Finally, it is the Friday – weekend is nearer. Here is what I found around the nest interesting. Maybe these will appeal to you too. Some are related to economics, some to markets, some to geopolitics and some are just for fun.
- Can Ukraine Gnaw Its Way out of Trouble? – For one thing, fighting never stopped. The conflict continued to rage around the disputed town of Debaltseve, which Russian President Vladimir Putin insisted should surrender to the rebels but backed down after Merkel threatened to walk out of the Minsk deliberations. The rebels, however, decided to change the facts on the ground by continuing to fight over the key transportation hub and forcing a Ukrainian army retreat. Other areas have also reported continued fighting.
- Argentina’s Tangled Web – Contrary to the general reverence in the news media for his indictment of senior Iranian officials for their alleged responsibility for the bombing, his case was built on a massive accumulation of highly dubious and misleading claims — from the “irrefutable evidence” of Rabbani’s participation in planning to the identification of the alleged suicide car bomber. This writer’s investigation of the case over several months, which included interviews with U.S. diplomats who had served in the embassy in Buenos Aires in the years following the AMIA bombing as well as with the FBI official detailed to work on the case in 1996-97, concluded that the Argentine investigators never found any evidence of Iranian involvement.
- The unwitting euro enforcer… – That range of answers partly reflects the silence of the ECB charter on the matter, a remarkable state of affairs in itself given how much hangs on it. If ELA continues, a (if not the) key de facto mechanism forcing Euro authorities to cooperate will have failed, leaving the world’s second reserve currency burdened with bureaucracy but without a biting coordinating mechanism. On the other hand, if ELA stops, all Greek banks will collapse and Grexit is inevitable—a global shock likely bigger than Lehman’s. And with Italy, Spain, Portugal, and Ireland all without ESM programs, they would not clearly be legally eligible for OMT from the ECB to cap contagion from Grexit.
- Failed Theory Posed by Wall Street Dems – The education-only solution wasn’t appropriate when it was first put forward, and it is not even remotely plausible now given developments since the mid-1990s—and especially since 2000. Wages for the college-educated have been stagnant for the dozen years since 2000 (when the wage boom of the late 1990s receded).
- Should the US Switch to a Declining Discount Rate? – Imagine that that you can save 100 lives by enacting one of two regulatory policies. The policies have the same cost, which must be paid right now. However, one of the regulatory policies saves the 100 lives in the present, while the other saves 100 lives 50 years from now. In this hypothetical example, the two policies are equal in their costs. Are the policies equal in their benefits, because both policies save 100 lives? Or does saving 100 lives in the present have a different value–a greater value–than saving 100 lives in the future?
- Shocking incentive failure rate in North Carolina – @sandymaxey points me to a new report from the North Carolina Justice Center that is making my head spin. Picking Losers shows that the state’s flagship development program, the Job Development Investment Grant (JDIG), has seen 62 of its 102 projects fail in the period from its inception in 2002 until 2013. That is, 60% of the projects failed to meet either their job, investment, or wage goals, and had to have their awards canceled.
- Fixed exchange rates and Blame Thy Neighbour – think international relations would be better. I think that countries would be blaming themselves and not their neighbours. Flexible exchange rates would make it more likely that countries would take responsibility for their own predicaments, and start doing the reforms to monetary policy, fiscal policy, and economic policy in general, that they would need to undertake.
- Germany Leaves Door Open to Deal Based on Greek Proposal – European Commission President Jean-Claude Juncker “sees in this letter a positive sign, which in his assessment could pave the way for reasonable compromise in the interest of the financial stability in the euro area as whole,” commission spokesman Margaritis Schinas told reporters in Brussels.