Bloomberg has another one of its meandering monsters today, this time under the headline “Austerity Doesn’t Pay as Debt Markets Ignore Rating Cuts”. The 3,300 words can be reduced quite easily to one sentence: Countries are implementing austerity measures in order to bolster their credit ratings and keep their borrowing costs low, but it turns out that credit ratings have no effect on borrowing costs after all.
Jon Hilsenrath, the Fed Whisperer, has a very good piece this morning on a key worry facing monetary policymakers as we go into the latest FOMC meeting: the Fed might be able to push long-term interest rates down, but as any fixed-income professional knows, there’s a huge difference between rates and credit. And something worrying is clearly happening in the mortgage market: rates are low, but credit is very, very hard to come by. Or, as millionaire homeowner Chris Hordan put it to Hilsenrath, “If you don’t need the money, you can get it all day long. Thank you, Ben Bernanke.”
Matt Yglesias has a very odd piece at Slate entitled “The Kickstarter Recession”. In a nutshell, he seems to think that a crowdfunded economy would run on less money than the current economy, and therefore produce less in the way of much-needed tax revenues. He’s wrong on both counts, I think.
Infographics are invidious things: they seem to have an astonishing ability to make people simultaneously switch off their brains and reblog them. And today sees a prime example, from Hearst, which managed to get a credulous news article out of Steve Smith and Lauren Indvik by sending them this infographic. Here’s how it begins:
Yanis Varoufakis is hosting what he calls “a debate between Felix Salmond and Marshall Auerback”, by asking Auerback to respond to my post on Target2. But here’s the thing: it’s not really a debate if the two sides agree on nearly everything. There’s very little to take issue with in Auerback’s post, and he doesn’t seem to disagree with me on the substance of Target2. Instead, he takes a step back and gives a bit of big-picture context for Target2, asks why the Target2 imbalances have grown so big, and speculates that it could be German attempts to kill Target2, rather than Target2 itself, which would cause chaos in the Eurozone.
My latest video, above, is a reprisal of my blog post about variable pricing, and why it’s a great thing. The insight here is that pricing for a product like Broadway tickets is not the zero-sum game that it might seem at first glance. Yes, the more money that theatergoers spend, the less money they’re left with, and the more cash flowing into the pockets of New York’s performers and producers. (Which, incidentally, is quite the racket: one day I want to write a post about how theater producers get to effectively charge their investors 4-and-50, way more than the 2-and-20 we see in the finance world.)