Too Many Smart People Are Being Too Dismissive of Inflation

Link: https://www.nytimes.com/2021/03/05/opinion/fed-inflation-markets.html

Excerpt:

That assistance should also be more concentrated on where the need exists. According to Bloomberg, California’s revenues for this fiscal year are roughly 10 percent greater than expected (partly a result of soaring technology company valuations), while general-fund revenue in New York is estimated to be 11.7 percent lower than prepandemic forecasts.

And we should take a fine-toothed comb to lesser-known wasteful provisions, like giveaways to the airlines and an indirect bailout (added by the House) of multiemployer pension funds. Some of the money that we save by trimming the American Rescue Plan Act can be reallocated to one of our most pressing needs: infrastructure. Those funds get spent more slowly (and because of that put less immediate pressure on prices) and have the critical effect of helping to improve our unimpressive productivity growth rate.

Wasting precious dollars that could be better spent can’t possibly be worth the risk of igniting high inflation again.

Author(s): Steven Rattner

Publication Date: 5 March 2021

Publication Site: New York Times

Montana Teacher Retirement System Pension Solvency Analysis

Graphic:

Excerpt:

The latest analysis by the Pension Integrity Project at Reason Foundation, updated this month (February 2021), shows that deviations from the plan’s investment return assumptions have been the largest contributor to the unfunded liability, adding $897 million since 2002. The analysis also shows that failing to meet investment targets will likely be a problem for TRS going forward, as projections reveal the pension plan has roughly a 50 percent chance of meeting their 7.5 percent assumed rate of investment return in both the short and long term.

In recent years TRS has also made necessary adjustments to various actuarial assumptions, exposing over $400 million in previously unrecognized unfunded liabilities. The overall growth in unfunded liabilities has driven Montana’s pension benefit costs higher while crowding out other education spending priorities in the state, like classroom programming and teacher pay raises.

The chart below, from the full solvency analysis, shows the increase in the Montana Teacher Retirement System’s debt since 2002:

Author(s): Jen Sidorova, Swaroop Bhagavatula, Steven Gassenberger, Leonard Gilroy

Publication Date: 1 March 2021

Publication Site: Reason

Senate passes $1.9 trillion Covid relief bill, including $1,400 stimulus checks, with no Republican support

Link: https://www.nbcnews.com/politics/congress/senate-passes-1-9-trillion-covid-relief-bill-including-1-n1259795

Excerpt:

The Senate passed a $1.9 trillion coronavirus relief package Saturday, capping off a marathon overnight session after Democrats resolved internal clashes that threatened to derail President Joe Biden’s top legislative priority.

The far-reaching legislation includes $1,400 stimulus checks, $300-per-week jobless benefits through the summer, a child allowance of up to $3,600 for one year, $350 billion for state aid, $34 billion to expand Affordable Care Act subsidies and $14 billion for vaccine distribution.

The final vote was 50-49 along party lines, with every Republican voting “no.” It came after Democrats voted down a swath of Republican amendments on repeated votes of 50-49 to avoid disrupting the delicate agreement between progressive and moderate senators.

Author(s): Sahil Kapur

Publication Date: 6 March 2021

Publication Site: NBC News

Why reopening US schools is so complicated

Link: https://www.technologyreview.com/2021/03/05/1020304/reopening-us-schools-complicated/

Excerpt:

The US can look to Europe for how this played out: European countries tried in-person learning last fall but began closing schools as B.1.1.7 swept through the continent. By December, countries including the Netherlands and Germany had shut down their schools in the face of rising case numbers. The CDC says it may need to update school reopening guidelines in light of new information about variants. 

This task is made more difficult because tracking the spread of variants in the US is tough right now. Compared with other countries, it has very few labs doing this work, and while more funding will help, Friedrich says there will still be a gap.

Author(s): Mia Sato

Publication Date: 5 March 2021

Publication Site: MIT Technology Review

Restaurants and other business can go back to full capacity on March 19 as Lamont rolls back COVID restrictions in CT

Graphic:

Excerpt:

Gov. Ned Lamont said Thursday that Connecticut will eliminate capacity limits on restaurants, houses of worship, retailers and most businesses on March 19 but will retain mandates for social distancing and masks as a precaution against a resurgence of COVID-19.

The rollback comes as about 60% of Connecticut residents 65 and older have been vaccinated against the coronavirus, helping to drive down hospitalizations, new infections and deaths to their lowest point in 2021, though still higher than last summer.

The governor’s announcement was expected. It comes after Texas, Mississippi and three other states took more aggressive steps to end mask mandates and business restrictions, a move denounced as premature by President Joe Biden.

Author(s): MARK PAZNIOKAS, JENNA CARLESSO

Publication Date: 4 March 2021

Publication Site: CT Mirror

RIP Gold. Killed by Bitcoin

Excerpt:

Can the store of value argument hold up for BTC without it being a medium of exchange? It has for gold for thousands of years so quite possibly. Gold is money but it’s not readily usable currency. BTC could be considered in the same light.

The artificiality of BTC’s value is a problem. It can be argued using cultural relativism that gold is no more intrinsically valuable than BTC. But it does have a long history, especially as a reserve currency, that must be worth something. Can we see central banks buying BTC? Certainly not if it develops as a parallel medium of currency that undermines them.

Likewise, gold is the outcome of production. BTC consumes resources to produce nothing. Not that that is necessarily a problem in a virtual world but it again weighs against the perception of BTC as a store of value. So does the fact that BTC is a truly useless item if some kind catastrophe befalls society which does underping the value of gold in some measure.

Author(s): David Llewellyn-Smith, Yves Smith

Publication Date: 4 March 2021

Publication Site: naked capitalism

US ‘excess savings’ are not excessive

Link: https://voxeu.org/article/us-excess-savings-are-not-excessive

Graphic:

Excerpt:

Calculating ‘excess savings’ is simple: they are the cumulative amount by which personal saving during the pandemic exceeded a counterfactual path without COVID-19. As shown in blue in Figure 1, personal saving has been elevated since last March. The red line represents one plausible counterfactual scenario, in which the saving rate out of disposable income is constant at its pre-pandemic level (7.3%), while disposable personal income grows at its average rate over the previous twenty years (3.5%). ‘Excess savings’ are the area between the two lines. According to this calculation, they amount to $1.6 trillion. Different plausible assumptions on the counterfactual evolution of personal saving in the absence of the pandemic lead to relatively small differences in this headline number. 

Author(s): Florin Bilbiie, Gauti Eggertsson, Giorgio Primiceri

Publication Date: 1 March 2021

Publication Site: VoxEU

Coronavirus Deranges the Immune System in Complex and Deadly Ways

Excerpt:

Scientists say the coronavirus could undermine the immune system in several ways.

For example, it’s possible that immune cells become confused because some viral proteins resemble proteins found on human cells, Luning Prak said. It’s also possible that the coronavirus lurks in the body at very low levels even after patients recover from their initial infection.

“We’re still at the very beginning stages of this,” said Luning Prak, director of Penn Medicine’s Human Immunology Core Facility.

Author(s): Liz Szabo

Publication Date: 4 March 2021

Publication Site: Kaiser Health News

Covid Baby Bust Has Governments Rattled

Graphic:

Excerpt:

Of course, there’s a case to be made that fewer people in advanced economies is a good thing. But arrayed against that are all the “because groaf” forces. The two drivers of growth are demographic growth, as in more people, and productivity increases. National leaders are afraid of becoming the new Japan, having an aging population and falling in the “size of economy” pecking order, when Japan has weathered a financial system crisis and implosion of real estate prices with remarkable grace. And the demographic time bomb? The feared dependency ratio? More older Japanese work. Japanese even more so than Westerners prize attachment to communities and organizations, so it would probably suit those who are able to handle it to remain in the saddle or get a part-time job.

But the big point is that the Covid impact on child-bearing is widespread and looks set to continue for quite a while. The old solution in advanced economies for low birth rates was immigration. But that’s now become fraught. First is that neoliberalism-induced widening income disparity means those on the bottom are extremely insecure. Bringing more people in to them sure looks like a mechanism for keeping their crappy wages down. Second is advanced economies now eschew assimilation as if it were racist. But what did you expect, say, when Germany brought in Syrian refugees, who skewed male and young, and didn’t even arrange to teach them German? The notion that there’s a public sphere, where citizens hew to national norms versus a private sphere seems to have been lost (having said that, I don’t understand the fuss about headscarves; Grace Kelly wore them, so why should a religious intent matter?).

Author(s): Yves Smith

Publication Date: 5 March 2021

Publication Site: naked capitalism

The U.S. Grid Isn’t Ready For A Major Shift To Renewables

Link: https://oilprice.com/Energy/Energy-General/The-US-Grid-Isnt-Ready-For-A-Major-Shift-To-Renewables.html

Excerpt:

This is one massive system, and the sources that feed it electricity have become increasingly diversified. And while the shortage of natural gas was a big reason for the power outages in Texas, it was certainly not a shortage of gas that caused the blackouts in California last summer during a heatwave. Grid reliability has come to the fore because the decarbonization of electricity generation is not all fun, games, and zero-emission power.

The U.S. grid, as it is now, cannot support the massive shift to low-carbon power generation, Westhaven Power says. Operators need better control of regional grids to be able to anticipate dangerous situations like the ones in Texas and California, but obtaining it would become trickier with more intermittent wind and solar feeding the grid, the utility explains.

“What events in Texas and California demonstrate is the shortcomings of having highly-centralised power systems and the true value of resilience and flexibility in our energy grids, a value that is going to become even more vital as we continue to transition to renewable energy,” says Dr. Toby Gill, the chief executive of UK-based climate tech startup Intelligent Power Generation.

Author(s): Irina Slav

Publication Date: 3 March 2021

Publication Site: Oil Price

Bad Stimulus: Government Payments to Individuals Are a Terrible Way to Solve America’s Structural Economic Problems

Excerpt:

Biden’s stimulus is not the stuff of economic revolution—it’s a mix of common sense and keeping the lights on. And the fundamental thinking behind the stimulus approach reflects a continuation of neoliberal policies of the past 40 years; instead of advancing broader social programs that could uplift the population, the solutions are predicated on improving individual purchasing power and family circumstances. Such a vision of society as a collection of enterprising individuals is a hallmark of the neoliberal policy formula—which, as the stimulus bill is about to make clear, is still prevalent within the Democratic and the Republican parties. This attention to individual purchasing power promises to be the basis for bipartisan agreement over the next four years.

The reality is that social programs on health care and education, and a new era of labor and banking regulation, would put the wider society on sounder feet than a check for $1,400.

Author(s): Albena Azmanova

Publication Date: 4 March 2021

Publication Site: naked capitalism