Results for “"the show so far"”
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Following the science? — the show so far

As the pace of recovery quickens, and most balance sheets continue to look decent, it seems increasingly obvious that $1.9 trillion is too much to spend.  We are spending at least $1 trillion too much, with very little investment to show for it, and $1 trillion is a lot of money.  Heaven forbid they should make part of the stimulus dependent on future macroeconomic variables, which is what science would suggest.

New CDC school opening guidelines fail to “follow the science.” School reopening is a big, big issue. Overall the blue states are not doing well on it, and the Biden administration is hurting rather than helping.

Vaccine distribution is doing better, with 2.4 million doses distributed per day by the end of this last week.  I am less sure how much that is above the previous trajectory.  At least originally, Biden was boasting of aspiring to doing one million doses a day, so the presidential grasp of detail is not what pushed us over the edge here.

Those are arguably the three most important issues at the moment, and the overall performance level is not great.

The AstraZeneca vaccine still is not approved, with no sign of an FDA budge in sight.  Canada approved it last week, so now there are more than fifteen nations on board.  The new data on its performance are quite strong, even for a single dose.

Biden will be appointing an FDA head, but I haven’t heard talk of reform in spite of major and ongoing failures, and some in process reforms in the UK.  Is it even permissible to raise the topic of “the deregulations we need”?

The $15 minimum wage idea seems doomed to fail, in any case it was obviously worse than an “indexed by state” approach, even if you hold the Dube-ous view of minimum wage economics.

There is also this:

The emergency facility — a vestige of the Trump administration that was open for only a month in summer 2019 — is being reactivated to hold up to 700 children ages 13 to 17.

By the way, arrests of unaccompanied children at the border are up 50% this month (WSJ).  So this problem isn’t going away.  Is science being used to structure the incentives properly for these migrants?

That issue aside, immigration is the one policy area where there has been major sustained improvement, and where those improvements are likely to continue.

As far as I know, there is no immediate plan to eliminate or lower the Trump tariffs on Chinese goods.

The (non-scientific) belief in a new era of cooperation with Europe, including in opposition to China, already lies in tatters.

I don’t know if the American military should have bombed Syria, but I do know that it did and I suspect our government also does not know if it should have, not really know in the scientific sense.

I do get that the Biden administration “feels more scientific” to you, and it has the demeanor of a proper establishment, and it offers experts much higher status, and it does not encourage yahoos to storm the Capitol, for which I am very grateful.

But the rather obvious evidence here is that the scientific record is already quite poor.

The show so far, a continuing series

1. The situation with North Korea has moved to one of open confrontation.  That said, there are stronger commercial sanctions on North Korea than before, and the attitude of the Chinese does seem to have shifted toward recognizing North Korea as a problem needing to be solved.  For the time being, both the missile tests and the jawboning have stopped, for unknown reasons.  Note that the South Korean and Japanese markets remain high, of course the U.S. market is strong too.

2. Trump has spent a great deal of time with Prime Minister Abe, the real “pivot toward Asia.”  Abe is being treated like the most important leader of the free world — is that crazy?  Merkel is now teetering.

3. The Trump administration has recognized and encouraged a much more explicit semi-military alliance between America and India, also part of the pivot.  China-India relations could be the world’s number one issue moving forward.

4. The apparent “green light” from the Trump administration probably raised the likelihood and extremity of the Saudi purge/coup.  I give this a 20% chance of working out well, though with a big upside if it does.  Whether you like it or not, so far it appears to me this is Trump’s most important initiative.

Just to interject, much of your assessment of the Trump administration should depend on #1-4, and I am worried that is hardly ever the case for those I see around me.  While I do not view the current administration as “good executors” on foreign policy, the remaining variance on #1-4 is still very high and it is not all on the down side.

5. The Trump administration seems to think that keeping production clusters within this nation’s borders is of higher value than shaping the next generation of the world’s trade architecture.  I don’t think they will get much in return for this supposed trade-off, but there you go.

6. I am seeing deeply biased assessments of tax reform, from both sides.  I don’t favor raising the deficit by $1.5 trillion (or possibly more), I do favor cutting corporate rates and targeting some of the most egregious deductions.  I am disappointed that there is not more celebration of the very good features of the plan on the table, that said big changes in the proposed legislation still are needed.

7. In terms of regulatory reform (WSJ), the administration has done better than my most optimistic scenario.  In their worst area, carbon, progress on solar and electric cars is bigger good news than the bad policy news.  And for all practical purposes, the carbon policy of Trump is not much different from that of say Angela Merkel.

8. The suburbs are rebelling against the Republican Party.  There is a decent chance the Republicans will lose the House in 2018, as well as numerous governorships.  Soon we may get a window of a very different Trump, plus more investigations.

9. Various people connected to Trump will be nabbed for crimes and perjuries.

10. Trump has personally “gone after” many political and social norms, but it is not yet clear if they will end up weaker or stronger as a result.  His “grab them…” tape for instance seems, in the final analysis, to have empowered a major rebellion in the opposite direction.  #10 is a major reason why many commentators hate Trump as a person and president, and I can understand that response, but I am myself more focused on what the final outcomes will be and there we do not know.

11. The cultural and intellectual force of liberalism — broadly defined — has been greatly weakened by a mix of Trump and Trump-related forces.  I find this tragic and a major source of despair.

12. I do not favor “a decline in the dignity of the presidency” in the manner we are seeing, but I find many of these criticisms are stand-ins for not liking the substance of what is happening.  I don’t think we know what are the costs (or benefits) are from this transformation of the presidential image.  I could readily imagine those costs are high, but as a sociological matter I am seeing “the dignity of the office of the president has been insulted” as a stand-in for “my dignity has been insulted.”

13. The quality of discourse continues to decline.

The show so far, a continuing series

South Korea suspends THAAD deployment

Turkey prepares to send troops to Qatar

Iran’s Revolutionary Guards charge that Saudi Arabia was behind the terror attack on Teheran

Hmm…Meanwhile Qatar is engaging in talks with Turkey and Iran for emergency food and water supplies.

I don’t know what to expect from the Qatar situation, but I will say this.  If America really is withdrawing from its global role, “crude economism” predicts that small, hard to defend, oil-rich states are the first places where you would expect fighting to break out.  So Qatar is a bellwether for how global world order is likely to evolve.

Recall, by the way, that Qatar hosts the largest U.S. military base in the Middle East.  Unless the Qatar situation is resolved very quickly, and sufficiently in Qatar’s favor, I would say that the expected return from hosting such bases just fell dramatically.

The show so far, a continuing series

Vix is up 16% today, a sign that a Trump presidency is now seen as having a much more uncertain future.  I agree with Charles Cooke that the 25th amendment is not really an option, nonetheless investigations will be proceeding, with the FBI and many Republicans not really on Trump’s side.  It is not obvious that Trump will handle himself well during that process.  The chances for tax and health care reform are dwindling.  Many Republican leaders are pondering the logic of Timur Kuran, namely when they should flip out of their preference falsification and state their real views.

I think also that Trump’s instructions to Comey to halt the Flynn prosecution are significant.  I view much of the press coverage as overstated or sometimes even hysterical, including for the Russia leaks, but the Comey business fits into the category of “impeachable offense.”  A normal president would not be impeached for it, but Trump is not a normal president.  The instructions to Comey would not be the actual reason he would be impeached, but they create a path along which an impeachment inquiry could proceed, nudged along by other “non-impeachable but unpopular and objectionable actions” Trump might take in the meantime, and what information might be revealed in the meantime.  There are many shoes yet to drop.  So my estimate of the chances of a Trump impeachment or resignation have gone up from about 5% to about 25%, in less than a two-day span.

Addendum: Do consider the remarks of Philip Wallach.

The show so far, a continuing series

In my view, the Republicans have had a very weak hand to play on health care (not enough good ideas!), but over the last week they have played it brilliantly (which is not the same thing as having good policies).  Those House members who need to say “I voted to repeal Obamacare” can now do so.  The Republicans also have an option on proceeding further with reform, with everyone knowing the Senate will write its own bill.  The defects of what they voted for are not so significant for this reason, and the cavalier attitude of many House Republicans toward the contents of the bill makes perfect sense.

At the same time, the Republicans have the option of letting the bill die in the Senate, where it is far easier to blame the Democrats for inaction — how many American swing voters understand the fine points of the Byrd rule and filibuster anyway?  If you are what I call a “fulminating Democrat,” you are actually playing into Republican hands on this one (it would have been better to have spent the week saying abortion should be legal but rare, and talking about white people).

The big victory celebration pleased Trump, but more importantly all Republicans involved learned there is a way forward on many other issues: let Congress lead the way and pull Trump out of the bully role.  That lesson won’t soon be forgotten.  And from Trump’s point of view, he hasn’t given up the option of later working with the Democrats to pass a more centrist version of health care reform.

I don’t see the broader American public as so impressed with the Democrats’ arguments against the bill, mostly because they are not paying attention.  It doesn’t feel like it has the urgency of when Obamacare was passed, and in fact it doesn’t.  No one succeeded in showing it did, because it didn’t.

I still see the Republican House majority as extremely fragile, but on this one I believe the Democrats got pwned.

The show so far, a continuing series

Hint: Trump is not working with Paul Ryan to disassemble Medicare as we know it.

Those of us who predicted gridlock, stasis, and an excessively weak Trump presidency are so far right.  Hardly anything has gotten through, though we have managed to scare off 40% of the potential foreign applicants for higher education, one of America’s most successful export industries.  Tax reform, which is not an ideological touchstone, won’t be easy, and the Republicans have not reached prior agreement on many of the (numerous) details.  Russia will continue in the headlines.  The weakness of political parties remains an underlying theme.  Overall, it is good that health care reform is off the table for now, because superior alternatives were not likely to result.

Is it good or bad, all things considered, that foreign governments are seeing increasing latitude to ignore Trump’s threats?  And why exactly does Trump dislike Germany so much?

By the way, the end of global QE is rapidly approaching, with U.S., European, and possibly Chinese central banks all tightening at about the same time; maybe that’s the real news!

Addendum: Alex writes to me:

39% of responding institutions reported a decline in international applications, 35% reported an increase, and 26% reported no change in applicant numbers.

http://www.aacrao.org/docs/default-source/TrendTopic/Immigration/intl-survey-results-released.pdf?sfvrsn=0

The show so far, a continuing series

The big news was that China actually started to apply real pressure to North Korea, namely ceasing to buy their coal for the rest of the year.  That may prove a phantom or reversed piece of news, but still it is real progress of some kind, if only in expected value terms.  Did Trump’s antics and also his courting of Abe have anything to do with this?  We don’t know.  Was Obama’s THAAD missile deployment to South Korea a factor?  Probably.  I say score one for them both.  Keep in mind that is probably the world’s #1 foreign policy problem, and otherwise progress has been hard to come by.  Their KL airport assassination also may end up as a relevant PR disaster, costing them further foreign support.

Closer to home, outright Obamacare repeal seems increasingly unlikely.  Since I never favored Obamacare, you might think I am unhappy, but as I see it they were likely to replace with something unworkable and worse.  So this is, if not good news outright, at least the opposite of bad news.  Whether through brilliance or incompetence, Trump simply isn’t leading on this issue and so major changes won’t get done, maybe not even minor changes.

Republicans in state governments are running away from fiscal conservatism rather rapidly.  The Michigan legislature turned down a tax cut and there was a significant revolt in Kansas.  That was an under-reported story, namely a reversal of Tea Party influence on Republican-controlled state governments.

The Border Tax plan appears to be dead or on life support.  Flynn is gone and replaced by the apparently excellent McMaster.  There is talk (fact?) again of Kevin Hassett as CEA chair — a great idea — and Russia seems increasingly disillusioned with our president, also a nicer place to be.

The new Executive Order on regulation has some upside deregulatory potential.  Whether or not you favor a federal role in the matter, I thought it was a good sign to see Betsy DeVos sticking up for transgender rights.

Proposed policies on trade and immigration, as well as rhetoric toward the press, remain awful, plus various “background problems” continue, but overall I thought this was a very good week for Trump, with Flynn out to pasture and the North Korea news far outweighing the rest.

VIX is down, again, or the show so far (again)

A few days ago Conor Sen tweeted:

It’s close right now, but today might be the lowest close for the VIX since February, 2007.

Here is the broader chart.  How can that be?  Not to mention a high Dow.

The consensus view is that the first two weeks for Trump have been an extreme disaster.  But is that true?  Protest has been robust, and so far checks and balances seem to be working.

He issued a bunch of executive orders that mostly cannot be carried through.  He still hasn’t filled most of the second-tier positions of import, and for the State Department he fired/induced to quit a whole bunch of senior figures.  That militates in favor of not much getting done.  Obamacare abolition and tax reform are being postponed until next year it seems, for better or worse.  The Wall is stupid but won’t matter much and may not even happen, given environmental review, Native American rights, and the preferences of Texas Republicans.

Trump also trampled on just about every sacred icon held by those who inhabit my Twitter feed, most of all by having Bannon insult the press by telling them to shut up for a while, and the steady stream of absurdities continues.  Yet the underlying story (NYT) seems to be about six guys in the White House who don’t know how to use the levers and pulleys of the Executive Branch.

Or consider the assessment of E. Richards:

As of now, however, events since January 20 support the conclusion that Donald Trump is not very sincere about actual, rather than verbal chaos and that his administration will mostly defend the world order status quo.

As for beating up on the marmite crowd, is there a better form of training wheels?

People, I do not favor this kind of experiment with governance or with rhetoric.  And the market is by no means always a correct forecast.  But right now it is worried less than many of you are.  I do understand that America is consuming some of its political and reputational capital.  Yet so far the best prediction is that the relatively manageable scenarios are coming to pass.

Addendum: Just think what kind of embedded embarrassment this is for the Democrats.  Whether you agree with Democratic economic policy or not, and whether you agree with the markets or not, the Democrats in effect cannot convince the markets that their presidential rule is better for capital values than is the…scenario of Trump.  The more stupidities you see, and the more you criticize him, the more painful that ouch should become.

The show so far, UK edition

Mrs May later said the UK would be prepared to leave the EU without an exit agreement, saying: “No deal for Britain is better than a bad deal for Britain.” The government could then strike trade deals with other countries and use “competitive tax rates” to boost the economy, she said.

The prime minister confirmed that both [sic] houses of parliament would have a vote on the final Brexit deal, expected in early 2019. She did not clarify what would happen if either house were to reject the deal.

Here is the FT article, the pound is up again.  And while I do not think the House of Lords would block a democratically-determined Brexit, might this not lead to the end of the House of Lords as we know it?  If they don’t stand up for anything, why bother with them?

The Economist has a useful explainer on why the “WTO option” for Brexit will prove tricky; I would like to see more serious analysis of this issue.  Here is the latest on Northern Ireland, the chance of a hard border with the Republic of Ireland has gone up.

In any case, I suspect this was always the equilibrium.

The Show So Far

MR has many new readers, especially since the financial crisis, so I thought I would offer this brief guide to what we are all about.  Plus one of the readers, under "requests," asked for a foundation statement for this blog.  Here, in six easy steps, is "The Show So Far":

1. Luring Alex to lunch.

2. A "public choice" and indeed Straussian reading of Star Wars.

3. Alex ponders immortality and it changes his life.

4. When to say "I Love You".

5. The economics of relativity.

6. Alex explains the difference between Tyler and Alex.

For this New Year I remain thankful to have what I consider the very best readers in the world.

Most Popular MR Posts of 2017

The most popular post on MR for 2017 was my post, Switzerland is Prepared for Civilizational Collapse. Who can tell what will go viral? I suppose people are thinking a lot about civilizational collapse in recent times.

Next was Tyler’s post on Richard Thaler’s Nobel Prize.

There’s a lot of interest in Tyler’s religious beliefs as What is the Strongest Argument for the Existence of God? and Why I Don’t Believe in God were both widely read and commented upon.

Next came a bunch of econ posts from both Tyler and myself including:

Not surprisingly politics was also popular, including Tyler’s The Show so Far and Who Should be Shamed? and my post Authoritarians Distract Rather than Debate.

Overall, what strikes me is how normal 2017 seems. Compare with last year’s top posts, which are crazy. I don’t think 2017 was any less crazy than 2016 but–god help us–crazy has become normal.

The boom continues and indeed broadens

Growth in the all-important US services sector picked up sharply in September, providing further evidence that the recent string of hurricanes that battered swathe of southeastern US is unlikely to have a significant impact on US third quarter growth.

The Institute for Supply Management’s non-manufacturing gauge came in at 59.8 last month – the highest reading since August 2005. It is a sharp leg up from the reading of 55.3 recorded in August and easily trounced expectations for it to dip to 55.1.

Readings above 50 point to expansion, while those below indicate contraction.

The services sector, which includes professional services, healthcare and other non-manufacturing industries, makes up about 80 per cent of US gross domestic product.

The report comes just days after another ISM survey showed US manufacturing activity grew at its fastest pace in more than 13 years in September and reinforces the view in the market that US economic recovery remains on course for the second half of the year.

That is from Pan Kwan Yuk at the FT, file under “The Show So Far.”

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