest oil producer is suffering from the collapse in crude prices. But another top commodity export in Norway, salmon, is fetching record-high prices because of low supplies and a weak currency. As the seafood-industry news site iLaks.no reported this month, oil has fallen so low and salmon risen so high that one standard, 4.5 kilogram fish now costs more than a barrel of crude, measured in kroner.
One #salmon costs more than a barrel of #oil as slump deepens https://t.co/1BsHu269aC via @mikaelholter pic.twitter.com/6pPE3VLUeb
— Forward Guidance (@ecoeurope) January 26, 2016
There was an article a few weeks ago purporting to show that public deficit expansion (increased net public spending) has never worked. I won’t link to the article because I would not want the magazine to get any advertising revenue via my blog and also because, frankly, the article is one of those reinvent history efforts – along the lines of when the facts do not align with theory the way forward is to just make up some new facts and deny what actually happened. But one of the examples use to justify the claim “Keynesian deficit spending … over and over again … has not worked” is the Ireland and Denmark experience in the 1980s when these nations “reduced their government budget deficits, which according to Keynesian theory should have depressed the economy. But on the contrary, the economies did particularly well”. This example is often used these days to justify the claim that deficit spending does not promote growth and fiscal austerity does not damage growth. However, no ‘Keynesian’ theory I know suggests that cutting the fiscal deficit will ‘depress’ the economy. It all depends … and that is what this article (like all the others that use this example) fails to recognise or admit. It bears also on current events in Canada and Argentina, which are demonstrating some other interesting facets of macroeconomics.…Bill Mitchell – billy blog
LATEST: McDonald's 4th-quarter global comparable sales rise 5%, beating estimates https://t.co/uHVFnpY1pa pic.twitter.com/7ZcgtObd0x
— Bloomberg Business (@business) January 25, 2016
Benefits are rippling through the economy, pushing down or steadying prices of everything from home heating and petrol prices to the cost of raw materials at factories. That’s also boosting China’s efforts to recalibrate its economic growth model away from a reliance on heavy industries and investment toward consumption and services.
China reaps $460 billion a year from commodity crash https://t.co/q8LlA5wBg7
— Bloomberg Markets (@markets) January 25, 2016
(A quick note: I noticed that the M&B posts get posted on other blogs. If you want me to respond to you, you should comment at NEP.)New Economic Perspectives
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