Tag Archives: United States

As U.S. expansion notches record, recovery may have only just begun

By Howard Schneider – It was only last year that U.S. gross domestic product caught up with estimates of its potential, surpassing where Congressional Budget Office analysts feel it would have been if the housing bubble hadn’t burst in 2007, investment bank Lehman Brothers hadn’t failed the following year, and the world had not cratered into a deep recession.

The periods when GDP exceeds potential are typically when workers enjoy the greatest wage gains and members of historically sidelined communities find jobs. In recent years, those periods have not lasted long, a fact that Fed and other officials are wrestling with as they weigh possible interest rate cuts and assess just where the U.S. economy now stands.

The approach of the decade-long expansion mark has boosted speculation about how much longer the recovery might last, whether a recession is inevitable in the next couple of years, and whether the Fed and U.S. government are adequately prepared to fight another downturn.

For the type of progress Fed and elected officials feel is needed to rebuild middle-class incomes, it may take several more years.

But the environment has changed.

In the short-term, global trade disputes and other risks could slow the economy no matter what the Fed does. more>

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Globalization’s Wrong Turn

And How It Hurt America
By Dani Rodrik – Globalization is in trouble. A populist backlash, personified by U.S. President Donald Trump, is in full swing. A simmering trade war between China and the United States could easily boil over. Countries across Europe are shutting their borders to immigrants. Even globalization’s biggest boosters now concede that it has produced lopsided benefits and that something will have to change.

Today’s woes have their roots in the 1990s, when policymakers set the world on its current, hyperglobalist path, requiring domestic economies to be put in the service of the world economy instead of the other way around. In trade, the transformation was signaled by the creation of the World Trade Organization, in 1995. The WTO not only made it harder for countries to shield themselves from international competition but also reached into policy areas that international trade rules had not previously touched: agriculture, services, intellectual property, industrial policy, and health and sanitary regulations. Even more ambitious regional trade deals, such as the North American Free Trade Agreement, took off around the same time.

In finance, the change was marked by a fundamental shift in governments’ attitudes away from managing capital flows and toward liberalization. Pushed by the United States and global organizations such as the International Monetary Fund and the Organization for Economic Cooperation and Development, countries freed up vast quantities of short-term finance to slosh across borders in search of higher returns. more>

Transatlantic Relations: Difficult Decisions Ahead

By Gordon D. Sondland – The EU often espouses the rhetoric of supporting free trade, while simultaneously employing numerous non-tariff barriers to its markets. While these NTBs take many forms, prominent among them are the EU’s unjustified and trade restrictive policies with respect to agricultural and food products, notably unwarranted bans not based on science or actual risk.

It is not a coincidence that the United States has an agricultural trade surplus with the world of $22 billion and a deficit with the EU of $15 billion. The EU’s tariffs are also higher than the United States.

Historically, the United States has been there for Europe for more than seven decades. Our commitment to a free, prosperous and secure Europe has come in many forms, from American dollars to American lives. The United States decided to make a strategic, long-term investment in this transatlantic relationship.

Hundreds of billions of dollars have flowed into Europe, along with the incalculable investment into Europe’s security via non-obligatory defense spending. At the same time, we have opened our lucrative markets and welcomed European trade and investment throughout our economy.

Against this backdrop, I arrived in Brussels last July highly optimistic.

Fast-forward six months. I am deeply disappointed we have not seen faster, deeper progress on the wide number of areas where European rules prevent U.S. firms from fair access to European markets. This lack of demonstrable progress on real and tangible U.S. concerns presents a serious challenge to the transatlantic relationship at a time when it is more important than ever that we be working together.

Rest assured, President Trump is committed to fixing the imbalance in our trade relationship so it will not burden yet another American administration. more>

Updates from Adobe

5 & 3/4 Questions
By Erin Robinson – I am in my head a lot…a perpetual daydreamer of sorts. It’s quite a high when I get truly inspired. My mind goes into overdrive, and I can barely physically keep up! I tend to scribble numerous miscellaneous thoughts on Post-its and on my left hand.

My work, I usually describe as sometimes hauntingly beautiful, bold, graphic, vibrant, textured, and always magical. As a woman of color, I also like to illustrate women that represent me. Living in Brooklyn for numerous years, I found myself surrounded by some of the most incredibly stunning black, brown, and beige women from a variety of different places and different cultures…full of eccentricity.

When I draw for myself, I tend to create illustrations with a story behind them. The stories usually pull from fairy-esque things I believed in as a little girl. You’ll notice hints of red string and lotuses through many of those pieces. I like adding bits of symbolism.

I’ve been drawing since I can remember. My parents are both very creative and made sure I had the tools to nurture my animated mind.

I went into corporate America as a fashion design VP for children. I found myself stifled after a period of time and felt like I wasn’t really expressing who I truly was inside…what my true artistic capabilities were. I felt like I had climbed the corporate ladder as far as I could go, and after a sabbatical, a lot of thinking and stepping out of fear, and encouragement from a handful of friends, I decided to really share my art world. more>

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Climate change is becoming a defining issue of 2020

Democratic voters actually care about climate change. 2020 candidates are responding.
By Ella Nilsen – Rep. Alexandria Ocasio-Cortez thinks former Vice President Joe Biden’s $5 trillion climate plan — one of the first major policies his campaign has released — is a “start,” albeit one that needs to be scaled up dramatically.

“I think what that has shown is a dramatic shift in the right direction, but we need to keep pushing for a plan that is at the scale of the problem,” Ocasio-Cortez, progressive superstar and co-sponsor of the Green New Deal, told reporters on Tuesday. (For the record, she thinks the plan that gets closest is Washington Gov. Jay Inslee’s, which she called the “gold standard.”)

But the very fact that Biden felt the need to release a climate plan near the start of his policy rollout shows the influence and success of Ocasio-Cortez and her allies in the climate movement.

Five candidates, including Biden, Inslee, Sen. Elizabeth Warren, and former Reps. Beto O’Rourke and John Delaney have all released massive plans to combat climate change, ranging from $1.5 trillion to $3 trillion in federal investment over a decade. Candidates are factoring in the spur of private investments as well, hence the jump to $5 trillion in Biden’s plan.

“It’s a recognition of where the electorate is,” Monmouth University polling director Patrick Murray told Vox. “This popped out from the very beginning. Climate change and the environment in general was the No. 2 issue after health care for Democratic voters.

“I think it’s just becoming a zeitgeist for Democrats,” Murray added.

Over the past eight months, climate change has shot up as a core Democratic issue in polls. more>

What’s Great Power Competition? No One Really Knows

By Katie Bo Williams – More than a year since the new National Defense Strategy refocused the U.S. military away from counterinsurgency and back towards the country’s greatest strategic competitors, some policy and strategy experts say the Pentagon hasn’t yet figured out how to “compete” with Russia and China.

In fact, it hasn’t even settled on a definition for the “competition” in “great power competition.”

The uncertainty has left former officials scratching their heads about how, specifically, the Defense Department plans to counter China and Russia beneath the threshold of armed conflict. It also appears to be pulling the Pentagon’s policy planners beyond their traditional purview of fighting and winning wars.

“The NDS has two pieces to it: it says you have to compete with China and Russia and prepare for conflict with China and Russia,” said Mara Karlin, a former deputy assistant defense secretary for strategy and force development. “Those are different. The way you would manage and develop your force is different depending on which one you are biasing towards.” more>

Kavanaugh Ethics Complaints Once Again Dodge Ruling In The 10th Circuit

By Steve Denning – The judicial review of multiple ethics complaints against Justice Kavanaugh continued on its Gilbert-And-Sullivan trajectory with a 6-1 decision by the 10th Circuit last Friday that that court does not have jurisdiction to consider the complaints, even though Chief Justice Roberts explicitly requested the 10th  Circuit to assess them.

Some 83 ethics complaints had been filed against Judge Kavanaugh alleging not only false statements under oath during hearings on his nominations to the U.S. Court of Appeals for the D.C. Circuit in 2004 and 2006, but also, more flagrantly, misconduct at the nomination hearing for the U.S. Supreme Court itself in 2018, including making inappropriate partisan statements and treating senators with disrespect.

The complaints were not made without legal basis. More than 2,400 law professors concluded that during the Senate confirmation hearings, Kavanaugh has “displayed a lack of judicial temperament that would be disqualifying for any court.” Unlike the allegations of lying about events that happened many years ago, there was no question of fact as to whether Kavanaugh’s conduct at the Senate hearings actually took place: it was visible for the whole country to see on national television.

Former Supreme Court Justice John Paul Stevens also stated that Judge Kavanaugh has demonstrated bias and is “not fit for the Supreme Court.” Former Justice Stevens, in remarks to retirees in Boca Raton, Fla, declared that Kavanaugh’s statements on September 27 revealed prejudices that would make it impossible for him to do the court’s work. “They suggest that he has demonstrated a potential bias involving enough potential litigants before the court that he would not be able to perform his full responsibilities.” more>

How Politics Delayed A Boeing Fix And Endangered Public Safety

By Steve Denning – This is an abrupt change for the Trump administration.

Just last night, the Acting Administrator of the FAA, Daniel K. Elwell, had doubled down on keeping the Boeing 737 MAX 8 in the air, stating that his agency’s extensive review of “aggregate safety performance from operators and pilots of the Boeing 737 MAX… shows no systemic performance issues and provides no basis to order grounding the aircraft.” Boeing’s CEO, Dennis Muilenburg, after a call with President Trump, had also declared his complete faith in the plane’s safety.

Trust in a crisis depends on truth-telling—something the current administration is not renowned for, with almost 10,000 false or misleading statements from the president alone.

In this case, the FAA statement last night did not disclose that five pilots had already raised serious concerns about the 737 MAX 8 in the federal database where pilots can voluntarily report about aviation incidents without fear of repercussions.

Instead, the FAA statement said, “Other nations’ civil-aviation authorities had not provided data to us that would warrant action.” Yet Elwell didn’t have to look to foreign civil aviation authorities for such evidence. There was such evidence, right here at home, as reported in the Dallas Morning News.

The FAA statement also did not disclose that Boeing had already issued an emergency airworthiness directive about the Boeing 737 Max 8 in response to the crash of Lion Air Flight 610 in Indonesia. The directive “was prompted by analysis performed by the manufacturer showing that if an erroneously high single angle of attack (AOA) sensor input is received by the flight control system, there is a potential for repeated nose-down trim commands of the horizontal stabilizer.”

Nor did the FAA statement disclose that Boeing and the FAA had been working together for some months to deal with the possibility that the Indonesia crash was caused by a malfunction of its stabilization system.

While it is reassuring the U.S. has finally taken action to ground the Boeing 737 MAX 8 and MAX 9, the sequence of events points to institutional issues in aviation safety generally. more>

Debunking Deregulation: Bank Credit Guidance and Productive Investment

Deregulated banking in rich countries delivers more “investment” in speculative asset markets, not productive businesses.
By Josh Ryan-Collins – Mortgage and other asset-market lending typically does not generate income streams sufficient to finance the growth of debt. Instead, the empirical evidence suggests that after a certain point relative to GDP, increases in mortgage debt typically slows growth and increase financial instability as asset prices rise faster than incomes.

These new empirical findings support a much older body of theory that argues that credit markets, left to their own devices, will not optimize the allocation of resources.

Instead, following Joseph Schumpeter’s, Keynes’ and Hyman Minsky’s arguments, they will tend to shift financial resources away from real-sector investment and innovation and towards asset markets and speculation; away from equitable income growth and towards capital gains that polarizes wealth and income; and away from a robust, stable growth path and towards fragile boom-busts cycles with frequent crises.

This means, we argue, there is a strong case for regulation, including via instruments that guide credit. In fact, from the end of World War II up to the 1980s, most advanced economy central banks and finance ministries routinely used forms of credit guidance as the norm, rather than the exception. These include instruments that effected both the demand for credit for specific sectors (e.g. Loan-to-Value ratios or subsidies) and the supply of credit (e.g. credit ceilings or quotas and interest rate limits).

In Europe, favored sectors typically included exports, farming and manufacturing, while repressed sectors were imports, the service sector, and household mortgages and consumption. Indeed, commercial banks in many advanced economies were effectively restricted from entering the residential mortgage market up until the 1980s. Public institutions — state investment banks and related bodies — were also created to specifically steer credit towards desired sectors. more>

How Trump’s Economic Chickens Are Finally Coming Home To Roost

By Steve Denning – Assisted by the least qualified White House staff in history, Trump has continued to breach conventional wisdom and practice. Yet Liberal analysts have watched with dismay as polls have showed stable support from Trump’s base, no matter how outrageous the behavior. Surely, they said, the economic reality of what Trump is up to must eventually kick in.

Now a trifecta of bad economic news for his base raises the question whether that time has finally arrived:

The comfort offered by Trump’s fictions is too seductive to be undermined by facts. To Trump’s base, the beautiful myth of “the Wall” is, and remains, more attractive than the real world.

In this way, “the Wall” has become a code-name for the racist, anti-immigrant isolationist policies of Trump’s presidency and a symbol of multiple toxic policies,

There’s a catch with the use of fictions in politics. “The chief disability of propaganda,” wrote Hannah Arendt in her classic book, The Origins of Totalitarianism, “is that it cannot fulfill the longing of the masses for a completely consistent, comprehensible, and predictable world without seriously conflicting with common sense.”

For a time, common sense can be held at bay and prevented from intruding into the cocoon of reassuring fiction. Yet the deliberate distortion of reality is also the cause of propaganda’s inevitable downfall. It is the inexorable collision with reality that eventually ruins the cocoon. It’s not a matter of whether. It’s only a question of when. more>