● Pathology of the Capitalist Spirit: An Essay on Greed, Loss, and Hope
By David Levine
Excerpt via publisher, Palgrave
Since the eighteenth century, economists have defined the terms in which we think about capitalism: economic growth, freedom, and power. Originally, capitalism was understood as the form of economic organization that created a new world of wealth and the alleviation of poverty, or, at least it created the possibility that there might be such a world. Subsequently, the matter of freedom became increasingly important. Capitalism was either equated with freedom or considered an essential precondition for it. At the same time that these two themes were being explored, a third gained traction, which is that capitalism is essentially an institutional–legal mechanism for enabling the few to gain wealth at the expense of the many.
March Retail Sales Tumble The Most In 9 Months
Today’s retail sales report for March looks pretty bad. It may turn out to be a temporary setback due to the cold weather or an early Easter. That’s the optimistic outlook. The alternative view is that today’s weak update on consumption is a sign of deeper trouble for the business cycle in the months ahead. Only time will tell, of course, but for now it’s hard to ignore the number du jour. It’s still premature to assume the worst, but the latest data point hasn’t done us any favors for thinking positively.
Just-In-Time (Whew!) Delivery: A Hefty Drop In Jobless Claims
Initial jobless claims retreated sharply last week, delivering a timely reprieve from the increases in previous weeks–increases that were beginning to look troubling, if they persisted. They haven’t, at least for now. New filings for jobless benefits dropped a sizable 42,000 last week to a seasonally adjusted 346,000. Once again, the latest claims data is within shouting distance of the post-recession low of 333,000, which was set back in mid-January. Is today’s report a sign that the previous runup in claims was just another case of noise for this volatile series? Possibly, although more convincing evidence will take several more weeks of updates.
US Retail Sales: March 2013 Preview
Tomorrow’s report on US retail sales for March is projected to show a 0.2% gain for the month, according to The Capital Spectator’s average econometric forecast. That’s sharply lower than the 1.1% gain reported by the Census Bureau for February. Meanwhile, the Capital Spectator’s March projection is moderately above the range of consensus forecasts for several surveys of economists.
Asset Allocation & Rebalancing Review | 11 April 2013
The US stock market rose to an all-time high yesterday, based on the S&P 500. US equities also look strong in relative terms so far this year vs. all the major asset classes.
Diverging Paths: Stocks & The Market’s Inflation Forecast
Has the stock market finally broken free of inflation expectations? If so, is this a turning point for the market? For inflation expectations? For the economy? Lots of questions at this point, with no answers. At least no definitive answers. Meanwhile, there’s the striking image of diverging paths: the equity market running sharply higher while the market’s inflation forecast grinds lower.
A Smart Way To Look At A “Dumb” Investing Strategy
Expecting rebalancing to juice portfolio returns is a “dumb idea,” according to Forbes. “Rebalancing is fine if all you are trying to do is sleep better at night. But the idea that it increases your expected return is balderdash.” This can be reasonable advice… up to a point. But all-or-nothing blanket statements don’t usually fare well when it comes to evaluating investing strategies for the real world. That’s surely the case when reducing the pros and cons of rebalancing, and all the accompanying nuances, to a one liner.
The Data Will Set You Free (Or At Least Suggest A Few Interesting Regressions)
There’s been a lot of chatter over the last two years or so about recession predictions, and why some smart economists have been so wrong so far. There are no definitive answers, even if some explanations look potentially informative, if not exactly kind for the dismal scientists who stumbled. But we’ll leave that for another day… well, maybe not entirely. The ever-perceptive Noah Smith (who moonlights as an assistant finance professor at Stony Brook when he’s not blogging) weighs in, albeit inadvertently and through the thought experiment of pondering “A world without macroeconomists?” Along the way, he observes that taking the numbers at face value, with minimal if any theory, can still tell us something useful at times, but not without complaints — “Measurement Without Theory,” as Koopmans famously charged (pdf).
Q1:2013 US GDP Nowcast Update | 4.08.2013
First-quarter US GDP is expected to increase 3.2%, according to the latest update of The Capital Spectator’s average econometric nowcast. That’s virtually unchanged from the previous 3.1% nowcast, published on March 19. (GDP percentage changes are quoted as real seasonally adjusted annual rates.)
Book Bits | 4.6.13
● The Alchemists: Three Central Bankers and a World on Fire
By Neil Irwin
Q&A with author via The New York Times/Economix blog
Q: Americans generally view the financial crisis as a domestic event, and it’s already fading from memory. A central message of your book seems to be that it was primarily a European event, and it’s not over yet.
A: If history teaches one thing, it is that when a severe global financial panic sets in, it can easily bend and warp and metastasize. That’s how what we once quaintly called the subprime crisis came to have such varied effects as banking collapses in Iceland and Ireland and Cyprus, a lost decade for the British economy, and a series of events that nearly unraveled 60 years of progress toward a united and peaceful Europe. At its worst, those types of unpredictable domino effects can lead to some very bad places, of which the Great Depression and World War II are the prime examples. Fortunately nothing nearly that bad has happened this time. But as catastrophic as the 2008 experience was for the U.S. economy and millions of Americans, it was closer to the start of the crisis than the end.
