By Joseph Joyce
The Exorbitant Privilege in a World of Low Interest Rates
The U.S. dollar has long enjoyed what French finance minister Valéry Giscard d’Estaing called an “exorbitant privilege.”  The U.S. can finance its current account deficits and acquisition of foreign assets by issuing Treasury securities that are held by foreign central banks as reserves. The dollar’s share of foreign reserves, while falling, remains over 60%.  But in a world of low interest rates, how exorbitant is this privilege, and is it solely a U.S. phenomenon?
John Plender of the Financial Times has pointed out that U.S. Treasury bonds offer a rate of return that matches or is higher than that of other government bonds with similar risk ratings.  This is true whether we look at

Econospeak (Barkley Rosser, pgl, Peter Dorman, Tom Walker) is in the financial section along with  Bonddad blog (New Deal democrat) and  Capital Ebbs and Flows (Joseph Joyce), and I am proud to say have a direct connection to Angry Bear (under general blogs…).
Dear Dan,
I wanted to let you know that your blog, Angry Bear Blog has been featured in the Top 100 Economics Blogs of 2019
One of the significant changes this year has been the removal of newspaper blogs such as Bloomberg View and Real Time Exchange to focus on more niche blogs. The lack of female economist (and bloggers) has been a common criticism of this list. I’ve made an effort to include more female bloggers, but if you have any suggestions, I can consider them for the 2020 list.

(Dan here…Lifted from comments at Spencer’s SP 500 PE)
PGL comments:
1.
It is strike day for Lyft and Uber. Uber’s IPO is estimated to be at $90 billion which strikes me as way overpriced. Why? Net revenue is only $7.9 billion whereas operating costs are $12 billion for the latest reported year. Their net revenue is 7.5 times that of Lyft. Lyft’s operating costs turn out to be 170% of its net revenues.
Interestingly both companies have net revenues that are 23% of gross billing. Let’s put it this way. If your driver charges you $10 for a ride, he keeps only $7.70 even though its is his car, his gasoline, and he is an independent contractor getting no wages or fringe benefits.
If this strike works – the financials for these two companies will go from

The National Bureau of Economic Research has highlighted two studies. (hat tip Spencer England)
U.S. Consumers Have Borne the Brunt of the Current Trade War

Recent tariff increases are unprecedented in the post-World War II era in terms of breadth, magnitude, and the sizes of the countries involved.

In 2018, the United States imposed tariffs on a variety of imported goods, and other countries responded with tariffs on imports from America. Two new NBER working papers analyze how this “trade war” has affected U.S. households and firms.
The recent tariffs, which represent the most comprehensive protectionist U.S. trade policy since the 1930 Smoot-Hawley Act and 1971 tariff actions, ranged from 10 to 50 percent on about $300 billion of U.S. imports —

(Dan here…lifted from Robert’s Stochastic Thoughts)
by Robert Waldmann
G and GDP update
I think it might be time for an update on the crudest of tiny sample reduced form analysis of fiscal policy and the current recovery. One reason for my continued interest is that there was a rather large tax cut enacted in 2017.  Trump critics tend to argue that it failed to encourage investment, but did affect aggregate demand. I wonder if the noticeable increase in GDP growth is due to the tax cut or the spending increase from the 2017 omnibus spending bill.
So I look at GDP and G (government consumption plus investment) again. Both are annual changes in billions of 2012 dollars (Not logs). I subtracted 400 billion from the change in quarterly GDP (multiplied by 4 to

By New Deal democrat
Weekly Indicators for April 29 – May 3 at Seeking Alpha
My Weekly Indicators post is up at Seeking Alpha.
The trend in the past couple of months across all timeframes has been very much to the positive. It is either a signal of a renewed boom, or else a countertrend bounce back from the December-January government shutdown + residual seasonality due to a late Easter. Because I do not think that the tail wags the dog, my vote is for the latter.
But I report, you decide!

By New Deal democrat
Weekly Indicators for April 22 – 26 at Seeking Alpha

My “Weekly Indicators” post is up at Seeking Alpha.
The data has been improving since the beginning of March, and continued to improve this week. Although at the moment the prevailing sentiment, based on new stock market highs, and yesterday’s surprise 3.2% Q1 GDP, seems to be “happy days are here again!”, my suspicion is that the intermediate and lagging data is going to fade.

One reason for my suspicion is that most of the long leading data (except for interest rates) continues to point down, as in the two leading components of yesterday’s GDP report, as to which my post is also up at Seeking Alpha, here.

As usual, clicking over and reading helps reward me with a $ or 2 for my

(Dan here…Social Security is an issue that seems to generate a lot of firm beliefs and passion, as witness recent threads.  It is rare that people refer to actuary material.  On the other sides of the issue are people like Andrew Biggs, who is knowledgeable and smart in his arguments.  I am posting this as a reminder to readers that contributors do usually go the extra mile…in this case even recently, and since 2008 with Dale, Bruce Webb, and Arne Larson.   Below is a copy of a response to Dale from the Deputy Chief Actuary 2017)

Dear Mr. Coberly,
Representative DeFazio’s office forwarded your letter of August 5, 2017 to our office and asked that we respond to you. Your understanding of the financing of the Social Security Trust Funds is on target,

By Dale Coberly

SOCIAL SECURITY TRUSTEES REPORT OUT TODAYor was it yesterday?

Ho Hum.  The 2019 Social Security Trustees Report was released yesterday.

The Committee for a Responsible Federal Budget published its usual half truths (also known as “lies”):. “We are all going to die!”

The Reporters and Columnists Who Cover Them ™ reported the half truths as the whole story:  “We are all going to die!”

The “Progressives”  demanded the “rich pay their fair share”  and “expand Social Security” to pay for everything

Angry Bear ignored the whole thing.

The whole truth would have pointed out that while there is a funding problem projected for sixteen years in the future,  it’s a small problem and the Trust  Fund is NOT the problem.

If the future arrives

By New Deal democrat
Sales rebound from government shutdown-induced “mini-recession;” March housing lays an egg
While March retail sales rose strongly, total business sales for February – also released yesterday – which includes manufacturers’ and wholesalers’ sales in addition to retail sales, continued to languish. This adds to the evidence that there was a “mini-recession” for several months likely brought about by the lengthy government shutdown, and there has been a rebound since (including blockbuster new lows in jobless claims).
This post is  up at Seeking Alpha.
But I’ve been reluctant to conclude that the slowdown this year is off. This morning’s housing permits and starts for March were solid evidence in support of that position, showing that the

By Joseph Joyce

The global economy seems headed for a slowdown. The IMF now expects global growth this year of 3.3%, a drop of 0.2 of a percentage point from its previous forecast. Growth in the advanced economies is projected to be particularly feeble, with expected U.S. economic growth of 2.2%, growth of 1.3% predicted for the Eurozone , and Japan’s growth anticipated to be 1%. Of course, a breakdown of U.S.-China trade talks, the imposition of new U.S. tariffs on European cars or a disorderly Brexit could disrupt the forecasts. Can government policymakers improve these conditions?
Central banks have limited policy space. In the U.S., the Federal Reserve has made clear that it does not expect to raise the Federal Funds rate this year, and retains the

By New Deal democrat
The three best arguments against an economic slowdown

I still think I’m right that there will be a worsening economic slowdown that shows up by about summertime and continues towards the end of the year.But there is one long leading indicator and two important short leading indicators that are going the other way. Rather than ignore them, I accept them and explain why I don’t think they negate my forecast. This article is up at Seeking Alpha.
——-
On a more somber note, Today We Are All Parisians.

By New Deal democrat
The economy in 2019: a look at the “big picture”

Although I have a bunch of nerdy forecasting models, I view my primary mission as trying to explain what is going on in the economy for ordinary middle and working class American workers and consumers.I’ve been meaning to do a “30,000 foot perspective” on the economy for awhile, to draw together all the information into a Big Picture narrative. Well, I finally got around to it, and it is up at Seeking Alpha. This is something that should be of particular interest to those who have followed me all the way back from my Daily Kos days.
The most overlooked feature of the economy in the past five years has been the way low gas prices have allowed room for the economy – and real wages – to

By New Deal democrat
Weekly Indicators for April 8 – 12 at Seeking Alpha
My Weekly Indicators post is up at Seeking Alpha.
Lower interest rates have to some extent been offset by weaker real money supply. In any event, they haven’t fed through into other, shorter term indicators just yet.
As always, clicking over and reading should bring you up to date on the economy, and reward me a little for my efforts.

By New Deal democrat
Weekly Indicators for April 1 – 5 at Seeking Alpha
My Weekly Indicators post is up at Seeking Alpha.  Interest rates ticked up this week, which brought the readings on some interest rate indicators back down.
As usual, clicking over and reading helps reward me with a little $$$ for my efforts.

By Joseph Joyce    (lifted from Capital Ebbs and Flows)
Partners, Not Debtors: The External Liabilities of Emerging Market Economies

My paper,  “Partners, Not Debtors: The External Liabilities of Emerging Market Economies,” has been published in the January 2019 issue of the Journal of Economic Behavior & Organization.
Here is the abstract:
This paper investigates the change in the composition of the liabilities of emerging market countries from primarily debt (bonds, bank loans) to equity (foreign direct investment, portfolio) in the decades preceding the global financial crisis. We examine the determinants of equity and debt liabilities on external balance sheets in a sample of 21 emerging market economies and 20 advanced economies over the period of