Compared to a sample average, the inflation adjusted dollar is strong. It’s not clear what that means — namely because the (real) dollar is not statistically distinguishable from a unit root process. The dollar is also likely to get stronger, based on historical patterns.
Figure 1: Trade weighted CPI adjusted value of USD against a broad basket of currencies (blue), and against a narrow basked of currencies (tan), both in logs, 2006M01=0. NBER defined peak-to-trough recession dates shaded gray. Fed series spliced; pre-2006 is goods trade weights, 2006 onward is goods and services trade weights. Source: Federal Reserve via FRED, BIS, NBER, and author’s calculation.
“Strong” Relative to Trend
One could draw a linear trend through each of the series, and calculate the deviation from this trend. This would ok, and indeed consistent with purchasing power parity (with measurement error) if the real rate exhibited trend stationarity. One would not want to do this for the BIS series (unit root is not rejected, trend stationary is), while is ambiguous for the Fed series ((unit root not rejected, trend stationarity borderline not rejected). See more discussion of the hazards of assuming trend stationarity when difference stationarity is more likely, in this post.
In principle, if one had the foreign price level, one could estimate an error correction model incorporating PPP, and different reversion rates for prices and nominal exchange rates, that might have more power (see Chinn (2000) for an example of this methodology). I leave that for future research.
Taking a leap of faith, assuming trend stationarity (with 0.02% real depreciation per annum, not statistically significant), one finds a 17% (log terms) overvaluation in July 2022, slightly higher than that in February 2002 (15%), but much smaller than that in March 1985 (39%).
Figure 2: Deviation from trend of trade weighted CPI adjusted value of USD against a broad basket of currencies (blue). NBER defined peak-to-trough recession dates shaded gray. Fed series spliced; pre-2006 is goods trade weights, 2006 onward is goods and services trade weights. Source: Federal Reserve via FRED, NBER, and author’s calculation.
Of course, this is only one way of defining currency strength. There are numerous ways to assess whether a currency is strong, or overvalued – see discussion here of various approaches, and for Penn effect/Big Mac Parity here.
Stronger vs. Strong
Another way of evaluating “strength” is to see whether the dollar is on an upswing or downswing, as Engel and Hamilton (AER, 1990) did. (Previous post here)
I take data over the 1973-2022 period, and estimate a Markov Switching model. The dependent variable is the semester-on-semester change in the log value of the dollar, sampled at the end of each semester (i.e., last month of each semester).
Figure 3: Semester/semester change in log real value of US dollar against broad basket of currencies, annualized (blue) and average over 1973S2-2022S2 (red dashed line). NBER defined peak-to-trough recession dates shaded gray. Source: Federal Reserve Board, NBER, and author’s calculations.
Assuming a constant variance over two regimes, I estimate an upswing regime with real appreciation of 3.4% per annum and downswing regime with real depreciation of 2% per annum.
The probability of staying in regime 1 (appreciation) conditional on being in regime 1 is 85%; the probability of transitioning to regime 2 (depreciation) from regime 1 is 16%. The probability of staying in regime 2 conditional on being in regime 2 is 87%; in contrast, the probability of transitioning into regime 1 when in regime 2 is 13%.
The smoothed regime probabilities are presented in Figure 4:
Figure 4: Smoothed regime probabilities for regime 1 (appreciation) and regime 2 (depreciation) estimated on annual data, 1974-2022. NBER defined peak-to-trough recession dates shaded gray. Source: Federal Reserve Board, NBER, and author’s calculations.
Hence, as of 2022S2, the US dollar was likely in appreciation regime. The expected duration is 3.2 years. In this case, the dollar appreciation still has some time to run. That being said, estimates using different frequencies will yield different results. The ambiguity is not unexpected; Engel (1994) found that it was hard to exploit the long swing characteristic in such a way as to outperform a random walk.
https://fred.stlouisfed.org/graph/?g=qXmH
January 15, 2018
Real Advanced and Emerging Country Trade Weighted Price of an American Dollar, 2017-2022
(Indexed to 2017)
https://fred.stlouisfed.org/graph/?g=sxvP
January 15, 2020
Real Advanced and Emerging Country Trade Weighted Price of an American Dollar, 2020-2022
(Indexed to 2020)
https://fred.stlouisfed.org/graph/?g=yCkY
January 15, 2018
Real Broad Effective Exchange Rate for China, United States, India, Japan and Germany, 2017-2022
(Indexed to 2017)
https://fred.stlouisfed.org/graph/?g=RRJl
January 15, 2018
Real Broad Effective Exchange Rate for China, Indonesia, Brazil, United Kingdom and France, 2017-2022
(Indexed to 2017)
which is the strongest horse in the paddock outside the glue factory?
probably us$, but unipole world is sketchy.
How enlightening.
[ Chuckles in “Beavis and Butthead” fashion ] Hehe hehehehehe heh heheh heh, he said “pole”.
I have to note this given the interest in fertilizer prices in light of developments in Europe:
https://seekingalpha.com/article/4537840-fertilizer-stock-surge-2-us-stocks-to-capitalize?mailingid=28895899&messageid=must_reads&serial=28895899.1761749&source=email_must_reads&utm_campaign=Must+Read+August+30%2C+2022&utm_content=seeking_alpha&utm_medium=email&utm_source=seeking_alpha&utm_term=must_reads
Yea they are touting the stocks of two fertilizer multinationals but it also has a lot of interesting market information.
You may have heard that Iran is helping out Putin’s war crimes by providing Russia with drones. Seems the Russians cannot even get this right:
https://news.yahoo.com/iranian-drones-used-russia-against-190323579.html
Iran has sent its first shipment of drones to Russia that Moscow aims to use in attacks against Ukraine, according to a Biden administration official who said U.S. intelligence indicates the drones have already seen “numerous failures.”
The U.S. believes that Iran transferred Mohajer-6 and Shahed-series drones to Russia earlier this month on a Russian flight between the two countries, according to the administration official. The White House warned back in July that the Iranian government was preparing to sell hundreds of drones to Russia to use on the battlefield in Ukraine, but at the time officials couldn’t say whether any drones had actually been transported to Russia. The Iranian drones could help address weaponry shortfalls Russia is experiencing as it continues its military campaign in Ukraine, which has exceeded six months. Export controls imposed by the U.S. and other countries have also been designed to wear down Russia’s military capabilities in the long run. However, the administration official said that the U.S. has information suggesting the drones Russia received from Iran in the first shipment “have already experienced numerous failures.”
“UK’s biggest warship suffers propeller shaft damage off south coast after setting sail for US…The vessel – Britain’s largest warship and Nato’s flagship carrier – has had a history of problems, getting stranded in Portsmouth at the end of 2020 after flooding in its engine room damaged the electrics. During its first two years in service, the carrier reportedly spent fewer than 90 days at sea after springing leaks twice in five months.”
https://www.theguardian.com/uk-news/2022/aug/28/hms-prince-of-wales-breaks-down-day-after-leaving-portsmouth
Echoes the US’ F-35?
I guess Putin asked you to distract from all the failures of his invading Army in Ukraine. Hey Johnny boy – we know Putin told you this but how many Ukrainian ladies did his Russian soldiers rape so far?
Sachs mentions The Project for the New American Century. But wait – this was started in 1997 not 1992. It was lead by Billy Boy Kristol and Robert Kagan – neither of which were exactly advisors to Bill Clinton. Now Billy Boy and Kagan did have too much sway with Bush43 but by the time Bush43 became President, Yeltsin was replaced by your boss Putin.
pgl is mixed up yet again. Sachs writes about 1992, when he was an advisor to Yeltsin: “And it took me, actually, quite a while to understand the underlying geopolitics. Those were exactly the days of Cheney and Wolfowitz and Rumsfeld and what became the Project for the New American Century, meaning for the continuation of American hegemony. ”
For pgl’s enlightenment. Cheney was SecDef then and Wolfowitz was his assistant (two of pgl’s idols.). They were part of what eventually became PNAC.
pgl needs everything explained to him.
Wait – Putin replaced Yeltsin in 1992? No troll – you may think you have a point here but as usual you have no clue about what happened to Russia after Gorby left power. Try reading Stiglitz. BTW – accusing me of being a Cheney fan is a blatant lie but it is all baby boy Johnny has WHAAA WHAAAA
Seems that pgl deems it noteworthy to point out the problems with Iranian drones…and ignore the problems with the NATO flagship…and other NATO pieces of junk. At least credit the Swiss people’s attempt to get it right by holding a referendum on the purchase. I mean, why buy an F-35, when you can buy equipment that actually works? But their dear leaders saw it differently, thereby making a mockery of both Swiss democracy and Swiss fiscal responsibility.
https://www.aerotime.aero/articles/31996-switzerland-no-f-35-order-referendum
I guess pgl’s schtick is schadenfreude. If so, there’s plenty to go around:
“Schadenfreude? Iran television casts ‘Spotlight’ on UK and European Union energy crisis.” https://gilbertdoctorow.com/2022/08/27/schadenfreude-iran-television-casts-spotlight-on-uk-and-european-union-energy-crisis/
I’m sure Iranians will be fondly thinking of the cold, starving Brits as they pass the winter in comfort. The days when BP and the Brits could overthrow an Iranian democracy and impose a Shah are long gone.
There you go again with the false childish attempts at insulting people who school you on your BS.
Shall we go over this again? NO ONE here buys your serial BS. NO ONE. Yes – everyone here knows you are lying little baby boy. Try growing up.
Apparently pgl thinks that the flagship of NATO didn’t break down…for the umpteenth time. He also seems to think that the F-35 is a great airplane (hint: he must work for Lockheed, if he thinks it’s a great plane, It’s a cash cow!)
According to pgl, it’s only Russia and Iran who military equipment is trash. A true patriot!!!
JohnH
August 31, 2022 at 2:48 pm
Repeating your lies do not make them true. I have never endorsed this joke of a plain.
Seriously dude – we would ask you to stop lying but if you did, you would have nothing to say.
You are working for the Iranian government parroting their propaganda now? Oh right – Iran is helping Putin commit war crimes killing innocent people in Ukraine. Of course you are working for these war lords!
john, do you have anything positive to say about Gorbachev?
Putin is on record asserting that the Gorbachev reforms were very bad things if one believes Russia should be ruled by ruthless dictators. So no – JohnH is not allowed to say anything positive about Gorbachev.
Did I say something negative about Gorbachev? I always thought Yeltsin was a hapless drunk, who destroyed Russia, following the advice of the neoliberal advisors. However, Jeffrey Sachs seems to indicate that Yeltsin didn’t have much of an alternative, given that the Polish recovery option was precluded by US diktat.
JohnH
August 31, 2022 at 2:43 pm
Did I say something negative about Gorbachev? I always thought Yeltsin was a hapless drunk, who destroyed Russia, following the advice of the neoliberal advisors.
I guess if he got that loan, he would have laid off the vodka? BTW what destroyed Russia was his crony capitalism and the oligarchs. Hey Johnny boy – should we loan more money to crooked oligarchs? Oh yea – your boy Putin needs more money!
“Did I say something negative about Gorbachev?”
I did not ask if you said something negative. it would be revealing to see what, if anything, you had to say that was positive about him.
I’ve always found Chuck Todd to be incredibly annoying, probably only slightly less annoying than David Gregory (who was off the charts annoying).
https://www.thedailybeast.com/nbcs-meet-the-press-shakeup-puts-chuck-todd-in-jeopardy
The day they make his firing official I’m doing a Tom Cruise “Risky Business” dance in my living room.
Chuck Todd is annoying but he is not as bad as Tim Russert. Meet the Press in our youth was a good show but they ruined it with Russert and Todd.
Jeffrey Sachs was an advisor to Yeltsin: “I was economic adviser both to Poland and to the Soviet Union in the last year of President Gorbachev and to President Yeltsin in the first two years of Russian independence, 1992, ’93. My job was finance, to actually help Russia find a way to address, as you described it, a massive financial crisis. And my basic recommendation in Poland, and then in Soviet Union and in Russia, was: To avoid a societal crisis and a geopolitical crisis, the rich Western world should help to tamp down this extraordinary financial crisis that was taking place with the breakdown of the former Soviet Union.
Well, interestingly, in the case of Poland, I made a series of very specific recommendations, and they were all accepted by the U.S. government — creating a stabilization fund, canceling part of Poland’s debts, allowing many financial maneuvers to get Poland out of the difficulty. And, you know, I patted myself on the back. “Oh, look at this!” I make a recommendation, and one of them, for a billion dollars, stabilization fund, was accepted within eight hours by the White House. So, I thought, “Pretty good.”
Then came the analogous appeal on behalf of, first, Gorbachev, in the final days, and then President Yeltsin. Everything I recommended, which was on the same basis of economic dynamics, was rejected flat out by the White House. I didn’t understand it, I have to tell you, at the time. I said, “But it worked in Poland.” And they’d stare at me blankly. In fact, an acting secretary of state in 1992 said, “Professor Sachs, it doesn’t even matter whether I agree with you or not. It’s not going to happen.”
https://www.democracynow.org/2022/8/30/wests_false_narrative_china_russia_ukraine
Important context to current events…
Yep. The Soviet model eventually put the various Soviet and satellite states in such dire economc condition that a complete change in ecnomc regme, supervised by foreigners, was required. Today’s oligarchic model risks a similar outcome. Johnny, I think you’re finally on to something!
Yes, and Sachs proposed an economic policy that worked well in Poland but was blocked by the US for Russia. And what was the result? Oligarchs and Putin.
But MacroDuck thinks that US policy under Yeltsin was stupendous. And he certainly has no idea why, after Russia’s epic economic collapse of the 1990s, presided over by Yeltsin and neoliberal American advisors, Russians just might see the United States as an existential threat.
But don’t try to bother folks like MacroDuck and pgl with history and context…it’s too complicated and only confuses them.
“But MacroDuck thinks that US policy under Yeltsin was stupendous.”
You do this a lot. It is dishonest and childish. And guess what troll? Everyone here know this is what you do. Which is why EVERYONE here has zero respect for any of the BS you write. Not even your BFF Princeton Steve has a lick of respect for your pathetic comments.
“But don’t try to bother folks like MacroDuck and pgl with history and context…it’s too complicated and only confuses them.”
Hey dumbass – I am the one that told you to get read Stiglitz’s chapter on Yeltsin’s crony capitalism. It is entitled Who Lost Russia. Shut up your dumb babble and try READING it.
JohnH,
BTW, also just for the record the successful economic reform program was NOT suggested by Sachs. It was cooked up by the finance minister of the time, Lezsek Balcerowiz, whom I knew personally before he implemented the reforms and when he was working on them. I have published on exactly how his proposals over time and how they were adopted.
Sachs was a sideshow, with some major parts of what he proposed NOT getting adopted.
JohnH
September 1, 2022 at 9:28 am
Sachs’ agenda was blocked. It was the IMF/Washington Consensus that was adopted and that was what Stiglitz rightly criticized.
Stiglitz did have some critiques of the Washington Consensus but if JohnH thinks Sachs was not on board – he has not clue what the Washington Consensus even was. So let us help this know nothing lying troll out:
https://www.piie.com/blogs/realtime-economic-issues-watch/what-washington-consensus
The main Washington Consensus policies include maintaining fiscal discipline, reordering public spending priorities (from subsidies to health and education expenditures), reforming tax policy, allowing the market to determine interest rates, maintaining a competitive exchange rate, liberalizing trade, permitting inward foreign investment, privatizing state enterprises, deregulating barriers to entry and exit, and securing property rights. Williamson noted that these policies contradicted conventional wisdom in developing countries, many of which embraced state dominated systems in the 1950s.
I noted for our economic know nothing lying troll what Sachs himself wrote back in 1993 about Yeltsin’s Russia. The main theme of his essay was to use fiscal discipline to bring down inflation. Sachs was a proponent of every other item here.
JohnH is a lot like Bruce Hall – they use big terms they do not remotely understand. And neither one knows a single thing about basic economics.
“But the real explanation lies elsewhere – and is much simpler. Until 1998, the rouble was overvalued, making it impossible for domestic producers to compete with imports. The IMF did not want Russia to devalue, and it provided billions of dollars to prop up the exchange rate. The IMF and the US Treasury worried that any change would restart inflation, because there was little or no excess productive capacity.”
JohnH cannot be bothered to read his own link which notes what Stiglitz really said. Sachs wanted large loans to Russia from the US. Sachs in 1993 was afraid of Russian inflation. Maybe that did not happen but they got large loans from the IMF. JohnH loves to talk about the Washington/IMF consensus but like Bruce Hall, he is using terms he does not even remotely understand. Sachs was on board with the alleged consensus that Stiglitz criticized. But poor Johnny boy cannot be bothered to understand the obvious.
I guess Dr. Sachs is unaware of the massive corruption of Yeltsin’s oligarch friends. If so, he and you should read the chapter Stiglitz wrote documenting how crony capitalism reigned during the Yeltsin years.
Stiglitz: “The Ruin of Russia. No rewriting of history can change the fact that neo-liberal reform produced undiluted economic decline. Unfortunately, under the preceding years of IMF programmes, the market economy – with high interest rates, illegitimate privatisation, poor corporate governance and capital-market liberalisation – provided only incentives for asset-stripping.”
https://www.theguardian.com/world/2003/apr/09/russia.artsandhumanities
Sachs was talking about 1992. Stiglitz is talking about the period after 1992…the period when Sach’s recommendations were blocked and Bill Clinton turned the IMF loose on Russia, eventually resulting in Putin.
As I said, you have to explain everything to pgl.
“market economy – with high interest rates, illegitimate privatisation, poor corporate governance and capital-market liberalisation – provided only incentives for asset-stripping”.
Yep – and only a moron would extend massive loans to these crooks. I guess you are too dumb to get that Sachs was pushing the free market agenda that Stiglitz was criticizing. You know – you just pulled a Bruce Hall. Finding a cherry picked quote that you do not understand only to embarrass yourself again!
Sachs’ agenda was blocked. It was the IMF/Washington Consensus that was adopted and that was what Stiglitz rightly criticized.
As I repeat again, you have to explain everything to pgl, because his historical memory is so confused…except for what he tries to rewrite to support his bogus assertions.
“JohnH
September 1, 2022 at 9:28 am
Sachs’ agenda was blocked. It was the IMF/Washington Consensus that was adopted and that was what Stiglitz rightly criticized.”
Little Johnny boy – do you know why the other preK kids are laughing at you. Well no – it is more than how you pee in your pants all day. They got what I said. Sachs supported the neoliberal agenda that Stiglitz criticized. The only thing in his recommendations that was blocked was a massive loan these crooks would have defaulted on/
This is simple enough that the other kids get it but not little Johnny boy. Now have your mommy change your diaper.
I see what attracted Putin’s poodle to this interview:
The war in Ukraine — just to finish the introductory view — could have been avoided and should have been avoided through diplomacy. What President Putin of Russia was saying for years was “Do not expand NATO into the Black Sea, not to Ukraine, much less to Georgia,” which if people look on the map, straight across to the eastern edge of the Black Sea. Russia said, “This will surround us. This will jeopardize our security. Let us have diplomacy.” The United States rejected all diplomacy. I tried to contact the White House at the end of 2021 — in fact, I did contact the White House and said there will be war unless the U.S. enters diplomatic talks with President Putin over this question of NATO enlargement. I was told the U.S. will never do that. That is off the table. And it was off the table. Now we have a war that’s extraordinarily dangerous.
No Putin did not invade Ukraine. We invaded Russia. That has been your disgusting spin for 7 months.
Of course you are a liar and Sachs is being a stooge.
JohnH,
Well, this is a massive misrepresentaton of what happened back then, but not surprising you would indulge in such, although I understand some of this is coming from Sachs himself.
First of all, it was lech Walesa appealing to the US Congress that got Poland such a generous deal from the US. No other former satellite of the USSR got such a deal, such as Hungary or the Czech Republic, none of them. It was not just Russia. Sachs is seriously misrepresenting this. It is also the case that Sachs is misrepresenting what he advocated for Poland. I remember well him giving a speech at the ASSA/AEA meetings in the early 90s complaining that the Polish government was not following his advice to cut the size of its pensions to help avoid budget deficits. As it turned out, this was a wise policy on the part of the Poles that helped stabilize both their economy as well as their society. Russia followed more the Sachs advice on that matter.
You should keep in mind when you try to pose potted stories about what happened in the transition period of the early 90s that some of us were around then and happen to know a bit about the matter, having published extnesively on it, publications with lots of google scholar citations. You got any of those, boy?
I have asked this know nothing troll to read Stiglitz’s Who Lost Russia many times but of course he has refused to do so:
https://www.scribd.com/document/56633545/Stiglitz-Who-Lost-Russia?irclickid=xCxWBt2tfxyNWyJxyiSAh2UGUkDRirz533NTw40&irpid=2003851&utm_source=impact&utm_medium=cpc&utm_campaign=affiliate_pdm_acquisition_Bing%20Rebates%20by%20Microsoft&sharedid=EdgeBingFlow&irgwc=1
Barkley…why should I trust your “potted story” more than I trust Sachs’?
It seems to me that Sachs point of view is legitimate. He is quite brave to offer a different point of view in the face of a flood of propaganda that we see every time the US engages the enemy du jour. Like whistleblowers, such people don’t just stand up and tell truth to power unless they believe the importance and validity of what they have to say.
We need a lot me people like Sachs. We need a lot fewer knee-jerk dog whistle cheerleaders like pgl and MacoDuck who believe what they read in the NY Times and parrot it incessantly.
Because I saw Sachs make his idiotic speech to the ASSA/AEA complaining about the Poles not cutting their pensioons. I do not lie like you do.
You really do not know who I am, do you? I happen to know Leszek Balcerowicz personally. I knew him before Sachs knew him and discussed with him his plans for economic reform in Poland even before the Communist government fell.
I probably know more about Poland and Russia than Sachs does, despite his having advised their governments. Sachs was an expert on Latin America, and he had given lots of advice governments there in the 1980s. Basically when he went to the transition economies he took his story book from Latin America to there.
Got it, boy?
Well – you think Putin is a great leader so yea – ignore people who actually know what they are talking about.
I will also add that I happen also to know Sachs personally. He is a nice guy and very smart and knowledgeble. But as of the last time I saw him speak he was admitting that he was in over his head and messed up while advising the Soviet and East European nations in the transition. He was the full stereotype of the western economist who knew nothing about those nations who got sent in by the World Bank to mindlessly impose the Washington Consensus, which indeed was heavily influenced by Jeffrey’s own work in Latin America. Hey, what worked for Bolivia should work for Eastern Europe!
As it is, the Washington Consensus changed, partly due to the many disasters in the transition economies. Now there is more emphasis on maintaining social safety nets and not letting income get too unequal. Somebody here played a role in that change, although I shall not say who, while, of course super secret agent Moses might be able to figure it out.
Again regarding Poland, it really did get a special deal from the US. There are lots of Polish-Americans, with lots of them in crucial swing states like Wisconsin. Walesa had huge positive ratings when he spoke to Congress thanks to his leadership of the Solidarity Movement at the beginning of the 1980s, and in his speech to Congress he guilt tripped the US by invoking Yalta and much more. I am sorry to see with Sachs’s new weird defending of Putin and various idiocies that he is now distorting what went down back in the early 1990s.
But Barkley, Sachs said his advice to Russia was ignored…but what got implemented was the IMF/Washington Consensus garbage.
Are you saying that Sachs is lying?
Johnny boy is now saying Sachs opposed the Yeltsin crony capitalism the same way Stiglitz did? Seriously? I guess the dumbest troll never read what Sachs was saying back then:
https://www.jeffsachs.org/newspaper-articles/nfthx74ahza5k5h7kk96pe5r3t78zc
Sachs did call for a massive loan to this corrupt crony capitalism regime so Yeltsin could redo the Volcker 1981 monetary disaster. But yea Russia did have high inflation and Sachs back then was some sort of New Classical monetarist type.
But this praised of Yeltsin was from the fact the Sachs bought into the entire free market neoliberalism that Stiglitz warned against.
Sachs in own words shows how utterly ignorant JohnH is.
JohnH
September 1, 2022 at 9:33 am
But Barkley, Sachs said his advice to Russia was ignored…but what got implemented was the IMF/Washington Consensus garbage. Are you saying that Sach s is lying?
No but Johnny is. Sachs was part of the Washington Consensus. I provided what he wrote in 1993. READ it troll. I let Macroduck know what the Washington Consensus is. READ it troll as Sachs was all in with their policy recommendations.
Johnny boy is once again way over his little bitty brain.
‘We need a lot me people like Sachs. We need a lot fewer knee-jerk dog whistle cheerleaders like pgl and MacoDuck who believe what they read in the NY Times and parrot it incessantly.’
Seriously? Sachs was a member of the Washington Consensus. But you are too stupid to see what this really was or what Sachs wrote back in 1993. I provided links to both but I guess you are too dumb to read that too. We need more members of the Washington Consensus according to Johnny boy? Lord – you are an utter moron.
JohnH,
I would say that Sachs is currently seriously misrepresenting what went down, and your version of things is way off. He was indeed the very embodiment of the Washington Consensus when he was giving all that advice, which he later admitted was maybe not so good, but now seems to be backtracking on that. I saw him make the fool of himself that he later admitted he was, even if now he is trying to cover it up, for what reason I really do not know.
Let me reemphasize what may be the most important bottom line here. Sachs is apparently running around comparing what happened with Russia to what happened with Poland. But in fact what happened with Russia happened with ALL of the other former Soviet bloc and Soviet republic nations with the SINGLE EXCEPTION OF POLAND. This is not a matter of meanie Washington Consensus cold warriors creating special problems for Russia, with, as pgl notes, it not obvious that giving Russia that loan at that time would have made things better anyway. Russia was getting what was the standard treatment for all the transition nations EXCEPT POLAND.
It was Poland that was the exception for reasons I have listed above. I note that it was not just a matter of getting loans. Poland got all its past debts cancelled, again something no other Eastern European nation got to get, and that came from the US Congress for political reasons. I mean, Lech Walesa was a big publi8c hero in the US back then. Given that Sachs was in fact pushing parts of a hard line Washington Consensus view on Poland that they should cut their social safety net, which he was, I actually find it pretty abominable that he is now pushing this line of Russia having suffered because Poland supposedly got all this special treatment. It really makes me wonder how badly he has lost either his mind or his morality. He seems to be getting down in the moral gutter with you, JohnH, I hate to say.
So JohnH’s latest excuse for Putin’s war crimes in Ukraine goes back some 30 years when Jeffrey Sachs recommended we give loans to Yeltsin’s Russia and that advice did not happen. Even Johnny boy admits Yeltsin was a “hapless drunk” who presided over a crony capitalistic regime that allowed the oligarchs to steal massive amounts of Russian resources. Oh wait – the value of those oil resources were also lowered by a commodity bust with oil prices falling to their lowest inflation adjusted levels in our life times. And Johnny boy thinks people should have loaned massive amounts of funds to this corrupt regime. And we wonder why that alleged Fortune 200 company he worked for went bankrupt!
Barkley notes Sachs today has changed his tune from his Washington Consensus views in the 1980’s and 1990’s. But the economic know nothing JohnH says Sachs was not a Washington Consensus type. Of course JohnH has no idea what is meant by Washington Consensus or what Sach believed in the 1990’s. This confirms what Barkley and I have been saying:
https://fpif.org/jeffrey_sachss_metamorphosis_from_neoliberal_shock_trooper_to_bleeding_heart_hits_a_snag/
But his fame circumvents an understanding of his economic theories, which have been applied with disastrous consequences. He first came to global prominence in the mid-1980s as the wunderkind of Harvard University’s econ department. He became one of the school’s youngest tenured professors at twenty-eight, and quickly sold himself as an advisor to struggling governments dealing with crises of hyperinflation, a topic about which Sachs boldly claimed to know “just about everything that is needed to be known.” It was during this period that the young economist fashioned his unique brand of shock therapy — a free market fundamentalism of privatization, deregulation, and government subsidy-slashing for commodities such as oil, met with debt relief and foreign aid — that would later take shape as the Washington Consensus and be subsequently savaged by the likes of Naomi Klein, William Easterly, and Dambisa Moyo. Despite massive policy failures in countries that followed his advice, Sachs has successfully avoided accepting any responsibility for suboptimal outcomes of his theory.
pgl and JohnH,
I note that another difference between what Sachs proposed and what the Poles did involved privaization. Sachs and the Washington Consensus pushed mass rapid privatization, but along with not undoing their social safety net the Poles also did not engage in mass rapid privatization. In fact they moved slowly on that and have continued to do so, with something like 30% of the Polish economy remains state-owned even now. Much of their privatization took the form of encouraging new private businesses to start, many of which became highly successful. I note that Balcerowicz changed his mind on this matter over time back and forth.
There is a lot of ignorance about the details of what was done and what is the nature of the Polish economy.
Sad to hear about this. Incredibly underrated as a leader. It could have been different.
https://www.reuters.com/world/mikhail-gorbachev-who-ended-cold-war-dies-aged-92-agencies-2022-08-30/
I thought Yeltsin was underrated as well. But that’s a debate for another day.
We had a lot of hopes for the Yeltsin regime but crony capitalism and the commodity price bust doomed him. Now Putin is worse but he has been lucky with the oil price boom. Russia never has had a truly great leader so Gorby looked good by comparison.
pgl,
It was the late Yegor Gaidar, first post-Gorbachev PM of Russia, who emphasized the role of oil prices in the condition of the Soviet and then Russian economies over time. During the Brezhnev period in the 70s, the mounting stagnation got covered up by the high oil prices of that period. Oil prices fell sharply in 1986 and then basically remained low through the 90s. This coincided the shift from positive economic growth in the USSR coming to an end in 1986 and then going negative, contributing substantially to the problems of the Soviet economy and system as Gorbachev was trying to reform it. Then the low oil prices contributed to the bad performance of the Russian economy under Yeltsin, although the massive corruption and some other bad policies played a major role in how things went so badly.
Putin has effectively enjoyed rising and then pretty high oil prices for most of the time since he took power. This obviously is helping him right now in this time when the underlying Russian economy has really gone down the tubes, especially since sanctions were imposed given his invasion of Ukraine. That this is a major issue becomes clear when we see the Putin trolls here cheering when oil prices go up.
Reuters messed up. Gorby was 91.
https://jabberwocking.com/election-momentum-is-swinging-toward-democrats/
“Republicans in purplish districts or states are caught in a vice: they can either piss off Trump or piss off voters. I suspect there will be something of a panicked stampede toward voters over the next couple of months.”
Expect a lot of pro-lifers start telling us they respect the rights of women. Yea – right.
https://madison.com/news/national/doj-cites-efforts-to-obstruct-probe-of-docs-at-trump-estate/article_186783d8-97b5-5b9b-909a-0711becaae01.html
WASHINGTON (AP) — The Justice Department said Tuesday that classified documents were “likely concealed and removed” from former President Donald Trump’s Mar-a-Lago estate as part of an effort to obstruct the federal investigation into the discovery of the government records.
Oh well Rick Perry Mason Stryker will tell us that only the Presidential Records Act here as the former President is above pesky little laws such as obstruction of justice and basic treason.
https://fred.stlouisfed.org/series/DEXUSEU/
Over the past 19 months, the Euro has so devalued that one Euro buys only $1 whereas one Euro used to buy $1.25. No wonder Euro area inflation is high relative to US inflation.
https://www.nytimes.com/2022/08/31/health/life-expectancy-covid-pandemic.html
August 31, 2022
U.S. Life Expectancy Falls Again in ‘Historic’ Setback
The decline during the pandemic is the sharpest in nearly 100 years, hitting American Indian and Native Alaskan communities particularly hard.
By Roni Caryn Rabin
The average life expectancy of Americans fell precipitously in 2020 and 2021, the sharpest two-year decline in nearly 100 years and a stark reminder of the toll exacted on the nation by the continuing coronavirus pandemic.
In 2021, the average American could expect to live until the age of 76, federal health researchers reported on Wednesday. The figure represents a loss of almost three years since 2019, when Americans could expect to live, on average, nearly 79 years….
https://www.aap.org/en/pages/2019-novel-coronavirus-covid-19-infections/children-and-covid-19-state-level-data-report/
August 25, 2022
Cumulative Number of Child COVID-19 Cases
Over 14.4 million children are reported to have tested positive for COVID-19 since the onset of the pandemic according to available state reports; nearly 350,000 of these cases have been added in the past 4
weeks. Approximately 6.6 million reported cases have been added in 2022.
14,448,622 total child COVID-19 cases reported, and children represented 18.4% (14,448,622 / 78,513,599) of all cases
Overall rate: 19,197 cases per 100,000 children in the population
American Academy of Pediatrics
Children’s Hospital Association
Correcting spacing:
https://www.aap.org/en/pages/2019-novel-coronavirus-covid-19-infections/children-and-covid-19-state-level-data-report/
August 25, 2022
Cumulative Number of Child COVID-19 Cases
Over 14.4 million children are reported to have tested positive for COVID-19 since the onset of the pandemic according to available state reports; nearly 350,000 of these cases have been added in the past 4 weeks. Approximately 6.6 million reported cases have been added in 2022….
Life expectancy is now higher in China than in the US.
https://www.medrxiv.org/content/10.1101/2022.04.05.22273393v4
June 1, 2022
CHANGES IN LIFE EXPECTANCY BETWEEN 2019 AND 2021 IN THE UNITED STATES AND 21 PEER COUNTRIES
By Ryan K. Masters, Laudan Y. Aron and Steven H. Woolf
RESULTS US life expectancy decreased from 78.85 years in 2019 to 76.98 years in 2020 and 76.44 years in 2021, a net loss of 2.41 years. In contrast, peer countries averaged a smaller decrease in life expectancy between 2019 and 2020 (0.55 years) and a 0.26-year increase between 2020 and 2021, widening the gap in life expectancy between the United States and peer countries to more than five years….
[ Imagine a gap in life expectancy between the US and 21 peer countries of more than five years. ]
How did you miss *this* article too?
U.N. Says China May Have Committed ‘Crimes Against Humanity’ in Xinjiang
The organization’s human rights office delivered its much-delayed report minutes before Michelle Bachelet, the U.N. high commissioner for human rights, was to leave office.
https://www.nytimes.com/2022/08/31/world/asia/un-china-xinjiang-uyghurs.html
By Nick Cumming-Bruce and Austin Ramzy
Aug. 31, 2022
Updated 7:15 p.m. ET
GENEVA — In a long-awaited report released on Wednesday, the United Nations’ human rights office accused China of actions that “may constitute international crimes, in particular crimes against humanity,” in its mass detention of Uyghurs and other predominantly Muslim groups in its far western region of Xinjiang.
The assessment was released shortly before midnight in Geneva and minutes before Michelle Bachelet, the U.N. high commissioner for human rights, was set to leave office.
The release ended a nearly yearlong delay that had exposed Ms. Bachelet and her office to fierce pushback by rights groups, activists and others who had accused her of caving to Beijing, which had sought to block the report.
“It is an unprecedented challenge to Beijing’s lies and horrific treatment of Uyghurs,” said Sophie Richardson, the China director for Human Rights Watch. “The high commissioner’s damning findings explain why the Chinese government fought tooth and nail to prevent the publication of her Xinjiang report, which lays bare China’s sweeping rights abuses.”
She added, “The United Nations Human Rights Council should use the report to initiate a comprehensive investigation into the Chinese government’s crimes against humanity targeting the Uyghurs and others — and hold those responsible to account.”
China, which received a copy of the report days before its release, had pressured Ms. Bachelet not to publish it. The report was a “farce orchestrated by the United States and a small number of Western powers,” Zhao Lijian, a spokesman for China’s foreign ministry, said at a regular news briefing on Wednesday.
The report does not appear to use the word “genocide,” a designation applied by the United States and by an unofficial tribunal in Britain last year. But it generally treats as credible rights groups’ and activists claims that China has detained Uyghurs, Kazakhs and others, often for having overseas ties or for expressing religious faith. The report said, however, that the U.N. agency “is not in a position to confirm estimates of total numbers of individuals affected by the V.E.T.C. system,” referring to the so-called “Vocational Education and Training Center.”
When news of the detentions began trickling out, the Chinese authorities at first denied the detention campaign, but later said they were teaching basic job and language skills to bolster employment and prevent radicalism.
Former detainees, however, have described physical abuse, mistreatment and hours of indoctrination in Communist Party ideology. Some of those held have included successful artists, scholars, businesspeople and other community leaders who had no need for job training.
The report said allegations of sexual and gender-based violence, including of rape, “appear credible and would in themselves amount to acts of torture or other forms of ill-treatment.”
It also said that the “arbitrary and discriminatory detention” of Uyghurs and other predominantly Muslim groups “may constitute international crimes, in particular crimes against humanity.”
Among its recommendations, the U.N. agency called on China to promptly “release all individuals arbitrarily deprived of their liberty,” clarify “the whereabouts of individuals whose families have been seeking information about their loved ones” and “promptly” investigate allegations of human rights violations in the facilities.
As the U.N. high commissioner for human rights, Ms. Bachelet had spoken out frequently and often frankly on abuses and concerns across all continents, including on China’s crackdown on democracy in Hong Kong. But when it came to China’s treatment of dissidents and the allegations of crimes in Xinjiang, she had spoken with extreme caution.
…
https://news.cgtn.com/news/2022-08-31/Chinese-mainland-records-392-new-confirmed-COVID-19-cases-1cWfUdNHW24/index.html
August 31, 2022
Chinese mainland records 392 new confirmed COVID-19 cases
The Chinese mainland recorded 392 confirmed COVID-19 cases on Tuesday, with 349 attributed to local transmissions and 43 from overseas, data from the National Health Commission showed on Wednesday.
A total of 1,426 asymptomatic cases were also recorded on Tuesday, and 22,787 asymptomatic patients remain under medical observation.
The cumulative number of confirmed cases on the Chinese mainland is 243,081, with the death toll from COVID-19 standing at 5,226.
Chinese mainland new locally transmitted cases
https://news.cgtn.com/news/2022-08-31/Chinese-mainland-records-392-new-confirmed-COVID-19-cases-1cWfUdNHW24/img/2d01b78412b14d4397eebd4f3dcdbf1c/2d01b78412b14d4397eebd4f3dcdbf1c.jpeg
Chinese mainland new imported cases
https://news.cgtn.com/news/2022-08-31/Chinese-mainland-records-392-new-confirmed-COVID-19-cases-1cWfUdNHW24/img/ec3b7a5d27ce4418a839c3a3226debf5/ec3b7a5d27ce4418a839c3a3226debf5.jpeg
Chinese mainland new asymptomatic cases
https://news.cgtn.com/news/2022-08-31/Chinese-mainland-records-392-new-confirmed-COVID-19-cases-1cWfUdNHW24/img/9c37009752ec450fa35032c832bf129d/9c37009752ec450fa35032c832bf129d.jpeg
https://www.worldometers.info/coronavirus/
August 30, 2022
Coronavirus
United States
Cases ( 96,149,016)
Deaths ( 1,069,748)
Deaths per million ( 3,218)
China
Cases ( 242,689)
Deaths ( 5,226)
Deaths per million ( 4)
Nobel Prizes given to US 400, given to UK 137, given to Germany 111, given to China 1.
I’m going to foolishly assume this list is pretty damned near accurate. I think it’s worth noting that the list of ethnic Chinese is longer,
https://en.wikipedia.org/wiki/List_of_Chinese_Nobel_laureates
Also, I am a little embarrassed and ashamed, it appears we have missed some others here (of actual Chinese nationality and not just ethnicity, and I’m mildly surprised Menzie (not that it is his “duty” or something, just mildly surprised) hasn’t corrected us.
Mo Yan appears to be another (literature). And so does Tu Youyou in Medicine.
Happy to be corrected on this, or ne told my list is abbreviated too short. I apologize for this error. I should have caught this way earlier and apologize to any Chinese reading the blog.
https://www.nobelprize.org/prizes/medicine/2015/tu/facts/
https://www.nobelprize.org/prizes/medicine/2015/tu/interview/
https://www.nobelprize.org/prizes/literature/2012/yan/facts/
* or be told my list is abbreviated too short.
Um, OK, so it looks like maybe there have been THREE prizes given to citizens of the PRC. I shall raise the number when I post this point when ltr again tells us about that 4 per million dead from Covid in PRC. Do you actually support her doing that over and over and over and over? Actually, aside from you claiming she is a he, you might given that you like to post and repost some things over and over and oaver.
@ Barkley Junior
Often times I am posting new things. they just seem to you like they aren’t new because I’m telling you (as I am here on the 2 additional Chinese nationals who have won a Nobel)) that you’re wrong for the millionth time. Which is all your narcissist “brain” can focus on, “Somebody told ME, Barkley Mr. Perfect Junior, I’m wrong!!!! Apocalypse has now started!!!!” instead of whatever topic you are wrong on most recently, with only about a 48 hour gap between each of your screw-ups.
I have stated before I’m largely neutral on “ltr”. What I think of his posts isn’t going to change anything. He’s going to post here probably until he croaks. So, I’m not gonna get worked up about it. You have to remember I spent 7 years of my life surrounded by and immersed in “ltr”s in the state propaganda sense, 7 years….. These people thought Steve Wozniak, Thomas Edison, and Tim Berners-Lee were “amateurs” because none of them invented paper, printing, gunpowder, or the compass. I had at least two arguments with Chinese who wanted to get into loud shouting arguments with me that window unit ACs were a “Chinese invention”. OK??~~so reading a couple paragraphs of what “ltr” writes doesn’t phase me. I got skin calluses for state brainwashing that are even thicker than your empty cranium.
* I should stress here, when I say “Chinese” in the above comment. I’m referring to mainland Chinese. I apologize for not making that crystal clear. And even then, I am speaking in a general sense, not absolute or in a blanket fashion.
Isn’t it obvious that domestic inflation plus strong dollar equals noise? Why can’t you just admit that Fischer Black in “Noise” was right?
The only thing that is obvious is that you are a worthless troll, STOP posting these asinine comments.
FX rates help determine relative rates of inflation. Even in a period of increasing global inflation under a floating rate regime, isn’t it obvious that some countries will have lower inflation than others as a result of exchange rates?
Fischer Black would assuredly understand, even you don’t.
http://www.e-m-h.org/Blac86.pdf
A link to Black’s Journal of Finance paper. I doubt rsm has ever read it or if he did, he has no clue what this paper said. Now if you can spot where Black said anything remotely connected to rsm’s babble, you are a better reader than I am.
An immediate concern of a “strong US dollar” might be the impact on the politically sensitive manufacturing sector.
The Philadelphia Fed Manufacturing Index declined 3.3% and 12.3% in June and July, then it rose 6.2% in August.
What is interesting is the conclusion that firms expect declines 6 months from now:
August 2022 Manufacturing Business Outlook Survey
Note: Survey responses were collected from August 8 to August 15.
Manufacturing activity held mostly steady on balance, according to the firms responding to the August Manufacturing Business Outlook Survey. Most of the survey’s indicators rose from last month. Although the general activity index turned positive, it was low, and the new orders index remained negative. The employment index increased, while the price indexes continued to decline but remained elevated. The survey’s future indexes rose slightly but continue to suggest that the firms expect overall declines six months from now.
Elsewhere the increased value of LNG exports should help net exports.
A lot of commodities that the US exports are seeing strong prices.
I guess all Dr. Oz has got is a strange desire to act like Donald the jerk:
https://www.msn.com/en-us/news/politics/oz-campaign-again-mocks-fetterman-s-health-in-pennsylvania-senate-race/ar-AA11jGXP?ocid=msedgdhp&pc=U531&cvid=630f7b01de7147fd88f975eb10b6c937
Oz, a heart surgeon, made his name as a TV doctor (who admitted in Senate testimony to promoting diet pills which “don’t have the scientific muster to present as fact”). His campaign has chosen to question Fetterman’s health. On Tuesday, it invited the Democrat to a debate next week. The campaign said: “Dr Oz promises not to intentionally hurt John’s feelings at any point. We will allow John to have all of his notes in front of him along with an earpiece so you can have the answers given to him by his staff in real time. “At any point John Fetterman can raise his hand and say bathroom break … We will pay for any additional medical personnel who might need to have on standby.”
Seriously – this clown has zero qualifications to be in the Senate. Mocking someone else’s health? Oh wait – Oz sold his “diet” pills to Trump and Chris Christie!
Inflation is starting to ‘drop like a rock’ rather than a feather, according to Fundstrat’s Tom Lee.
Lee observed outright deflation in some areas of the economy, suggesting that inflation is less sticky than perceived.
Stock market investors are looking for a cool down in inflation as it would allow the Fed to ease its rate hike trajectory.
https://www.msn.com/en-us/money/markets/inflation-is-starting-to-drop-like-a-rock-leading-to-deflation-in-certain-areas-of-the-economy-fundstrat-says/ar-AA11jO0H
I cannot attest to Tom Lee’s credentials but let’s hope he is correct.
I thought Russia was counting on selling its oil to Asia. This has to be bad news for Putin:
https://www.yahoo.com/entertainment/russian-oil-exports-asia-fallen-174909098.html
Seaborne shipments of Russian oil hit their lowest level since March last week, according to Bloomberg.
Flows to Asia are down by about 500,000 barrels per day for the week ending August 26.
Half of Russia’s crude exports have been going to customers in Asia since the war in Ukraine began.
Russian shipments of crude oil sent by sea to Asia have fallen to their lowest level since March, according to data from Bloomberg.
Shipments fell by 500,000 barrels a day for the week ending August 26, with flows to Asia sinking to 1.59 million barrels per day.
Total shipments sank to 3.04 million barrels per day over the same period compared to 3.62 million barrels per day a week earlier.
https://news.cgtn.com/news/2022-08-31/China-s-first-domestic-HPV-vaccine-has-100-efficacy-in-clinical-trial-1cWlec4iQ48/index.html
August 31, 2022
China’s first domestic HPV vaccine has 100% efficacy in clinical trial
A recent study has found that the first HPV (human papillomavirus) vaccine developed in China, Cecolin, can offer female adults full immunity against two types of the virus.
Cecolin was jointly developed by Xiamen University and Xiamen Innovax, making China the third country in the world to attain an independent cervical cancer vaccine supply after the U.S. and the UK. It earned World Health Organization Prequalification in October 2021.
In the study, a group of Chinese researchers analyzed data from 66 months of follow-up visits as a part of the bivalent vaccine’s Phase 3 clinical trial, and found that its efficacy against high-grade genital lesions, typical symptoms of cervical cancer, reached 100 percent.
Furthermore, the E coli-produced HPV 16/18 recombinant vaccine realized 97 percent efficacy against persistent HPV infections, according to the study * published in the journal Lancet Infectious Diseases on August 26, 2022….
* https://www.thelancet.com/journals/laninf/article/PIIS1473-3099%2822%2900435-2/fulltext