Alphabetism: "Excessive reliance upon the alphabet or alphabetic structures."
Example, from today's article in the New York Times about mass murderer Jarod Laughner:
"He also said that Mr. Loughner had increasing trouble interacting in social settings — during one party, for instance, Mr. Loughner retreated upstairs alone to a room and was found reading a dictionary."
Reminds me of the WH Auden couplet:
"I'm afraid there's many a bespectacled sod
Prefers the British Museum to God."
Be on guard for such behavior!
Wednesday, January 12, 2011
Tuesday, January 4, 2011
Rogoff expects currency chaos in 2011
01-04-2011 16:17
Armageddon can wait
By Kenneth Rogoff
CAMBRIDGE ― Where are global currencies headed in 2011? After three years of huge, crisis-driven exchange-rate swings, it is useful to take stock both of currency values and of the exchange-rate system as a whole.
And my best guess is that we will see a mix of currency wars, currency collapses, and currency chaos in the year ahead ― but that this won’t spell the end of the economic recovery, much less the end of the world.
Let’s start by acknowledging that the modern system of floating exchange rates has, on the whole, acquitted itself remarkably well. True, given complex risk factors and idiosyncratic policy preferences, it has been particularly challenging of late to divine the logic underlying big exchange-rate swings. For example, even though the United States was at the heart of the financial crisis, the dollar initially soared.
But, even if exchange rates work in mysterious ways, their cushioning effect is undeniable. The sharp depreciation of the euro after the crisis helped sustain German exports, thereby keeping the eurozone afloat.
Emerging markets’ currencies also collapsed, even in economies with huge foreign-exchange reserves and relatively little debt. Since then, most emerging-market currencies have rebounded sharply. In hindsight, these exchange-rate swings mirrored the initial collapse and subsequent rebound in global trade, helping to mitigate the recession.
By contrast, the financial crisis was hardly an advertisement for expanding the scope of fixed exchange rates. The eurozone’s peripheral countries, including Greece, Portugal, Ireland, and Spain, found themselves pinned to the mast of the common currency, unable to gain competitiveness through exchange-rate depreciation.
The intellectual father of the euro, Columbia University’s Robert Mundell, once famously opined that the optimal number of currencies in the world is an odd number, preferably less than three. It is hard to see why right now.
Perhaps when we have one world government, it will make sense to have one world currency. But, even setting aside the equilibrating benefits of flexible currencies, the prospect of a single, omnipotent central bank is not particularly appealing. Witness the vitriol and hysteria that accompanied the U.S. Federal Reserve’s policy of so-called “quantitative easing.” Imagine the panic that would have ensued in a world where gold, storable commodities, and art were the only ways for investors to flee from the dollar.
But the continuing success of the floating exchange-rate system does not imply a smooth ride in 2011. For starters, we can certainly expect a continuation of the so-called currency wars, in which countries strive to keep their exchange rates from appreciating too rapidly and choking off exports. Asian governments will probably gradually “lose” their battle in this war in 2011, allowing their currencies to appreciate in the face of inflationary pressures and threats of trade retaliation.
As for currency collapse, the most prominent candidate has to be the euro. In an ideal world, Europe would deal with its excessive debt burdens through a restructuring of Greek, Irish, and Portuguese liabilities, as well as municipal and bank debt in Spain. At the same time, these countries would regain export competiveness through massive wage reductions.
For now, however, European policymakers seem to prefer to keep escalating the size of bridge loans to the periphery, not wanting to acknowledge that private markets will ultimately require a more durable and sustainable solution. No risk factor is more dangerous for a currency than policymakers’ refusal to face fiscal realities; until European officials do, the euro remains vulnerable.
The dollar, on the other hand, looks like a safer bet in 2011. For one thing, its purchasing power is already scraping along at a fairly low level globally ― indeed, near an all-time low, according to the Fed’s broad dollar exchange-rate index. Thus, normal re-equilibration to “purchasing power parity” should give the dollar slight upward momentum.
Of course, some believe that the Fed’s mass purchases of U.S. debt poses an even bigger risk than Europe’s sovereign debt crisis. Perhaps, but most students of monetary policy view quantitative easing as the textbook policy for pulling an economy out of a zero-interest-rate “liquidity trap,” thereby preventing the onset of a sustained deflation, which would exacerbate debt burdens.
As for China’s renminbi, it is still supported by a highly political exchange-rate regime. Eventually, China’s rapid growth will have to be reflected in a significant rise in its currency, its domestic price level, or in both. But, in 2011, most of the equilibration will likely take place through inflation.
Finally, currency chaos is the safest bet of all, with sharp and unpredictable swings in floating exchange rates around the world. During the mid-2000s, there was a brief window when some argued that currencies had become more stable as a corollary of the “Great Moderation” in macroeconomic activity.
Nobody is saying that now. The floating exchange-rate system works surprisingly well, but currency volatility and unpredictability look likely to remain an enduring constant in 2011 and beyond.
Kenneth Rogoff is professor of economics and public policy at Harvard University, and was formerly chief economist at the IMF. For more stories, visit Project Syndicate (www.project-syndicate.org).
Armageddon can wait
By Kenneth Rogoff
CAMBRIDGE ― Where are global currencies headed in 2011? After three years of huge, crisis-driven exchange-rate swings, it is useful to take stock both of currency values and of the exchange-rate system as a whole.
And my best guess is that we will see a mix of currency wars, currency collapses, and currency chaos in the year ahead ― but that this won’t spell the end of the economic recovery, much less the end of the world.
Let’s start by acknowledging that the modern system of floating exchange rates has, on the whole, acquitted itself remarkably well. True, given complex risk factors and idiosyncratic policy preferences, it has been particularly challenging of late to divine the logic underlying big exchange-rate swings. For example, even though the United States was at the heart of the financial crisis, the dollar initially soared.
But, even if exchange rates work in mysterious ways, their cushioning effect is undeniable. The sharp depreciation of the euro after the crisis helped sustain German exports, thereby keeping the eurozone afloat.
Emerging markets’ currencies also collapsed, even in economies with huge foreign-exchange reserves and relatively little debt. Since then, most emerging-market currencies have rebounded sharply. In hindsight, these exchange-rate swings mirrored the initial collapse and subsequent rebound in global trade, helping to mitigate the recession.
By contrast, the financial crisis was hardly an advertisement for expanding the scope of fixed exchange rates. The eurozone’s peripheral countries, including Greece, Portugal, Ireland, and Spain, found themselves pinned to the mast of the common currency, unable to gain competitiveness through exchange-rate depreciation.
The intellectual father of the euro, Columbia University’s Robert Mundell, once famously opined that the optimal number of currencies in the world is an odd number, preferably less than three. It is hard to see why right now.
Perhaps when we have one world government, it will make sense to have one world currency. But, even setting aside the equilibrating benefits of flexible currencies, the prospect of a single, omnipotent central bank is not particularly appealing. Witness the vitriol and hysteria that accompanied the U.S. Federal Reserve’s policy of so-called “quantitative easing.” Imagine the panic that would have ensued in a world where gold, storable commodities, and art were the only ways for investors to flee from the dollar.
But the continuing success of the floating exchange-rate system does not imply a smooth ride in 2011. For starters, we can certainly expect a continuation of the so-called currency wars, in which countries strive to keep their exchange rates from appreciating too rapidly and choking off exports. Asian governments will probably gradually “lose” their battle in this war in 2011, allowing their currencies to appreciate in the face of inflationary pressures and threats of trade retaliation.
As for currency collapse, the most prominent candidate has to be the euro. In an ideal world, Europe would deal with its excessive debt burdens through a restructuring of Greek, Irish, and Portuguese liabilities, as well as municipal and bank debt in Spain. At the same time, these countries would regain export competiveness through massive wage reductions.
For now, however, European policymakers seem to prefer to keep escalating the size of bridge loans to the periphery, not wanting to acknowledge that private markets will ultimately require a more durable and sustainable solution. No risk factor is more dangerous for a currency than policymakers’ refusal to face fiscal realities; until European officials do, the euro remains vulnerable.
The dollar, on the other hand, looks like a safer bet in 2011. For one thing, its purchasing power is already scraping along at a fairly low level globally ― indeed, near an all-time low, according to the Fed’s broad dollar exchange-rate index. Thus, normal re-equilibration to “purchasing power parity” should give the dollar slight upward momentum.
Of course, some believe that the Fed’s mass purchases of U.S. debt poses an even bigger risk than Europe’s sovereign debt crisis. Perhaps, but most students of monetary policy view quantitative easing as the textbook policy for pulling an economy out of a zero-interest-rate “liquidity trap,” thereby preventing the onset of a sustained deflation, which would exacerbate debt burdens.
As for China’s renminbi, it is still supported by a highly political exchange-rate regime. Eventually, China’s rapid growth will have to be reflected in a significant rise in its currency, its domestic price level, or in both. But, in 2011, most of the equilibration will likely take place through inflation.
Finally, currency chaos is the safest bet of all, with sharp and unpredictable swings in floating exchange rates around the world. During the mid-2000s, there was a brief window when some argued that currencies had become more stable as a corollary of the “Great Moderation” in macroeconomic activity.
Nobody is saying that now. The floating exchange-rate system works surprisingly well, but currency volatility and unpredictability look likely to remain an enduring constant in 2011 and beyond.
Kenneth Rogoff is professor of economics and public policy at Harvard University, and was formerly chief economist at the IMF. For more stories, visit Project Syndicate (www.project-syndicate.org).
Monday, January 3, 2011
Paradigm shift: Now they're worrying about the US economy overheating!
This morning's Wall Street Journal has an article with the title "Investors' Forecast: Sunny With Chance of Overheating." Too hot is described as economic growth of 4%, which isn't that hot in today's world. But still, it is a paradigm shift.
http://online.wsj.com/article/SB10001424052748703384504576055950354533470.html?mod=ITP_pageone_0&mg=com-wsj
http://online.wsj.com/article/SB10001424052748703384504576055950354533470.html?mod=ITP_pageone_0&mg=com-wsj
Thursday, December 30, 2010
US state and local tax revenues improving sharply
Some states have revenue increases in the 20%-30% range.
From today's Wall Street Journal:
Combined state and local tax revenues rose 5.2% to $284.3 billion in the third quarter of 2010 from the same period a year ago, the Census Bureau reported Wednesday. That was a big reversal from the third quarter of 2009, when tax revenues fell by 5.4% from the year-earlier period.
States in the Red
"Revenue wise they're turning the corner," said William Fox, an economics professor at the University of Tennessee who specializes in state and local taxes. But, he said, "fiscal stress is likely to continue in many states because spending is still out of line with lower revenues."
http://online.wsj.com/article/SB10001424052970203525404576049901002799880.html?mod=ITP_pageone_1
From today's Wall Street Journal:
Combined state and local tax revenues rose 5.2% to $284.3 billion in the third quarter of 2010 from the same period a year ago, the Census Bureau reported Wednesday. That was a big reversal from the third quarter of 2009, when tax revenues fell by 5.4% from the year-earlier period.
States in the Red
"Revenue wise they're turning the corner," said William Fox, an economics professor at the University of Tennessee who specializes in state and local taxes. But, he said, "fiscal stress is likely to continue in many states because spending is still out of line with lower revenues."
http://online.wsj.com/article/SB10001424052970203525404576049901002799880.html?mod=ITP_pageone_1
Wednesday, December 29, 2010
Will Beijing die of thirst?
Perhaps it will have to shrink:
Beijing Preparing For Latest Arrival Of Snow In 22 Years.
Xinhua (12/29) reports Chinese meteorologists believe "Beijing will witness the latest arrival of snow in 22 years as the previous record of late-arriving snowfall being on Dec. 28, 1988." Beijing "The city has been without rain or snow for nearly two months, and the precipitation during the flood season from Jun. 1 to Sept. 15 this year was 273 millimeters, the lowest since 1960," Guo Wenli, director of the climate center under the Beijing Municipal Bureau of Meteorology. Furthermore, "underground sources supply over two thirds of Beijing municipality's needs, and since 2004 the city has also begun drawing on 'karst' groundwater supplies 1 km or deeper below surface. Those deep underground sources, stored in porous rock, were originally set aside for use only in times of war or emergency." The city currently has projects in the work to divert water from the south to help relieve the problem.
Beijing Preparing For Latest Arrival Of Snow In 22 Years.
Xinhua (12/29) reports Chinese meteorologists believe "Beijing will witness the latest arrival of snow in 22 years as the previous record of late-arriving snowfall being on Dec. 28, 1988." Beijing "The city has been without rain or snow for nearly two months, and the precipitation during the flood season from Jun. 1 to Sept. 15 this year was 273 millimeters, the lowest since 1960," Guo Wenli, director of the climate center under the Beijing Municipal Bureau of Meteorology. Furthermore, "underground sources supply over two thirds of Beijing municipality's needs, and since 2004 the city has also begun drawing on 'karst' groundwater supplies 1 km or deeper below surface. Those deep underground sources, stored in porous rock, were originally set aside for use only in times of war or emergency." The city currently has projects in the work to divert water from the south to help relieve the problem.
Thursday, December 23, 2010
Government revenues/GDP lowest in 20 years OECD-wide
Fears of tax rises as government revenues near 20-year low, says OECD
From The Telegraph Dec 23, 2010.
Governments' tax revenues are close to a 20-year low, according to the Organisation for Economic Cooperation and Development (OECD), raising the prospect of widespread and painful tax rises.
The OECD estimates that between 2008 and 2009, tax revenues measured against economies' output fell, on average, more than one percentage point.
By Emma Rowley 6:30AM GMT 16 Dec 2010
The think-tank estimates that between 2008 and 2009, tax revenues measured against economies' output fell, on average, more than one percentage point across the 34 developed nations it covers.
The unprecedented drop dragged nations' average tax to gross domestic product (GDP) ratios - the "tax burden" - to less than 34pc, a level not seen for almost two decades.
"This is the lowest average tax burden since the early 1990s," said the OECD, blaming businesses' falling profits and tax cuts made to soften the effects of the recession.
The Paris-based body warned that many countries would now try to boost their tax revenues over and above the levels enjoyed before the financial crisis.
"These are figures that we have not seen in peacetime," said Jeffrey Owens, director of the OECD's tax policy centre, following the annual report's release.
He warned: "Any package to solve the current deficit situation in most countries will require an increase in taxation, and in many it will require tax increases that go beyond the level prior to the crisis."
In the UK, the tax-to-GDP ratio has now fallen for three consecutive years, to stand at just over 34pc in 2009, close to the region's average, according to the OECD.
Denmark last year had the highest tax burden, at more than 48pc, while Mexico had the lowest at below 18pc, preliminary figures show.
In Spain, which is struggling under huge debt, the tax burden slumped by seven percentage points of GDP from 2007 to 2009.
The OECD wants members to move away from taxes on income and profits, which could distort economies, towards taxes on consumption, such as VAT, and environmental taxes.
Despite reforms, "green" taxes to discourage pollution make up a smaller proportion of average GDP now than they did 10 years ago, according to the think-tank.
Separately, Chancellor George Osborne on Wednesday tried to play down expectations that UK taxes will be cut before the election planned for 2015. The VAT rise to 20pc coming in January was "not temporary", he said in an interview. "It can't be," Mr Osborne said. "We are talking about a totally different scale of revenue and the VAT rise is a structural change to the tax system to deal with a structural deficit."
From The Telegraph Dec 23, 2010.
Governments' tax revenues are close to a 20-year low, according to the Organisation for Economic Cooperation and Development (OECD), raising the prospect of widespread and painful tax rises.
The OECD estimates that between 2008 and 2009, tax revenues measured against economies' output fell, on average, more than one percentage point.
By Emma Rowley 6:30AM GMT 16 Dec 2010
The think-tank estimates that between 2008 and 2009, tax revenues measured against economies' output fell, on average, more than one percentage point across the 34 developed nations it covers.
The unprecedented drop dragged nations' average tax to gross domestic product (GDP) ratios - the "tax burden" - to less than 34pc, a level not seen for almost two decades.
"This is the lowest average tax burden since the early 1990s," said the OECD, blaming businesses' falling profits and tax cuts made to soften the effects of the recession.
The Paris-based body warned that many countries would now try to boost their tax revenues over and above the levels enjoyed before the financial crisis.
"These are figures that we have not seen in peacetime," said Jeffrey Owens, director of the OECD's tax policy centre, following the annual report's release.
He warned: "Any package to solve the current deficit situation in most countries will require an increase in taxation, and in many it will require tax increases that go beyond the level prior to the crisis."
In the UK, the tax-to-GDP ratio has now fallen for three consecutive years, to stand at just over 34pc in 2009, close to the region's average, according to the OECD.
Denmark last year had the highest tax burden, at more than 48pc, while Mexico had the lowest at below 18pc, preliminary figures show.
In Spain, which is struggling under huge debt, the tax burden slumped by seven percentage points of GDP from 2007 to 2009.
The OECD wants members to move away from taxes on income and profits, which could distort economies, towards taxes on consumption, such as VAT, and environmental taxes.
Despite reforms, "green" taxes to discourage pollution make up a smaller proportion of average GDP now than they did 10 years ago, according to the think-tank.
Separately, Chancellor George Osborne on Wednesday tried to play down expectations that UK taxes will be cut before the election planned for 2015. The VAT rise to 20pc coming in January was "not temporary", he said in an interview. "It can't be," Mr Osborne said. "We are talking about a totally different scale of revenue and the VAT rise is a structural change to the tax system to deal with a structural deficit."
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