Commentaries
Now raising intellectual capital
from Rolfe Winkler:
Afternoon Links 1-4
Living on nothing but food stamps (Deparle/Gebeloff, NYT) The safety net of last resort: 2% of U.S. households report zero income other than a food stamp card.
Twenty years on Japan is still paying its bubble era bills (Economist) Heard on the Street also writes today that Japan is looking at its third consecutive lost decade. Copious amounts of deficit spending and money printing hasn't worked for Japan. It won't work for us.
Petition halts Iceland's repayment plan (UPI) Icelanders want bank creditors -- in this case foreign depositors -- to eat the loss of bank failures. Probably sensible. Depositors were foolish to chase returns in Iceland to begin with. Putting Icelanders into debt slavery to pay them off does little good.
Lessons learned but not applied (Simon Johnson) Summers/Geithner know the right prescription to handle bank failures. They just aren't willing to follow it themselves... (ht Walker Todd)
from Rolfe Winkler:
Unemployed Japanese living in 30sqft “capsules”
Sad/fascinating piece from Hiroko Tabuchi in NYT: For some in Japan, Home is a tiny plastic bunk
For Atsushi Nakanishi, jobless since Christmas, home is a cubicle barely bigger than a coffin — one of dozens of berths stacked two units high in one of central Tokyo’s decrepit “capsule” hotels....
from Rolfe Winkler:
Lunchtime Links 12-31
Bankers get $4 trillion gift from Barney Frank (Reilly, Bloomberg) David pours over HR 4173, all 1,279 pages of it. He finds some interesting nuggets. One of the bigger problems I see is the proposed insurance fund that would pay for resolving systemically dangerous banks. Talk about moral hazard!
Show some balls (Saletan, Slate) A colorful take on new TSA security procedures.
from Rolfe Winkler:
Economic calcification, Japanese edition
Japan's labor market is desperately troubled. For years, the number of temporary workers has been on the rise as Japanese employers find it harder to afford full-timers. Like the rest of the Japanese economy, the labor market needs the flexibility to deflate. But the government won't allow that to happen. The latest example is a proposal to ban manufacturers from hiring temporary workers (Otsuma/Hagiwara, Bloomberg):
The government is preparing legislation “that will stop manufacturing firms from employing temps and encourage them to hire full-timers,” [Health and Labor Minister Akira] Nagatsuma said yesterday on a business program....
Don’t worry about the weak dollar
By John M. Berry
There’s no way to shut off the incessant warnings about a weak dollar from foreign officials and some economists, but it’s perfectly safe to ignore them.
You can also yawn the next time Treasury Secretary Timothy Geithner repeats the mantra, “It is very important to the United States that we continue to have a strong dollar.”
A chance for real change at the G20
For years, policy makers were able to cut and paste statements on global imbalances from one communique to the next. The words were never backed by action. This G20 meeting could very well be different.
Most commentators are not expecting much. Such cynicism is easy to understand. When the IMF tried to bang heads together in 2006 the result was a series of empty pledges. It now makes for comic reading.
Carrying the dollar lower
There’s been lots of hand wringing over the fate of the dollar, with its recent slide giving rise to, in the words of blogger Macroman, the “dollar going down forever” crowd. Data released from the U.S. Treasury on foreign capital flows didn’t help matters. Seems in July foreign investors wanted to put their funds elsewhere.
Lots of ink has already been spilled on the well worn arguments that blame reckless borrowing by the US government and the growing movement toward establishing an alternative world currency as the drivers behind the dollar’s decline.
Tough talking for Rio on China iron ore
No great surprise that Rio Tinto has acknowledged it has given up trying to fix an annual iron ore price with Chinese steel mills.
What strains credibility is the miner’s insistence that this has nothing to do with the detention of its negotiating team in China.
Japan takes a kinder approach to growth
The victorious Democratic Party of Japan did not put economic growth at the heart of its electoral sales pitch. The party’s manifesto mentions “growth” only once. The word “support”, by contrast, appears 19 times.
Even so, there are reasons for optimism that the DPJ’s softer and more nurturing policies are just what the economy needs.
(more…)
from Rolfe Winkler:
Peering into our future…
A WSJ article on Japanese elections comes with the following table.
Japan has spent 20 years fighting deflation with loose monetary policy and deficit spending. To what end?
Keynesians point to Japan's experience as evidence that the U.S. government can borrow much more before interest rates rise. I suspect they're right. But what's the point if, at the end of all of that, we're saddled with unpayable debts?
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The Wall
