Foreign aid looks good, now that it’s gone

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May 24, 2025 — Joni Mitchell sang, “Don’t it always seem to go, that you don’t know what you’ve got ‘til it’s gone.”   She was lamenting loss of the environment.  Aid to developing countries (Overseas Development Assistance) may now be in the same category.

  1. How much does the US spend?

For the last 80 years, Americans have spent more on humanitarian assistance, economic development programs, and other foreign aid than any other country: $72 billion by the US government in 2024, and more by private NGOs. read more

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How to forecast a recession

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April 24, 2025 — Everyone wants to know if a recession is imminent.  But the most popular recession indicators are not necessarily the best places to look for the answer.

The question is front and center in the US now because of concerns over actions by the Trump Administration.  Six factors currently might trigger a downturn:

  • the trade war,
  • crash in the US stock market,
  • chaotic cuts in USG spending,
  • a US fiscal crisis arising from government shutdown, debt limit stand-off, or credit downgrading,
  • the blocking of net immigration, and
  • increased uncertainty and risk (driven especially by the erratic rollout of US tariff policy), as reflected in sharp increases in the VIX and  bond premia.
  1. Leading indicators

How can we tell if a recession is near?  Consider as an analogy a sailing ship navigating through heavy fog, watching out for land, fearing to founder.  If the lookout sights certain birds, it is more likely that land is near. Analogously, some leading indicators may signal a heightened probability of recession. But only a probability; nothing is certain. read more

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No Mar-a-Lago Accord

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March 23, 2025 — What is to be made of proposals for a “Mar-a-Lago Accord” coming from some Trump devotees, notably Stephen Miran?  (He is the new Chair of President Trump’s Council of Economic Advisers.)

Sometime during the next 3 years and 10 months, Trump could well find some event that he will want to trumpet under the name of his Florida residence.   But the Mar-a-Lago Accord about which people are talking, regarding the dollar, doesn’t stand a chance.

  1. The return of international coordination?

The proposal comprises an effort, coordinated among large countries, to intervene to depreciate the dollar, in hopes of improving the US trade balance. That much resembles the successful 1985 Plaza Accord, which is said to be its inspiration.
One could imagine a sensible proposal for concerted intervention to bring down the dollar from its height, coordinated with American steps to cut its budget deficit and steps by Germany and China to increase their budget deficits, thus helping to address the fundamental causes of the international trade imbalances. But this is not that. read more

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