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.
The permissiveness of Republican leaders who acquiesce to violence, collusion, and corruption is encouraging more of the same.
In the annals of the Trump era, May 25, 2017, will deserve a special mark. Four remarkable things happened on Thursday, each of which marks a way that this presidency is changing the nation.
The first remarkable thing was President Trump’s speech at the NATO summit in Brussels. Many European governments had hoped—which is a polite way to say that they had suggested and expected—that Trump would reaffirm the American commitment to defend NATO members if attacked. This is the point of the whole enterprise after all! Here’s how it was done by President Obama at the NATO summit after the Russian invasion of Crimea:
First and foremost, we have reaffirmed the central mission of the Alliance. Article 5 enshrines our solemn duty to each other—“an armed attack against one … shall be considered an attack against them all.” This is a binding, treaty obligation. It is non-negotiable. And here in Wales, we’ve left absolutely no doubt—we will defend every Ally.
She lived with us for 56 years. She raised me and my siblings without pay. I was 11, a typical American kid, before I realized who she was.
The ashes filled a black plastic box about the size of a toaster. It weighed three and a half pounds. I put it in a canvas tote bag and packed it in my suitcase this past July for the transpacific flight to Manila. From there I would travel by car to a rural village. When I arrived, I would hand over all that was left of the woman who had spent 56 years as a slave in my family’s household.
The condition has long been considered untreatable. Experts can spot it in a child as young as 3 or 4. But a new clinical approach offers hope.
This is a good day, Samantha tells me: 10 on a scale of 10. We’re sitting in a conference room at the San Marcos Treatment Center, just south of Austin, Texas, a space that has witnessed countless difficult conversations between troubled children, their worried parents, and clinical therapists. But today promises unalloyed joy. Samantha’s mother is visiting from Idaho, as she does every six weeks, which means lunch off campus and an excursion to Target. The girl needs supplies: new jeans, yoga pants, nail polish.
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At 11, Samantha is just over 5 feet tall and has wavy black hair and a steady gaze. She flashes a smile when I ask about her favorite subject (history), and grimaces when I ask about her least favorite (math). She seems poised and cheerful, a normal preteen. But when we steer into uncomfortable territory—the events that led her to this juvenile-treatment facility nearly 2,000 miles from her family—Samantha hesitates and looks down at her hands. “I wanted the whole world to myself,” she says. “So I made a whole entire book about how to hurt people.”
While he avoided major blunders in the Middle East on his first foreign trip, he may come to regret his failure to affirm U.S. support for the alliance.
Presidential trips are hard to assess. George H.W. Bush threw up on the Japanese prime minister; he was sick. Bill Clinton went to China without going to Japan, a big no-no. Someone threw a shoe at George W Bush; he ducked. President Barack Obama failed to meet with human-rights activists in China. His speech was censored on Chinese television.
These all passed for big problems. Then again, those were different times.
The bar for President Donald Trump on his foreign trips this past week was, by comparison, unusually low. Everyone expected problems. Trump famously knows very little about foreign policy. In his March 17 meeting with Angela Merkel, the chancellor of Germany, he confessed he had never heard of the Transatlantic Trade and Investment Partnership or the G-20. She made him a colorful map of the Soviet Union’s sphere of influence, which he apparently liked. So, when Trump embarked on a nine-day trip of five countries, it seemed particularly ambitious. Most new presidents go to Canada or Mexico.
The Washington Post reports that the president’s son-in-law suggested using Russian diplomatic facilities to create a secret channel to Moscow.
Jared Kushner, a senior adviser to President Trump and his son-in-law, suggested to Russian Ambassador Sergei Kislyak that he be allowed to use Russian diplomatic facilities to communicate securely with Moscow, The Washington Postreported on Friday.
The request reportedly came in a meeting in Trump Tower at the beginning of December that included Kushner, Kislyak, and former National-Security Adviser Michael Flynn. It came to the attention of American officials through intercepts of Russian communications in which Kislyak relayed the request to his superiors in Moscow; the officials who spoke to the Post specified that they were not monitoring either the meeting or the communications of the Americans who were present.
Preston Brooks, Greg Gianforte, and the American tradition of disguising cowardice as bravery
You wouldn’t say that Preston Brooks sucker-punched Charles Sumner in the Senate chamber in 1856—but only because he used a cane. Brooks, a South Carolina congressman, began bludgeoning Sumner, the anti-slavery Massachusetts senator, while Sumner wasn’t looking, and beat him unconscious as Sumner was still bent under his desk trying to stand up.
Brooks and his supporters in the South saw the incident as an act of great valor, as the historian Manisha Sinha writes. Brooks bragged that “for the first five or six licks he offered to make fight but I plied him so rapidly that he did not touch me. Towards the last he bellowed like a calf.” The pro-slavery Richmond Enquirer wrote that it considered the act “good in conception, better in execution, and best of all in consequence.” Other “southern defenders of Brooks,” Sinha writes, praised Brooks for his “manly spirit” and mocked Sumner for his “unmanly submission.” It would have been manlier for the unarmed Sumner not to have been ambushed.
Should you drink more coffee? Should you take melatonin? Can you train yourself to need less sleep? A physician’s guide to sleep in a stressful age.
During residency, Iworked hospital shifts that could last 36 hours, without sleep, often without breaks of more than a few minutes. Even writing this now, it sounds to me like I’m bragging or laying claim to some fortitude of character. I can’t think of another type of self-injury that might be similarly lauded, except maybe binge drinking. Technically the shifts were 30 hours, the mandatory limit imposed by the Accreditation Council for Graduate Medical Education, but we stayed longer because people kept getting sick. Being a doctor is supposed to be about putting other people’s needs before your own. Our job was to power through.
The shifts usually felt shorter than they were, because they were so hectic. There was always a new patient in the emergency room who needed to be admitted, or a staff member on the eighth floor (which was full of late-stage terminally ill people) who needed me to fill out a death certificate. Sleep deprivation manifested as bouts of anger and despair mixed in with some euphoria, along with other sensations I’ve not had before or since. I remember once sitting with the family of a patient in critical condition, discussing an advance directive—the terms defining what the patient would want done were his heart to stop, which seemed likely to happen at any minute. Would he want to have chest compressions, electrical shocks, a breathing tube? In the middle of this, I had to look straight down at the chart in my lap, because I was laughing. This was the least funny scenario possible. I was experiencing a physical reaction unrelated to anything I knew to be happening in my mind. There is a type of seizure, called a gelastic seizure, during which the seizing person appears to be laughing—but I don’t think that was it. I think it was plain old delirium. It was mortifying, though no one seemed to notice.
Borrowing from other cultures isn’t just inevitable, it’s potentially positive.
Sometime during the early 2000s, big, gold, “door-knocker” hoop earrings started to appeal to me, after I’d admired them on girls at school. It didn’t faze me that most of the girls who wore these earrings at my high school in St. Louis were black, unlike me. And while it certainly may have occurred to me that I—a semi-preppy dresser—couldn’t pull them off, it never occurred to me that I shouldn’t.
The president’s business tells lawmakers it is too difficult to track all its foreign revenue in accordance with constitutional requirements, and it hasn’t asked Congress for a permission slip.
Days before taking office, Donald Trump said his company would donate all profits from foreign governments to the U.S. Treasury, part of an effort to avoid even the appearance of a conflict with the Constitution’s emoluments clause.
Now, however, the Trump Organization is telling Congress that determining exactly how much of its profits come from foreign governments is simply more trouble than it’s worth.
In response to a document request from the House Oversight Committee, Trump’s company sent a copy of an eight-page pamphlet detailing how it plans to track payments it receives from foreign governments at the firm’s many hotels, golf courses, and restaurants across the globe. But while the Trump Organization said it would set aside all money it collects from customers that identify themselves as representing a foreign government, it would not undertake a more intensive effort to determine if a payment would violate the Constitution’s prohibition on public office holders accepting an “emolument” from a foreign state.
The president urged Muslims to “reject violence” in a statement that contrasted sharply with those issued by Bill Clinton, George W. Bush, and Barack Obama.
President Trump wished all Muslims a “joyful Ramadan” in a statement Friday, just hours before the start of the month-long Islamic holiday during which those observing fast from sunrise to sunset.
Though such statements are commonplace among American presidents, Trump’s remarks took on a markedly different tone than did those of his predecessors. While the statement, like those of presidents past, noted the “acts of charity and meditation” that define the holy month, it went on to focus on a topic that has been at the forefront of Trump’s first trip overseas as president: terrorism.
“This year, the holiday begins as the world mourns the innocent victims of barbaric terrorist attacks in the United Kingdom and Egypt, acts of depravity that are directly contrary to the spirit of Ramadan,” the White House statement reads, adding that “such acts only steel our resolve to defeat the terrorists and their perverted ideology.”