Brexit: Were both sides wrong?

This article caught my eye:

Britain’s services sector, which accounts for more than 75% of the country’s GDP, continued its recovery from the initial shock of the Brexit vote in September, according to the latest PMI data from IHS Markit, released on Wednesday morning.

It completes a trilogy of much better than expected post-Brexit economic figures released this week, following strong growth in the manufacturing and construction sectors.

Every major constituent of UK economy has now staged a huge comeback following a massive drop in the immediate wake of Britain’s vote to leave the European Union.

Over the last couple of days, both the manufacturing and construction sectors came in substantially higher than had been expected, suggesting once again that the early uncertainty after the Brexit vote has now almost completely worn off.

This perfectly epitomizes the lack of accountability in economics.  Let’s review:

1. After Brexit the media was full of breathless reports that “uncertainty” over Brexit was the biggest shock to hit the UK since WWII.  We were told a recession was likely.  The opinion makers fully understood that Brexit itself was at least two years away.  The expectation was that Brexit uncertainty would be a massive confidence shock for the UK, causing investment to tank.

2.  The early data is beginning to look increasingly positive, although in my view it’s still too soon to tell.  We’ll know soon enough—maybe 4 to 8 months.

3.  Almost none of the uncertainty regarding Brexit has been resolved.  If anything, recent reports have been on the negative side—toward the sort of scary and uncertain “hard Brexit” that was expected to be especially devastating for investment.  Yes, Theresa May did set a date to begin negotiations, but that was just a few days ago and had no impact on the recent macro data.

Notice that the article says that:

Over the last couple of days, both the manufacturing and construction sectors came in substantially higher than had been expected, suggesting once again that the early uncertainty after the Brexit vote has now almost completely worn off. (emphasis added)

My response:

You don’t get to say that.  If the UK economy is doing well post-Brexit vote (and I’m still not 100% sure it is, but I think it’s plausible that it is) then it suggests that uncertainty doesn’t matter.

The policy uncertainty that the UK faced three months ago has absolutely not gone away, and that’s not even debatable. If the UK is doing fine, it means that something else drives the business cycle, not uncertainty.  What could that something else be?  Here are my top 6 prospects:

1.  NGDP/monetary policy

2.  NGDP/monetary policy

3.  NGDP/monetary policy

4.  NGDP/monetary policy

5.  Labor market regulations

This lack of accountability is a much more general problem in macro and finance. People are not held accountable for their views.  Just the other day a commenter gave me a hard time for making fun of Jim Chanos’ China predictions.  Chanos has been predicting a Chinese real estate crash for a number of years. Instead, the Chinese real estate sector is booming.  The commenter’s response was that Chanos had made some money shorting Australian mining stocks. Well that’s fine, but people need to be held to account for their actual predictions.  If I make multiple predictions, then it’s likely at least some of them will come true.  Chanos wasn’t famous for his views on mining stocks; he was famous for his forecast of a China crash.

This is a general problem.  Nobody wants to be held accountable for their predictions.  Over at Econlog, I admitted that the knee jerk reaction of the UK stock market to Brexit seems to have been wrong, and since I’m an EMH guy, that’s a loss for me.  I’m on record predicting a 0.5% rise in the UK unemployment rate next year, and if that does not occur I’ll point it out next year and admit I was wrong.  It’s important to learn from your mistakes.

Five months ago I came out against Brexit:

In the end, I see the Brexit vote as being part of an epic global struggle of narrow-minded nationalism versus enlightened cosmopolitan neoliberalism. Elsewhere the issues are much starker, and the white hats and black hats are much easier to spot. But it’s the defining issue of our time, just as it was the defining issue of the first half of the 20th century. (This is not to imply that all Brexit fans are narrow-minded nationalists—I respect many supporters of Brexit—just that the issue has become tangled up in the global swing toward nationalism.)

I did not cite a fear of recession, rather that the UK would move away from neoliberalism.  The FT is giving a lot of attention to Theresa May’s recent speech. If I had to sum up the speech in a single sentence, it would be that May is determined to move the UK sharply away from the neoliberal policies of Cameron/Osborne.  She wants lots more nationalism and also some additional statism.  Some British classical liberals seemed to feel that Brexit would allow the UK to become another Hong Kong.  May’s vision is about as far from Hong Kong as it’s possible to be, and still be on the “conservative” side of the political spectrum.

Can nationalism ever be combined with libertarianism?  I suppose it’s theoretically possible.  But I’ve never seen it, and don’t expect I ever will. For some reason, nationalism and statism seem joined at the hip.


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54 Responses to “Brexit: Were both sides wrong?”

  1. Gravatar of Cris G Cris G
    5. October 2016 at 11:09

    Can nationalism ever be combined with libertarianism?
    Well, I think Maggie Thatcher proved that, to a certain degree, it can be done.

  2. Gravatar of AntiSchiff AntiSchiff
    5. October 2016 at 12:11

    Dr. Sumner,

    Based on the change in the FTSE 250 index in the week following Brexit, my model interpreted the reaction as reflecting an expected fall in GDP of .85% and a .55% increase in unemployment, so it seems our numbers were similar. The model predicted the correct currency exchange rate changes for Pound/Dollar and Pound/Yen, to a tenth of a percent.

    It is interesting that the currency has remained weak, having fallen more than 3% since, while the FTSE 250 has soared about 20%, yet inflation is still tame. Like you, I didn’t realize the FTSE 250 isn’t as representative of the UK domestic public economy as I’d like.

  3. Gravatar of AntiSchiff AntiSchiff
    5. October 2016 at 12:12

    I should have said that was an expected fall in the GDP growth rate of .85%, so a slowdown, but not a recession.

  4. Gravatar of Christian List Christian List
    5. October 2016 at 13:37


    Can nationalism ever be combined with libertarianism?

    This totally depends on your definitions of nationalism and libertarianism. I’m pretty sure you can find speeches and actions (by Reagan and Thatcher for example) that combine elements from both ideologies.

  5. Gravatar of Jill Jill
    5. October 2016 at 13:44

    Can nationalism ever be combined with libertarianism?

    The Devil is in the details here. Some particular policies, which some might term nationalist policies, can certainly be combined with some other policies, which some might term libertarian policies. I guess people are always trying to do what works. But pragmatism is the best ism, I think– to look at how these policies work in the real world where they have been tried before in similar circumstances.

  6. Gravatar of Ray Lopez Ray Lopez
    5. October 2016 at 14:15

    This post may seem ‘off-topic’ but given today’s ‘night is day and day is night’ post, maybe not!

    OT?- Sumner thinks IS sometimes slopes upwards in the ISLM model. Let’s examine the kookiness of this belief. Sumner (earlier last year): “Ray, You still don’t know? Really? I think the IS curve often slopes upward. ”

    So, open your textbook, and note IS curve (goods produced) slopes downward, because, logically, as interest rates fall, it’s cheaper to build stuff. If interest rates rise, it’s easier just to park money in the bank and not build anything. Very logical. But Sumner disagrees. To Sumner, as interest rates fall, let’s say they become negative, then people don’t want to build anything, presumably they are like deer stuck in headlights, perhaps they hoard money thinking to build stuff next year will be even cheaper. OK. So the IS curve slopes *upward*.

    But the LM curve, (money produced/demanded) still slopes upward in Sumner’s mind, since according to the Keynes liquidity preference theory, the demand for money is positively related to aggregate output and negatively related to interest rates (makes sense, as the economy gets richer people hold more money, and, all things equal, if interest rates increase they hold less money).

    The intersection of IS and LM shows on the Y,i chart what output at what interest rate occurs. According to Sumner’s bizarre logic, both curves are sloping upwards but somehow they intersect (i.e., they must have different slopes). Shifts in LM, IS however produce the opposite effects of conventional wisdom.

    With Sumner’s bizarre “IS curve often slopes upward” you get the following results (do a quick sketch and compare to the textbook conventional sketches of IS, LM, where IS slopes down, not up):

    An *increase* in any one of these variables: consumer expenditures, investments, government spending, net exports, and/or a decrease in taxes will –> cause a *decrease* in output (GNP) and a *decrease* in interest rates! (the OPPOSITE of conventional wisdom)

    Or, equivalently, take the converse of the above: in Sumner’s bizarre world, cutting government spending, decreasing net exports, increasing taxes, decreasing consumer purchases and decreasing investments will, magically, INCREASE GDP and INCREASE interest rates! Amazing.

    Then Sumner’s wonders why he’s not taken seriously. But I like Sumner’s ‘troll’ style. Like a boxer leading with his glass chin, egging on his opponent to knock him out (and he does), Sumner is nothing if not entertaining. Everybody loves a Bozo.

  7. Gravatar of Philo Philo
    5. October 2016 at 14:22

    “The policy uncertainty that the UK faced three months ago has absolutely not gone away, and that’s not even debatable.” I think this statement is ‘way too strong. Maybe the Brexit vote made the market uncertain about something *other than what you are focusing on*: the uncertainty that was worrying the market *has* been cleared up since then, though the uncertainty on which you are focusing has not been. For example (but it’s just one example): maybe the market was worried about the B of E’s response to the Brexit vote.

  8. Gravatar of Liberal Roman Liberal Roman
    5. October 2016 at 14:54

    https://twitter.com/asentance/status/783764238011695104

    “Theresa May is promising to over-ride the independence of the Bank of England and force up interest rates”

    This should be an interesting expirement….A good natural expirement for you Scott. It’s cool when you don’t think about the human carnage this might unleash.

  9. Gravatar of Joe B Joe B
    5. October 2016 at 16:04

    Ronald Reagan was perhaps the greatest nationalist and and was certainly the greatest protectionest US president of the last 100 years. But remembered as glory years for free enterprise.

    Is international free trade so important to national growth?

    Perhaps cumbersome yet still corrupt global administrative bodies do more harm than smaller national bureaucracies.

    It would help if globalist central banks did not suffocate growth.

  10. Gravatar of Tom Brown Tom Brown
    5. October 2016 at 16:05

    Maybe we should consult a “top economist”:
    http://www.businessinsider.com/google-ranks-donald-trump-as-top-economist-2016-10

    Although that looks like that’s been “corrected” now:
    https://www.google.com/search?safe=off&q=Top+economist&oq=Top+economist&gs_l=serp.3..0i67k1l5j0l5.8718.8718.0.9290.1.1.0.0.0.0.135.135.0j1.1.0….0…1c..64.serp..0.1.134.ZqHgcYR3CNI

  11. Gravatar of E. Harding E. Harding
    5. October 2016 at 16:34

    I appear to be right on all counts. I openly supported Brexit and thought it had a 50% chance of winning on January 1 of this year. That was a way better estimate than prediction markets’. I predicted (probably publicly, but not certain where), Brexit would not cause a recession, and I strongly advocated against May’s Prime Ministership in these comments.

    If the UK’s doing fine, the uncertainty is not enough to matter. And I predicted the UK would do fine.

    “I’m an EMH guy, that’s a loss for me”

    -I win. 🙂

  12. Gravatar of Major.Freedom Major.Freedom
    5. October 2016 at 16:56

    Sumner wrote:

    We were told a recession was likely

    You were one of those people:

    https://www.themoneyillusion.com/?p=31820

    “Just to be clear, I think that is certainly a possible outcome—recession in Britain and no recession elsewhere. But I also think we need to take these stock market reactions more seriously. Even with the recoveries today, eurozone markets are down sharply from Thursday’s close; declines almost comparable to the UK (FTSE250), or (in the case of the PIGS) even steeper. The markets are telling us that there are big risks for all of Europe, and non-trivial (but modest) risks for the global economy.

    Because the shock to the UK is more of a real shock, perhaps the damage there is more unavoidable. In that sense I agree with the article.

    […]

    I have forecasted a 50 basis point increase in the UK unemployment rate. You might call that a “mini-recession”.”

    and of course:

    “Right now, almost no plausible amount of monetary stimulus from the ECB would be excessive. It’s pedal to the metal time.”

    Comments like that last one are indicative of the optimality of money being completely market driven. We can do better than billions of people being adversely affected by megalomaniacs with delusions of grandeur and fallacious economic beliefs. The worst are those who are convinced they are being benevolent, for their destruction is relentless.

    —————————–

    “Over at Econlog, I admitted that the knee jerk reaction of the UK stock market to Brexit seems to have been wrong, and since I’m an EMH guy, that’s a loss for me.”

    No it isn’t, because EMH is not the theory: “the market correctly predicts the future.” You are thinking of Rational Expectations theory. EMH is the theory of how much information is encapsulated in stock prices, to varying degrees. If I predicted Brexit would not cause any recession, and you predicted it would, and we went short or long on British stocks in accordance with our beliefs, such that the resulting stock prices became what they were with that information taken into account, then that would be consistent with (but, IMO, not evidence of) EMH.

    EMH does not require every investor to either go long or go short on British stocks and then be correct about future boom or recession. Rational expectations requires such a thing.

  13. Gravatar of Major.Freedom Major.Freedom
    5. October 2016 at 17:04

    You can easily understand how Rational Expectations theory is false, because it is not possible for investors to agree with one future. The fact that stock prices exist is due to DIFFERENCES in the judgments and expectations of investors. If stock prices fall, then that does not mean investors all agree that future prospects are this or that. Investors who sell a stock have different judgments and expectations as compared to investors who buy what the sellers sell.

    It is unthinkable for every investor to go long any stock. In order for an investor to buy a stock they think owning the company is a good deal at that price, another investor has to sell that stock and believe owning that company is a bad idea as compared to that price.

  14. Gravatar of Major.Freedom Major.Freedom
    5. October 2016 at 17:10

    On a world scale, the smaller and more numerous are states, the more liberty there is for the individual.

    Most economists are able to understand that the smaller and more numerous are private companies, the better, ceteris paribus, it is for competition and consumer interests. This is of course not to say size is the cause of consumer betterment, only that with more competition, the less any one company can relax and produce lower quality goods at higher prices.

    For reasons only individualists truly understand, these same economists almost universally fail to understand this principle when it comes to the production of security and protection. Here, and we can include Sumner, the larger and fewer are states, the more liberty individuals supposedly have.

  15. Gravatar of Gary Anderson Gary Anderson
    5. October 2016 at 17:13

    Libertarianism led to deregulation in the banking industry, allowing the banks to take over the world. I think libertarianism backfired.

    There is a good sovereignty, based on the Westphalia Peace. There is a bad sovereignty, based on Hitler and most likely, Trump.

    But all globalist government is really just empire. God hates empire. Now we have the Tower of Basel. The name is not lost on students of ancient history.

    Brexit is good, not for racial reasons, but because as Lars Christensen has said, if you peg to the Euro, your economy is dead in the water.

  16. Gravatar of Major.Freedom Major.Freedom
    5. October 2016 at 17:14

    “Both sides were wrong”

    Sumner, please explain how two mutually exclusive, and exhaustive predictions, can both be wrong. If the future will be either one or the other, how can there be a future that is neither one?

    Seems like you want to believe that if you can’t be right, then nobody can. Huh.

  17. Gravatar of Dan W. Dan W.
    5. October 2016 at 17:25

    The last 8 years have brought us vastly increased centralization of state power, what with ObamaCare, Dodd-Frank and an Executive branch promoting its idea of social justice. Are the Democrat’s Nationalists?

    Does anyone expect a President Hillary to roll back these regulations or to reverse the trend of centralization of state power in Washington DC? Yet no one is saying Hillary Clinton is a Nationalist!

    The assertion that Statism follows Nationalism is based on nothing but projection.

  18. Gravatar of Major.Freedom Major.Freedom
    5. October 2016 at 17:43

    “I’m on record predicting a 0.5% rise in the UK unemployment rate next year, and if that does not occur I’ll point it out next year and admit I was wrong. It’s important to learn from your mistakes.”

    Does that include talking about mistakes concerning long and variable lags?

  19. Gravatar of dtoh dtoh
    5. October 2016 at 18:07

    @scott
    Can nationalism ever be combined with libertarianism?

    I think not. They are contrary to one another. Excessive statism can lead to libertarianism, i.e. Thatcher or Reagan, OR it can lead to nationalism.

    When the only thing that the “conservative” parties can produce is politicians like Jeb and May, then it’s a lot more likely that statism will lead to nationalism.

    BTW – May’s speech made me want to puke.

  20. Gravatar of Scott Sumner Scott Sumner
    5. October 2016 at 18:10

    Cris, I don’t recall Thatcher as being nationalistic.

    Jill, I understand that in a technical sense they could be combined, but there seems to be something in nationalism that pushes people away from free markets.

    Philo, Maybe, but if they were worried about the BoE response, that should have showed up in the exchange rate.

    More importantly, if this “uncertainty” is so mysterious that we can’t even tell if it exists or not, then it’s not much of a macroeconomic theory. It’s more like astrology.

    Liberal, Interesting, but the markets don’t believe it, and neither do I. If rates rise, it will be because UK inflation overshot.

    Harding, You didn’t like May because you didn’t think she was nationalistic enough. So no, you didn’t “tell me so”.

  21. Gravatar of Scott Sumner Scott Sumner
    5. October 2016 at 18:13

    dtoh, I mostly agree, but it’s bizarre to combine Jeb and May. May is more like an intelligent, non-insane Trump. She’s way more statist and nationalistic than Jeb, I mean Jeb!

  22. Gravatar of Major.Freedom Major.Freedom
    5. October 2016 at 18:31

    Gary Anderson:

    “Libertarianism led to deregulation in the banking industry, allowing the banks to take over the world. I think libertarianism backfired.”

    Banking has not been deregulated. Regulations have increased in banking. What you are calling deregulation was in fact a change in existing regulations.

    Banking is the most highly regulated industry in the world. It is literally socialist.

    Further, it was not libertarianism that motivated the changes in regulation you are referring to.

    Actual deregulation in banking would entail the government getting out of banking.

  23. Gravatar of Major.Freedom Major.Freedom
    5. October 2016 at 18:32

    Banks haven’t taken over the world. Central banks have allowed governments to print money to take over over the world to a higher degree.

  24. Gravatar of Jill Jill
    5. October 2016 at 18:43

    I wonder if there is some point between libertarianism and nationalism, where you have some of the advantages of each. Maybe you have some limits on immigration that you don’t make lots of your citizens umemployed by importing workers who are willing to work for lower wages and willing to live in tiny apartments with lots of roomates, to save on housing costs. But you still have fairly free trade with other nations and some other aspects of free markets.

    You don’t have to choose e.g. between lawless anarchic chaos vs. Soviet Communism. There is stuff in between.

  25. Gravatar of am am
    5. October 2016 at 20:54

    http://uk.businessinsider.com/brits-are-hoarding-money-post-brexit-2016-9
    Uncertainty drives growth in narrow money and is a worrying sign for the UK economy. That is the theme in this link. You may wish to comment on it and the theories of uncertainty.

  26. Gravatar of Ray Lopez Ray Lopez
    5. October 2016 at 21:04

    MF scoring big points using Sumner’s own words against him, +1.

    Sumner conspicuous by his silence to my post, noted. 😉

  27. Gravatar of Vaidas Urba Vaidas Urba
    5. October 2016 at 23:39

    Scott,

    In Caplanian sense Chanos was more right than wrong on China, as he did earn money on his trade.

  28. Gravatar of E. Harding E. Harding
    6. October 2016 at 03:08

    @ssumner

    “Harding, You didn’t like May because you didn’t think she was nationalistic enough. So no, you didn’t “tell me so”.”

    -I did, in fact, tell you at the time. Here’s what I actually said:

    https://www.themoneyillusion.com/?p=31824#comment-897714

    There’s a thing called the Internet, Sumner. You might be aware of it.

    Of course, part of my reasoning was also that May, being a supporter of Remain, would be inappropriate to carry out the transition to Brexit. But look at what I actually criticized her for in your comment threads! Are you starting to agree with me now?

  29. Gravatar of MikeDC MikeDC
    6. October 2016 at 05:29

    I don’t think there can be accountability because there’s no certainty in the term uncertainty.

    To unravel that into something less obtuse, my point is that you can’t say “uncertainty doesn’t matter” unless you’re using a very precise, technical meaning of uncertainty. I think it matters, but you’re not going to see it since true (Knightian) uncertainty is a convenient “black hole”. By definition it’s incalculable. At best, you could see the “event horizon” of the uncertainty by seeing the various calculable risks associated with it.

    But… we don’t do very well with immeasurable concepts. Thus, there’s literally no way to “hold someone to account” for making a prediction about a true uncertainty, because there’s no measurable counterfactual. The only holding to account possible would be to systematically scorn every prediction of uncertainty leading to a negative outcome (ie to treat uncertainty as if it didn’t matter).

    That’s actually very appealing in a deterministic, Stiglerian sort of sense, but it also seems pretty myopic. If we think true uncertainty doesn’t matter, then we confine ourselves to ignoring quantifiable risks. Doesn’t sound like something that someone arguing against Trump and Bexit should do.

  30. Gravatar of Art Deco Art Deco
    6. October 2016 at 06:28

    She’s way more statist and nationalistic than Jeb, I mean Jeb!

    Jeb! is a Mexicanophile who speaks Spanish at home and once classified himself as ‘hispanic’ on a government application form. He also (see John Derbyshire’s critiques of his public writings) has a casual and thoughtless contempt for American workers. Give him a job at Mercatus. The only people ‘less nationalistic’ than Jeb! live and work in the academic-legal-media-social wok nexus which has the Democratic Party as its electoral vehicle (and which is typified by BO). On, and characters like the late Scott Nearing who openly loathe the country they live in.

  31. Gravatar of Tom Brown Tom Brown
    6. October 2016 at 06:49

    I recall Harding advocating against May because he said she’s an

    untrustworthy, incompetent, super-duper authoritarian post-menopausal woman.

  32. Gravatar of Tom Brown Tom Brown
    6. October 2016 at 06:55

    … I see he beat me to it. =)

  33. Gravatar of Doug M Doug M
    6. October 2016 at 08:20

    If Brexit has a an economic impact, it should be that it creates inferior terms of trade which would result in small reduction in long-term growth. Brexit should not trigger an immediate recession. Over time of a couple of tenths off of GDP growth accumulate, but over the short-term it is barely noticeable. And when it appears, there is so much noise, it is impossible to tell how much Brexit has altered the dynamics compared to whichever other animal spirit we choose to blame today.

    If you are a rational investor, a small variation in the growth trajectory can have a large impact on valuation. Earnings have levered response to changes in growth, and valuations represent the NPV of all future earnings. So, a significant market reaction may well be rational even though the direct economic impacts may be undetectable.

  34. Gravatar of Gary Anderson Gary Anderson
    6. October 2016 at 12:46

    Major, you said: Gary Anderson:

    “Libertarianism led to deregulation in the banking industry, allowing the banks to take over the world. I think libertarianism backfired.”

    Banking has not been deregulated.

    But Major, it is one thing to have regulations, but quite another to apply them. And clearly, the Fed mispriced CDO risk, destroying mortgage backed securities before they were even issued. If banks were so regulated, why didn’t any bankers go to jail for issuing loans that could not be paid back?

    And further, Major, repeal of Glass-Steagall and created of structured finance with the financial modernization and commodities modernization acts led to deregulation and creation of derivatives that have cause massive bond hoarding and yields to relentlessly decline. Now the system regulates US!

  35. Gravatar of ssumner ssumner
    6. October 2016 at 15:42

    am, It’s possible that uncertainty leads to more demand for cash, but that’s pretty easy for a central bank to offset.

    Ray, I only respond to your funny posts.

    Vaidas, I don’t agree. Caplan’s bets are very specific. If someone predicts a 1929 style stock market crash, for instance, a 1% drop doesn’t count as “correct.”

    Harding, You like authoritarians, so I assumed you were complimenting her.

    And she’s pursuing the exact anti-immigration policy you called for.

    MikeDC, I already responded to that above.

    Art, It’s nice to see your anti-Mexican bigotry out in the open. I hate it when people try to cover it up. He speaks Spanish at home?!?!? How horrible!!

    When I was young students were actually encouraged to learn second languages.

  36. Gravatar of Art Deco Art Deco
    6. October 2016 at 16:16

    Art, It’s nice to see your anti-Mexican bigotry out in the open. I hate it when people try to cover it up. He speaks Spanish at home?!?!? How horrible!!

    Since, as always, you’ve elected to misconstrue a fairly straightforward point in order to play forensic games, I’ll just pretend you actually did not understand it and explain it real slow. You said,

    “She’s way more statist and nationalistic than Jeb, I mean Jeb!”

    It would be pretty tough to not be ‘more nationalistic’ than Jeb! FWER, Jeb Bush fancies all things Mexican and has a distinct disdain for ordinary Americans, just more amiable and not so snotty as that which the President trades in (or Kevin Williamson trades in). There are people who are ‘less nationalistic’ than Jeb. Victor Navasky to name one. But Navasky doesn’t hide his contempt for his countrymen.

  37. Gravatar of msgkings msgkings
    6. October 2016 at 20:25

    @Art: You don’t hide your contempt for your countrymen either, starting with the hosts of the blogs you frequent. I guess your contempt for Alex Tabarrok doesn’t count as he’s Canadian.

  38. Gravatar of Postkey Postkey
    7. October 2016 at 00:47

    “If banks were so regulated, why didn’t any bankers go to jail for issuing loans that could not be paid back?”

    ‘Bankers’ were as ‘ignorant’ as the majority in the financial sector {Brooksley E. Born was an exception}?

    “As Axel Weber remarked, afterwards:
    I asked the typical macro question: who are the twenty biggest suppliers of securitization products, and who are the twenty biggest buyers. I got a paper, and they were both the same set of institutions…. The industry was not aware at the time that while its treasury department was reporting that it bought all these products its credit department was reporting that it had sold off all the risk because they had securitized them…

    1.09 into
    http://www.lse.ac.uk/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.aspx?id=1856

  39. Gravatar of Tom Brown Tom Brown
    7. October 2016 at 08:51

    Harding, You like authoritarians, so I assumed you were complimenting her.

    Ah, but is she a Dunning-Kruger authoritarian? … the official ideology of the Trump candidacy. It makes a difference!

  40. Gravatar of Tom Brown Tom Brown
    7. October 2016 at 08:57

    He speaks Spanish at home?!?!? How horrible!!

    And don’t forget Scott, that despite his best efforts to distract us from the ugly fact, (((globalist)))-cuck Romney knew how to speak *FRENCH*!!! [shudder]. We really dodged a bullet there!

  41. Gravatar of Tom Brown Tom Brown
    7. October 2016 at 09:12

    O/T: I’m so hoping that Trump reads Drudge on this and brings it up on Sunday. Looks like Limbaugh is hip to the conspiracy too.

  42. Gravatar of Art Deco Art Deco
    7. October 2016 at 11:23

    And don’t forget Scott, that despite his best efforts to distract us from the ugly fact, (((globalist)))-cuck Romney knew how to speak *FRENCH*!!! [shudder]. We really dodged a bullet there!

    Tom Brown, when you’re through playing the teenage girl, tell me who collared the hard-line vote in the primaries, including my support, for what that’s worth. You know, the other major candidate who avoided getting snookered into Charles Schumer’s amnesty scheme. His name is what? His father was born where?

  43. Gravatar of Vaidas Urba Vaidas Urba
    7. October 2016 at 12:00

    Scott,

    Chanos earned much more than 1% on his China bet. Maybe the problem is with the language, to really understand what Chanos is saying you have to look atnwhat he is buying.

  44. Gravatar of Tom Brown Tom Brown
    7. October 2016 at 14:25

    Third-time newlywed Donald J. Trump — the candidate that Jesus personally chose to save the USA (according to upstanding “evangelicals” and other God-botherers like Franklin Graham, Jerry Falwell Jr, Dr. James Dobson, Michele Bachmann, Ben Carson and the “prospertity gospel” crowd) — shares his Godly thoughts on where he can get away with grabbing married women who aren’t his new bride:
    http://theresurgent.com/trump-bragged-about-grabbing-women-by-theiruhhhhhhh/
    Jesus surely sent us Trump to save us from political correctness, right? Praise be!!

    But seriously, who on planet Earth is surprised by this — even a little?

  45. Gravatar of Tom Brown Tom Brown
    7. October 2016 at 14:30

    … perhaps Trump’s firebrand evangelical supporters will insist they publicly act out something like this with him now — if for nothing else to attempt to remove his stench from themselves:
    https://youtu.be/jBYTKsYTn5o?t=56

  46. Gravatar of Art Deco Art Deco
    7. October 2016 at 14:47

    the candidate that Jesus personally chose to save the USA (according to upstanding “evangelicals” and other God-botherers like Franklin Graham, Jerry Falwell Jr, Dr. James Dobson, Michele Bachmann, Ben Carson

    There’s a distinction between what people say and your asinine gloss on what they say. The real James Dobson said this:

    “If anything, this man is a baby Christian who doesn’t have a clue about how believers think, talk and act. All I can tell you is that we have only two choices, Hillary or Donald. Hillary scares me to death. And, if Christians stay home because he isn’t a better candidate, Hillary will run the world for perhaps eight years. The very thought of that haunts my nights and days. “

  47. Gravatar of Gary Anderson Gary Anderson
    7. October 2016 at 14:48

    Real biblical truth opposes racial superiority. Anyone who knows Trump believes he is part of a master race cannot accept that, which is morally equal to murder and politically worse than murder.

  48. Gravatar of Gary Anderson Gary Anderson
    7. October 2016 at 14:50

    Dobson is a phony Christian. And he is manifestly lost.

  49. Gravatar of Major.Freedom Major.Freedom
    7. October 2016 at 15:11

    Gary Anderson:

    “But Major, it is one thing to have regulations, but quite another to apply them.”

    Right, and more regulations were in fact applied over the years.

    The fact that capitalism breathes through the blowholes of regulations, does not suggest that the “freedom” within those narrow confines is the same thing or similar to “regulations were not enforced”.

    What you seem to be saying is the a priori belief that recessions and crises are caused by capitalism, and that governmental regulations would otherwise stop them.

    The truth is the opposite. Recessions and crises were caused by government intervention. The “mispricing” you speak of

    “If banks were so regulated, why didn’t any bankers go to jail for issuing loans that could not be paid back?”

    Because the costs of regulations are to a significant degree inexternalized onto the less politically connected. What, did you actually believe that regulations “help the little guy”? Regulations have historically, and by public choice theory, as well as other more complex theories, can be shown to be, a system that protects the established politically connected businesses against the smaller, less politically connected competitors.

    The so-called “big business” have always been the most eager and willing to increase “regulations”. They do this for selfish reasons, they don’t care about you or poor people. Big business is typically the authors of new regulations. Why? They want more government intervention to make it more difficult for competitors to compete. The higher costs of regulations are always the worst for the smaller, higher cost competitors. The silent majority you never hear about because they cannot afford airtime on CNN.

    You wrote:

    “repeal of Glass-Steagall and created of structured finance with the financial modernization and commodities modernization acts led to deregulation…”

    No, again there was no “deregulation.” The creation of all of these risk management products are the RESULT of the massive increase in financial and monetary regulations. When investors have to operate in an environment with fewer and less pronounced market forces, and a greater number of and more pronounced political forces, the incentive is to devote more and more resources to protect against arbitrary political whims.

    The financial industry of derivatives was financed by inflation. Both directly and as a consequence. You don’t see all these complex products for boring gold or Bitcoins. You see them in areas that are highly sensitive to the politics of fiat money.

    “massive bond hoarding”

    The government is to blame for this. Bond hoarding because of the artificially high risk introduced into the economy by socialist, anti-market regulations and inflation.

    You are blaming the victim.

  50. Gravatar of ssumner ssumner
    7. October 2016 at 17:10

    Art, You said:

    “ordinary Americans”

    I’m pretty sure you imagine a white person when you picture one.

    In fact, there aren’t any ordinary Americans, they don’t exist.

    Vaidas, Don’t make this so complicated. When someone says the China real estate market is going to crash, and it booms instead, they were wrong.

  51. Gravatar of Lorenzo from Oz Lorenzo from Oz
    8. October 2016 at 05:14

    Libertarianism is probably helped by a certain amount of social diversity, as said diversity reduces the level of government action practicable without social friction. (The US experiment of greatly increasing social diversity AND greatly increasing the ambit of US federal government action does not seem to be working so well.)

    And if nationalism means exulting a certain ethnic group, it is probably going to require a ins-and-outs mentality that is not conducive to libertarianism.

    On the other hand, one could reasonably argue that the high level of Scandinavian economic freedom was precisely because cultural homogeneity encouraged a larger state which required more economic efficiency to carry it.

    So, from the libertarian side, the story may be somewhat mixed.

    On the other hand, exulting a particular ethnic identity does probably mean exulting common action in a way definitely not conducive to libertarianism but is conducive to nationalism

    And I don’t think that Reagan or Thatcher are good examples of nationalists. They were both patriots, which is not the same thing. Patriotism is support for one’s polity (which they showed lots of). Nationalism is support for one’s ethnic group having political expression (which neither seemed to about at all really).

  52. Gravatar of Lorenzo from Oz Lorenzo from Oz
    8. October 2016 at 05:15

    That should be “is conducive to statism”.

  53. Gravatar of Art Deco Art Deco
    8. October 2016 at 06:16

    I’m pretty sure you imagine a white person when you picture one.

    About 63% of the population is white in an unqualified way. About a quarter of the hispanic population is caucasian. I don’t know why you’d think a generic American would be pictured differently. There was an Ursula LeGuin character who magically turned the whole population gray, but neither you nor I are characters in The Lathe of Heaven. Most Americans are wage-earners as well, and that is how I picture them.

    In fact, there aren’t any ordinary Americans, they don’t exist.

    No, they are pretty pervasive. It’s just that people like you fancy they have no legitimate interests or concerns.

  54. Gravatar of Art Deco Art Deco
    8. October 2016 at 06:29

    And I don’t think that Reagan or Thatcher are good examples of nationalists. They were both patriots, which is not the same thing. Patriotism is support for one’s polity (which they showed lots of). Nationalism is support for one’s ethnic group having political expression (which neither seemed to about at all really).

    This is a factitious distinction that is popular with liberals. Most nation-states have ethnic delimiters. Countries in the Western Hemisphere and the Antipodes do not. Some patriotism or nationalism is salutary and some is pathological. It depends on its aims and discrete properties. Right now we see efforts by the Eurotrash elite and professional-managerial types to define as pathological any kind of independent spirit and self-assertion. Israel is despised, Mr. Orban’s government is despised, Mr. Kaczynski’s government is despised, Trump is despised, Brexit’s a cause for alternating bouts of butt-hurt and apoplexy. Russia’s mildly revanchist stance (regrettable, but not surprising in context) is the cause for more butt-hurt and apoplexy. What’s interesting is that bizarro (though not yet severe) Chinese revanchism bothers them not at all. Lunatic Arab revanchism goes unremarked. Eurocrats going from one failure to another are just eggs to be broken to make the cosmopolitan omelet….

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