The Insightful Troll

Rants and ruminations.

Harvard's Reinhart and Rogoff Predict a U Shape Recovery

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What will the economy look like when we finally turn the corner? And how ling will it take. That is the primary question on people mind. Despite what the Trump administration says, looks like we are in for a U shape recovery. And it will take five long years. At best.

Bloomberg Markets spoke to Reinhart, a former deputy director at the IMF who’s now a professor at the Harvard Kennedy School, and Rogoff, a former IMF chief economist who’s now a professor at Harvard. It turns out this time really is different.

So what does the economic recovery look like?

Carmen Reinhart:

And you want to talk about a negative productivity shock, too. The biggest positive productivity shock we’ve had over the last 40 years has been globalization together with technology. And I think if you take away the globalization, you probably take away some of the technology. So that affects not just trade, but movements and people. And then there are the socio-political ramifications. I liken the incident we’re in to The Wizard of Oz, where Dorothy got sucked up in the tornado with her house, and it’s spinning around, and you don’t know where it will come down. That’s where our social, political, economic system is at the moment. There’s a lot of uncertainty, and it’s probably not in the pro-growth direction. There is talk on whether it’s going to be a W-shape if there’s a second wave and so on. That’s a very real possibility given past pandemics and if there’s no vaccine. One thing that’s clear is the numbers are going to look spectacularly great in some months simply because you’re coming out from a base that was pretty devastated. That doesn’t imply that per capita incomes are going to go back in V-shape to what they were before.

The shock has disrupted supply chains globally and trade big-time. The World Trade Organization tells you trade can decline anywhere between 13% and 32%. I don’t think you just break and re-create supply chains at the drop of a hat. There are a lot of geographic changes that are being necessitated because, if the economic downturn has been synchronous, the disease itself hasn’t been synchronous.

Another reason I think the V-shape story is dubious is that we’re all living in economies that have a hugely important service component. How do we know which retailers are going to come back? Which restaurants are going to come back? Cinemas? When this crisis began to morph from a medical problem into a financial crisis, then it was clear we were going to have more hysteresis, longer-lived effects.

Kenneth Rogoff:

In our book, Carmen and I use the definition of recovery as going back to the same income as the beginning. That, by the way, is really not the Wall Street definition of recovery, where recovery is going back to where the trend was. So we use a much more modest version of recovery. And still, with postwar financial crises before 2008-09, the average was four years, and for the Great Depression, 10 years. And there are many ways this feels more like the Great Depression.

Also you probably need a debt moratorium that’s fairly widespread for emerging markets and developing economies. As an analogy, the IMF or Chapter 11 bankruptcy is very good at dealing with a couple of countries or a couple of firms at a time. But just as the hospitals can’t handle all the Covid-19 patients showing up in the same week, neither can our bankruptcy system and neither can the international financial institutions.

So there are going to be phenomenal frictions coming out of this wave of bankruptcies, defaults. It’s probably going to be, at best, a U-shaped recovery. And I don’t know how long it’s going to take us to get back to the 2019 per capita GDP. I would say, looking at it now, five years would seem like a good outcome out of this.

You Went to Harvard Right?

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Bill Burr sums up the US college system perfectly:

The funny thing about that scandal is that they got their dumb kids in there but then they were able to handle the curriculum with no problem. None of them flunked out. So evidently, the real difficulty is getting in. Once you are in, you are fine.

Conan:

Yea. Yea.

Bill:

You went to Harvard right?

Obama’s HBCU Commencement Speech

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In his first national address since the Covid-19 pandic, former President Barack Obama delivered a commencement speech to graduates at historically black colleges and universities (HBCUs) Saturday.



On our current leadership in America:

More than anything, this pandemic has fully finally torn back the curtain on the idea that so many of the folks in charge know what they’re doing, A lot of them aren’t even pretending to be in charge.

On the Covid-19 pandemic:

Let’s be honest, a disease like this just spotlights the underlying inequalities and extra burdens that black communities have historically had to deal with in this country. We see it in the disproportionate impact of Covid-19 on our communities, just as we see it when a black man goes for a jog and some folks feel like they can stop and question and shoot him if he doesn’t submit to their questioning.

And finally on challenge ahead for us:

And on the big unfinished goals in this country, like economic and environmental justice and health care for everybody, broad majorities agree on the ends. That’s why folks with power will keep trying to divide you over the means. Because that’s how nothing changes. You get a system that looks out for the rich and powerful and nobody else. So expand your moral imaginations, build bridges, and grow your allies in the process of bringing about a better world.

A Contemporaneous History of the Absurd

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Edward Luce in a well researched article for The Financial Times:

What has gone wrong? I interviewed dozens of people, including outsiders who Trump consults regularly, former senior advisers, World Health Organization officials, leading scientists and diplomats, and figures inside the White House. Some spoke off the record.

Again and again, the story that emerged is of a president who ignored increasingly urgent intelligence warnings from January, dismisses anyone who claims to know more than him and trusts no one outside a tiny coterie, led by his daughter Ivanka and her husband, Jared Kushner – the property developer who Trump has empowered to sideline the best-funded disaster response bureaucracy in the world.

People often observed during Trump’s first three years that he had yet to be tested in a true crisis. Covid-19 is way bigger than that. “Trump’s handling of the pandemic at home and abroad has exposed more painfully than anything since he took office the meaning of America First,” says William Burns, who was the most senior US diplomat, and is now head of the Carnegie Endowment.

“America is first in the world in deaths, first in the world in infections and we stand out as an emblem of global incompetence. The damage to America’s influence and reputation will be very hard to undo.”

Density Does Not Spread Covid-19

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The spread of Covid-19 is not a cause by density, but by poverty and the massive wealth disparity in the United States. Combined with a weak to non-existent safety net for millions of displaced workers, the conditions are ripe for contagion spread. Dr. Mary T. Bassett, in an excellent article in the New York Times:

Imagine a low-wage worker, who holds two jobs to support her family and pay the rent, who has to work during this pandemic because her job is “essential,” who works when sick because she has no sick leave. She travels on a crowded bus, puts off medical care because she lacks insurance, and then returns to an apartment crammed with young children and elderly family members. Maybe she fills in on the night shift as an aide at a nursing home.

This all conspires to make her especially vulnerable to the coronavirus — with the result that her household, her nursing home and her neighbors all are liable to become sick as well. In this scenario, “the city” is not to blame for the explosion in cases of Covid-19.

That disease is devastating cities like New York because of the structure of health care, the housing market and the labor market, not because of their density. The spread of the coronavirus didn’t require cities — we have also seen small towns ravaged. Rather, cities were merely the front door, the first stop.

It’s not that there are too many people in cities. It’s that too many of their residents are poor, and many of them are members of the especially vulnerable black, Latino and Asian populations.

Prince and the Revolution Live Show Airs Tonight

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As part of a benefit for Covid-19 relief, The Prince Estate will be broadcasting a classic concert by Prince & the Revolution from 1985’s Purple Rain tour on YouTube. The stream (embedded below) will begin on Thursday, May 14 at 8pm ET and will only be available through Sunday, May 17.


Utterly Incapable of Leadership

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Coronavirus-related job losses top 20.5 million, as the unemployment rate reaches almost 15 percent, the highest rate since The Great Depression. Joy Reid and her panel discuss a new ad from The Lincoln Project called ‘Mourning in America, that details horrible outcomes of the mismanagement of the pandemic.


Steve Schmidt, a former Republican strategist no less, perfectly summarizes the Trump presidency.

We see a man just so small, so outmatched, so in over his head. And so it is that at the beginning of the third decade of the 21st century, in a time of peace and prosperity generally, the United states elected very narrowly to the Presidency a reality television star, a failed business man, really a carnival barker. We had a real lack of imagination in this country for the capacity for the possibility of tragedy. And real tragedy has come. And we look at that ad, it was just a few days that it aired and yea it talks about 60,000 dead Americans and soon we’ll be at 100 thousand and soon we will be at 200 thousand. This is a man who promised to run saying, ‘I can fix it alone.’. ‘I will make America great again.’ And his legacy will be mass death, will be suffering at an epic level and economic collapse. Thats’s the trump legacy and he has demonstrated through this he has exactly zero capacity to lead this nation out of this mess. It will not be the work of one presidential term. It will be the work of many presidential terms for there to be a season of American recovery, and we see every day his incapacity to lead. In short less than 6 months the American people are going to have to decide in the most import election this country has had since 1864 whether the United States will go into a steep descent of decline or we can possibly begin to recover from the Trumpian disaster that the country faces.

Are We Becoming Stupid?

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Just listening to our national discourse proves there is something to what Nicholas Carr is hinting at in “Is Google Making Us Stupid? What the Internet is doing to our brains”

So, yes, you should be skeptical of my skepticism. Perhaps those who dismiss critics of the Internet as Luddites or nostalgists will be proved correct, and from our hyperactive, data-stoked minds will spring a golden age of intellectual discovery and universal wisdom. Then again, the Net isn’t the alphabet, and although it may replace the printing press, it produces something altogether different. The kind of deep reading that a sequence of printed pages promotes is valuable not just for the knowledge we acquire from the author’s words but for the intellectual vibrations those words set off within our own minds. In the quiet spaces opened up by the sustained, undistracted reading of a book, or by any other act of contemplation, for that matter, we make our own associations, draw our own inferences and analogies, foster our own ideas. Deep reading, as Maryanne Wolf argues, is indistinguishable from deep thinking.

If we lose those quiet spaces, or fill them up with “content,” we will sacrifice something important not only in our selves but in our culture.

We Are Not Essential. We Are Sacrificial.

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Sujatha Gidla, a NYC M.T.A. conductor in an opinion piece for the New York Times:

The conditions created by the pandemic drive home the fact that we essential workers — workers in general — are the ones who keep the social order from sinking into chaos. Yet we are treated with the utmost disrespect, as though we’re expendable. Since March 27, at least 98 New York transit workers have died of Covid-19. My co-workers say bitterly: “We are not essential. We are sacrificial.”

That may be true individually, but not in our numbers. Hopefully this experience will make us see clearly the crucial role we play in keeping society running so that we can stand up for our interests, for our lives. Like the Pittsburgh sanitation workers walking out to demand protective equipment. Like the G.E. workers calling on the company to repurpose plants to make ventilators instead of jet engines.

I took my second test on April 30. It was negative. Tomorrow, I will go back to work.

These are the true heroes in this pandemic. Not the politicians, not the movie stars, not the journalists. It is the garbage collectors, public transportation workers, the grocery workers. And of course the first responders and medical workers.

And these are the people that we treat the worst in society. These are the people we consistently pay the least. We provide no healthcare, no medical leave. Worst of all, most people think of them as lower class citizens. The lazy. The uneducated. The people who just need to “bootstrap themselves” to success. These are the soldiers on the wall.

They are holding us together by a thinest of margins. We must correct these inequities.

Tiny Desk Concert - Suzanne Vega

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Most people know Suzanne Vega from just two songs in the 80s - “Luka” and “Toms Diner”. But she has been making great music for the past 40 years. I have been a huge fan for years. Here is Susanne performing with brilliant guitarist Gerry Leonard.

Normalizing Three Thousand Deaths

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Jay Rosen perfectly describes Trump’s plan for dealing with Covid-19.

The plan is to have no plan, to let daily deaths between one and three thousand become a normal thing, and then to create massive confusion about who is responsible — by telling the governors they’re in charge without doing what only the federal government can do, by fighting with the press when it shows up to be briefed, by fixing blame for the virus on China or some other foreign element, and by “flooding the zone with shit,” Steve Bannon’s phrase for overwhelming the system with disinformation, distraction, and denial, which boosts what economists call “search costs” for reliable intelligence.

Stated another way, the plan is to default on public problem solving, and then prevent the public from understanding the consequences of that default. To succeed this will require one of the biggest propaganda and freedom of information fights in U.S. history, the execution of which will, I think, consume the president’s re-election campaign.

Herd Immunity Will Cost Millions of Lives

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Herd immunity doesn’t stop a virus in its tracks. The number of infections continues to climb after herd immunity is reached. The problem with “natural” herd immunity & Covid-19 is that millions will die.

In an opinion piece in the New York Times:

In the absence of a vaccine, developing immunity to a disease like Covid-19 requires actually being infected with the coronavirus. For this to work, prior infection has to confer immunity against future infection. While hopeful, scientists are not yet certain that this is the case, nor do they know how long this immunity might last. The virus was discovered only a few months ago.

But even assuming that immunity is long-lasting, a very large number of people must be infected to reach the herd immunity threshold required. Given that current estimates suggest roughly 0.5 percent to 1 percent of all infections are fatal, that means a lot of deaths.

Perhaps most important to understand, the virus doesn’t magically disappear when the herd immunity threshold is reached. That’s not when things stop — it’s only when they start to slow down.

Second Amendment Does Not Protect Terrorism

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In any other country taunting or threatening a public official with the use of deadly force would be met with swift and probably deadly force. What exactly do these people hope to accomplish? This is a direct effort to intimidate our elected officials into voting their way. It isn’t gong to work. These left wing nuts hiding behind the second amendment should be arrested and tried as domestic terrorists.

May the 4th Be With You

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We finally we have a holiday that isn’t crippled by coronavirus lockdowns and social distancing. Choose whether you want to deepen your engagement by making it relevant, or just use it as an escape pod off the Star Destroyer. Or both. You must do what you think is right, of course.

May the Force be with you. Always.

Dolphins Coach Don Shula Dies at 90

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Coach Shula presided over the only team to have a perfect 17-0 season. A record that no other team has matched since. Here is a great look at his amazing career.

We Need to Ask Better Questions

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During the on going quarantine it is common for conversations and zoom meetings to begin with the obligatory ‘How are you doing?’ Ashley Fetters challenges us to ask a better question.

If we want to take the extra step to show our loved ones that we’re really asking, though, and not just greeting them as we might have done in normal times, reaching for a question that more explicitly asks after their emotional or psychological well-being might help. “How are you coping?,” for instance, signals that you don’t expect whomever you’re talking with to be doing great, and that you are genuinely curious about how they’re handling things. “What’s been on your mind lately?” suggests openness to a deeper conversation. You might also follow up on a worry or concern they’ve mentioned before, and check in on how they’re feeling about it now.

However you choose to start your conversations during quarantine, perhaps the most important thing is to ask a genuine question that invites a genuine answer. One of the kindest gestures we can extend to others in a time like this is to make clear that they don’t have to pretend they’re fine.

When Should You Wear a Mask?

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Katie Notopoulos over at Buzz Feed’s How to Plague advice column on when you should wear your mask:

A good way to gauge the amount of distance where it’s OK to dangle your mask around your neck or off one ear is to imagine your mouth is your asshole. If you were completely alone, it would be fine to let your nude tushy hang out, but you’d want to pull on your pants as soon as you saw anyone coming, even from 100 feet away. Basically, if someone can see you, mask up.

How Dumb Is President Trump?

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Here are some things that Donal Trump has said - from nuking tornados to taking over airports in the revolutionary war. And let’s not even get started on injecting people with disinfectant. I don’t know if I should laugh or cry. What is really scary is that 40% of the country thinks this guy is a genius.

Social Distance Across the World

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Filmmakers Ivan Cash and Jacob Jonas made a short crowd sourced video on how people all over the world are dealing with social distancing.

Amid what can feel like a constant deluge of depressing news, A Social Distance is a glimmer of hope and a welcome reprieve. The short documentary—co-directed by Jacob Jonas and Ivan Cash, scored by Steve Hackman, and premiering on The Atlantic today—offers a window into the ordinary quarantine experiences of people from more than 30 countries. In the self-submitted videos, people dance, play music, take us on a tour of their refrigerator, and introduce us to their pets. Edited together, these intimate moments create a synchronicity of humanity—a feeling of togetherness that’s difficult to conjure when you’re sequestered at home.