Mispricing money comes with consequences. And the longer that money is mispriced the more uncomfortable those consequences will be. We are now seeing what look to be the early stages of a long, painful period of readjustment…
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Those who believe in free markets — or who are familiar with the history of developed economies after they became developed (or, maybe, completed postwar reconstruction) — ought to have little time for industrial policy. Free markets are bottom-up, flexible, and work with their own imperfections. They function through a continuous process of communication that recognizes that the valuable message sent by a price yesterday may be worthless today. Much of their operation is by trial and error. To be sure, there are disasters — plenty of them — but they often point to a better use of capital elsewhere or next time. The prosperity free markets have brought, and the human flourishing they have enabled, is unmatched.
By contrast — and despite some successes — industrial policy has a generally inglorious track record…
Read MoreFrom CNBC:
Republicans are considering extending the enhanced unemployment insurance benefit at a dramatically reduced level of $400 per month, or $100 a week, through the rest of the year, sources told CNBC.
Congress passed a $600 per week, or $2,400 a month, boost to jobless benefits in March to deal with a wave of unemployment unseen in decades as states shut down their economies to combat the coronavirus pandemic. The policy expires at the end of July as the U.S. unemployment rate stands above 11%, despite two strong months of job growth.
The GOP, which has not made a final decision on how it will craft unemployment insurance in a bill set to be released this week, previously discussed extending the benefit at an additional $200 per week instead of $600. Democrats want to make the $600 per week sum available at least until next year.
There are good arguments to be made for reducing the enhanced benefit from its current level, but a reduction to $100 (or even $200) seems to me like too great a cut too soon.
Read MoreDeciding how and, critically, when, to put America back to work again after the COVID-19 shutdowns has, all too often, been framed as a debate between green eyeshade and stethoscope. Or, to put it another way, risking lives to put a few points on the Dow. Today’s appalling unemployment data are a reminder that describing the choice in that way is to play politics with a pandemic, and to avoid confronting the daunting dilemmas that will be involved in finding the right time to sound some sort of All Clear.
Read MoreThe economic numbers are beginning to come in, and, predictably enough, just about wherever you check, they are appalling. In Pennsylvania alone last week there were more than 350,000 first-time claims for unemployment assistance. That compares with (seasonally adjusted) initial national claims over the last year averaging in the low 200,000s, and the news is only going to get worse in Pennsylvania and, probably, every other state. Brokerage research, usually a reliable source of good cheer until well past the last moment, now makes for bleak reading. On Friday, Goldman Sachs estimated that U.S. GDP would tumble by an annualized 24 percent in the second quarter (against earlier expectations of a 5 percent hit). A pandemic has consequences and so do the measures taken to contain it. This week Morgan Stanley ratcheted up the gloom, forecasting an annualized 30 percent GDP decline in a second quarter when unemployment could hit nearly 14 percent. Tracking the course of these projections shows how rapidly the mood is darkening, and expectations play no small role in driving the economy.
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