Bundesbank chief Jens Weidmann gets basic facts wrong and thinks his colleagues are the devil.
Have you heard of "inflation"? Good. Have you heard that "inflation" can make your borrowing costs appear ... inflated? Yes? Congratulations, you know more about money than Bundesbank president Jens Weidmann.
As Germany's member of the European Central Bank's (ECB) governing council, Weidmann has opposed doing anything to solve the euro crisis. Because, inflation! (Pay no attention to the core inflation behind the curtain of 1.5 percent in September). Weidmann is one of those people who thinks it's always 1923 -- that Weimar hyperinflation is always just around the corner. Despite this preoccupation with anything resembling a price increase, Weidmann mysteriously develops amnesia about inflation when it comes to figuring out real government borrowing costs. Here's what he had to say about rising bond yields in Europe's periphery, via Linda Yueh of Bloomberg.
Government borrowing costs over 7 percent haven't caused the end of world in the past and the euro zone wouldn't fall apart if some had to temporarily pay such rates.
This is just a basic fallacy. Weidmann is confusing real and nominal rates. It's easy to pay 7 percent to borrow when inflation is high, but not so much when inflation is low. The chart below compares unadjusted and inflation-adjusted Spanish borrowing costs since 1978.
(Note: I used headline CPI as the deflator).
I'm not sure how many words this picture is worth, but there are two big stories here. First, Spain used to pay much more than 7 percent to borrow in nominal terms, but that was back in its pre-euro days when inflation was much higher. Second, Spain even used to pay more than 7 percent to borrow in real terms, but that was back when it actually had real growth. It's a bit harder to pay 7 percent when growth and inflation have both flatlined.
In other words, you can't pay your debts if you have no income. The chart below looks at Spain's borrowing costs less its nominal GDP growth rate -- that is, real growth and inflation together. When the blue line runs up, borrowing outpaces income growth. Spain today is what insolvency looks like.
Now, positive rates here aren't themselves a sign of doom. Far from it. We did for much of the Great Moderation. But rates above 5 percent? That's doom territory. It sets off a debt trap. Spain's national income can't support its borrowing costs, so they have to do austerity -- austerity that only pushes its income down and its borrowing costs up even more.
Weidmann doesn't think this is a problem. The opposite, actually. He thinks it's a good thing, because it pushes Spain to do the austerity and labor market reforms the ECB wants it to do. But the ECB thinks this austerity is a punishment. Weidmann thinks it's actually a medicine. In other words, the ECB thinks austerity is the price Spain should pay for the ECB to push its borrowing costs down, and Weidmann thinks austerity alone will push its borrowing costs down. The former has become the ECB's de facto policy -- a policy it's fair to say Weidmann does not like. He implied it shows the ECB is now under the influence of the devil. As in the one with the pitchfork.
That's not the kind of argument you make when the facts are on your side.
Three Atlantic staffers discuss “Beyond the Wall,” the sixth episode of the seventh season.
Every week for the seventh season of Game of Thrones, three Atlantic staffers will discuss new episodes of the HBO drama. Because no screeners were made available to critics in advance this year, we'll be posting our thoughts in installments.
More comfortable online than out partying, post-Millennials are safer, physically, than adolescents have ever been. But they’re on the brink of a mental-health crisis.
One day last summer, around noon, I called Athena, a 13-year-old who lives in Houston, Texas. She answered her phone—she’s had an iPhone since she was 11—sounding as if she’d just woken up. We chatted about her favorite songs and TV shows, and I asked her what she likes to do with her friends. “We go to the mall,” she said. “Do your parents drop you off?,” I asked, recalling my own middle-school days, in the 1980s, when I’d enjoy a few parent-free hours shopping with my friends. “No—I go with my family,” she replied. “We’ll go with my mom and brothers and walk a little behind them. I just have to tell my mom where we’re going. I have to check in every hour or every 30 minutes.”
Those mall trips are infrequent—about once a month. More often, Athena and her friends spend time together on their phones, unchaperoned. Unlike the teens of my generation, who might have spent an evening tying up the family landline with gossip, they talk on Snapchat, the smartphone app that allows users to send pictures and videos that quickly disappear. They make sure to keep up their Snapstreaks, which show how many days in a row they have Snapchatted with each other. Sometimes they save screenshots of particularly ridiculous pictures of friends. “It’s good blackmail,” Athena said. (Because she’s a minor, I’m not using her real name.) She told me she’d spent most of the summer hanging out alone in her room with her phone. That’s just the way her generation is, she said. “We didn’t have a choice to know any life without iPads or iPhones. I think we like our phones more than we like actual people.”
The country’s exceptionally thin safety net prompts residents—especially those with less-steady employment—to view partnership in more economic terms.
Over the last several decades, the proportion of Americans who get married has greatly diminished—a development known as well to those who lament marriage’s decline as those who take issue with it as an institution. But a development that’s much newer is that the demographic now leading the shift away from tradition is Americans without college degrees—who just a few decades ago were much more likely to be married by the age of 30 than college graduates were.
Today, though, just over half of women in their early 40s with a high-school degree or less education are married, compared to three-quarters of women with a bachelor’s degree; in the 1970s, there was barely a difference. The marriage gap for men has changed less over the years, but there the trend lines have flipped too: Twenty-five percent of men with high-school degrees or less education have never married, compared to 23 percent of men with bachelor’s degrees and 14 percent of those with advanced degrees. Meanwhile, divorce rates have continued to rise among the less educated, while staying more or less steady for college graduates in recent decades.
The scientists are all talking like it’s a sure thing.
On August 21, the “moon” will pass between the Earth and the sun, obscuring the light of the latter. The government agency NASA says this will result in “one of nature’s most awe-inspiring sights.” The astronomers there claim to have calculated down to the minute exactly when and where this will happen, and for how long. They have reportedly known about this eclipse for years, just by virtue of some sort of complex math.
This seems extremely unlikely. I can’t even find these eclipse calculations on their website to check them for myself.
Meanwhile the scientists tell us we can’t look at it without special glasses because “looking directly at the sun is unsafe.”
A large Indian study of 4,500 newborn babies found that the right microbes can prevent a life-threatening condition called sepsis.
For all the hype that surrounds them, probiotics—products that contain supposedly beneficial bacteria—have rarely proven their worth in large, rigorous studies. There are good reasons for this disappointing performance. The strains in most commercially produced probiotics were chosen for historical reasons, because they were easy to grow and manufacture, and not because they are well-adapted to the human body. When they enter our gut, they fail to colonize. As I wrote in my recent book, they’re like a breeze that blows between two open windows.
But even though probiotic products might be underwhelming, the probiotic concept is sound. Bacteria can beneficially tune our immune systems and protect us from disease. It’s just a matter of finding the right strains, and helping them to establish themselves. Many scientists are now trying to do just that, and one such team, led by Pinaki Panigrahi at the University of Nebraska Medical Center, has just scored a big win.
Jen Hatmaker says the “days of silence are over” in polite evangelical culture.
By her own estimation, Jen Hatmaker is “low-grade Christian famous.” She has written 12 books, starred in an HGTV series with her family, built a large social-media following, and gone on tour with other prominent female Christian writers.
In some circles, Hatmaker is also controversial. Last fall, she told the writer Jonathan Merritt she thinks LGBT relationships can be holy. LifeWay, a large Christian retailer, pulled her books from their stores. Some of her followers were “angry or shocked or confused,” she said, and her interview set off a round of debate on the authority of evangelical women in ministry. This spring, Hatmaker wrote on her blog that she has “[become] painfully aware of the machine, the Christian Machine.”
“Seeing a partial eclipse bears the same relation to seeing a total eclipse as kissing a man does to marrying him.”
Ever since it was first published in 1982, readers—including this one—have thrilled to “Total Eclipse,” Annie Dillard’s masterpiece of literary nonfiction, which describes her personal experience of a solar eclipse in Washington State. It first appeared in Dillard’s landmark collection, Teaching a Stone to Talk, and was recently republished in The Abundance, a new anthology of her work. The Atlantic is pleased to offer the essay in full, here, until the day after the ‘Great American Eclipse’ on August 21.
It had been like dying, that sliding down the mountain pass. It had been like the death of someone, irrational, that sliding down the mountain pass and into the region of dread. It was like slipping into fever, or falling down that hole in sleep from which you wake yourself whimpering. We had crossed the mountains that day, and now we were in a strange place—a hotel in central Washington, in a town near Yakima. The eclipse we had traveled here to see would occur early in the next morning.
The nation’s current post-truth moment is the ultimate expression of mind-sets that have made America exceptional throughout its history.
When did America become untethered from reality?
I first noticed our national lurch toward fantasy in 2004, after President George W. Bush’s political mastermind, Karl Rove, came up with the remarkable phrase reality-based community. People in “the reality-based community,” he told a reporter, “believe that solutions emerge from your judicious study of discernible reality … That’s not the way the world really works anymore.” A year later, The Colbert Report went on the air. In the first few minutes of the first episode, Stephen Colbert, playing his right-wing-populist commentator character, performed a feature called “The Word.” His first selection: truthiness. “Now, I’m sure some of the ‘word police,’ the ‘wordinistas’ over at Webster’s, are gonna say, ‘Hey, that’s not a word!’ Well, anybody who knows me knows that I’m no fan of dictionaries or reference books.
Many presidential appointees face an agonizing choice—leave the president with fewer restraints on his darker impulses, or stay to serve the republic even if it costs their integrity.
John Kelly’s stricken look, head slumped on chest, as President Trump brayed a defense of the “fine people” on both sides in a Charlottesville march of neo-Nazis and white supremacists, said it all. A man raised to believe in a code of decency and honor had to endure language from his boss which would have earned one of Kelly’s Marine lieutenants the chewing-out of a lifetime. And he had to listen knowing that despite his efforts to instill discipline in the White House, he could expect more rhetoric—lies, bombast, and provocation—that would inflame some of the worst memories and darkest impulses of the American soul. If Kelly had not chosen to be there fully aware of who Donald Trump is, one might have felt sorry for him.
Life inside North Korea's Camp 14 so twisted 13-year-old Shin In Geun that he betrayed his mother and only brother.
Life inside North Korea's Camp 14 so twisted 13-year-old Shin In Geun that he betrayed his mother and only brother.
A North Korean soldier patrols inside the fence of a prison camp near the Chinese border / AP
Nine years after watching his mother's hanging, Shin In Geun
squirmed through the electric fence that surrounds Camp 14 and ran off through
the snow into the North Korean wilderness. It was January 2, 2005. Before then,
no one born in a North Korean political prison camp had ever escaped. As far as
can be determined, Shin is still the only one to do it.
He was 23 years old and knew no one outside the fence.
Within a month, he had walked into China. Within two years, he was living in
South Korea. Four years later, he was living in Southern California.