ISIS vs. Moderate Muslims
ISIS vs. Moderate Muslims
Later this fall, “The Simpsons” will be nationally syndicated in China for the first time. How will the show’s new viewers respond? Hua Hsu considers:“Will Chinese audiences—not exactly the most ironic bunch on Earth—take to the churlish sarcasm of ‘The Simpsons’? Or will the series’ nose-thumbing defiance seem tame at a time when many young people have skipped directly to cynical despair?”
”When a majority of citizens disagrees with economic elites and/or with organised interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favour policy change, they generally do not get it.”https://www.princeton.edu/~mgilens/Gilens%20homepage%20materials/Gilens%20and%20Page/Gilens%20and%20Page%202014-Testing%20Theories%203-7-14.pdf
A pineapple growing in my yard. #gardening #fruit
Prices in the U.S. may increase more than many expect this year, says David Rosenberg. That’s a 180- degree turn for the economist who not long ago correctly predicted a declining inflation rate, a view now prevalent among his peers.“This deflation, disinflation, benign inflation story which seems to be everybody’s mindset is really yesterday’s story,” said Rosenberg, 53, chief economist and strategist at Gluskin Sheff & Associates in Toronto. The Federal Reserve, through efforts to spur growth, “is carrying out the mother of all reflationary policies,” he said in an interview. “My bet is the Fed will ultimately get what it wants, and then some.”Such a scenario is out of sync with the consensus. Janet Yellen, the new chair of the Fed, has said inflation is running below policy makers’ 2 percent target and is unlikely to flare up soon. The median forecast in a Bloomberg survey of economists in January put inflation at 1.3 percent in 2014 and 1.8 percent next year.Investors, too, are sanguine: The five-year breakeven rate, a market gauge of inflation expectations over the next five years based on trading in inflation-linked Treasuries, was at 1.92 percent yesterday, down from 2.32 percent last year at this time.Rosenberg predicts wages and rents will head higher as the job and housing markets rebound, and as faster credit creation and record stimulus by the Fed stoke price pressures. He said it’s troubling that “whether you’re bullish or bearish on the economy, the one universally held view right now is that there is no inflation whatsoever.”
Known for his pessimistic outlook on the U.S. economy, the former Merrill Lynch chief economist for North America was among the earliest to warn of the housing bubble in 2005 and the recession that began in 2007, though he missed projecting the stock market’s rally since 2009, which enabled the Standard & Poor’s 500 Index (SPX) to appreciate about 170 percent.
Rosenberg said this week he is sticking to his view even as the Fed’s preferred price gauge, tied to personal consumption, showed prices climbed just 1.1 percent in the 12 months through December.
“You have to expect that as the economy does better inflationary pressures follow suit,” Rosenberg said. “The Fed will purposely lag the cycle, which is why the yield curve has been steepening and will continue to steepen. But at some point the bond market will call the Fed’s bluff and the Fed will have to start raising interest rates.”
The figures counter “those who’ve been saying, you know, for the last five years that we’re just on the brink of hyperinflation,” former Fed Chairman Ben S. Bernanke said the day of the CPI report at a forum sponsored by theBrookings Institution in Washington. The Fed has “all the tools we need” to ensure inflation doesn’t surge over the next few years even if it maintains a large balance sheet, he said.
Yellen should know about inflation expectations. Her forecasting record was the best out of 14 Fed policy makers, the Wall Street Journal reported last July based on its analysis covering the period from 2009 to 2012.
Rosenberg addressed that risk in a Dec. 16 note. “I see all the signs ahead of cost-push inflation — which will become more readily apparent once commodity prices find a bottom,” he wrote. “The next decade is going to look more like the 70s than many think.”
Triggered by the oil shock, inflation surged to almost 12 percent in 1974. The Fed under Chairman Arthur Burns was slow to respond and forecasters and bond investors were also caught off guard. Paul Volcker, who took over as the central bank chief in 1979, had to raise the federal funds rate in the following year to as high as 20 percent.
In an interview in January, Rosenberg said the U.S. may avoid double-digit inflation because of “structural and demographic factors that will limit how far inflation is going to go.” Still, it may “revisit the highs of the last cycle” marked by close to 5 percent for the CPI and 3 percent for the core index, he said.
Rising wage pressures and a drop in the rental vacancy rate signal core inflation is about to turn the corner, said Torsten Slok, the New York-based chief international economist for Deutsche Bank AG. Average hourly earnings for private workers show that once wage inflation takes hold, it continues for several years, he said, citing a four-year surge that began in March 2004 and a five-year spurt from early 1994.
While the U.S. is still “in the early phase of this uptrend, inflation will be grinding higher by the end of this year,” Slok said. “The risk is, the market could start to worry about inflation before the Fed does.” — (Bloomberg)
The contrarian nature of the call is cause for extra analysis. Wages are indeed set to rise given some leading indicators. Also, it’s important to note that if the reduced labor participation rate is more structural in nature, then we don’t have as much labor slack as many think. The problem with this view is that it assumes that the US economy is set for a period of sustained growth. While numerous indicators do point to this development [absent the weather], its important to account for exogenous risk such as China, the Eurozone, and the adverse effects of rising interest rates at many important emerging economies due to the Fed’s taper. Higher interest rates from these EMs may adversely affect global economic growth given their importance. One thing’s for certain, uncertainty is pretty high at this point.