The Big Picture Marginal Revolution — Small steps toward a much better world. Next New Deal (Wonkish. Part One of Two. This part covers theory, part two some data.) Can the number of people quitting their jobs tell us anything useful about slack in the labor market? No. At most, it tells us to focus even more on the stuff we already knew to be watching. Evan Soltas has argued that the rate at which people quit their job tells us all we need to know about the unemployment rate, in particular how likely it is that the long-term unemployed and people who have left the labor force could be brought back into the labor force. As a reminder, there are currently 2.5 million Americans who want a job but aren’t looking, and as such are counted as “marginally attached to the labor force” instead of unemployed. We should distinguish between what quit rates can tell us about the employed and what they can tell us about the status of the unemployed. Under Soltas' view, quits make it more difficult for the existing unemployed to find jobs by increasing unemployment. Vacancy Chains
FinanceProfessor.com Mergers, Acquisitions, Venture Capital, Hedge Funds - DealBook Eurozone Crisis: In the Eye of the Storm The Eurozone crisis has been in retreat since the introduction of the European Central Bank’s (ECB) three-year long-term refinancing operations (LTROs) in late December 2011. At the European Council Meeting in early March, journalists who cover the crisis fretted that boredom loomed. The current lull does not indicate that the Eurozone is in the clear, but rather it is simply in the eye of the storm, and more drama inevitably awaits. Extend and pretend So far, there are three key mechanisms the troika — the European Commission, International Monetary Fund (IMF) and ECB — has employed to buy time for the Eurozone’s weaker countries to regain competitiveness and return to growth. The first of the Eurozone’s time-buying mechanisms is the bailout programs that have been provided to Greece, Portugal and Ireland. It also seems unlikely that Portugal will manage to borrow in the markets when its bailout runs out next year. Figure 1: Ten-year government bond yields Source: Bloomberg. Like this:
Calculated Risk The Economy and the Economics of Everyday Life - Economix Blog Gauging Corporate Financial Results Alphaville Elsewhere on Wednesday, - The real problem with HFT. - Summers’ inverse Say’s Law. - The impolitic wisdom of Simon Kuznets. - Buying the future. Markets: Japanese stocks suffered as hopes for monetary stimulus faded, but the rest of Asia-Pacific was upbeat after Wall Street staged a rally. We all know the role played by the vendor financing feedback loop of hell in dotcom bubble mark 1. Quickly summarised, tech equipment suppliers became overly dependent on sales to internet startups funded through vendor financing, a situation which saw them lending money to companies with dubious track-records for the purpose of buying equipment directly back from them. Nevertheless, it’s still a model replicated on a consumer level in the west, whether it’s through car company lending money to customers so that they can buy their cars or sofa company loans for purchases of sofas. Read more If you’re short the rupee* the past few months have been uncomfortable. From Goldman, for example: Read more Read more