Suddenly Everything Is Clear

From the deep thinkers at

Investment experts often judge whether stocks are cheap or expensive by comparing the prices to how much money the companies are earning.


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Some Things I’ve Been Reading…

The Cliff Hangs on the Fed: Why Ben Bernanke Controls the Economy’s Fate
Ramesh Ponnuru and David Beckworth, The Atlantic, December 12 2012
The authors argue that regardless of any contraction associated with the ‘fiscal cliff’ the Federal Reserve has the ability to prevent an impact on the overall level of spending in the economy through monetary easing. They acknowledge that central banks can’t hit their targets precisely, but maintain that they “have the power to come close, which means that fiscal policy cannot have a large effect if they are trying.” They deny that the zero-interest rate bound limits the potential effectiveness of monetary easing.

Models Behaving Badly
Robert Skidelsky, Project Syndicate, December 18, 2012
Skidelsky argues in the opposite direction based on the recent record of missed growth forecasts in the UK and Europe. He concludes that the reason is that monetary authorities underestimated the impact of fiscal austerity and “overestimated the extent to which quantitative easing (QE) by the monetary authorities – that is, printing money – could counterbalance fiscal tightening.” He concludes that while monetary easing “did lower bond yields, the extra money was largely retained within the banking system, and never reached the real economy. This implies that the problem has mainly been a lack of demand for credit – reluctance on the part of businesses and households to borrow on almost any terms in a flat market.”

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Geithner: No Agreement without Clinton Tax Rates on Wealthy

Tim Geithner wants tax rates to go back to what they were under Bill Clinton, because it was “a time when the American economy was doing exceptionally well.” Ok, but if his argument is that those rates were good for the economy, why wouldn’t he also argue for (i) all taxes to go back to the Clinton rates and (ii) spending to go back to the Clinton levels.

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John Heilemann: “News products that feed our own biases”

Insightful comment on Morning Joe this morning –

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Manukau and Mogadishu

I was struck by the following sentences from two different articles in today’s NZ Herald. First this

“There was a lot of disorder and domestic incidents across the district – more than usual for a Friday night. There was lots of fighting, and groups of people fighting in the streets of various locations over town”

and then this

“That’s the kind of place it was, incredibly dangerous, and large numbers of men walking around with all kinds of weapons.”

The first is Manukau in South Auckland. The second, Mogadishu, Somalia.

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Good Ol’ Kiwi Optimism

It is remarkable that on a day when major news outlets publish articles with the following headlines:

the NZ Herald has an article with the headline:

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Friedman on Why America Is Falling Behind

Some interesting insights here from Tom Friedman on NBC’s Meet The Press:

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Kristof Admires the Military as a Model for Providing Social Services

Nicholas Kristof in the NY Times this morning writes approvingly of the US military as a model for the way society should take care of people. A few key extracts…

The United States armed forces knit together whites, blacks, Asians and Hispanics from diverse backgrounds, invests in their education and training, provides them with excellent health care and child care. And it does all this with minimal income gaps

“It’s the purest application of socialism there is,” Wesley Clark, the retired four-star general and former supreme allied commander of NATO forces in Europe, told me. And he was only partly joking.

“It’s a really fair system, and a lot of thought has been put into it, and people respond to it really well,” he added. The country can learn from that sense of mission, he said, from that emphasis on long-term strategic thinking.

This is a rare enclave of single-payer universal health care, and it continues with a veterans’ health care system that has much lower costs than the American system as a whole.

While one of America’s greatest failings is underinvestment in early childhood education (which seems to be one of the best ways to break cycles of poverty from replicating), the military manages to provide superb child care. The cost depends on family income and starts at $44 per week.

“I absolutely think it’s a model,” said Linda K. Smith, executive director of the National Association of Child Care Resource and Referral Agencies, which advocates for better child care in America.

This is all fine, but it’s hard to tell what Kristof is really suggesting here. Yes, the US military successfully provides a high level of ‘socialized’ services to its members. But isn’t it also relevant to mention that in return for that the military expects those members to be willing to die for their country? And that even apart from that, people in the military are required to give up an enormous amount of freedom over how they live their lives. Isn’t this precisely the reason that many people recoil from efforts to introduce more socialized models of the way services are provided to the US – the impact (whether real or perceived) on personal freedom? And before we get too carried away with enthusiasm for the way the military cares for people, it’s worth taking time to review their record in dealing with Traumatic Brain Injury in personnel returning from the battlefield.

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Are We Really Just Animals?

The NZ ACT Party’s Hillary Calvert generated some controversy last week during a discussion about battery hen cages. From TVNZ

We care about people ahead of silly little chickens,” Calvert said.

Save Animals from Exploitation (SAFE) says the comments are “outlandish and offensive” and is demanding to know if the MP’s statements represent the views of the Act Party.

I don’t find Calvert’s comments inherently outlandish and offensive – in general I think the view that people are more important that animals is both true and widely accepted. However the context of the remarks seems to indicate that she doesn’t think animal welfare is important at all – a position that I think is harder to justify.

However what I found more interesting was the reaction of the Green Party’s Sue Kedgley (emphasis added) –

“I was profoundly offended by what Ms Calvert had to say. We are all animals. What right do we have to force animals to live in cages, just so we can have eggs?

Evidentely her concern goes beyond just the issue of people causing unnecessary discomfort to animals, but involves instead the whole idea that humans should have any rights to exploit animals for their own benefit at all – including presumably killing them for food – any more than we have a right to exploit other humans for our own benefit. In this view it seems that any kind of animal farming would rank alongside slavery.

Well, I don’t personally agree with that position, but I’m actually more struck by some other implications of the fundamental idea that “we are all animals”. It seems to me that if that were true, then there would be no reason at all for people to be upset with Rep. Anthony Weiner’s recent behavior in sending sexually explicit messages and pictures to women other than his wife. If he is just an animal, why should we be surprised, let alone shocked, at any kind of behavior that he demonstrates? It’s just behavior – not something one can attribute any kind of moral value to. For that matter, how can Sue Kedgley be offended by Hillary Calvert’s behavior – she is just an animal too. And animals don’t have much concern for the well-being of other species.

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Where You May And May Not Take Your Vacation

The Australian Tourism Minister, Martin Ferguson, is quoted in the Sydney Morning Herald as saying that Australians saving vacation time for overseas trips is a “disgrace” and that “We’ve got to change our own mindset [and get people to realise that] a short break is as good as a long break and encourage people to actually have a holiday in Australia.”

The real disgrace is that a Minister of the Crown thinks he has some business telling private citizens where and how they should take their vacations. And the irony is that the reason people are taking more overseas trips is the high value of the Australian dollar, which is primarily a consequence of the very high demand for Australian commodity exports. Far from causing harm to the Australian economy, increasing outbound tourism is actually a reflection of how well the Australian economy is doing (at least until the China bubble bursts :)).

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