There's a long list of things that could kill the euro zone. But the most deadly might also be the most overlooked. It's the crazy way that Europe measures inflation.
Let's step back for a minute. Most central banks nowadays aim for price stability defined as 2 percent core inflation. The "core" means that they strip out volatile food and energy prices because 1) those prices mostly don't figure into long-term contracts, and 2) they're set in world markets. But Europe goes further. They strip out housing too.
Spain and Germany can't agree on how to calculate housing costs. Neither can the rest of Europe. That makes measuring euro zone inflation a problem. But Europe's solution is no solution at all. They just ignore the problem. As Kantoos Economics points out, Europe's consumer price index, the HICP, simply excludes housing costs.
Why should you care about bad inflation data? Because the ECB is nothing if not a inflation-targeting central bank. And an inflation-targeting central bank with bad inflation data is like a blind firefighter.
The below chart courtesy of Lars Christensen tries to quantify the problem. It looks at an alternative measure of inflation, the GDP deflator (blue), and sees if it has grown at a 2 percent clip (red) recently. Spoiler alert: It hasn't.
Per the GDP deflator, inflation has been dangerously low in Europe the past four years. You can thank the euro-wide housing bust for that. From Spain to Ireland to France and the Netherlands, housing bubbles have deflated. But the ECB doesn't see these price declines when it targets 2 percent HICP inflation. So it overestimates inflation, underestimates the size of the crisis, and consequently does much less than it should.
There's a long list of things that could save the euro zone, and almost all of them involve the ECB being much, much more aggressive. That's not going to happen as long as the ECB targets a metric that conveniently ignores housing, which is, for families in most developed countries, the single biggest expense.
Better data won't save the euro any more than prescription glasses can put out a house fire. But, like better glasses on a firefighter, it would be a good start.
Russia's strongman president has many Americans convinced of his manipulative genius. He's really just a gambler who won big.
I. The Hack
The large, sunny room at Volgograd State University smelled like its contents: 45 college students, all but one of them male, hunched over keyboards, whispering and quietly clacking away among empty cans of Juicy energy drink. “It looks like they’re just picking at their screens, but the battle is intense,” Victor Minin said as we sat watching them.
Clustered in seven teams from universities across Russia, they were almost halfway into an eight-hour hacking competition, trying to solve forensic problems that ranged from identifying a computer virus’s origins to finding secret messages embedded in images. Minin was there to oversee the competition, called Capture the Flag, which had been put on by his organization, the Association of Chief Information Security Officers, or ARSIB in Russian. ARSIB runs Capture the Flag competitions at schools all over Russia, as well as massive, multiday hackathons in which one team defends its server as another team attacks it. In April, hundreds of young hackers participated in one of them.
David Bentley Hart’s text recaptures the awkward, multivoiced power of the original.
In the beginning was … well, what? A clap of the divine hands and a poetic shock wave? Or an itchy node of nothingness inconceivably scratching itself into somethingness? In the beginning was the Word, says the Gospel according to John—a lovely statement of the case, as it’s always seemed to me. A pre-temporal syllable swelling to utterance in the mouth of the universe, spoken once and heard forever: God’s power chord, if you like. For David Bentley Hart, however, whose mind-bending translation of the New Testament was published in October, the Word—as a word—does not suffice: He finds it to be “a curiously bland and impenetrable designation” for the heady concept expressed in the original Greek of the Gospels as Logos. The Chinese word Tao might get at it, Hart tells us, but English has nothing with quite the metaphysical flavor of Logos, the particular sense of a formative moral energy diffusing itself, without diminution, through space and time. So he throws up his hands and leaves it where it is: “In the origin there was the Logos …”
The cryptocurrency is almost certainly due for a major correction. But its long-term value remains a mystery.
To call Bitcoin the biggest and most obvious bubble in modern history may be a disservice to its surreality.
The price of bitcoin has doubled four times this year. In early January, one bitcoin was worth about $1,000. By May, it hit $2,000. In June, it breached $4,000. By Thanksgiving, it was $8,000. Two weeks later, it was $16,000.
This astronomical trajectory might make sense for a new public company with accelerating profits. Bitcoin, however, has no profits. It’s not even a company. It is a digital encrypted currency running on a decentralized network of computers around the world. Ordinary currencies, like the U.S. dollar, don’t double in value by the month, unless there’s a historic deflationary crisis, like the Panic of 1837. Instead, bitcoin’s behavior more resembles that of a collectible frenzy, like Beanie Babies in the late 1990s.
A conversation about inheritance, philanthropy, and aging with the philosopher Martha Nussbaum and the law professor Saul Levmore
What is the right way to age? It’s a question that isn’t explored enough in American society, where, seemingly, people are expected to be forever young, until, suddenly, they are not. Reflecting this binary, any writing about a long life’s final decades tends toward extremes. On one hand, there are the accounts of heroic men and women who still put in more than 40 hours a week on the job in their late 60s and early 70s (a genre I like to call “retirement porn”). On the other, there are the articles warning about the dangers of not adapting a home for aging bodies, or the plague of financial scammers targeting lonely or cognitively challenged seniors.
That leaves out a vast middle, the space where many older people actually, you know, live their lives. Luckily, Martha Nussbaum, the renowned philosopher and ethicist at the University of Chicago, and Saul Levmore, the former dean of and a current professor at the university’s law school, decided to explore that middle. The result? The recently published Aging Thoughtfully: Conversations About Retirement, Romance, Wrinkles, & Regret.
Students don't seem to be getting much out of higher education.
I have been in school for more than 40 years. First preschool, kindergarten, elementary school, junior high, and high school. Then a bachelor’s degree at UC Berkeley, followed by a doctoral program at Princeton. The next step was what you could call my first “real” job—as an economics professor at George Mason University.
Thanks to tenure, I have a dream job for life. Personally, I have no reason to lash out at our system of higher education. Yet a lifetime of experience, plus a quarter century of reading and reflection, has convinced me that it is a big waste of time and money. When politicians vow to send more Americans to college, I can’t help gasping, “Why? You want us to waste even more?”
As the Alabama Senate race enters its final days, Doug Jones is making an all out push—while his rival is nowhere to be seen.
MONTGOMERY, Ala.—The dramatic contrast between the two Senate campaigns in Alabama grew even more stark during the final weekend before Election Day.
Doug Jones, the Democratic candidate, is holding multiple events every day, taking questions from the press, and campaigning with other Democratic politicians. His opponent Roy Moore has all but disappeared. Dogged by controversy following allegations by nine women of sexual misconduct or abuse when they were teenagers, Moore has not appeared in public since last Tuesday, and isn’t scheduled to to so again before Monday. Reports suggest that he was in Philadelphia on Saturday watching the Army-Navy football game, and a Moore spokesperson told me that he attended a Christmas gathering with supporters and friends on Sunday evening—closed to the press.
Will the vice president—and the religious right—be rewarded for their embrace of Donald Trump?
No man can serve two masters, the Bible teaches, but Mike Pence is giving it his all. It’s a sweltering September afternoon in Anderson, Indiana, and the vice president has returned to his home state to deliver the Good News of the Republicans’ recently unveiled tax plan. The visit is a big deal for Anderson, a fading manufacturing hub about 20 miles outside Muncie that hasn’t hosted a sitting president or vice president in 65 years—a fact noted by several warm-up speakers. To mark this historic civic occasion, the cavernous factory where the event is being held has been transformed. Idle machinery has been shoved to the perimeter to make room for risers and cameras and a gargantuan American flag, which—along with bleachers full of constituents carefully selected for their ethnic diversity and ability to stay awake during speeches about tax policy—will serve as the TV-ready backdrop for Pence’s remarks.
The "Weinstein effect" continues to roil the nation’s power centers. But the allegations against the president have largely stayed in the background.
It’s been two months since the reckoning began. In early October, The New York Times and The New Yorker first published the alarming accounts of women who said they’d been assaulted by Hollywood mogul Harvey Weinstein. Rare is the day since then that women, and some men, haven’t come forward with accounts of sexual misconduct from famous and not-so-famous men alike.
Lurking in the background of the roiling debate about harassment and assault in American society are the allegations made against President Trump by at least 19 women, many of whom came forward after the release of the Access Hollywood tape in October 2016. Trump vociferously denies any wrongdoing. “Is the official White House position that all of these women are lying?” a reporter asked Sarah Huckabee Sanders, the White House press secretary, in late October. “Yeah, we’ve been clear on that from the beginning, and the president’s spoken on it,” Sanders replied.
A defense of consent as a lodestar of sexual morality
In "What Do You Desire?" Emily Witt travels to San Francisco, attends a shoot for a pornographic video about "women bound, stripped, and punished in public," reflects on her own unsuccessful search for romantic love, and ponders the implications of a sexual culture where no desire is considered off-limits so long as all participants give their consent. She'd prefer love to sexual novelty. But "what if love fails us?" she asks. "Sexual freedom has now extended to people who never wanted to shake off the old institutions, except to the extent of showing solidarity with friends who did. I have not sought so much choice for myself, and when I found myself with no possibilities except total sexual freedom, I was unhappy. I understood that the San Franciscans' focus on intention—the pornographers were there by choice—marked the difference between my nihilism and their utopianism. When your life does not conform to an idea, and this failure makes you feel bad, throwing away the idea can make you feel better."
How filler words and tiny pauses keep conversations from going off the rails
When one person asks another a question, it takes an average of 200 milliseconds for them to respond. This is so fast that we can’t even hear the pause. In fact, it’s faster than our brains actually work. It takes the brain about half a second to retrieve the words to say something, which means that in conversation, one person is gearing up to speak before the other is even finished. By listening to the tone, grammar, and content of another’s speech, we can predict when they’ll be done.
This precise clockwork dance that happens when people speak to each other is what N.J. Enfield, a professor of linguistics at the University of Sydney, calls the “conversation machine.” In his book How We Talk, he examines how conversational minutiae—filler words like “um” and “mm-hmm,” and pauses that are longer than 200 milliseconds—grease the wheels of this machine. In fact, he argues, these little “traffic signals” to some degree define human communication. What all human languages have in common, and what sets our communication apart from animals, is our ability to use language to coordinate how we use language.