Good piece by Binyamin Appelbaum in the NYT. It’s surprising that the positive data in recent months has not gotten more attention after so many previous false starts made the front page. Here’s my take.
Good piece by Binyamin Appelbaum in the NYT. It’s surprising that the positive data in recent months has not gotten more attention after so many previous false starts made the front page. Here’s my take.
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The Washington Post ran a classic pointless killing of trees piece on plans for transportation spending in a bill being debated in Congress. The piece told readers, among other things:
“A group co-chaired by former transportation secretaries Samuel K. Skinner and Norman Y. Mineta has estimated that an additional $134 billion to $262 billion must be spent per year through 2035 to rebuild and improve roads, rail systems and air transportation.”
Let’s see, $134 billion to $262 billion per year over the next 22 years, is that a lot or is it a little? I really doubt that even 1 percent of the readers of the Post has any idea how much money is involved here. If you added or subtracted a zero from these numbers it would probably look the same to most readers.
Suppose we put that as a share of GDP, this would be something like 0.6 to 1.2 percent of GDP over this period. (I’m assuming that these are nominal numbers, but the article doesn’t tell us and the report is horribly written so I couldn’t find the numbers upfront.) Or, the piece could have told readers that this was between 3 and 6 percent of projected federal spending over this period.
There are other ways to put these numbers in a context that would make them meaningful to Post readers, but this article just threw out budget numbers like it was a fraternity ritual. As a result it may be the industry standard for budget reporting, but it did not convey useful information to readers.
The Washington Post ran a classic pointless killing of trees piece on plans for transportation spending in a bill being debated in Congress. The piece told readers, among other things:
“A group co-chaired by former transportation secretaries Samuel K. Skinner and Norman Y. Mineta has estimated that an additional $134 billion to $262 billion must be spent per year through 2035 to rebuild and improve roads, rail systems and air transportation.”
Let’s see, $134 billion to $262 billion per year over the next 22 years, is that a lot or is it a little? I really doubt that even 1 percent of the readers of the Post has any idea how much money is involved here. If you added or subtracted a zero from these numbers it would probably look the same to most readers.
Suppose we put that as a share of GDP, this would be something like 0.6 to 1.2 percent of GDP over this period. (I’m assuming that these are nominal numbers, but the article doesn’t tell us and the report is horribly written so I couldn’t find the numbers upfront.) Or, the piece could have told readers that this was between 3 and 6 percent of projected federal spending over this period.
There are other ways to put these numbers in a context that would make them meaningful to Post readers, but this article just threw out budget numbers like it was a fraternity ritual. As a result it may be the industry standard for budget reporting, but it did not convey useful information to readers.
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Very good piece by Simon Johnson. It would be good to hear someone try to provide answers to the questions he raises.
Very good piece by Simon Johnson. It would be good to hear someone try to provide answers to the questions he raises.
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The NYT had an article on the surge in the number of people who are traveling to Mexico for medical care. This is hardly ideal, but since our political system is too corrupted by the insurers, the doctors, the drug companies and others who benefit from the waste in the health care system, this is likely to be the way in which the system is eventually reformed. People will vote with their feet and take advantage of the more efficient health care systems in other countries.
It’s too bad that the economics profession is so corrupt that almost none of them ever discuss the barriers to trade in health care services and how they can be eliminated. A small protectionist barrier that might boost the pay of a steelworker drives economists up the wall, but huge barriers that cost U.S. consumers hundreds of billions annually — and jeopardize their health — do not seem to bother economists.
The NYT had an article on the surge in the number of people who are traveling to Mexico for medical care. This is hardly ideal, but since our political system is too corrupted by the insurers, the doctors, the drug companies and others who benefit from the waste in the health care system, this is likely to be the way in which the system is eventually reformed. People will vote with their feet and take advantage of the more efficient health care systems in other countries.
It’s too bad that the economics profession is so corrupt that almost none of them ever discuss the barriers to trade in health care services and how they can be eliminated. A small protectionist barrier that might boost the pay of a steelworker drives economists up the wall, but huge barriers that cost U.S. consumers hundreds of billions annually — and jeopardize their health — do not seem to bother economists.
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The NYT has a good piece on how two of Spain’s top banking regulators went on to top positions at the IMF. They were hailed for their success in designing a regulatory structure in Spain that was widely praised for having designed a system that survived the 2008 financial crisis.
As it turns out, the Spanish regulatory system was not especially successful. The country had an enormous housing bubble and it was inevitable that when it burst, the banking system would face the sort of problems it is now seeing. As of the fall of 2008, banks had not yet recognized the enormous losses they had already incurred on their housing debt.
This should be a good lesson to ignorant experts everywhere: bubbles mean regulation failed. Countries with bubbles still waiting burst (e.g. Canada, U.K. and Australia) have a good financial crisis in their future. Get out some marshmallows to roast at the meltdown.
[Addendum: My reason for saying that the U.K., Canada, and Australia have housing bubbles is that house prices have gotten hugely out of line with rents. There have been large increases in the former over the last 10-15 years, while the latter have only modestly outpaced inflation. This will end very badly and the central bankers in these countries should be fired for not recognizing this fact.
On Spain and regulation, my point is that sound prudential regulation will not prevent bubbles. (I am taking the assessment of others that these systems were well-regulated. This is the responsibility of the central bankers. They are being unbelievably negligent to let these bubbles continue to grow. At the very least, everyone in a policymaking position should lose their pensions.]
The NYT has a good piece on how two of Spain’s top banking regulators went on to top positions at the IMF. They were hailed for their success in designing a regulatory structure in Spain that was widely praised for having designed a system that survived the 2008 financial crisis.
As it turns out, the Spanish regulatory system was not especially successful. The country had an enormous housing bubble and it was inevitable that when it burst, the banking system would face the sort of problems it is now seeing. As of the fall of 2008, banks had not yet recognized the enormous losses they had already incurred on their housing debt.
This should be a good lesson to ignorant experts everywhere: bubbles mean regulation failed. Countries with bubbles still waiting burst (e.g. Canada, U.K. and Australia) have a good financial crisis in their future. Get out some marshmallows to roast at the meltdown.
[Addendum: My reason for saying that the U.K., Canada, and Australia have housing bubbles is that house prices have gotten hugely out of line with rents. There have been large increases in the former over the last 10-15 years, while the latter have only modestly outpaced inflation. This will end very badly and the central bankers in these countries should be fired for not recognizing this fact.
On Spain and regulation, my point is that sound prudential regulation will not prevent bubbles. (I am taking the assessment of others that these systems were well-regulated. This is the responsibility of the central bankers. They are being unbelievably negligent to let these bubbles continue to grow. At the very least, everyone in a policymaking position should lose their pensions.]
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The consumer confidence index is a measure that gets way more attention than it deserves. It is has two components, a current conditions index and a futures expectations index.
While the current condition index tends to be a good measure of consumer spending, it has little predictive power. In other words, if the June reading is high, then June will probably be a good month, but it doesn’t tell us much about July and August.
On the other hand, the future expectations index is erratic and provides almost no information about spending in the present or future. That is why when the consumer confidence index falls, as it did yesterday, and the fall was driven by the expectations index, it is best ignored.
The consumer confidence index is a measure that gets way more attention than it deserves. It is has two components, a current conditions index and a futures expectations index.
While the current condition index tends to be a good measure of consumer spending, it has little predictive power. In other words, if the June reading is high, then June will probably be a good month, but it doesn’t tell us much about July and August.
On the other hand, the future expectations index is erratic and provides almost no information about spending in the present or future. That is why when the consumer confidence index falls, as it did yesterday, and the fall was driven by the expectations index, it is best ignored.
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A Washington Post article on the relatively good new home sales data reported for May made a case that the housing market is rebounding (it is). At one point it told readers that “home prices are low.”
This is not true. Home prices are roughly back to their long-term trend. They are low relative to their levels of the housing bubble years (1996-2007), but not compared to the prior hundred years of U.S. history.
A Washington Post article on the relatively good new home sales data reported for May made a case that the housing market is rebounding (it is). At one point it told readers that “home prices are low.”
This is not true. Home prices are roughly back to their long-term trend. They are low relative to their levels of the housing bubble years (1996-2007), but not compared to the prior hundred years of U.S. history.
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I’m not kidding. We have boys and girls on Wall Street making tens or even hundreds of millions of dollars at banks that enjoy taxpayer subsidies through “too big to fail” insurance. But Ezekiel Emanuel’s “share the wealth” NYT blogpost tells us how we can tap the Social Security and Medicare benefits of people who earned $70,000 a year during their working lifetime to make the poor better off.
It’s amazing how much effort the Washington gang goes through to nail workers who earned slightly more than the average, while doing its best to ignore the millionaires and the billionaires who have been the big winners in the economy over the last three decades.
I’m not kidding. We have boys and girls on Wall Street making tens or even hundreds of millions of dollars at banks that enjoy taxpayer subsidies through “too big to fail” insurance. But Ezekiel Emanuel’s “share the wealth” NYT blogpost tells us how we can tap the Social Security and Medicare benefits of people who earned $70,000 a year during their working lifetime to make the poor better off.
It’s amazing how much effort the Washington gang goes through to nail workers who earned slightly more than the average, while doing its best to ignore the millionaires and the billionaires who have been the big winners in the economy over the last three decades.
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Steven Pearlstein gets half of the story of the euro zone right: it will take renewed spending supported by euro-wide bonds to end the crisis. But that is only half. To restore the competitiveness of the peripheral countries, Germany and other core countries will have to see higher inflation.
We are not going to see prices actually fall in Spain and Italy. This means that if output in these countries is going to become competitive again in a reasonable period of time we will need to see inflation in the 3-4 percent range (possibly higher) in Germany and other core countries.
In keeping with this target, the European Central Bank should be the issuer or guarantor of the bonds. This should help to bring about the higher rate of inflation that is needed to restore balance between the euro zone regions.
Steven Pearlstein gets half of the story of the euro zone right: it will take renewed spending supported by euro-wide bonds to end the crisis. But that is only half. To restore the competitiveness of the peripheral countries, Germany and other core countries will have to see higher inflation.
We are not going to see prices actually fall in Spain and Italy. This means that if output in these countries is going to become competitive again in a reasonable period of time we will need to see inflation in the 3-4 percent range (possibly higher) in Germany and other core countries.
In keeping with this target, the European Central Bank should be the issuer or guarantor of the bonds. This should help to bring about the higher rate of inflation that is needed to restore balance between the euro zone regions.
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There is a well-funded effort in this country to try to distract the public’s attention from the massive upward redistribution of income over the last three decades by trying to claim that the issue is one of generational conflict rather than class conflict. Billionaire investment banker Peter Peterson is the most well-known funder of this effort, having kicked in a billion dollars of his own money for the cause.
However, he is far from the only generational warrior. The Washington Post has often gone into near hysterics screaming about retirees living on their $1,100 a month Social Security benefits and getting most of their health care paid for through Medicare. And, there is no shortage of politicians in Washington who like to think themselves brave because they will cut these benefits for seniors while protecting the income and wealth of the richest people in the country.
David Leonhardt flirted with this disreputable group in a column that focused on the gap between the old and the young. While much of the piece is devoted to political attitudes, it delves into utter nonsense in trying to contrast a “wealthy” group of seniors with a poor group of young people.
Leonhardt picks up on a study done by the Pew Research Center to tell readers:
“The wealth gap between households headed by someone over 65 and those headed by someone under 35 is wider than at any point since the Federal Reserve Board began keeping consistent data in 1989.”
That makes you think those oldsters are doing real well, right?
Well, if we look at the Pew study we see that the median household over age 65 has $170,500. Just so everyone understands how rich these people are, that number counts all of their assets. This is every penny they have in a retirement account, bank account, the value of their car and the equity in their home. The median price of a home in the United States is now about $180,000. This means that if the typical retiree took everything they own to pay down their mortgage, they would still owe $10,000. The only thing that they would have left to survive is that generous $1,100 a month Social Security check.
It is also important to note (which this Pew study did not) that the percentage of seniors with defined benefit pension plans (which are not counted in this number) has plummeted. Without factoring in the drop in DB pensions, it is not possible to make a serious comparison of the wealth of seniors over this period.
As an aside, how many people in this debate in Washington make less than $170,000 in a year? Yet, somehow seniors who will have this sum to survive on for the rest of their lives are rich? And by the way, half have less than this.
The wealth of the young is also a silly measure. Young people never have much wealth — in the good old days they had $11,500 according to Pew. (That would be less than two week’s pay for deficit hawk and Morgan Stanley director Erskine Bowles.) A recent graduate of Harvard Business school may still be paying off her debt at age 35. However no one in their right mind would worry about the financial well-being of a Harvard MBA.
Young people are not doing well right now, but the relevant measure here is their employment and wages. Because our economy is run by people too incompetent to have noticed an $8 trillion housing bubble, many young people are suffering. But this is a story of Wall Street greed, corruption, and incompetence. It has nothing to do with the Social Security and Medicare received by the elderly.
Leonhardt should be ashamed for falling for this tripe.
There is a well-funded effort in this country to try to distract the public’s attention from the massive upward redistribution of income over the last three decades by trying to claim that the issue is one of generational conflict rather than class conflict. Billionaire investment banker Peter Peterson is the most well-known funder of this effort, having kicked in a billion dollars of his own money for the cause.
However, he is far from the only generational warrior. The Washington Post has often gone into near hysterics screaming about retirees living on their $1,100 a month Social Security benefits and getting most of their health care paid for through Medicare. And, there is no shortage of politicians in Washington who like to think themselves brave because they will cut these benefits for seniors while protecting the income and wealth of the richest people in the country.
David Leonhardt flirted with this disreputable group in a column that focused on the gap between the old and the young. While much of the piece is devoted to political attitudes, it delves into utter nonsense in trying to contrast a “wealthy” group of seniors with a poor group of young people.
Leonhardt picks up on a study done by the Pew Research Center to tell readers:
“The wealth gap between households headed by someone over 65 and those headed by someone under 35 is wider than at any point since the Federal Reserve Board began keeping consistent data in 1989.”
That makes you think those oldsters are doing real well, right?
Well, if we look at the Pew study we see that the median household over age 65 has $170,500. Just so everyone understands how rich these people are, that number counts all of their assets. This is every penny they have in a retirement account, bank account, the value of their car and the equity in their home. The median price of a home in the United States is now about $180,000. This means that if the typical retiree took everything they own to pay down their mortgage, they would still owe $10,000. The only thing that they would have left to survive is that generous $1,100 a month Social Security check.
It is also important to note (which this Pew study did not) that the percentage of seniors with defined benefit pension plans (which are not counted in this number) has plummeted. Without factoring in the drop in DB pensions, it is not possible to make a serious comparison of the wealth of seniors over this period.
As an aside, how many people in this debate in Washington make less than $170,000 in a year? Yet, somehow seniors who will have this sum to survive on for the rest of their lives are rich? And by the way, half have less than this.
The wealth of the young is also a silly measure. Young people never have much wealth — in the good old days they had $11,500 according to Pew. (That would be less than two week’s pay for deficit hawk and Morgan Stanley director Erskine Bowles.) A recent graduate of Harvard Business school may still be paying off her debt at age 35. However no one in their right mind would worry about the financial well-being of a Harvard MBA.
Young people are not doing well right now, but the relevant measure here is their employment and wages. Because our economy is run by people too incompetent to have noticed an $8 trillion housing bubble, many young people are suffering. But this is a story of Wall Street greed, corruption, and incompetence. It has nothing to do with the Social Security and Medicare received by the elderly.
Leonhardt should be ashamed for falling for this tripe.
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