Author Archive

We’re here to remember Art, and to celebrate his remarkable life, and I’m honored to have been asked by Maria to share some of my own memories with all of you.
Art was my close friend for more than 30 years. There was no one whose company I more enjoyed, whose incredible spirit and open heart I more admired, and whose life story filled me with more respect and inspiration.
The simple truth is that I loved Art Rodriguez with all my heart. And, I can tell you this without any exaggeration, it was always a very easy thing to do.
Art’s life ended far too soon, but there’s no denying that he had…

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Treasury Secretary nominee Steve Mnuchin recently promised that “there will be no absolute tax cut for the upper class” under President-elect Trump’s tax plan. While the plan would cut the top personal income tax rate from 39.6% to 33% and the capital gains and dividends tax rate from 23.8% to 20%, Mnuchin explained that these cuts would be “offset by less deductions.” Specifically, Trump has proposed to limit itemized deductions to 0,000 for singles and 0,000 for joint filers. We find that these limits will not fully offset the cost of lower tax rates for the rich. Moreover, the limits…

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Perhaps in some distant future history textbook looking back on our time, the year 2016 will be remembered and classified as the one where central banks surrendered. There will not be, like Ghent or Versailles, a formal declaration of reality, rather what is going on is the quiet sort of resignation that is some parts trying to make sense of everything gone wrong, while others tend to full CYA mode. Make no mistake, however, in their literature, discussions, and even policy settings it is there. The latest was the ECB’s “shock” decision yesterday to preannounce a taper to its QE. From a…

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The ECB announced it would extend its asset purchases from April through December next year, but at a modestly slower pace of 60 bln euros rather than 80 bln euros.
We had been expected a six-month extension but without tapering. This would have added 480 bln euros and instead what the ECB will buy is 540 bln euros. The ECB will also expand the range of maturities it buys and will allow the purchases of instruments are yielding less than the minus 40 bp deposit rate.
The end date remains soft in the sense that asset purchases will continue until the Governing Council sees a substantial…

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Upon taking office, President-Elect Trump has pledged to rescind executive orders issued by President Obama. Interestingly enough, a nearly forgotten 2011 Executive Order issued by President Obama set forth principles for independent agencies to actually reduce regulatory burdens. Now that is one order worth reviving, not rescinding.In 2017, the Federal Communications Commission (FCC) should apply Executive Order 13579 and clear away old regulations, freeing up innovation and investment next-generation broadband services. A decades-long pileup of regulations is bogging down the future of…

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This year’s presidential campaign divided America more starkly than ever but exposed common ground on anxiety about globalization. President-elect Trump campaigned on a troubling reversal of U.S. trade policy. To prevent the potentially disastrous consequences of this, policymakers and private sector leaders need to figure out how U.S. companies and workers can more fully benefit from trade and restore the public’s faith in participation in the global marketplace.
Amid the ruins of World War II 70 years ago, the United States spearheaded the creation of today’s global trading. The expansion…

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The majority of alarmist headlines yesterday were all about Seattle, WA-based Amazon’s latest profit-making venture. Expanding its operations into the grocery space, the retailer is set to open stores sans checkout clerks. Upon entry in Amazon Go stores set to be opened to the public in the next year, customers will choose items for purchase only to be billed electronically. The days of long checkout lines may well be over with if the experiment succeeds.
Readers can probably imagine that what’s great for the customer is apparently not great for the typical American worker if traditional…

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“Markets are never wrong — opinions often are.”– Jesse Livermore
Short-term trades are demanding, far more than longer-term investments.The chance of near-term trading success is materially less than the chance of longer-term investing success.In the near term … noise, sentiment, luck and random price action plays a much great role in the outcome you receive than in the long run. But over the long run, as The Oracle of Omaha emphasizes, fundamentals generally win out. That is because over the short term the stock market is, in actuality, a voting machine but in the long run it more…

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243 years ago next Friday, patriots crept aboard three ships anchored in Boston Harbor and chucked 342 chests of tea into the icy waters below. This quintessentially American protest was sparked by a quintessentially American concern: inequitable government policy. The colonists were infuriated by the British government’s decision to grant a tax break to one-and only one-company: the East India Tea Company. Sound familiar?It’s noteworthy that before even taking office, President-elect Donald Trump has chosen to offer a tax break to one and only one company: Carrier Corporation. With an assist…

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Among white voters without a college degree - the so-called white working class - Donald Trump won by 39 percentage points. Since this group of less educated whites represents about one third of the electorate, we need to understand why it went so heavily for Trump. Was it economics or culture?
The economic argument holds that decent paying jobs are disappearing as a result of trade, technology, and de-industrialization. With a scarcity of good jobs, many people - men in particular - have faced high rates of joblessness. Some have chosen not to work at all rather than accept very low paid…

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President-elect Donald Trump’s allegedly heroic efforts to “persuade” Carrier Corp. to maintain manufacturing operations in Indiana have succeeded, for now. Notable here is that if President Obama or President-elect Hillary Clinton had done as Trump did, Republicans and conservatives would have been up in arms - with good reason - about their excessive use of federal power to blunt the message of the markets. But since it was a nominal Republican threatening Carrier with retaliation if it sought to maximize profits, certain members of the right lauded Trump’s meddling as a sign from the…

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As their time in office winds down, U.S. presidents and their supporters tend to focus on legacy: What will history say about them? Unfortunately, on the economy, the Obama crowd has a lot of work to do in the hopes that political spin will cloud or even overrule economic reality. The effort is well under way.It’s not like this hasn’t happened before. Franklin Delano Roosevelt’s New Dealers successfully spun the idea that Herbert Hoover was a laissez-faire president, unwilling to use the tools of government to fight off the Great Depression, and it took FDR and his government programs to end…

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On September 21, 1998, the Federal Open Market Committee (FOMC) held an unscheduled conference call just one week before the scheduled regular policy meeting. Then-Chairman Alan Greenspan was concerned about a good number of things, but in this case that included something he had said a few weeks earlier in Berkeley, CA. The transcript, of course, does not record whether or not Mr. Greenspan at that moment appreciated the irony of his unease, given that “Fed speak”, as it came to be known, was usually an intentional act of his own obfuscations.The Chairman was worried that certain comments he…

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Italy may be the next stop on the world’s journey to more economic nationalism. First we had Brexit - Britain’s decision to leave the European Union. Then we had the election of Donald Trump as the next U.S. president, pledging to put “America first” in his policies. Now Italy may be treading down the same path.
What’s at issue is a constitutional referendum, scheduled for Dec. 4, that would make it easier for the parliament to pass measures intended to improve a lackluster economy. But the latest polls suggest the referendum will fail, placing Italy in a precarious economic and political…

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Former Fed chief Bernanke will participate in a discussion tomorrow about the Fed’s communication. Ahead of it, he has sketched out his views on his Brookings Institution blog here.
Most of the discussion is on the Summary of Economic Projections (SEP), the infamous dot plot. Bernanke defends this communication tool, but implicit in the defense is a recognition that the tool is often misunderstood and misused.
Bernanke begins off with what the dot plots aren’t. They are not, he explains, a policy commitment by the FOMC. The idea that end of the of last year, the dots showed four hikes this…

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