January 10, 2023

• Financial markets are all over the place as investors cannot figure out how this year is still different from 2018. Investors are so confused that the financial press is even starting to wonder out loud about the investment decisions being made.

• Bond investors believe inflation and interest rates will decline rapidly to 2% even though no one who is adjusting interest rates thinks that.
• Central bankers cannot make head or tails out of unemployment, employment, and job market tightness numbers, but are determined to cause unemployment to go up.
• Economists, with no theory of inflation, are starting to yell at each other at ASSA's 2023 annual meeting was last week with the a high level of angst about the economy on display about the "unusual" economic situation we are in. "Yell" might be overstating, but reading some of the blogs coming out of the meetings indicate that there is no consensus about what is going on.
• The IMF has started to understand that their model for global trade and foreign investment is wrong (everyone else knew this already). Which is a problem given that is the basis for their structural adjustment programs.
• Government policy makers are complaining, but suggesting nothing good, different, or actionable.
• Foreign Policy folks are split on the situation, but lean towards the notion that there will be a war with China, a collapsed/failed-state of Russia, and more sates armed with nuclear weapons all within the next decade.

Meanwhile, working people continue to face high cost increases, low wage growth, and a dearth of options to get behind that make any sense.

This is not a great way to start 2023.

The USA's climate goals are ridiculously weak. But, they cannot even match those.

The International Energy Agency believes that emissions will continue to fall because of the move to electric cars. They are clearly not reading the headlines

Toyota leasing unit warns of ‘unprecedented’ challenge to boost EV sales The world’s biggest carmaker risks missing its already low target for second consecutive year

The President of France brushes-off his playbook for attacks on working people:

On Tuesday his government will present its draft law, which is expected to require French citizens to work two or three years past the current retirement age of 62 to qualify for a full pension. In a bid to win support, the government will also offer sweeteners, such as an increase in the minimum pension and concessions for older people with physically demanding jobs.

The French president argues that raising the retirement age is the only way to preserve the system as the ratio of workers to retirees falls in the coming decades. He has ruled out other approaches such as raising taxes, lowering pensions or adding to the public debt.

“We must work longer,” he said in his televised New Year’s address.

The "cost" is not the issue, the reason for making people work longer is to increases funds to the government without raising taxes on capital.

Lengthening the working life is similar to lengthening the working day, it is not without trade-offs felt by working people.

Bad graph warning:

A decade of input prices. Things are going to be more expensive again next year.