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March 05, 2013

Noted for March 5, 2013

  • Ian Buruma: Send in the Clowns: "Rage against the political establishment has become a global phenomenon. Chinese bloggers, American Tea Party activists, British Europhobes, Egyptian Islamists, Dutch populists, Greek ultra-rightists, and Thai 'red shirts' all have one thing in common: hatred of the status quo and contempt for their countries’ elites. We are living in an age of populism. The authority of conventional politicians and traditional media is slipping away fast…. In a globalized world managed by bankers and technocrats, many people feel that they have no say in public affairs; they feel abandoned. Our national politicians, increasingly powerless to cope with serious crises, are suspected, often with good reason, of simply looking after their own interests. All we can do is vote the rascals out, sometimes by voting for candidates whom we would not take seriously in more normal times."

  • Mark Thoma sends us to Neil Irwin on Bernanke and Yellen versus Stein: "Jeremy Stein, a Fed governor since last May ... argued in a Feb. 7 speech that there are already signs of overheating in the markets for certain kinds of securities, including junk bonds and real estate investment trusts…. If the last 15 years have taught us anything, it is that financial bubbles can wreak huge damage to the economy, so it’s worth it to try to nip them in the bud. The two most powerful Fed officials have offered, in speeches Friday night and Monday morning, what amounts to a riposte to these arguments. 'Long-term interest rates in the major industrial countries are low for good reason', Chairman Ben Bernanke said Friday evening…. Vice-chair Janet Yellen chimed in Monday morning... "there are some signs that investors are reaching for yield, but I do not now see pervasive evidence of trends such as rapid credit growth, a marked buildup in leverage, or significant asset bubbles that would clearly threaten financial stability." So the Bernanke-Yellen response to the Stein-George argument boils down to a polite version of this: Are you crazy? Unemployment is really high! Inflation does not appear to be much of a threat! Why should we cripple the prospects of economic recovery just because investors may be paying too much for certain types of corporate bonds and end up losing money?"

  • Noah Millman: What’s Natural About Natural Law?: "Why do I say I don’t 'get' natural law arguments? Because I don’t understand what’s 'natural' about them…. Human beings have to some degree immutable natures, natures we can comprehend with reason, and these natures determine, to a considerable degree, what social arrangements will 'work' and what arrangements won’t – in the sense of contributing to human flourishing…. I don’t have any objection to the foregoing…. But… how do we know what our essential natures are?… [H]ow do we know that your theory is true? What is its evidentiary basis? And I don’t know what the answer would be from the natural law side – indeed, I’ve never heard a proper answer…. [A]dvocates of a natural law approach cannot explain adequately how they know what they claim to know about our natures…. And the suspicion grows, over time, that this question isn’t opened not because it cannot be opened but because it must not be opened, because it is really the conclusions that are 'known' absolutely, and not the premises."

  • Laurence Ball, Douglas W. Elmendorf, and N. Gregory Mankiw: The Deficit Gamble: "The historical behavior of interest rates and growth rates in U.S. data suggests that the government can, with a high probability, run temporary budget deficits and then roll over the resulting government debt forever. The purpose of this paper is to document this finding and to examine its implications. Using a standard overlapping-generations model of capital accumulation, we show that whenever a perpetual rollover of debt succeeds, policy can make every generation better off. This conclusion does not imply that deficits are good policy, for an attempt to roll over debt forever might fail. But the adverse effects of deficits, rather than being inevitable, occur with only a small probability."

  • Andrew Sullivan: Quotes For The Day: "'In November 2003, after a court decision in Massachusetts to legalise gay marriage, school libraries were required to stock same-sex literature; primary school children were given homosexual fairy stories such as “King & King”. Some high school students were even given an explicit manual of homosexual advocacy entitled “The Little Black Book: Queer in the 21st Century”. Education suddenly had to comply with what was now deemed "normal",' – Cardinal Keith O’Brien, March 3, 2012. 'I wish to take this opportunity to admit that there have been times that my sexual conduct has fallen below the standards expected of me as a priest, archbishop and cardinal,' – Cardinal Keith O’Brien, March 3, 2013. O’Brien does not stand accused of molesting or raping minors or children; just of sexual harassment of priests under his authority."

  • Scott Sumner: John Cochrane on fiscal dominance (never reason from a price change, example #656): "If a crystal ball told me that rates would be 5% in 2016 I’d be jumping for joy. Yes! A robust recovery is finally about to begin! Tax revenues will soar—less spending on unemployment compensation and food stamps. Etc. etc. The federal deficit will finally start shrinking. Alas, that’s not likely to occur…. [Cochrane says] 'the Treasury and Fed need a new "accord" to decide who is in charge of interest-rate risk, most likely the Treasury, and then grant it clear legal authority to manage that risk. The Fed should then swap its portfolio of long-term bonds for a portfolio of short-term Treasuries and forswear meddling in the maturity structure again…. Many corporations and homeowners are borrowing long to lock in low funding costs. So should the Treasury.' People have been saying that for years, and they’ve been wrong…. [T]he EMH… is one reason I expect interest rates to remain low. But not the only reason. History is also on my side. When countries hit the zero bound they tend to say close to that level for a long time."

Tim Duy on the Difference Between Bernanke-1999 and Bernanke-2012: Federal Reserve Blogging: "Why One Would Use a Balance Sheet Recession to Shift Downward The Path of Prices Is Certainly Something of a Mystery" | Brian Hare and Vanessa Woods: We Didn’t Domesticate Dogs. They Domesticated Us | Henning Bohn (1991): The sustainability of deficits with lump-sum and with income-based taxation | The East India Company Ltd. | Jeffrey Toobin: Ruth Bader Ginsburg’s Long Crusade | Quinn Norton: Life Inside the Aaron Swartz Investigation | Why Every Office Should Switch To Walking Desks | Janet Yellen On Continuing QE: The #1 Candidate To Replace Bernanke Gives A Huge Endorsement Of Continuing QE | Jonathan Chait: The GOP Budget Divide: Don’t Know vs. Don’t Care | Loyal to the Group of Seventeen | Sarah Wildman: Closed Sessions |

On March 4, 2013:

March 05, 2013 at 02:14 AM |

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