I am not confident

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I am not confident that the rally in the stock market post-Trump was even about the markets pricing a boom. Bonds sold off, but not by much, in yield (i.e. expected growth?) terms.

And I like Adam Posen’s claim — for which I cannot find a link — that the rise of equities could easily have been as much about giveaways as about “growth.” For example, if you free banks to do the heads-I-win / tails-taxpayers-lose trade, it may raise bank stock prices, depending in part I guess on how far markets are willing to look ahead. But would that really raise trend growth prospects?  Jamie Dimon would say it would, but he is not a disinterested observer — or right.

Speaking of Adam Posen, I want to repeat a story of the first time I kind of met him. I was giving a talk at the IMF, because they claimed to want “private sector input” into their forecasts to make up for them always being wrong.  My talk was on how Japan had “surplus” (humor me) savings and could benefit from a much weaker yen, to help recycle those savings. At that point, it was not obvious that the whole world would soon be “surplus” savings, so I cast such an approach as global-net-positive, and particularly positive for Japan.

The moderator of my panel — whom I assume was later fired as part of the IMF’s stop-being-wrong-and-austerian initiative a few years back — “corrected” my presentation at the end, mentioning that Japan had a fiscal deficit and therefor could not possibly be “surplus” savings.  Next! And I was actually airbrushed out of the summary of the conference.

THEY invited ME, told me I was wrong, and then denied I attended.  Gee, thanks, IMF.

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Junior IMF staff in mid-90s were early to the anti-austerian take.

A bunch of youngsters — seemingly from the movie Gattaca — were in the front row being very polite, madly writing down all I had said.  And in among them was Adam Posen, staring up at me with the kindest bewildered condescension I have ever seen. He wanted to assume I had legitimate points, and was therefore not the least dismissive, but he could not for the life of him figure out what the hell I was talking about.

I will always think well of Adam for giving the benefit of the doubt that way.