Wednesday, April 30, 2014

Water to Replace Gasoline in Engines?

Check out the article above.
To summarize, there is a new scientific breakthrough that may allow fuel to be created from water instead of oil. What effects would this have on fuel economies? World economies? Financial Crisis?

For Joe

If the FCC gets enough public comments against the proposed changes in internet pricing and access, they may cave.  Here is a piece on how public comments work in the rule making process.  Consider making a short comment if you care about access to the internet.

Everything You Need To Know Before E-mailing The FCC About Net Neutrality – Consumerist

If you feel like you don't understand the issue well enough, take a look at this short piece in the LA Times:,0,3234289.column



Politics, banks, and housing

Another fascinating account of how politics interacts with lobbying.  The GSE's are the government-sponsored enterprises set up in the 1930's to help finance home ownership.  They failed in the financial crisis and were taken over and recapitalized by the government (given public dollars to cover the losses and keep them going).  Now Congress is trying to decide what to do.  One one hand, the American Dream is tied up with home ownership.  So consumers have a big stake in making sure homeownership is affordable.  The banks want fees and profits.  And Congress is stymied.  Read the article.  It is short.

GSE Reform Dead for Now | naked capitalism

It’s Good - no - Great to be the CEO Running a Huge Criminal Bank

This is an article about about the unethical nature of the unequal treatment of banks and bankers.  It is written by Bill Black, a forensic accountant who was integral to the prosecutions of bankers in 1980's-early 1990's after the savings and loans banks failed.  He dissects both media and governmental language used to excuse fraud.  It is a fascinating read.

It’s Good - no - Great to be the CEO Running a Huge Criminal Bank | New Economic PerspectivesNew Economic Perspectives

Tuesday, April 29, 2014

Basel III Explained, sort of...

BNP Paribas' "Basel III for Dummies"

Too big just failed!

Energy Future filed for Bankruptcy and is bound to become one of the biggest Chapter 11 filings in corporate history. 

Read the full article here:

Why No Outrage Over Apple's Big Bond Deal?

If you borrow the money to buy back your stock and to pay dividends and bonuses it is tax deductible.  If  you sell product and make profits and then buy back stock and pay dividends, it is taxable.  Which would you do?

From Bloomberg:

 The interest payments on the bonds will be tax-deductible. All of
this works out nicely for Apple shareholders. Ordinary Americans can
only dream of being able to enjoy such wondrous tax efficiency.

As Floyd Norris of the New York Times wrote in a column
about a year ago: "Isn't that nice of the government? Borrow money to
avoid paying taxes, and reduce your tax bill even further." He also
posed this question: "Could this become the incident that brings on
public outrage over our inequitable corporate tax system?"Considering that Apple is about to do another $17 billion bond deal of this sort, it would seem we have an answer: No.


Why No Outrage Over Apple's Big Bond Deal? - Bloomberg View

Attacks on the free press in Asia

Bloomberg has a nice piece on freedom of the press in Asia (see here)It outlines problems in one country after another. 

Hanif has consistently decried a culture of impunity that is enabled by
the media’s apathy, if not complicity. He has also warned how these
entwined evils steadily creep in from the atrocity-rich borderlands to
the uncaring heartland. “Even in the darkest of times,” Hannah Arendt
once wrote, “we have the right to expect some illumination.” Yet
journalistic institutions, pressured by political, military and
commercial interests, increasingly seem too frail to oblige. The
responsibility falls, frequently and unfairly, on such individual
dissenters as Hanif, whose courage and integrity make them all the more
vulnerable in these dark times.

I would argue that we have much the same process going on in the west.  It is not as bloody or violent.  And the internet makes it more difficult to suppress information.  But the illumination is so often tainted with ideological spin (right, left, middle) that we often want to discount everything.  

This is the beginning of a recovery....surely

The Wall Street Journal has a piece on the Eurozone today where central bank officials promise to do whatever it takes to beat deflation.  The plan appears to be for more QE.  Here is a chart that summarizes their problem:


Banks aren't loaning money out.  But no worries:

After all, the measure works by encouraging
businesses and households to borrow and spend. But in the euro zone,
where 70% of corporate finance is provided by banks, bond purchases may
make little difference to the availability of credit because many banks
are still trying to shrink their balance sheets.
Private-sector credit supply continues to contract in the euro zone despite the sharp fall in bond yields this year.
if the banking system is in poor shape, why are policy makers
increasingly optimistic about the recovery? Part of the answer is that
too much focus is being placed on credit growth.
in five recoveries is "creditless" according to a 2011 International
Monetary Fund working paper. Credit growth remained very subdued for
several years during the recovery from Sweden's financial crisis in the
early 1990s, according to J.P. Morgan research. U.K. bank lending is
only now starting to pick up, more than a year after a strong recovery

 I am a bit skeptical.  A normal recession does not create the kind of havoc that the Great Recession has.  I'm not sure that income and savings are sufficient to jump start the economy.  And yet, it is a business cycle afterall.  At some point, things have to improve.

ECB Chief Draghi Banks on New Whatever It Takes -

Monday, April 28, 2014

How Bank of America botched its dividend and capital plan

This is an article to further understand how Bank of America got into the situation that it is now.

Is there a tech bubble?

I think Utsav asked in class if there is a tech bubble. Here is a video arguing against it. The video is almost 7 minutes, you do not have to watch it all.

Do you agree with the two experts? Are they arguments well supported?


Bank of America Suspends Buyback and Dividend Increase

This is good article for our next class discussion.

US regulator sues 16 banks for alleged Libor rigging

Here is an interesting article on some banks that are being sued for malpractice. This article voices, to some extent, some of the themes that Admati and Hellwig discuss in Chapter 13 of The Bankers' New Clothes.

Mergers, research, and the long run

This is a great little article about choice.  Go to the link and read it.  The punchline is given below:

 One future is for companies to intensify research in areas of need such
as oncology, exchanging assets in order to concentrate on what they do
best. The other is to succumb to cost-stripping backed by hedge funds
for whom five years is a long time. It is a moral choice.

The future of pharma lies in research, not cuts -

Sunday, April 27, 2014

Medicaid Expansion

Pennsylvania Awaits Ruling on Medicaid Expansion

“The request comes in the form of a waiver that the Republican governor has requested as part of his bid to receive additional federal funds for Medicaid, the state-federal program for the poor and disabled.
If approved, Pennsylvania would be the first state to include the work requirement for Medicaid. According to federal regulations, a decision by the U.S. Centers for Medicare and Medicaid Services could come as early as Monday, but Corbett's office says that won't happen.
Points of debate in Corbett's 124-page plan, dubbed Healthy PA, include questions over premium rates and plans to waive both retroactive eligibility and Medicaid's appeals process, which advocates for the poor contend would violate the law.
The Affordable Care Act expands Medicaid expansion to all adults below 138 percent of the federal poverty level, or an additional 454,000 people in Pennsylvania, according to the Kaiser Family Foundation.
Corbett's plan seeks to build on modifications, or "waivers," President Barack Obama's administration has granted in states such as Arkansas and Iowa that allow use of federal Medicaid money to purchase private plans.”

According to the article, the whole premise of this extension is to help individuals break a cycle of poverty, do you agree with that statement? what do you think about the possible extension of Medicaid in Pennsylvania?
Full article at:

Saturday, April 26, 2014

How to tame skyrocketing CEO pay - The Term Sheet: Fortune's deals blogTerm Sheet

A little history on how CEO pay got so large:

How to tame skyrocketing CEO pay - The Term Sheet: Fortune's deals blogTerm Sheet

And then...sometimes we innovate in spite of ourselves......

A battle is looming over renewable energy, and fossil fuel interests are losing - The Washington Post

Monopoly kills efficiency and innovation yet again.....

Yesterday, the Wall Street Journal
reported that the FCC is about to release proposed regulations that
would allow broadband providers to charge additional fees to content
providers (like Netflix) in exchange for access to a faster tier of
service, so long as those fees are “commercially reasonable.”... Jon Brodkin of Ars Technica
has a fairly detailed yet readable explanation of why this is bad for
the Internet—meaning bad for the choices available to ordinary consumers
and bad for the pace of innovation in new types of content and
services. Basically it’s a license to the cable providers to exploit a
new revenue source, with no commitment to use those revenues to actually
upgrade service. (With an effective monopoly in many metropolitan areas
and speeds already faster than satellite, the local cable provider has
no market pressure to upgrade service, at least not until fiber becomes
more widespread.) The need to pay access fees will make it harder for
new entrants on the content and services side; in the long run, these
fees could actually be good for Netflix, since it won’t have to worry as
much about competition. The ultimate result will be to lock in the
current set of incumbents that control the Internet, ushering in the era
of big, fat, incompetent monopolies.

How did this happen?  The FCC is run by a former industry lobbyist; the big lobby firms are run by fromer FCC regulators and so forth. 

I’m Shocked, Shocked! | The Baseline Scenario

Friday, April 25, 2014

Russia's credit rating downgraded

In class we talked about how Greece, for instance, affected the economic situation of the United States. What is your opinion about Russia’s situation? Do you think it will impact the US? In what way? to what extend? Was the move from the S&P a political motivated decision? 
Here is part of the article: 
“S&P downgraded Russia's rating to 'BBB-' from ‘BBB'.
Also on Friday, Russia's central bank raised its key interest rate from 7% to 7.5% as it sought to defend the value of the rouble.
Announcing the downgrade, S&P said: "In our view, the tense geopolitical situation between Russia and Ukraine could see additional significant outflows of both foreign and domestic capital from the Russian economy.
Investors have been pulling money out of Russia since last year when the country's economy ran into trouble, but this process has intensified in recent weeks amid concerns over Ukraine.
In the first three months of this year, foreign investors have withdrawn $63.7bn (£37bn) from Russia, and economic growth has slowed significantly - it is expected to grow at no more than 0.5% during 2014.
Russia's central bank said its rate rise was because of a higher inflation risk and the weakness of the rouble. The Russian currency has lost nearly 8% against the dollar this year.
The bank said its move would enable it to lower inflation to 6% by the end of 2014 and added it did not plan on cutting rates in coming months.
Russia's Economy Minister Alexei Ulyukayev dismissed S&P's move, saying that "partially, it is kind of a politically motivated decision”.

Full article at:

More on borrowing and budget deficit

Here is an article on the decrease of the EU budget deficit, and the impacts on recovery from the financial crisis.
Any comments, thoughts or questions

Rising Inequality

Here is a link to a 5 minute video of Thomas Piketty's interview on his book 'Capital in the 21st Century.'

He states that income inequality is inherently not bad. [This reminded me of our discussion about the federal debt and whether we should be concerned about it.] His main argument is that governments need to intervene in order to reduce/eliminate the wideninng income inequality. He also talks about how politics is involved in the widening inequality.

What can governments do to ensure that the policies that will be developed uplifts the majority of the population out of poverty, especially when the rich have more influence in policy making and thus more likely to advocate for policies that serve their self-interest?

Gimme cash now.

Here is a wonderful piece on the pitfalls of shareholder activism.  In a new world vision, corporations exist to funnel cash to shareholders, not to make things.  I doubt this movement toward the financialization of everything will last beyond the next economic crash.

Disgorge the Cash – The New Inquiry

Politics as usual

The best way to run a campaign is to go negative.  And the best way to do that is to highlight something said or done in the past:

Miller knows he's up against a well-oiled machine on the pro-Hillary side,
comprised of Ready for Hillary, Priorities USA and Correct The Record,
an offshoot of American Bridge, the opposition research outfit founded
by Clinton ally David Brock. Miller speaks almost reverentially of the
Democratic opposition output that thoroughly outperformed the
Republicans in 2012.

To that end, America Rising has been partially modeled after Brock's
American Bridge, which might be best known for uncovering then-Senate
candidate Todd Akin's comments on "legitimate rape" in 2012. A need was
identified in the Republican post-2012 autopsy, which concluded that
the party didn't have opposition research resources to keep up with the
Democrats. America Rising was founded by Matt Rhoades, a former campaign
manager for Mitt Romney. He was joined by Miller and Joe Pounder, who
were both working at the Republican National Committee.

Now the original and its knockoff are both angling to set the early
scene for 2016. American Bridge is tracking each of the potential GOP
candidates, while America Rising is building a dossier on the Clintons.
Correct The Record, in turn, is monitoring the attacks that Miller and
company launch against Hillary Clinton.  "That's a campaign that they're running right now. They're trying to
avoid the accountability that comes with being a candidate," Miller
said. "We're certainly not scared of the Clinton machine. but what we
are conscious of is the need to build something that can counter it."

That effort includes their staff member on the ground in Arkansas as
well as employees in their headquarters in Arlington, Va. They have a
video team that pours through old Clinton footage, a research team on
the analog paper trail and one person dedicated to watching her
appearances on the speaking circuit. And when the midterms are over in
November, more of America Rising's resources will likely go toward the
anti-Hillary campaign.

Meet The Oppo Researchers Who Want To Derail The Clinton 2016 Train

Radical thinking by one of the great financial writers of today

Martin Wolf of the Financial Times argues that private banks should not be the entities entrusted with money creation:

Printing counterfeit banknotes is
illegal, but creating private money is not. The interdependence between
the state and the businesses that can do this is the source of much of
the instability of our economies. It could – and should – be terminated....Banking is therefore not a normal market activity, because it provides
two linked public goods: money and the payments network. On one side of
banks’ balance sheets lie risky assets; on the other lie liabilities the
public thinks safe. This is why central banks act as lenders of last
resort and governments provide deposit insurance and equity injections.
It is also why banking is heavily regulated. Yet credit cycles are still
hugely destabilising.

He argues that banks should be highly regulated and references The Banker's New Clothes.  Or that fractional reserve banking should be eliminated:  banks should hold 100% reserves against deposits.

I am just amazed to see Wolf make these arguments.

Strip private banks of their power to create money -

Thursday, April 24, 2014

Legal Memo Defends Ackman’s Actions in Allergan Bid

According to this article: 

In the wake of this week’s unusual hostile bid for Allergan, one of the most pressing questions has been whether William A. Ackman, the activist investor who runs Pershing Square Capital Management, engaged in insider trading.
By accumulating a large stake in Allergan while knowing a bid was imminent, Mr. Ackman clearly had an advantage over other investors. And when Pershing Square and Valeant Pharmaceuticals announced its plans, the value of Mr. Ackman’s $4 billion stake quickly rose by about $1 billion. But because Mr. Ackman is part of the buying group, it appears he was well within his legal rights. The fact that the tactic was legal, however, does not mean it is not drawing scrutiny.

Another issue receiving scrutiny in the wake of the bid for Allergan is whether Pershing Square and Valeant should have been forced to disclose the stake they were amassing sooner.
The S.E.C.’s so-called Schedule 13D window stipulates that investors who accumulate 5 percent of a company’s stock must publicly report their position within 10 days of crossing that threshold, but allows the stake to grow in those 10 days.
“For many years numerous market participants have urged Congress to shorten the window, noting that almost every other developed market has a much shorter period to make filings disclosing large positions,” the Cleary lawyers wrote. The Dodd-Frank regulation in 2010 authorized the S.E.C. to close or shorten the 10-day window, but it has not yet acted.

Finally, there is the question of whether Valeant and Pershing Square should have filed antitrust pre-notification under the Hart-Scott-Rodino Act, notifying regulators of a potential merger of rivals. But because Pershing Square mostly bought options, it did not have to report holding underlying shares. Therefore, the Cleary lawyers wrote, “it appears that no filing had been required.”
Though Pershing Square and Valeant appear to have stayed well within their legal rights in accumulating their 9.7 percent stake in Allergan, “this week’s high-profile events regarding Allergan may put pressure on the S.E.C. (and potentially Congress) to address a number of important policy questions,” the memo stated.”

Do you think this is a case of “illegitimate imbalance of information beyond the classic insider trading?” Any opinions about this topic?

What is happening here???

Central banks are keeping interest rates really low.  So investors go into riskier investments in the search for yield.  Consider Europe:

 Europe is seeing a boom in so-called CoCo, or contingent convertible,
bonds issued by banks to shore up capital. Investors in these securities
are wiped out or forced to convert the bonds to stock, if the issuer's
capital falls under a certain threshold, or if regulators consider the
bank ripe for a bailout...The only way to hedge the risk is to buy put options on the issuing
banks' stock or short it, creating the potential for a "death spiral"
should things go wrong. Credit default swaps on CoCos will only become
available in September.Another booming asset class is catastrophe bonds, sold by insurance companies to pass on all sorts of natural disaster risks. These catastrophe bonds bet against damage from named storms in the US....Low interest rates are great for European governments happily increasing their already oppressive
debt burdens. They are also nice for creating the impression that
European economies are growing – at rates scarcely discernible from
zero. Yet glorified bets on U.S. weather patterns and the capital levels
of European banks are inherently shaky investments. And blockbuster
junk bond issues such as Numericable's are downright scary...[Numericable is a European company]. 

Hunt for Exotic Yields Is Dangerous - Bloomberg View

The problem is that the artificially low nominal interest rates mask the amount of risk involved in all of these activities.  What happened to the idea that lower interest rates create incentives for more real investment?  

Wednesday, April 23, 2014

More about pharmaceuticals!

This is for those who did not know much about the topic of pharmaceutical acquisitions shared in class yesterday. 

According to the article, pharmaceutical companies strategy for growth revolves around acquisitions because "productivity for them, while improving, is not improving fast enough."

"Some drug makers regard deal-making as a normal course of business. Allergan’s pursuer is Valeant, a Canadian pharmaceutical company whose growth strategy revolves around acquisitions. On Tuesday, it unveiled its unsolicited takeover bid for Allergan, hoping to create a powerhouse maker of eye-care and cosmetic treatments like Botox.
Based outside Montreal, Valeant has sought to become a major specialty drug maker over the last six years by buying up businesses that are hard to replicate. Its biggest deal to date was last year’stakeover of Bausch & Lomb, the eye-care specialist, for $8.7 billion. Still, it has had its eye on bigger game, first broaching the idea of a merger with Allergan a year and a half ago.
But Valeant’s current approach has raised eyebrows, since it has teamed up with William A. Ackman, an outspoken hedge fund mogul known to fight loudly for change at corporations. The two formed one of the most unusual corporate pairings in recent memory: After reaching a handshake agreement in February to back a takeover bid by Valeant, Mr. Ackman began quietly accumulating shares in Allergan, carefully avoiding tripping rules that would require him to disclose his holdings. On Monday evening, he acquired enough shares to give him control of 9.7 percent of Allergan, giving him a powerful perch from which to demand a merger with his partner.
On Tuesday, Valeant took the cover off its bid, offering cash and stock that was worth about $152.89 a share.
During a nearly four-hour presentation for investors, Mr. Ackman and Valeant executives talked up the benefits of the deal. Combined, Allergan and Valeant would have annual sales of more than $15 billion, while enjoying $2.7 billion in cost savings. And the merged drug maker would benefit greatly from Valeant’s low tax rate.
Both Mr. Ackman and J. Michael Pearson, Valeant’s chief executive, estimated that a combined company would be valued at more than $200 a share.
During the presentation, Mr. Ackman excitedly pointed to what the combined company could do: more mergers.
“We’re looking beyond this transaction,” the hedge fund manager said."

Here is the link to the full article:

What is your opinion about this topic? Do you think this acquisition tactic will bring some problems in the future? if yes, what kind of consequences?

Delinquent IRS employees paid bonuses by the agency

This article made me think of the discussions we had about compensation pay.
What criteria should be used to determine bonuses?

Is capitalism driving itself out of business?

 I found this interesting article on technological innovation, and the possible long run effect on capitalism. Here is an extract from the article:

"In his latest book, The Zero Marginal Cost SocietyRifkin argues that the private market's drive for efficiency and productivity has brought us ever closer to a world in which the marginal cost to produce just about everything will inch closer and closer to zero.

Picture factories run entirely by robots, powered by renewable energy sources like wind and the sun, creating products delivered by driverless vehicles, also run on renewable energy. Maybe these products won't even need to make any kind of journey at all. Perhaps they can simply be produced at your home or a few blocks away with the help of a 3-D printer.
Speaking of your home, in Rifkin's new world, your next one may very well be built by locally generated, 3-D-printed materials, in record time, removing the considerable expense of transporting construction goods. Rifkin cites an MIT lab that is working to develop a house frame in a single day "with virtually no human labor." An equivalent frame, Rifkin says, "would take an entire construction crew a month to put up."

That home will be powered by -- you guessed it -- increasingly cheap renewable energy, and it will be stocked with more sensors than you can imagine, all feeding data into a smart grid, so your house knows how much energy you need and when, and what needs to be repaired.

This is a technological utopia brought to you by the convergence of what Rifkin calls the Communications Internet (how information is shared), the Energy Internet (how energy needs are shared and energy itself is distributed), and the Logistics Internet (how products are built and delivered), all equaling the so-called Internet of Things.

Granted, the initial cost of building such a system will be substantial. But once it's up and running, Rifkin argues, the benefits will fundamentally reshape our economic order. "The Internet of Things is already boosting productivity to the point where the marginal cost of producing many goods and services is nearly zero, making them practically free," Rifkin writes. "The result is corporate profits are beginning to dry up, property rights are weakening, and an economy based on scarcity is slowly giving way to an economy of abundance."

Link to the article:

Do you agree with his argument? What effects do you think this will have on employment? Any thoughts, comments or questions?

Whistleblowers beware

Employees of U.S. intelligence agencies have been barred
from discussing any intelligence-related matter _even if it isn’t
classified _ with journalists without authorization, according to a new
directive by Director of National Intelligence James Clapper.  Intelligence
agency employees who violate the policy could suffer career-ending
losses of their security clearances or outright termination, and those
who disclose classified information might face criminal prosecution,
according to the directive, which Clapper signed March 20 but was made
public only Monday by Steven Aftergood, who runs the Federation of
American Scientists’ Project on Government Secrecy.  Under the
order, only the director or deputy head of an intelligence agency,
public affairs officials and those authorized by public affairs
officials may have contact with journalists on intelligence-related

The order doesn’t distinguish between classified and
unclassified matters. It covers a range of intelligence-related
information, including, it says, “intelligence sources, methods,
activities and judgments....

“IC employees . . . must obtain authorization for contacts with the
media” when it comes to intelligence-related matters, and they “must
also report . . . unplanned or unintentional contact with the media on
covered matters,” the directive says.

Aftergood said
Clapper’s order could end up hurting the credibility of the U.S.
intelligence community by limiting the discussion of events to what’s
approved by his office. Alternate voices that might call attention to
inaccurate or incomplete statements will be smothered or dissuaded from
speaking out, Aftergood said.

“Whether because of deception or
error or whatever it might be, the authorized official view is not
always the right one and it is usually incomplete,” Aftergood said.

U.S. intelligence community already has a substantial record of issuing
inaccurate or abbreviated information to the public, from bogus and
exaggerated information on whether Iraq had weapons of mass destruction
to Clapper’s misleading testimony to Congress on the collection of
Americans’ private communications data.

more here:

more here:

I think, by the definition of "media" in the directive, it is conceivable that someone could lose his/her job by speaking to any of us since this is an open blog.

U.S. intelligence chief bars unauthorized contacts with reporters on all intel-related matters | National | McClatchy DC

Housing and the American Dream

Two quick articles here.  The first highlights a recent Gallup poll that found that Americans still believe housing is the best long term investment.  Is it the American Dream or is it, as Robert Shiller says, a form of irrationality?  (see here for story).  

Then there is this piece from the LA Times about the number of middle aged people in California who lost their jobs and homes and had to move back in with their parents:

Driven by economic necessity — Rohr has been chronically unemployed
and her husband lost his job last year — she moved her family back home
with her 77-year-old mother.

At a time when the still sluggish economy has sent a flood of jobless
young adults back home, older people are quietly moving in with their
parents at twice the rate of their younger counterparts.

For seven years through 2012, the number of Californians aged 50 to
64 who live in their parents' homes swelled 67.6% to about 194,000,
according to the UCLA Center for Health Policy Research and the Insight
Center for Community Economic Development.

Go here for link .

Good summary of Tuesday's discussion points

Simon Johnson, an MIT professor, has written prolifically  about the crisis and its aftermath He had a blog piece today that highlights many of the points discussed last night:  He points out that almost no one says that the banks are the "right" size.  But bank capture of regulators and politicians has made it difficult to resize them and do away with some of the implicit and explicit subsidies.  It is a short clearly written post.  The link is below.

big financial firms with small amounts of equity capital and a lot of
debt may be in the interest of their managers, but it is definitely not
in the interest of the rest of society. Moreover, providing large
implicit subsidies to firms that are too big to fail should not be an
attractive policy, because it encourages such firms to take on excessive
risk (and to become even bigger).
CommentsView/Create comment on this paragraphAnd
yet debate about these issues has remained wide open. The question is
no longer so much one of beliefs. Now it is simply about money –
particularly campaign contributions, but also the revolving door between
Washington and Wall Street, as well as the vast pro-megabank interests
that pour millions of dollars into think tanks and other, more shadowy


Simon Johnson points to European governments as the main obstacle to financial re-regulation. - Project Syndicate

Tuesday, April 22, 2014

Piketty and Art

Here is yet another article discussing Piketty's new book that we'll be reading. It extends upon his work and asks questions about how his findings apply to the art industry.

Increasingly, art has become a popular investment among the rich. Historically, this has been the case too, as the exceptionally wealthy have plenty of cash to buy what they want.  

"Last year, worldwide auction sales of postwar and contemporary art climbed to a historic peak of 4.9 billion euros, or $6.8 billion, a massive increase over the €1.42 billion in auction sales in 2009, according to the 2014 Art Market Report published by the European Fine Art Foundation in March."

"So was the art market then, and is it now, a potent signifier of income inequality? Attempts to question how the eight- and nine-figure prices now being paid by billionaires for rectangles of painted canvas might relate to a wider economic and social context tend to be dismissed by many working in the art world as the “politics of envy.”

"As Mr. Piketty points out in his conclusion to “Capital in the Twenty-First Century,” those who have a lot of money “never fail to defend their interests.” Those interests are also staunchly defended by those hoping to make money." 

Do you think art is worth as much as it is selling for now? Or do you think it is just being used as a tool that furthers the interests of the wealthy and magnifies income inequality? 

Hopefully these articles about Capital are getting you excited about (or less apprehensive) the large book that awaits us at the end of class.

An end to subprime auto loans?

The article gets off to a great start: "U.S. subprime auto lenders are 'exercising more caution,' especially when it comes to higher-risk customers."  However, the mood changes throughout the article, ending with: "Nonetheless, there are other indications 'that lenders are still willing to take on increasing risk...So we don't anticipate a major slowdown in subprime lending.'"

I don't know what to make of this.  Is it that lenders recognize certain individuals are very high risk and will start to "cautiously" lend to them?  This is starting to seem more and more familiar.  Is anyone optimistic that they will start to exercise real caution?

Monday, April 21, 2014

Income Inequality and Single-Parent Families

This article tries to shed light on an often ignored variable that contributes to income inequality - single parent families. Increases in the divorce rate and births outside of wedlock has resulted in many more single-parent families, and this has very negative effects overall.  For reasons discussed in this article, this variable has largely been ignored in the income inequality discussion. I wonder if it will be addressed in Capital. What do you make of this issue? How would you circumvent some of the problems the authors mention?

Some excerpts:

"The two-parent family has declined rapidly in recent decades. In 1960, more than 76% of African-Americans and nearly 97% of whites were born to married couples. Today the percentage is 30% for blacks and 70% for whites. The out-of-wedlock birthrate for Hispanics surpassed 50% in 2006. This trend, coupled with high divorce rates, means that roughly 25% of American children now live in single-parent homes, twice the percentage in Europe (12%). Roughly a third of American children live apart from their fathers." 

"Abuse, behavioral problems and psychological issues of all kinds, such as developmental behavior problems or concentration issues, are less common for children of married couples than for cohabiting or single parents, according to a 2003 Centers for Disease Control study of children's health. The causal pathways are about as clear as those from smoking to cancer." 

"More than 20% of children in single-parent families live in poverty long-term, compared with 2% of those raised in two-parent families, according to education-policy analyst Mitch Pearlstein's 2011 book "From Family Collapse to America's Decline." The poverty rate would be 25% lower if today's family structure resembled that of 1970, according to the 2009 report "Creating an Opportunity Society" from Brookings Institution analysts Ron Haskins and Isabel Sawhill. A 2006 article in the journal Demography by Penn State sociologist Molly Martin estimates that 41% of the economic inequality created between 1976-2000 was the result of changed family structure" 

The rise of temporary employment

For many Americans, 'temp' work becomes permanent way of life

More and more businesses are starting to hire more temporary employees.  The article makes the claim that this is more than a temporary cycle of a recovering economy, it is becoming the new way to run a business.  Traditionally, according to this article, as the economy has become more stable, permanent hiring replaces temporary hiring -- however this article believes is not a trend but a permanent change.  Do you agree with this?  Or do you think businesses will move back toward hiring more permanent workers in the coming months and years?

On another note, the article points out the advantages to businesses for using temporary employees, but what are the disadvantages?  Additionally, what, if any, are the advantages to the workforce when businesses use temporary employment (the disadvantages are made quite clear)?

Sunday, April 20, 2014

Google and Conspiracy Theories

I've sometimes wondered about how expansive Google is becoming and the enormous amount of information they have about people/companies/everything essentially. They've been displaying interest in new industries as well (e.g. automobile, healthcare).

Does the size and influence of Google concern you? Do you think the government may have to step in at some point if Google's growth continues? Some of the things that the author reveals about Google in this article are surprising in a bad way to me.


Easter Vacation to Boost UK Economy

A fun little article breaking down the boost to the UK economy Easter may provide.  Apparently American parents aren't as fun as those from the UK (at least I couldn't find any data to back them up). Economics is fun!

Saturday, April 19, 2014

A reason to get rid of paper money?

Earlier this quarter, a post was made about currencies and the potential for currencies such as bit coin to take over one day.

This post in the WSJ, Why You Shouldn't Put Your Money Where Your Mouth Is, talks about paper money as a mean of spreading illness and disease.

What are your thoughts about the article? Could this speed up the process of 'getting rid of' paper money in the world?

Here is another link to the post

Preview to Piketty

The last book on the syllabus, Capital in the 21st Century, has been making headlines in various news sources that I've read. This NYT article is a bit long, but it is a nice background to the book. I've pulled out some quotes.

Have you guys been coming across references to his work as well?  What points that Piketty bring up in this article do you agree/disagree with or are interested to read more about when we get to the book?

“This sort of vaccinated me for life against lazy, anticapitalist rhetoric, because when you see these empty shops, you see these people queuing for nothing in the street,” he said, “it became clear to me that we need private property and market institutions, not just for economic efficiency but for personal freedom.” - Piketty on a visit to Romania in 1990

"His book punctures earlier assumptions about the benevolence of advanced capitalism and forecasts sharply increasing inequality of wealth in industrialized countries, with deep and deleterious impact on democratic values of justice and fairness."

"...By debunking the idea that “wealth raises all boats,” Mr. Piketty has thrown down a challenge to democratic governments to deal with an increasing gap between the rich and the poor — the very theme of inequality that recently moved both Pope Francis and President Obama to warn of its consequences."

"As for the Gulf War, it showed him that “governments can do a lot in terms of redistribution of wealth when they want.” The rapid intervention to force Saddam Hussein to unhand Kuwait and its oil was a remarkable show of concerted political will, Mr. Piketty said. “If we are able to send one million troops to Kuwait in a few months to return the oil, presumably we can do something about tax havens.”

"American economists too often narrow the questions they examine to those they can answer, “but sometimes the questions are not that interesting,” he said. “Trying to write a real book that could speak to everyone meant I could not choose my questions. I had to take the important issues in a frontal manner — I could not escape.”

"The rate of growth of income from capital is several times larger than the rate of economic growth, meaning a comparatively shrinking share going to income earned from wages, which rarely increase faster than overall economic activity. Inequality surges when population and the economy grow slowly."

"Inequality by itself is acceptable, he says, to the extent it spurs individual initiative and wealth-generation that, with the aid of progressive taxation and other measures, helps makes everyone in society better off. “I have no problem with inequality as long as it is in the common interest,” he said."

"The last part of the book presents Mr. Piketty’s policy ideas. He favors a progressive global tax on real wealth (minus debt), with the proceeds not handed to inefficient governments but redistributed to those with less capital. “We just want a way to share the tax burden that is fair and practical,” he said."

Here’s what economic recovery could look like for your family

Here’s what economic recovery could look like for your family

Here's a short article and a video that talks about what a recovered economy would actually look like. What I found particularly interesting, in lieu of our minimum wage increase discussion, is the segment where they talk about the free market driving wages up without any government intervention (starts with about 4 min 15 sec left in the video).  Do you think these wages increases will happen across all industries without any government intervention?  Anything else in the video or article you strongly agree or disagree with?

Get Rich, Live Longer: The Ultimate Consequence of Income Inequality - Derek Thompson - The Atlantic

A nice piece on health outcomes of increasing inequality.  One chart really stands out:

The data is from the University of Michigan’s Health and Retirement Study,
a survey that tracks the health and work-life of 26,000 Americans as
they age and retire. The data is especially valuable as it tracks the
same individuals every two years in what’s known as a longitudinal
study, to see how their lives unfold.  (see here for link)

Now think about this in the context of social security reform:

 When somebody in Washington proposes raising the
retirement age for Social Security or Medicare, he typically says
something like: "We can afford it, because we are living longer." Yes, We can afford it, when the We
in that sentence applies to an audience of white rich old men and women
who really are seeing their lifespans grow by leaps and bounds. But We
doesn't apply to the millions of poor women whose lifespans are
actually declining. Raising the Social Security retirement age
disproportionately reduces lifetime benefits for the very people Social
Security was invented to protect. 

Friday, April 18, 2014

Calculated Risk: By Request: Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama

Job growth and presidents: who created how many jobs and of what type: public or private sector.  Its a short piece and may surprise you.

Friday, April 18, 2014

By Request: Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama

by Bill McBride on 4/18/2014 08:21:00 PM

Following some comments from Senator Rand Paul, I've been requested to post this again with a couple of tables added.

Senator Paul said last week: "When is the last time in our country we created millions of jobs? It was under Ronald Reagan ..."

Senator Paul said last week: "When is the last time in our country we created millions of jobs? It was under Ronald Reagan ..."

That is completely wrong.
Senator Paul said last week: "When is the last time in our country we created millions of jobs? It was under Ronald Reagan ..."

That is completely wrong.

Calculated Risk: By Request: Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama

Renting vs. Buying a Home

This is an interesting interactive map showing whether it is better to rent or buy homes. The data compares average monthly rent to average monthly mortgages. Does the data surprise you? Or is it what you would expect? It was not too surprising to me.

To big to be held liable

Just how far does the bailout go?  This article describes how GM may dodge liability for defective cars produced before the company went bankrupt.  GM is trying to claim that the "New GM" is a separate legal entity from "Old GM" and as such is not liable to compensate customers (or at least the compensation should be limited) for defective ignition switches in older models.

What are your thoughts on this claim?  Though it will be looked at as a legal issue, the case has strong economic implications.  Would a ruling in favor of "New GM" encourage large corporations to continue to operate under the assumption of the too big to fail?  Could GM create a new theory here - too big to be liable?

Privatization and profits: consider prisons


Privatization of the US Prison System | Global Research

Thursday, April 17, 2014

Full Emplyment within Sight?

Janet Yellen, chair of the Federal Reserve, recently gave a speech in which she expressed her belief that a return to full employment is "quite plausible" within the next two years. This article provides a brief discription of the speech (and provides a link to a more detailed write up).  Do you agree with Yellen? How likely to you think a return to full employment is within the next two years?

Infographic about the Federal Reserve

This is a pretty nice infographic. Despite all that we've talked about, a little review on the Fed's organization and history is helpful.

Has anybody been paying attention to Yellen's recent comments? This second article is a bit longer, but it summarizes what she said on Monday -


A nice straight forward piece on the pros and cons of high frequency trading

 Joesph Stiglitz is quoted a lot in this piece that is well worth reading.  A snippet:

Better “nanosecond” price discovery comes at the expense of a
market in which prices reflect less well the underlying fundamentals.
As a result, resources will not be allocated as efficiently as they
otherwise would be.Because one reason that market
efficiency matters is that prices are a signal to companies about where
they should invest. Facebook's recent purchases,
for instance, tell entrepreneurs that developing new messaging apps is
an order of magnitude more valuable for society than is developing
virtual reality.2
And high-frequency trading does not do much for those signals, because,
you know, the usual: High-frequency trading happens faster than you can
blink, and the people deciding what real investments to make are too
busy blinking to pay attention to it.

The big argument is that financial gains by high frequency traders result in losses to investors in the real economy.  

How Much Trading Should There Be? - Bloomberg View

This one is for Mark

Junk Food:

India is striving to understand the health impacts of junk food on children.  A working group was set up to do some research and make recommendations for regulating junk food availability and labeling.  Here are some quotes:


“There is nothing called junk food. The problem with obesity lies
with children who do not exercise enough. What is needed is for them to
run and jump, and to do this they need to consume high-calorie food. So,
food high in salt, sugar and fat is good for them.” This is what was
argued vehemently and rudely by representatives of the food industry in
the committee, set up under directions from the Delhi High Court to
frame guidelines for junk food in the country.

On the face of it there was no one from the junk food industry in the
committee. In the early meetings, we only knew that there were members
of two associations who were representing the food industry in the
committee. But as discussions got under way, it became clear that the
big junk food industry was present in the meeting. We learnt that the
member representing the National Restaurant Association of India was a
top official from Coca-Cola—the world’s most powerful beverage company
that is at the centre of the junk food debate globally. The other
grouping, All India Food Processors Association, was represented by
Swiss food giant Nestle, which has commercial interest in instant
noodles and other junk food.....

The question before the working group was not whether action was
needed, but how to address these concerns. The first step was to build
the criteria to define and identify junk food—how much of sugar or fat
or salt in food is unhealthy. Based on this, a list was prepared of the
most common junk food that would need to be regulated. It included chips
and other fried packaged food; carbonated beverages; instant noodles;
and confectionery.

The working group was unanimous in its position: children are not the
best judge of their food and are aggressively targeted by ads and
seduced by celebrities. Moreover, schools are the right place to learn
right values about nutrition.

The working groups ended up with two position statements.  The one endorsed by the industry representatives said, in part,

Their position was that instead of
banning such food [in schools], children should be asked to “eat responsibly”.

How the Junk Food Industry Preys on the Young in Emerging Markets | naked capitalism

Wednesday, April 16, 2014

A little more on the federal budget......

 Where Your 2013 Taxes Went

2015 Revenue

National Priorities Project

Slowdown in Health-Care Spending to Continue?

Blinder made it pretty clear how important addressing rising healthcare costs will be in the future. We also talked about it yesterday when trying to come up with ways to balance the deficit.

This article in the WSJ has a graph that shows how spending on healthcare has decreased over the past few years and then opens up a debate. Some economists argue this fall in spending has been due to the recession while others argue that it is due to improvements in efficiency and practices. Where do you stand on the debate?


Blinder stresses the importance of timing with regard to the Fed's monetary policy.  Though he briefly mentions it, Blinder states that the Fed must be careful of deflation rates when they begin to tighten up their policies (pg. 375).

The first article suggests that deflation may be a problem in the coming months and the second briefly describes the dangers of deflation.  Is the U.S. economy in any real danger of facing significant deflation problems or is Minneapolis Federal Reserve President Narayana Kocherlakota speaking hyperbolically when he says "I'm more worried about inflation being low"?

Fed Official More Worried About Deflation Than Inflation

Cutting pesion in Detroit

As far as I understand, pension and social security come from different sources of funding. Still, I find certain similarities between cutting pension in Detroit to pay off debt and increasing retirement age to help reduce the budget deficit (as suggested by our class yesterday).
Do you think citizens of Detroit, 20,000 retirees and 10,000 employees, will vote for the deal?

Major Study Finds That The US Is An Oligarchy - Business Insider

 An empirical study of American policy making has gotten a lot of press recently.  They looked at "key variables for 1779 policy issues.  Their statistical analysis showed that economic elites and organized groups representing business interests "have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence."  (see here for paper)

As reported in Business Insider, "

Researchers concluded that US government policies rarely align with
the the preferences of the majority of Americans, but do favour special
interests and lobbying organizations: "When a majority of citizens
disagrees with economic elites and/or with organized interests, they
generally lose. Moreover, because of the strong status quo bias built
into the US political system, even when fairly large majorities of
Americans favour policy change, they generally do not get it."  The positions of powerful interest groups are "not substantially
correlated with the preferences of average citizens", but the politics
of average Americans and affluent Americans sometimes does overlap. This
merely a coincidence, the report says, with the the interests of the
average American being served almost exclusively when it also serves
those of the richest 10 per cent.  The theory of "biased pluralism" that the Princeton and Northwestern
researchers believe the US system fits holds that policy outcomes "tend
to tilt towards the wishes of corporations and business and professional

Major Study Finds That The US Is An Oligarchy - Business Insider

Tuesday, April 15, 2014

We Do Not Live in a Post-Scarcity World

I found another blog from the Ludwig von Mises Institute and goes into the key issue of economics: scarcity.

William J. Anderson argues that the market is able to maximize economic efficiency by rewarding goods and services that have the lowest marginal costs:

"It is true that the advent of low marginal costs has forced new ways of retailing, but economic progress always has done that. For example, a generation ago, Wal-Mart was able to seize huge chunks of market share because the company had developed a distribution and retail strategy that made it a much lower-cost producer than were the other retailers, including Sears, J.C. Penny, and K-Mart. That does not mean markets have disappeared or are no longer relevant; likewise, Wal-Mart now finds itself under pressure from other retailers as well as the internet. Markets still prevail, but in different forms."

What is happening in Greece?

Nothing good:

The Grand Greek Paradox of
the day, meaning the impressive rise in the assets of a nation more
bankrupt than ever, is neither that grand nor that much of a paradox.
There is, indeed, a simple reason that international investors are
piling in to buy some of the nation’s paper assets (e.g. the freshly
minted government bonds and shares in some banks), even though the
country is economically kaput and its government is steeped in long-term insolvency more than ever. What’s this simple reason? The short-term decoupling of the value of paper assets from Greece’s real economy.

Take for instance the new bonds, worth
€3 billion, issued last week. This new debt has been added to the
existing stockpile of €320 billion for a shrinking economy with a
nominal GDP, currently, around €180 billion. To service it next year
alone (in 2015), the government must achieve a gargantuan primary
surplus of 12.5% of GDP and use it all to redeem debt (while Greeks are
in the clasps of untold misery and only 10% of the 1.3 million
unemployed receive any benefits). Why would a self-interested investor
buy these new bonds, in view of the unsustainability of the country’s
overall debt? The answer is, of course, that Berlin and Frankfurt have
signalled to investors that there is nothing to worry about.

Greece’s Grand Decoupling, the Nuclear Option and an Alternative Strategy: A comment on Münchau | Yanis Varoufakis

Monday, April 14, 2014

Pay employees to quit

While paying employees to quit may be old news, few and far businesses have practiced this rather adventurous idea. Since we have talked a lot about how to reduce unemployment, I think it may a nice change to talk about how to encourage people to leave a job that is not a good fit for them.
Gallup has shown that companies that have 9.3 "engaged" employees (those who are emotionally connected with their jobs and willing to go above and beyond) for every one "disengaged" employee saw 147 percent higher earnings per share on average in 2011-2012 when compared with their competitors. Meanwhile, employers with just 2.6 happy workers for every unhappy one saw earnings per share that was 2 percent lower than their competitors. Gallup estimates that "active disengagement" costs the United States $450 billion to $550 billion each year.
But that's not the only reason the idea is something more companies should adopt. For one, it has the potential to improve hiring upfront. If managers have to budget for a $5,000 quitting bonus for employees who don't stick around for the long haul, they might be more careful about truly hiring for fit rather than simply for a warm body. That's particularly the case for high-growth companies such as Zappos or Amazon that are experiencing very rapid expansion.

At the same time, it could also save companies both risk and cost later on. Employers could potentially pay more than $2,000 or $5,000 in severance if they decided to lay off those disengaged workers in the future, rather than motivating them to leave of their own accord. They also risk fewer termination-related lawsuits if more of their workers choose to leave on their own.

Do you think this is a wise approach, at least for fast growing companies? What is the flip-side of it?

When Governments Cut Spending

Towards the end of his book, Alan Blinder explores the federal budget deficit so I figured I post a video that answers whether reducing government spending is good for the economy.

Is the professor's opinion biased? Are there examples of spending cuts that led to weaker economic growth in developed economies? 

Monetary policy and rich and poor

From Reuters:

For poor nations, the easy monetary
policies in advanced economies are leading to big swings in capital
flows that could destabilize emerging markets. For rich countries, the hoarding of currency by developing nations is blocking progress toward a more stable global economy.  Those tensions, which have been brewing for years, seemed to be rising as finance
ministers and central bank chiefs from the Group of 20 economies
gathered last week in Washington, as evidenced by harsh words from
Washington and Delhi...

rich and poor say they are acting in their own self interest, and what
makes the conflict so intractable is that both have very rational

Even though the G20
agreed the global economy was on better footing, the tensions suggested
little progress ahead in rebalancing the global economy away from a
state where the rich world borrows massively to buy things from the poor

"This is not a healthy place," Raghuram Rajan, governor of India's central bank, told a panel ahead of the G20 meeting.

At an earlier meeting, Rajan was criticized by Bernanke, former Fed chief, for his position.  At the same meeting:

Charles Evans, president of the Chicago Federal Reserve was also
critical of Rajan's position. "We try to pay attention to the effect
that those economies have on our economy and the effect we have on
theirs, but at some point our mandate, our responsibilities, are for the

Much of the tension could be eliminated if fiscal policy were part of the toolbox.  True or false?

How well do economists predict turning points? |

Blinder says that he and and a few other economists predicted the Great Recession of 2008.  It all depends on what it means to predict.  From a summary of a recent IMF study:

The panel on the right shows the number of cases in which forecasters
predicted a fall in real GDP by September of the preceding year. These
predictions come from Consensus Forecasts, which provides for
each country the real GDP forecasts of a number of prominent economic
analysts and reports the individual forecasts as well as simple
statistics such as the mean (the consensus).

As shown above, none of the 62 recessions in 2008–09 was predicted as
the previous year was drawing to a close. However, once the full
realisation of the magnitude and breadth of the Great Recession became
known, forecasters did predict by September 2009 that eight countries
would be in recession in 2010, which turned out to be the right call in
three of these cases. But the recessions in 2011–12 again came largely
as a surprise to forecasters.

“There will be growth in the spring”: How well do economists predict turning points? | naked capitalism

Financial services, not just for the wealthy!

Financial advising has traditionally been exclusive to wealthy people. However, more and more start-ups today have realized that there's an underserved customer segment that is not rich and want some "hand-holding" in terms of financial planning. This reminds me of Walmart, which slowly occupied retailing in small towns where people did not have easy access to department stores and where there wasn't much competition. Targeting an underserved population may turn into a huge business.

What do you think about this business model? Would it revolutionize financial advising?

Saturday, April 12, 2014

NYT: Executive Pay: Invasion of the Supersalaries

Just as timely for a discussion of pay gap between executives and minimum-wage workers.

This is a short excerpt:
The current system of executive compensation, with its emphasis on performance, can theoretically constrain pay, but in practice it has not stopped companies from paying their top executives more and more. The median compensation of a chief executive in 2013 was $13.9 million, up 9 percent from 2012, according the Equilar 100 C.E.O. Pay Study, conducted for The New York Times. The 100 C.E.O.s in the survey took home a combined $1.5 billion last year, a slight rise from 2012. And the pay-for-performance metrics — particularly the idea of paying executives with stock to align their interests with shareholders — may even have amplified that trend. In some ways, the corporate meritocrat has become a new class of aristocrat.

Economists have long known that high executive pay has contributed to the widening gap between the very rich and everyone else. But the role of executive compensation may be far larger than previously realized. In “Capital in the 21st Century,” (Belknap Press), a new best seller that is the talk of economics circles, Thomas Piketty of the Paris School of Economics makes a staggering observation. His numbers show that two-thirds of the increase in American income inequality over the last four decades can be attributed to a steep rise in wages among the highest earners in society. This, of course, means people like the C.E.O.s in the Equilar survey, but also includes a broader class of highly paid executives. Mr. Piketty calls them “supermanagers” earning “supersalaries.”  “The system is pretty much out of control in many ways,” he said in an interview.

It continues:
In 2010, as part of the Dodd-Frank Act, Congress passed a rule that requires public companies to disclose the ratio of the C.E.O.’s pay to the median compensation at the firm. The main objective was to give shareholders a yardstick for comparing pay practices across companies, said Senator Robert Menendez, Democrat of New Jersey, who sponsored the provision.
But he acknowledged that the ratio could serve another function. “Productivity can’t come from the person at the top of the pyramid alone,” Mr. Menendez said. “You want a well-compensated work force to bring productivity and the execution to improve the bottom line.”
She suggested an alternative ratio that would compare the chief executive’s pay to the federal minimum wage, a number that would not cost companies anything to calculate. It could also serve another function: She proposes eliminating any tax deductibility for executive compensation that is more than 100 times the minimum wage. “It is simple and sweet,” she said.

Do you think the publishing pay ratio has work thus far?