Relevant and even prescient commentary on news, politics and the economy.

An Appointment I Disapprove Of

An Appointment I Disapprove Of

 While many of them could be more progressive, given that Biden himself is largely a moderate making moderate nods to the progressive wing of the Democratic Party in his appointments, I have largely been not too dissatisfied with appointments made so far by President-Elect Biden.  My only surprise is that a bunch of people set their pants on fire over the appointment of Neera Tanden as OMB director while barely a squeak has been heard about the appointment to NEC Chair of total Goldman Sachs flunky, Brian Deese.  Actually, I do not think there even should be an NEC, which essentially replaced the CEA as the policy shop, with it usually being run by Wall Street types who are not even professional economists.

The End Of The Embargo Against Qatar

The End Of The Embargo Against Qatar

 Yesterday Saudi Arabia announced that it is ending the embargo/boycott of Qatar, and though reportedly the UAE leadership is not entirely happy with this, they are going along with this as are the other nations involved in this, Bahrain and Egypt. This had begun in June 2017, reportedly with the encouragement and initial support by Trump and Jared Kushner, with them buying into it as part of an anti-Iran alliance, given that Qatar was accused of having dealings with Iran, with which it shares a major natural gas pool in the Persian Gulf. It took Trump and Kushner a few months to realize that the very important al-Ubeid airbase used by the US was there, so they shifted to trying to end the boycott, which involved a set of 13 demands that Qatar was not remotely going to follow, including shutting down Al-Jazeera. It looked for a while that the quartet, or some of its members, might invade Qatar, but then Turkey sent a bunch of troops to Qatar and in various ways began supporting it.  Probably the greatest cost to Qatar of this whole mess was not being able to use the airspace of these nations.

Who Has Been Warring Against Christmas?

Who Has Been Warring Against Christmas?

 Where I am the Third Day of Christmas is just finishing with the news that Grinch Trump has ended his own brief War on Christmas and is signing the Covid-19 relief bill, thereby reinstating unemployment benefits for 14 million people although they’ll miss a week of payments, as well as preventing millions more from being evicted from their rental housing units, along with the Omnibus spending bill so the government will not shut down after tomorrow.  There has been less noise this year about the War on Christmas by the usual gang of right wing media types who like to whine about merchants and others saying “Happy Holidays!” rather than “Merry Christmas!” during the runup to Christmas, probably because so many of them have been caught up in whining about Biden supposedly stealing the election from Trump.  But this somehow draws my attention to another group entirely who have been at warring on Christmas for a long time.

So according to most of the major Christian denominations such as the Roman Catholic Church, and the Episcopalians, and Lutherans, and others of that ilk, the official proper Christmas season actually is the Twelve Days of Christmas, the first of which was Christmas Day itself, with the twelfth day of Christmas being Jan. 6, the Epiphany, the day supposed the Magi (Wise Men) visited the Baby Jesus. But for many they are not even willing to wait until New Year’s day, the official seventh day, to bring it to an end.  There I was on Facebook yesterday, the second day, also known as Boxing Day in UK and some other places, and an FB friend posted about being “glad it is over,” with a commenter on that thread getting even more worked up and declaring to have “taken down out tree and put away all the decorations, I could hardly wait for it to end!”  Yikes! Along these lines for some years now around here there is a rock/pop radio station that begins playing cheesy commercial “Christmas” music like “Frosty the Snowman” all the time starting almost immediately after Halloween, but reverts immediately to its usual fare starting December 26, the Second Day of Christmas. Sheesh!

Trump As The Grinch Who Stole Christmas

Trump As The Grinch Who Stole Christmas

 So the Congress struggled for months after the House passed a $3.3 trillion followup Covid relief bill, which Senate Majority Leader McConnell blocked and kept blocking.  House Speaker Pelosi and Treasury Secretary Mnuchin kept negotiating and coming up with this or that proposal, only to mostly have McConnell shoot it down, or sometimes Pres. Trump himself doing so.  Finally after the election, and with the threat of losing control of the Senate, McConnell suddenly decided a deal needed to be made, so sure enough, with Mnuchin supposedly representing Trump, a deal got cut.  It must be recognized that the push for having another round of direct payments was pushed by Trump, who threw out several numbers, and McConnell got it that this was popular. So he went along with Mnuchin’s suggested $600 per person, half of what was sent out in the CARES round last spring.

The whole thing has also been linked to the Omnibus general budget spending package, which needs to get passed or the government will get shut down, with ongoing week by week Continuing Resolutions holding that off, the current one expiring on Monday.  It contains mostly things approved in the budget sent officially from Trump’s OMB to Congress, although it is pretty clear he does not know what is in there.

Bubble Bubble Toil And Trouble?

Bubble Bubble Toil And Trouble?

 Or maybe not.

So recently there has been a lot of buzz that we may be seeing a variety of speculative bubbles in the US and indeed world economy.  Many asset markets have risen in the last few months, with several of them either reaching new highs or getting close to doing so, with some of them rising very sharply quite recently, with all of this making many eyebrows rise to noticeable degrees and mumble about possible crashes, which could well happen in any of these markets. But probably not in all of them.

One is of course the US stock market, which has hit new record highs recently for most of its indices, with the Dow, in particular, making headlines when it passed 30,000, where it still is, if not at a record high level at this very moment.  It is ironic that President Trump spent so much time and effort focusing on the stock market, apparently engaging in stupid and ultimately deeply deadly policies regarding the pandemic out of a silly effort to affect favorably almost daily stock market movements.  People were not to be told how serious things were because, wow, the stock market might go down tomorrow and his reelection chances would be damaged!  Well, of course, when how serious things finally became clear in March, we did see a massive plunge of world stock markets, but a combination of Federal Reserve policy actions and a fiscal stimulus, along with the passing of the first wave of the pandemic, led the markets to recover quite rapidly from their horrific fall.  They generally continued to do not too bad even as we had another increase in the pandemic in the summer, which was probably just the spreading of the first wave into parts of the country that did not get it in March and April, especially parts where governors followed Trump in not enforcing masks and social distancing.

Why Did AMLO Wait So Long To Recognize Biden Victory?

Why Did AMLO Wait So Long To Recognize Biden Victory?

 I do not know, but it is on the surface at least surprising.

AMLO is the nickname of Andres Manuel Lopez Obrador, the President of Mexico since Dec. 1, 2018.  Only yesterday, along with Mitch McConnell, President Putin of Russia and President Bolsonaro of Brazil, AMLO congratulated Joe Biden on his victory over Donald Trump in the US presidential eleciton, leaving only North Korea’s Kim Jong Un still not recognizing Biden’s victory among world leaders.  Putin and Bolsonaro and Kim have all been personally close to Trump, with Bolsonaro also imitating him in terms of policy positions.  But what is with the delay by AMLO, especially given that polls have long shown Trump having the lowest popularity rating in Mexico of any nation in the world, down around 5%?

Besides Trump’s massive unpopularity there are other reasons one might not expect this delay on AMLO’s part.  One is ideological, although Kim Jong Un is a left wing Communist supporting Trump.  But indeed, even though he started out in the centrist PRI, AMLO has long been identified as the leading left progressive figure in Mexican politics, running as the presidential candidate of the main leftist party, the PRD, in 2006 and 2012 (Mexican presidents serves single six year terms), then starting his own party, MORENA, which he ran from successfully in 2018, although in that year he did have the support of a minor socially conservative party.

The Fiscal Stimulus Gridlock

The Fiscal Stimulus Gridlock

The best can be said about a possible fiscal stimulus in the face of a renewed Covid-19 surge that is dragging the economy down as many areas shut down in various degrees is that at least a few hours ago the US Senate approved a one week continuing budget resolution to keep the fed govt functioning. In past years govt shutdown was a big deal, but with the current president threatening to seize power in a coup even in the face of the SCOTUS unanimously repudiating his final “Kraken” lawsuit, not to mention the positive drama of the FDA approving the Pfizer vaccine for US use, well, a govt shutdown right now does not look like such a big deal. But, hey, for at least the next week it will not happen, snore.

But we are facing a much more serious matter than the matter of just keeping the US fed govt going now, given that the US economy seems on the verge of possibly going into “double dip,” as cutbacks on economic activity spread as we see the coronavirus surging across the country. The House back in either April or May or thereabouts passed the HEROES bill that was a $3 trillion bill. Mitch McConnell in the Senate said no.

Constructing An Alternative Reality

Constructing An Alternative Reality

 This has been gradually developing for about the last quarter of a century or so.  While there was some of this going on before, it took off after the Newt Gingrich-led GOP took over Congress in the 94 election and Rush Limbaugh began his radio show.  Not long after Fox News began a more aggressive stance against President Clinton, pushing any and every scandal that would lead to his impeachment for lying about his sex life, although this proved unpopular with the public.  But that did not slow it down.  It became more developed in the Bush admin when support for the Iraq War became increasingly disconnected from reality, a war that was not connected to reality to begin with as it was based on false claims about WMDs supposedly in Iraq.  When Obama became president the alternate reality became more developed as Fox and talk radio obsessed on the fake news birther nonsense, not to mention the endless obsession on Benghazi and Hillary’s emails.

And then Trump became president and all of this kicked up to a whole new level, with his 23,500 plus lies and counting, which came along with a personalistic cult worshipping him.  This was bad all through his presidency, but now that he has lost the election it has further accelerated, now reaching seriously deranged levels that are also seriously dangerous to US democracy.

Yellen And Akerlof Or Akerlof and Yellen?

Yellen And Akerlof Or Akerlof and Yellen?

 I have already posted about the nomination of Janet Yellen to be Treasury Secretary, a historic first and most duly deserved.  She is great and totally appropriate, and I have already bloviated at length on that.

I am now going to discuss a more obscure and odd matter, the view of her and her Nobel-Prize-winning husband, George Akerlof, in the eyes of the public.  This is triggered by various media stories that have sort of downplayed or dismissed him while praising her and lifting her up, which I am all for and have done myself here and elsewhere on numerous occasions.  I note that I may be in a special position to comment on this as I have known George for 60 years, which might make me concerned about how people view him, although as someone frequently described as “the nicest person in the economics profession” who is also genuinely humble, he does not mind or care about any of this at all.

Mostly I want to reaffirm his important role both in her work and more broadly his importance to the economics profession and more broadly the history and development of economic thought. While she published papers on her own and with others, her most important and influential papers have been coauthored with him, including the one getting mentioned in the news reports about efficiency wages.  They have had a long joint research program studying labor market behavior taking into account such things as social interactions effects such as workers taking seriously whether they are being treated fairly.  They also contributed to the lit on the downward stickiness of nominal wages, which is an important macro fact, with Yellen bringing this into the policy discussion at the Fed when she was first a gov there under Greenspan, with this playing a role in her helping him to move from focusing on a zero inflation target to a positive one.  A major paper by George with Dickens and Perry at Brookings would support this and help pin down what is now the nearly universal 2% target that most central banks use, for better or worse.  They have had an enormous influence on global central banking that is not all that well understood or recognized.

Unprecedented

Unprecedented

 It occurs to me that our current president has engaged in a rather large number of actions that are unprecedented by any other president, as well as some only rarely happening and not for a long time, many of which for nearly all other politicians would make them viewed as simply unacceptable for being a president.  However, with him, there have been so many that people simply ignore most of them as being, “Oh well, there goes Trump again being himself.”

First of all, I do not have a full list of his norm-shattering precedents. In googling I saw an article that proclaimed he had violated 20 “presidential norms.” But it was behind a firewall.  And even though these may have been norms, it may be that other presidents violated at least some of them.  Anyway, here goes a partial list.

The first president to be accused of violating the emoluments clause of the Constitution.  Actually, there are two such clauses, the more famous one involving foreigners buying off a president, and then a domestic one as well.  He has been accused of violating both of them on numerous occasions, although never formally convicted of any, with a couple of law cases in court, mostly involving just the Trump Hotel in Washington.  But the list of likely violations is long and involves many properties and forms, with at least 22 foreign nations reputedly involved.  The funny thing is that just because something is forbidden in the Constitution does not immediately make it specifically against the law.  In any case, it remains that somehow no other president has even been accused of violating either of these clauses, but Trump is pretty clearly massively guilty of actually violating both of them blatantly and numerous times, with only the mildest outcry even from his critics.

He is the first president to have been legally charged with engaging in racial discrimination.  This would have been in 1973 right after he began working for his father’s real estate business.  He was not found officially guilty but had an out of court settlement in which he was ordered to stop doing what he had been doing. As it was, the Justice Dept later accused him of doing exactly that, returning to his previous racially discriminatory practices, after which he seems to have more or less stopped.  Of course there are past presidents with much worse race relations records than his, such as outright owning slaves as did most of the Founding Fathers from the South.  But in those days what they did was legal, if immoral.