This is just plain stupid.
To think that someone got paid to issue this summons and that more money will be wasted in court.Comments »
“With growing evidence of a hard landing in China, the scales are dropping from speculators’ eyes and industrial commodity prices, including copper, are swooning. As in the past, almost overnight, tales of perpetual shortages in key industrial inputs are magically disappearing as unaccounted-for stockpiles materialize,” Shilling writes in the Christian Times Monitor.Comments »
Paul Krugman writes (citing Noah Smith) that he agrees with the empirical findings in my critique of the revival of Keynesian activism in the 2000s (the stimulus packages of 2001, 2008 and 2009). In particular, he writes that “it’s far from clear that the ARRA actually led to much of a rise in government spending, while the tax cuts that made up much of the stimulus were probably largely saved.”
But he then goes on to say that the stimulus was too small. That’s not what I found in my paper. As I stated in the paper, my “results do not lend support to” the view “that the stimulus was too small.” Rather the paper showed that “a larger stimulus package—with the proportions going to state and local grants, federal purchases, and transfers to individual the same as in ARRA—would show little change in government purchases or consumption.”
Now, I know that Krugman is trying to distinguish between good and bad Keynesian stimulus packages, and that he would like a stimulus package with higher proportions going to federal, state, and local government purchases than the 2009 stimulus, or, for that matter, the 2008 stimulus or the 2001 stimulus. But experiences from the 1970s raise serious doubts about the political and operational feasibility of such discretionary fiscal policy. So do recent experiences in many other countries, as shown by Hyun Seung Oh and Ricardo Reis.
In a simple Keynesian model, all the government has to do to combat a recession is quickly increase government purchases, but the difficulty with doing so in practice is one of the classic arguments against discretionary fiscal policy. Of course, it is not the only argument. Small or unreliable multipliers, the legacy of increased debt, the unpredictability and temporariness of such policies are some of the other arguments. Using dynamic models with expectations and incentives, I have found very small multipliers (around .5)
Read the rest here.Comments »
Breaking with current economic orthodoxy, Robert Barro, Paul M Warburg Professor of Economics at Harvard University, said large spending plans should be undertaken only if they can be justified financially on their own merits. Any other spending plans end up costing the country even more than the initial outlay as interest on the debt has to be paid and the deficit cleared.
“In the long run you have got to pay for it. The medium and long-run effect is definitely negative. You can’t just keep borrowing forever. Eventually taxes are going to be higher, and that has a negative effect,” he said.
“The lesson is you want government spending only if the programmes are really worth it in terms of the usual rate of return calculations. The usual kind of calculation, not some Keynesian thing. The fact that it really is worth it to have highways and education. Classic public finance, that’s not macroeconomics.”
Turning to the $600bn (£373bn) to $800bn US package, he added it was “mainly a waste of money”. Stimulus programmes, he said, offer little more than “rearranging the timing” of economic growth. “Possibly you could make an argument that it’s worth it. But it’s going to be a negative-sum thing overall, so you have to think it’s a big benefit for boosting the recovery.”
Read the rest here.
VRTX – Vertex Pharm resumed with a Hold at Canaccord Genuity
ITMN – InterMune resumed with a Buy at Canaccord Genuity
CEVA – Ceva target raised to $35 at Sterne Agee
DSCI – Derma Sciences initiated with a Outperform at Oppenheimer
CBS – CBS initiated with an Outperform at RBC Capital
WFM – Whole Foods assumed with an Overweight at Piper Jaffray
CSTR – Coinstar target raised to $68 from $67 at Northland Securities
FXCM – FXCM upgraded to Hold from Sell at Citigroup
AXL – American Axle upgraded to Buy from Hold at KeyBanc
ROK – Rockwell Automation initiated with a Neutral at UBS
WLT – Walter Energy downgraded to Neutral from Buy at Davenport
GPN – Global Payment initiated with a Hold at Jefferies
OC – Owens Corning downgraded to Hold from Buy at BB&T
NFLX – Netflix downgraded to Neutral from Buy at Merriman
AMTD – TD Ameritrade initiated with Hold at Citigroup
SCHW – Charles Schwab initiated with Hold at Citigroup
WU – Western Union target lowered to $23 from $25 at RBC Capital Mkts
SBAC – SBA Comm initiated with a Neutral at WedbushComments »
DPTR +8.9%, AXL +4.7%, GM +1.7%, CBAK +15.4%, DNDN + 0.1%, CTCH +4.7%, ARMH +0.5%, SCO +0.1%, SODA + 0.27%, GFI +1.4%, SAVE +1.6%
AIB -10.1%, CS -2.5%, WPPGY -2.5%, STD -2.4%, TOO -1.2%, DB -1.8%, UBS -1.7%, BP -1.4%, ASML -1.2%, HBC -1.1%, AIXG -4%, SBNY -2.9%, BCS -2.9%, BBVA -2.8%,
“Purchase applications for U.S. home mortgages rose last week, but refinancing activity plunged as interest rates jumped, an industry group said on Wednesday.
Overall, the seasonally adjusted index of mortgage application activity fell 5.2 percent last week, the Mortgage Bankers Association said. The index includes both refinancing and home purchase demand.”
“widened 75bps to +906bps on rumour it could be next on Moody’s downgrade radar”