News links for 13 Mar 2014
Today’s newsletter post is delayed until after the email distribution. I will be posting it at some point later. A lot of news links are hear, however.
“I think the expected path for monetary policy is already dovish, and wisely so. It was an awful recession. But there really is such a thing as “too much.” This is already quite a lot. And to say that the current policy path is broadly appropriate, as I’ve done, really does imply that it’s time to start talking about how tight the labor market is, about how much slack the U.S. economy has left, and about tightening. The reason the Fed is tapering now and talking ever more frankly about rate hikes is ultimately because yes, it’s about time.”
“Wells Fargo, the nation’s biggest mortgage servicer, appears to have set up detailed internal procedures to fabricate foreclosure papers on demand, according to allegations in papers filed Tuesday in a New York federal court.”
“Private employers are boosting their workers’ compensation at the fastest quarterly pace since before the recession. But the gain was driven disproportionately by benefits, a new Labor Department report showed Wednesday.”
“Ford becomes the 144th death row inmate to be exonerated over the past four decades, underlining the perils of innocent people being sent to their deaths in America’s capital punishment system. Yet despite such warning, several states such as Alabama, California, Florida and Missouri have taken recent steps to speed up the process of executions and whittle down the recourse to appeals in a way that had such expedition applied in Ford’s case would already have seen him put to death.”
“Unfortunately for Russia, this set of priorities helped make it possible for oligarchs to strip the state of assets as the economy collapsed. A thorough review of Fischer’s time at the IMF probably will make him look better than he already does in most people’s eyes. Still, it would be imprudent to vote to confirm him without knowing all of the relevant facts.”
“”Japan has just had 25 years of it and is desperately trying to get out of exactly the situation that Europe is moving into. But the European Union is not a nation. It is just an association of sovereign states, a very incomplete association, and it may not survive. This euro crisis has converted what was meant to be a voluntary association of equal sovereign states that sacrificed part of their sovereignty for a common benefit into a relationship between debtors and creditors. The debtors can’t pay their debts and are dependent on their creditors’ mercy, and that creates a two-class system. It’s not voluntary and it’s not equal.””
“”I think we have an interest-rate level that’s too low in the medium term from a German point of view,” said Mr. Schäuble during a news briefing on the government’s new budget plans. “I know that the situation is very different in some other European countries—that is why a common monetary policy isn’t quite so easy in Europe.” Mr. Schäuble said he hopes that a boost in countries’ competitiveness will help bring about an interest-rate level that is fairer for all.”
Ambrose presents the monetarist view of ECB policy
This Swiss article makes some good points about Germany’s budget plans. It wants to have a balanced budget for the first time since 1969. One problem is that this is done on the back of a currency union that is weak relative to where the DM would be. That has led to record current account surpluses. The second problem is that Germany has a dearth of capital investment at home. Public infrastructure investment is also needed, as German infrastructure measured according to economic potential has sunk 10% since 1991. Good read.
House prices in Brazil have increased by as much as 250% in the last six years. The talk is of a housing bubble. This article focuses on favelas where prices are even escalating.
Multiple deaths at the protests in Venezuela that continue. AT least 27 people have died since 12 February
Worst February inflation in 23 years in Argentina
“”China’s weak industrial activity data is one. Second, the appeal of commodity trade-related financing deals in China appears to be waning.” The latter factor is particularly intriguing. Chinese lenders, especially in the nonbank or “shadow” sector, often allow copper to be pledged as collateral. With expectations that the government is going to allow more bond defaults—the first happened last week—lenders are beginning to worry that copper’s value will decline.”
““We would argue that Bitcoin, and other digital currencies, lie somewhere on the boundary between currency, commodity and financial asset,” write Dominic Wilson, chief markets economist at Goldman Sachs, and Jose Ursua, a global economist with the firm. “Our best definition would be that it is currently a speculative financial asset that can be used as a medium of exchange.” A successful cyber-currency needs a fixed exchange rate to succeed, according to the economists, and the difficulties Bitcoin faces as a store of value are significant obstacle to its adoption.”
These robots are going to put people out of jobs! Technology.
“Top-secret documents reveal that the National Security Agency is dramatically expanding its ability to covertly hack into computers on a mass scale by using automated systems that reduce the level of human oversight in the process.”
The euro is trading at the highest levels since October 2011.
“Tighter credit has this week helped push Chinese copper prices to their lowest level since 2009 and dragged iron ore prices close to $100 a tonne. “