Sunday assorted links

by on June 26, 2016 at 3:41 am in Uncategorized | Permalink

In 383, the usurper Magnus Maximus withdrew troops from northern and western Britain, probably leaving local warlords in charge. Around 410, the Romano-British expelled the magistrates of the usurper Constantine III, ostensibly in response to his failures to use the Roman garrison he had stripped from Britain to protect the island. Roman Emperor Honorius replied to a request for assistance with the Rescript of Honorius, telling the Roman cities to see to their own defence, a tacit acceptance of temporary British self-government. Honorius was fighting a large-scale war in Italy against the Visigoths under their leader Alaric, with Rome itself under siege. No forces could be spared to protect distant Britain. Though it is likely that Honorius expected to regain control over the provinces soon, by the mid-500s Procopius recognised that Britannia was entirely lost to the Romans.

That is from Wikipedia on the end of Roman rule in Britain.  I smiled at this sentence, though it does not exactly reflect my view of the current situation:

The Empire’s historical relationship with Germanic tribes was sometimes hostile, at other times cooperative, but ultimately fatal, as it was unable to prevent those tribes from assuming a dominant role in the relationship.

I still think there is a twenty percent chance that the contemporary Brits reverse themselves, starting with inaction and culminating in a new election and referendum.  The EU has to “play nasty” in the meantime, but perhaps they too have heard of the Coase theorem.  Imagine an equilibrium where each EU nation “leaves,” for purposes of expressive voting, and then shortly thereafter re-enters.

British Parliamentarians and Republican Party delegates need to study up on their coordination games quite soon!

After education and occupation, the share of people not holding a passport was the next most strongly correlated characteristic with the Leave vote.

Here is more from John Burn-Murdoch at FT blogs, via Tim Harford.

There was absolute carnage in various markets following the realization of Brexit, and at times massive asset price changes, sometimes ranging from eight to ten percent, were compressed into minutes or hours.

I recall seeing in my Twitter feed that the dollar-pound rate shift was a fourteen-standard deviation event.  That’s not right, and is rather the sign of a bad model, but the point remains that something extraordinary happened.

So far I haven’t read or heard a single account of clearinghouses operating anything but smoothly, as they pretty much did during the various 2008 crashes.  Obviously this success is with central bank liquidity assistance, but still it would be worth studying further one part of the global financial system which seems to be in very good working order and is underpublicized at that.

Saturday assorted links

by on June 25, 2016 at 2:53 am in Uncategorized | Permalink

1. Fish out of water are more common than thought: “New research shows 33 different families of fish have at least one species that demonstrates some terrestrial activity and, in many cases, these behaviors are likely to have evolved independently in the different families.”

2. Can schooling increase IQ and fluid intelligence?

3. Google vs. Apple maps.

4. The Mystery of Millennial politics.

5. “As people get older, they become choosier about how they spend their time and with whom they spend it. Now, researchers reporting in the Cell Press journal Current Biology on June 23 find, based on a series of experimental and behavioral studies, that similar changes take place in Barbary macaques.”  Link here.  Is this a theory of Brexit voting?

6. Paul Krugman on Brexit.  Linton Kwesi Johnson on Brexit, sort of, video.  And a region’s recent change in income does not predict its Brexit vote, though income level does to some extent.  And here is Reihan on Brexit as an immigration backlash.

Cornwall has issued an urgent plea for reassurance that it will not be worse off following the Brexit vote.

The county has received a “significant amounts” of funding from the EU for the past 15 years due to its “relatively weak economy”.

But, after 56.5% of voters in the county chose to leave the Union, the council says it is now seeking urgent reassurance that money allocated to it will still be received.

Prior to the vote the Council said they were told by the Leave campaign that funding would still be available.

They also said they had been told Cornwall “would not be worse off” in terms of investment they received.

Here is the link.  Overall the regions most dependent on the EU economically were most likely to vote for Brexit.

This time around the UK was probably hurt somewhat; British stocks are down around 4% as I write. But French and German stocks are down 7% to 8%. The markets in southern Europe are down 10% to 15%. Brexit’s most powerful effect is to make the eurozone crisis worse, by increasing doubts as to whether the eurozone will stay together.

That is from Scott Sumner.  Here is David Beckworth’s analysis, he focuses on the contractionary effects of a strengthening dollar.

Here is David Goodhart writing about the UK:

…while many people in the top 20 or 30 per cent of the educational and economic hierarchy have become less attached to national social contracts in the past couple of generations, most people have actually become MORE attached to them. There are several reasons for this. The welfare state has been expanding not contracting in recent decades—think tax credits and the rise of housing benefit—and although state employment overall has been in decline, if you live in some of the most run down parts of Britain you are more likely than ever to be employed by the state. The fragmentation and disappearance of a once familiar industrial working class culture and the declining status of much non-graduate employment may also have contributed to a greater attachment to the symbols and benefits of national citizenship. The loss of tight local communities may have produced a stronger attachment to the imagined community of the nation. And the benefits of national belonging CAN be diminished by European integration and rapid, large scale immigration: this is not merely false consciousness.

The article is of more interest generally, and for the pointer I thank Alex X.

Spot the Problem

by on June 24, 2016 at 11:11 am in Uncategorized | Permalink

Google searches from the United Kingdom.

EU

Hat tip: Catherine Rampell on twitter.

Friday assorted links

by on June 24, 2016 at 10:58 am in Uncategorized | Permalink

Risen:

Scots

Those predicting Irish unity within a generation

The Irish

David Goodhart

Pollsters

Fallen:

David Cameron and Co.

Angela Merkel

Jeremy Corbyn

The Governor of Gibraltar

Advocates of economic self-interest theories of voting

Julien Benda

Those who pooh-poohed “backlash” objections to open borders

Those long the zloty

Prime Minister Abe

Old people

People

Still unknown

Boris Johnson

Central bankers

Vladimir Putin

Zhou En-Lai

Heard in Baghdad: “I never thought Britain would break up before .”

That was from Ben Wedeman

I’m afraid we are about to find out that most, if not all, the Remain economic warnings were true

That was from John Gapper

CNH at 6.65. Forget Brexit. If PBOC piggybacking on this, this will be the new story

That was from Christopher Balding

worth remembering that no European country has had an election/referendum explicitly pitting national vs EU where EU won. None.

That was from Austan Goolsbee

Weird night for Netflix to drop the first live episode of Black Mirror.

That was from Le Vine

ITV now reporting that Sinn Fein calling for new vote on united Ireland. Brexiters were adamant that this wouldn’t happen.

That was from Simon Nixon

Thank goodness the world economy has the steady hand of the American voter to steer it to calmer waters.

That was from Justin Wolfers

My sympathies with Mexicans out there wondering why their currency has been smashed by 5.6% on a UK election result.

That was from Toby Nangle

No political change was ever postponed because it would freak out traders.

That was from Kristi Culpepper

Though I don’t drink, some nights I need to stay up a little later.

That was from me

Molenbeek is the “Islamist” section of Brussels which recently became well-known as a breeding ground for terror attacks; it is sometimes described as a kind of desperate hell hole.  The Time Out guide for Brussels doesn’t mention it at all.  Naturally I wanted to see it.

I visited yesterday morning and saw the fruit, vegetable, and clothing market, and then walked around for another two hours.  It was charming, everyone was friendly to me, and I never felt threatened.  I bought some excellent cherries at a very good price (“cheap cherries,” and the surrounding streets offer “cheap charcuterie” as well).

Most of the people seem to be either Moroccan or Turkish.  The high ratio of Muslim women to Muslim men in the market was striking.

On the vegetable but not the clothing end of the stalls, I saw a fair number of blond Belgian women pushing their baby strollers and buying produce.  On my way in from the airport, my (white) Belgian cab driver told me he lived in Molenbeek and loved it, including the low rent — my apologies to Thomas Friedman of course.

Inside the boundaries of the market is a well-known Art Deco church from the 1930s, which upon first glance appeared to be an old mosque tower.  At that moment I was surrounded by hundreds of Muslims, and so was primed for the mosque look I suppose.  I walked up the stairs of the church to the door, and found it was barred and showed no signs of life.

One plaintive-looking Belgian man was standing on the steps, and he asked me quietly (in French) “Are you here for Mass?”  “Yes,” I said, not wanting to end the conversation.  “You’ll have to wait, then,” was his dead pan response.

Molenbeek

Here are ten reasons you should never visit Molenbeek.

Whose inflation?

by on June 24, 2016 at 12:21 am in Data Source, Economics | Permalink

There is a new and very important paper on this topic by Greg Kaplan and Sam Schulhofer-Wohl (pdf), emanating from the Minneapolis Fed:

We use scanner data to estimate inflation rates at the household level. Households’ inflation rates are remarkably heterogeneous, with an interquartile range between 6.2 to 9.0 percentage points on an annual basis. Most of the heterogeneity comes not from variation in broadly defined consumption bundles but from variation in prices paid for the same types of goods — a source of variation that previous research has not measured. The entire distribution of household inflation rates shifts in parallel with aggregate inflation. Deviations from aggregate inflation exhibit only slightly negative serial correlation within each household over time, implying that the difference between a household’s price level and the aggregate price level is persistent. Together, the large cross-sectional dispersion and low serial correlation of household-level inflation rates mean that almost all of the variability in a household’s inflation rate over time comes from variability in household-level prices relative to average prices for the same goods, not from variability in the aggregate inflation rate. We provide a characterization of the stochastic process for household inflation that can be used to calibrate models of household decisions.

For the pointer I thank David Levey.  One wonders of course what this means for various propositions in macroeconomics, such as the Fisher effect, or the use of monetary stimulus to alter the meaning of a given nominal reservation wage.  This is also of note: “…observable household characteristics have little power overall to predict household inflation rates.”  By the way, note that the data measure recorded prices, and not prices plus search costs, so the bargain hunters are paying higher net prices than these results would indicate, thus narrowing the differences in inflation rates across persons.

China bank spank

by on June 23, 2016 at 2:32 pm in Current Affairs, Economics | Permalink

The trainer, Jiang Yang, has issued an apology, saying the spanking was “a training model I have tried for years” and had not been instigated by executives at the bank…

The video, which first surfaced on Monday, appears to have been taken by someone in the audience on a smartphone.

Mr Jiang is seen reprimanding eight bank employees on stage, asking them why they received the lowest scores in a training exercise.

The employees give answers including “I did not exceed myself”, “I did not co-ordinate with my team” and “I lacked courage”.

Mr Jiang then says “get your butts ready” and proceeds to spank them with what appears to be a thick piece of wood.

Here is more along with the video.  It seems the spanker focused his apology toward the bank executives rather than those who were spanked.

For the pointer I thank Ray Lopez.