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Free Trade, the Primrose Path, and the Blinkered Blindness of macroeconomists

by New Deal Democrat

Free Trade, the Primrose Path, and the Blinkered Blindness of macroeconomists

Here’s what I learned today: the origin of the phrase “being led down the primrose path.”

It turns out that in medieval times, one meaning of the word “primrose” was the “prime,” or first or loveliest, rose.  Thus taking the primrose path was a particularly lovely journey. At least by the time of Shakespeare’s “Hamlet,” where Ophelia speaks of the “primrose path” to Laertes, the connotation developed of the use of a lovely and seductive experience to lure a mark to their misfortune or doom.
The doctrine of free trade is macroeconomists’ primrose path.  Today’s example comes from Tim Haab’s blog “Environmental Economics,” in the below post entitled “Quote of the Day: Both sides win from free trade . . . sheesh,” which I am reproducing in full:

That moment you realize the Chinese administration understands economics better than the U.S. administration…

From the Steve Bannon interview story:

“In reality, China and the United States’ long term cooperation has brought about real benefits for both countries’ peoples, any unbiased person will clearly see this fact,” [Chinese Foreign Ministry spokeswoman Hua Chunying] told a daily news briefing in Beijing.

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Sure Abigail Hauslohner, Paul Duggan, Jack Gillum and Aaron C. Davis Sure

Lifted from Robert’s Stochastic Thoughts
Sure Abigail Hauslohner, Paul Duggan, Jack Gillum and Aaron C. Davis Sure

I have trusted The Washington Post, since I learned how to read. However, By Abigail Hauslohner, Paul Duggan, Jack Gillum and Aaron C. Davis are testing me. In this article they assert that an American Nazi went over to that very dark side in spite of the well meaning efforts of Weimar.

“Fields looked forward to soldiering in democracy’s most powerful military.

That’s how Derek Weimer, his favorite teacher in 2015, remembers it.”

Suuuuure. History doesn’t repeat itself but it can’t resist an ironic pun. No doubt about it.

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Trump and What Army?

by Peter Dorman (originally published at Econospeak)

Trump and What Army?

Donald Trump is no stranger to outrageous public poses and statements, but his refusal to condemn white supremacists post-Charlottesville has apparently struck a nerve. Has he crossed some sort of new line? Here are some dark, speculative thoughts about the events of the past few days.

I believe Trump’s impeachment is an option that political and financial elites are holding in reserve. They appreciate the vehicle that has brought the hard right to power, but they are ready to remove it if it no longer serves their purposes. It’s not clear whether there is evidence sufficient to impeach him today, but there almost certainly will be in the coming months, especially as his finances are exposed. I am not claiming that impeachment is a certainty, only that less hormonally imbalanced elites want it to be available should they need it.

The problem is that something like a third of the country supports Trump, most of them passionately. His base will regard an impeachment as a final, decisive battle for American freedom, the fulfillment of all their most paranoid suspicions about the evil forces arrayed against them. And quite a few of them are armed.

The nightmare scenario is an impeachment process setting off mass violence in the streets—a civil war. Trump can be forgiven climate denialism, nuclear sabre-rattling and various other sins, but he can’t be allowed to encourage the formation of loyal paramilitary band of supporters, a praetorian guard of street thugs. Hence the uproar over Charlottesville by plutocrats and Republicans who have swallowed equally contemptible posturings in the past.

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WWE?

“Mr. Trump’s advisers have privately said they are wrestling”

“I don’t believe the allegations against the president are accurate,” Mr. Mnuchin said of the denunciations of the president, “and I believe that having highly talented men and women in our country surrounding the president in his administration should be reassuring to you and all the American people.”

Mr. Mnuchin and Gary D. Cohn, the president’s top economic adviser, who is also Jewish and who was also at the news conference in Trump Tower, have come under public pressure to resign in the past few days.

Many of Mr. Trump’s advisers have privately said they are wrestling with whether to remain working for the president. But most say they believe they are fulfilling a duty by serving.

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Boston

Yves Smith notes on the Boston rally this Saturday:

Thanks to a huge and well-organized police presence, as well as strict limits imposed on the participants, follow-up to the “Unite the Right” white supremacist event in Charlottesville, the “Boston Free Speech” rally on Saturday demonstrated that the community wasn’t about to cut extreme right wing agitators much slack:

“We probably had 40,000 people out here standing tall against hatred and bigotry in our city, and that’s a good feeling,” [Boston Police] Commissioner [William] Evans said.

The permit covered only 100 people. The city prohibited anyone carrying weapons, bats or other potential bludgeons, such as sticks to carry posters, glass containers and cans, sharp objects, and shields from coming to Boston Common. There were some small scale skirmishes and the police arrested 33, mainly for disorderly conduct.

The far right participants did not get to finish their agenda. The event broke up early as, per the Wall Street Journal, “a huge throng of counterprotesters approached Boston Common.”

Even though one of the six organizers, John Medlar, said he was a libertarian and denounced hate groups, at a minimum, scheduling this event as a follow-up to Charlottesville wasn’t consistent with that branding. Even the people planning protests on a clearly unrelated issue, the firing of Google’s James Damore, postponed demonstrations that were also originally set for this weekend to distance them from Charlottesville.

And it looks like the “Boston Free Speech” leaders, whether intentionally or not, were trying to have it both ways. From Boston.com last week:

John Medlar, who says he is an organizer for Boston Free Speech, the group behind the rally, told Boston.com that his group is not associated with the white supremacists who marched with tiki torches in Charlottesville last weekend. But the group has said in comments on a Facebook post that there would be “overlap” in attendance between the two rallies….

Boston Free Speech posted an updated list Friday of the rally’s speakers, which includes Joe Biggs, who worked until recently for Infowars, the website founded by conspiracy theorist Alex Jones; and Kyle Chapman, known on the internet as “Based Stickman” and founder of the Fraternal Order of Alt-Knights, which is described by the Southern Poverty Law Center as a “new Alt-Right group of street fighters.”…

Some speakers initially billed for the rally, such as Gavin McInnes, a former Vice Media co-founder and founder of the Proud Boys, a far-right group, dropped out following a Monday press conference by Boston officials condemning the event.

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Interactive timeline

Plan the time to take a deep breath and look at Steven Harper’s Interactive Timeline: Everything We Know About Russia and President Trump at Moyers and Company.

When it comes to Donald Trump, his campaign and their dealings with Russia past and present, sometimes it’s hard to keep track of all the players without a scorecard. We have one of sorts — a deeply comprehensive timeline detailing what actually happened and what’s still happening in the ever-changing story of the president, his inner circle and a web of Russian oligarchs, hackers and government officials.

Since first launched in February 2017, the timeline has grown to more than 400 entries — and we will continue to add updates each week.

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Industrial production: once again, the hard data fails to confirm the sof … ofertheluvofgaud

by New Deal Democrat
Industrial production: once again, the hard data fails to confirm the sof … ofertheluvofgaud

This morning’s report on industrial production confirms that the economy remains on autopilot, and that’s a good thing.

Overall production increased again, and the trend of rising production since spring of last year is clear:

When we break it down by manufacturing (blue, left scale), mining, and utilities (red and green, right scale), we get pretty much the same picture:

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Current Account Deficits and Safe Assets

by Joseph Joyce

Current Account Deficits and Safe Assets

The International Monetary Fund has issued its External Sector Report for 2017, and among its key findings: “Global current account imbalances were broadly unchanged in 2016…” The U,S. continues to record the largest deficit, $451.7 billion, which is equal in value to 2.4% of U.S. GDP. The continuing deficits contribute to the increase in the U.S. debtor status in its net international investment position (NIIP), currently valued at $8.1 trillion, which is equal to 42% of GDP. The Fund is concerned that these imbalances, as well as the persistent surpluses in Germany and other nations, “…raise the risk of disruptive corrections down the road, including due to diverging stock positions.” But as long as the dollar serves as the world’s reserve currency,  a U.S. current account deficit will be an inherent feature of the international financial system.

The share of U.S.-dollar denominated liabilities in the foreign reserves of central bankscontinues to hold at over 60% of all reserves. Foreign central banks own about $4 trillion of U.S. Treasury debt, and foreign private residents another $2 trillion. Andreas Steiner of the University of Gronigen (see also here) has demonstrated that the reserve currency status of the dollars lowers the current account balance as foreigners exchange goods and services for U.S. securities. John Benedetto of the U.S. International Trade Commission has shown that the U.S. current account deficits of the last decade were largely financed by the purchases of foreign governments of U.S. government debt.

The increases in foreign official holdings of Treasury securities have been partially offset in the capital accounts of many emerging market economies by private capital inflows. Laura Alfaro of Harvard Business School, Sebnem Kalemli-Ozcan of the University of Maryland and Vadym Volosovych of Erasmus University Rotterdam (see also here) pointed that developing countries with high productivity growth have received equity inflows. The “uphill” capital flows in the opposite direction are due to the official purchases of Treasury debt by these countries’ central banks. These patterns are consistent with the “long debt, short equity” composition of many emerging markets (see here).

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