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Curtain Rises on Kashkari

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Who is the man behind the curtain? The selection of Neel Kashkari as the new President of the Minneapolis Federal Reserve is fascinating for a lot of reasons. It’s especially important to those of us who live in the district, of course, but this is not any ordinary position. Kaskkari is taking over for Kocherlakota, the outgoing President who resigned last June – leaving the Fed with one less relentlessly “dovish” member of the Fed Open Market Committee (FOMC).

Who is this new guy? How was he chosen?

The whole process gives us a peak behind the curtain and raises a series of questions about the new, more politically active Fed. Kashkari also brings a new personality and well documented series of biases as an data-loving engineer who is, by all accounts, a genuinely nice if hard-driving guy.

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Ready for Liftoff?

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Another first Friday of the month, another jobs report. By the time you read this the Bureau of Labor Statistics’ (BLS) monthly Employment Situation Summary for October may have been released diligently at 8:30AM Eastern Time on the appointed date. The stock market may be reacting and everyone will turn their attention to the Federal Reserve.

It’s a strange ritual which keeps financial writers busy. But does it mean anything?

If all goes as it should this one should really move the markets. Exactly which direction is hard to tell for a variety of reasons – but that is what will matter more than anything else if this report comes in as “good” (in quotes) as it should be.

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Failing “Facts”

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As I prepare for a seminar on economics for today’s progressive, this particular post has come back to haunt me.  It’s a bit subtle but hurts like a sledgehammer if you think about it.  The bizzy whirl of my life as I prepare to announce my plans requires a repeat – and this one is standing out.  Enjoy!

Back in the 1950s, people who studied complex things like economies felt they were making real progress. The general belief was that by understanding how it all worked we could even things out and usher in a new era of continuous prosperity that would benefit everyone.

Some of the underlying “facts” that were identified at this time have been accepted as simple truths. Growth is always good, and economic growth always flows to workers, making their lives better generation by generation. There’s only one problem lately – some of the “facts” appear to not be as true as they used to be. That means that the underpinnings of modern economic theory are all being questioned and, perhaps, if we don’t keep our eyes open the new era of prosperity will be far more elusive than anyone thought.

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Too Much Credit?

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If you’re like most people, you probably think that you can never have too much access to credit. After all, you never know what might go horribly wrong or when an opportunity to really follow your dream might come up. A little scratch ready in the background might be the difference between the good life and something much less.

Then again, a lot of credit has a corrosive effect. In a world saturated with borrowing everything is judged against the expected return if the money was simply loaned out at market rates. It seems reasonable that where a little credit is a good thing a lot of credit, defining everything in the world, is the biggest enemy of both long-term thinking and a society looking to maximize happiness and human potential.

Logic says that where a little credit is good a lot could be bad, meaning there is an optimal point. Where is that? Where are we with respect to a good level of credit? It turns out that train left the station a very long time ago – and this may explain a lot of the problems in this economy.

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Tempus Fugit

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On Sunday we go through the ritual of changing over to Standard Time.  Spring water, fall down, as the saying goes – or something like that. It always seems perfectly ridiculous to think that somehow we “save” an hour when all we’re really doing is moving it around.

It’s even worse if you have friends or colleagues in Europe, which left daylight time last week.  This week and this week only there were six hours between St Paul and Frankfurt instead of the usual seven.  Next week it’s back to normal.

All this messing with the clocks only proves how artificial the whole idea of time is.  Perhaps we’re better off with one time across the globe.

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