November 18, 2017

Economic Scene: Solutions Remain Elusive After Financial Crisis

Two things struck me about the conclave. The first was hearing George Akerlof, a Nobel-winning economist from Berkeley, take to the lectern to compare the crisis to a cat stuck in a tree, afraid to move.

The second was realizing how, after five years of coping with the consequences of the disaster, there is still so much uncertainty about what policies are needed to prevent another financial shock from tipping the world economy into the abyss again a few years down the road.

“We don’t have a sense of the final destination,” said Olivier Blanchard, chief economist of the monetary fund. “Where we end I really don’t have much of a clue.”

In determining what is a sustainable level of government debt, or whether central banks should focus on anything other than inflation, or what should be done to prevent further bubbles from destabilizing economies, he argued “we are still very much navigating by sight.”

If you are one of the nearly five million American workers who have been unemployed for over six months, or one of the six million Spaniards, three million Italians or 1.3 million Greeks without a job or a clear prospect of finding one, this amounts to a tragedy.

Considering that the large and complicated financial institutions that set off the crisis five years ago have only gotten larger and more complex, the gap in knowledge is downright scary.

It is scarier to consider how politicians have chosen to ignore much of what the profession has learned from the experience.

Berkeley’s David Romer counted six shocks that hit the United States in the last three decades alone. The economy dodged the bullet in two — the Latin American debt crisis of the 1980s and the Russian default in the 1990s, which led to the bailout of a hedge fund, Long-Term Capital Management.

It took a hit in three — the collapse of much of the savings and loan industry in the late 1980s, the 1987 stock market crash and the dot.com implosion. But it got hammered in the last one.

Economists used to think it was obvious how to contain such shocks. No point trying to stop a bubble from inflating, they thought; it would be impossible to identify in the first place. The best a central bank like the Federal Reserve could do is stand ready to cut interest rates after the bubble burst, patch up the financial system and set the economy back on track. In terms of budgets, governments should aim for a prudent level of debt to retain space to borrow and spend when it was needed.

Now, interest rates have been near zero for years, and growth has not been restored to acceptable levels. And few if any of the economists gathered at the International Monetary Fund’s headquarters in Washington would venture a guess about what level of debt would be prudent these days.

On the eve of the financial crisis, Spain’s net debt was just over 25 percent of its economic output. The ratio of net debt to gross domestic product in Ireland hovered around 11 percent. Martin Wolf, chief economic commentator of The Financial Times, said that Britain’s debt ratio was close to a 300-year low, way below its level during the Industrial Revolution.

It wasn’t low enough, apparently. Five years later, Ireland’s bailout of its banks took its net debt to 102 percent of its economic output. Spain’s debt hit 80 percent of G.D.P. And Britain’s reached 86 percent — the highest since the 1960s.

This is of enormous consequence. One lesson from the crisis — first learned in the 1930s and corroborated in several contemporary analyses — is that when interest rates lose their power to stimulate the economy, additional government spending can help generate real growth. Still, the fear of “excessive” debt has led many governments to cut spending even in the face of economic stagnation.

Countries like Ireland and Spain have pretty much lost their ability to raise money in financial markets. They are now struggling to reduce debt with little success: cutting public spending in the midst of severe downturns only makes economic performance worse, adding to the debt burden.

Yet even in Britain or the United States, which can still borrow at near-record-low interest rates, governments have taken to cutting public spending at the expense of growth and jobs.

E-mail: eporter@nytimes.com;

Twitter: @portereduardo

Article source: http://www.nytimes.com/2013/04/24/business/solutions-remain-elusive-after-financial-crisis.html?partner=rss&emc=rss

E-Book Revolution Upends a Publishing Course

With the e-book revolution upending the publishing business, Madeline McIntosh, the president of sales, operations and digital for Random House, stood at the lectern on the opening day in June, projecting a slide depicting the industry as a roller coaster, its occupants frozen in motion at the top of a steep loop.

“You might be wondering if this is the moment where we’re at,” Ms. McIntosh, a tall figure in a slim navy dress, said with a smile, as dozens of students with plastic name tags hanging around their necks watched raptly.

So the summer session began with a focus on “The Digital Future.” Students were schooled in “Reinventing the Reading Experience: From Print to Digital” by Nicholas Callaway, the chairman of a company that produces book apps for children. Managers from Penguin Group USA explained how to master “e-marketing,” and a panel of digital experts talked about short-form electronic publishing — not quite a magazine article, not quite a book — which is so new, the genre doesn’t really have a name.

“You never know what’s going to happen,” Carolyn Pittis, the senior vice president of global author services at HarperCollins, told a packed room of students several days into the course. “So it’s very exciting for those of us who spent many years when a lot of things didn’t happen.”

As the students scribbled in notebooks and clicked on laptops, Ms. Pittis recounted some of the biggest developments in the industry so far in 2011. The proliferation of e-readers and the growing digital market share of Barnes Noble. Amanda Hocking, a formerly self-published author, making a book deal with a traditional publisher. J. K. Rowling’s selling her own “Harry Potter” e-books online. Even the surprise success of “Go the — to Sleep,” a hilariously vulgar children’s book parody that rose to the top of best-seller lists after being widely pirated via e-mail for months.

In the past year, e-books have skyrocketed in popularity, especially in genre fiction like romance and thrillers. For some new releases, the first week has brought more sales of electronic copies than of print copies.

All of which were ripe topics for discussion for students in the course this year, even as they deciphered messages that could be simultaneously weary and optimistic.

“A lot of what we hear is, ‘Is the Internet going to eat book publishing?’ ” said Selby McRae, a petite 22-year-old from Jackson, Miss., who entered the course after graduating from Hamilton College and completing an internship at the University Press of Mississippi. “And then they say, ‘But everything’s better than ever!’ ”

After appearing on a panel with other literary agents, Douglas Stewart of Sterling Lord Literistic said he had simply tried to explain the unfamiliar aspects of his job. “It is a really scary time to go into the business, and I’m sure they’re hearing that,” he said. “We’re all thinking that as we look out at the sea of eager faces — I wonder if they should be doing this right now?”

The course, which begins every year in June, bills itself as the “shortest graduate school in the country,” where students can learn in six weeks what it would take them a year to learn in the real world. (The second half of the course is devoted to magazine publishing.)

Legions of high-placed publishing executives have been through the course, like Morgan Entrekin (Radcliffe Publishing Course ’77), the publisher and president of Grove/Atlantic; Arthur Levine (R.P.C. ’84), who has his own children’s imprint at Scholastic; and Molly Stern (R.P.C. ’94), the senior vice president and publisher of Crown Publishers and Broadway Books.

This year’s 101 students were chosen from more than 475 applicants, the highest number in years, showing that they were not deterred by the $6,990 fee for tuition and room and board on the Columbia campus — or by the limitations of entry-level positions that pay around $30,000 a year .

The chosen candidates tend to emerge from college with impressive résumés: some have journalism degrees, successful climbs of Mount Kilimanjaro or stints working in independent bookstores or for literary magazines.

Article source: http://feeds.nytimes.com/click.phdo?i=d0aeda8d294015e499ccf75436084a09