Monday, August 31, 2015

Wrap Up for August '15

While watching the excess volatility in the stock market this month, it wasn't difficult to imagine that some people wanted the carnage to continue! Who remembers the "toughlove" concept? Do people have toughlove for the economy...much as they might for other individuals? Only consider what people believe "should" happen economically, depending on how they interpret events - such as a commenter who inspired Bonnie Carr to start her market monetarist blog, several years earlier.

At first glance, one would get the impression that economic toughlove is little more than letting the chips fall where they may. Hence tight money advocates tend to welcome losses on Wall Street as "needed corrections", in spite of the cause. These are also the individuals who are happy to witness widespread economic deflation, and somehow manage to convince the poor that they benefit as well. Others of us who think toughlove is about creating a stronger and more durable economy, are not quite as easy for the general public to understand. Something needs to be done about that...

Fortunately, some observers with a broad audience, represent toughlove in a more reasoned context. James Pethokoukis, for instance, notes that Republicans are missing their chance, as "the GOP plays with Trumpism", to shape a new economy.

John Cochrane takes a closer look at Rule of Law in the Regulatory State

The biggest driver of increased costs is public employees and retirees. "Growth in health spending is crowding out state and local spending for other services."(Austin Frakt, The Incidental Economist) http://www.nytimes.com/2015/08/04/upshot/dont-blame-medicaid-for-rise-in-health-care-spending.html?_r=0&abt=0002&abg=0

Lorenzo reviews the history of long distance trade:
http://lorenzo-thinkingoutaloud.blogspot.com/2015/08/the-three-ages-of-trade-and-distorting.html

Just what is a recession, anyway? (Nick Rowe) http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/08/on-defining-recession.html

Instead of lower income levels living in areas they cannot maintain, or expectations for them to live among wealthier groups, why not gain their input to generate settings they have the capacity to maintain.  http://www.theatlantic.com/business/archive/2015/08/more-americans-are-living-in-slums/400832/?google_editors_picks=true

The healthcare system is not working: https://www.washingtonpost.com/news/to-your-health/wp/2015/06/05/the-nursing-shortage-and-the-doctor-shortage-are-two-very-different-things/

Cities as "disruptors"? http://techcrunch.com/2015/08/07/cities-as-platforms/

"But why is Labour trapped by a dysfunctional faith in leaders?" http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2015/08/labours-dysfunctional-ideology.html

Local innovation for local problems: https://www.project-syndicate.org/commentary/counterfeit-medicine-innovation-developing-world-by-muhammad-hamid-zaman-2015-08

https://www.project-syndicate.org/commentary/emerging-market-growth-by-dani-rodrik-2015-08 "Back to Fundamentals in Emerging Markets"

Always good to post this link again - David Hume, "Of Money" http://www.econlib.org/library/LFBooks/Hume/hmMPL26.html

For once an article from Larry Summers which market monetarists could appreciate: http://www.ft.com/intl/cms/s/2/f664a7e0-4978-11e5-b558-8a9722977189.html#axzz3jgyOv9s3

The day the "dollar bloc" fell apart...Lars Christensen provides a much needed reminder http://marketmonetarist.com/2015/08/24/the-dollar-bloc-was-never-an-optimal-currency-area-and-now-it-is-falling-apart/

"Before thinking about why the labor share has fallen, it's worth thinking about the remarkable fact that it didn't change for such a long time." http://conversableeconomist.blogspot.com/2015/08/falling-labor-share-measurement-issues.html

Evan Soltas in "What Ails the American Startup?" writes, "The startups aren't that much worse, essentially, but the economy is much harsher towards them...The decline in new firms seems to be driven by changes that are making new firm survival more difficult in general, not just a decline in the cohort size itself."

Emily Washington (Market Urbanism), in "Engineering in the Dark", writes, "Infrastructure is often built based on shockingly little information about the demands of its users. And while poorly reasoned infrastructure policy in one city is bad enough, the United States' broad adherence to poorly reasoned policies has resulted in a nation in which swathes of neighborhoods are built on poor design foundations."

An article from the NYT that the Fed should "show some spine" and raise rates? Unfortunately, William Cohan interprets that the interest rate is determined by the supply and demand for credit. Paul Krugman sets Cohan straight.

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