Tuesday, November 18, 2014

Beveridge

Moral: Wherein we ask, can data-driven be hellish?

The original use suggested that we can get ourselves purgatory'd, real quick. From the Fed side (notice the shift? - pun intended), we, the savers, probably ought to feel the pain. That is, those of the ca-pital-sino game (and their residue) are seen as of prime importance for an economy (as in, lift the boats - former head quoted in a recent WSJ article).

However, in this date and age, computation ought to be of some use for improving our understanding. Trouble is, at the core, economics is dismal, but let's have some fun anyway.

That same WSJ article showed a Beveridge Curve (no, not related to quaff√≠ng) that may point to troublesome news for savers. As in, there has been a shift (see Figure 1 (page 5), for example, in the New York Fed report). It is problematic to savers since wage inflation has not come around as expected.

But, then, those of us who have been around for awhile were thinking that interest would rise about three years ago or so. Little did we know, it seems.

Basically, there are structural things to consider. But, even so, some at the Fed do not see anything related to an equity bubble. Yet, the old guy (two times removed) says so, since where are there long-term sights being rewarded?

That last statement acknowledges the urgency of reward from returns (even if ill-begotten) as determined by a year's worth of activity. In other words, let's sit back and watch the manipulations and extraordinary adjustments.

Hopefully, the new year will bring some reality (as in, those who are not on the teat) into the scene.

Remarks:  Modified: 11/19/2014

11/19/2014 -- Cass: “My view is the Fed has made a mockery of fundamentals, that there is no real natural price discovery," he says. Kass believes, "Every asset class in the world is being tied relative to the U.S. 10-year yield which is artificially depressed and even more depressed because of the recessionary conditions and the sovereign debt yields in Europe... It's leading toward malinvestment."

11/19/2014 -- Wait, despite all of the new beginnings, things like this headline announces (market down after investors look at Fed minutes) is just plain stupid from the viewpoint of a sustainable economy.

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