Baum's Views on Money
Good morning, dear readers. Here are some links for your reading (and listening) enjoyment!
Correlation isn't causation
Health-care spending is slowing; everyone agrees on that. The disagreement is over what caused it (slow growth or the Accountable Care Act) and whether it will continue. Studies show health-care spending has collapsed in most developed nations, not just the U.S., challenging the Obama administration's claim that the ACA is the reason. Then there's the small matter that most of Obamacare hasn't been implemented yet. One reason to think the slowdown is temporary is basic economics: the law of supply and demand. As more people get health insurance, the demand for medical care will go up. Unless there's a concomitant increase in supply, the price will rise.
If the Federal Reserve's talk of tapering was enough to send 10-year Treasury yields soaring 100 basis points, imagine what actual tapering will do. Nomura Research's chief economist Richard Koo says the Fed will need help. And what better friend than the U.S. Treasury, which could reduce its issuance of long-term bonds so the Fed could exchange its bonds for shorter-term notes. Monetarists could have told the Fed -- and did -- that it's quantity that matters, not the maturity of the securities.
Tweeting your way to a revenue stream
Anyone familiar with the Twitterverse knows that TV shows generate tweets. Now people who study such things are learning that the reverse is true. Twitter traffic can drive ratings. The challenge is to monetize it. For example, with data in hand, persuade TV stations to purchase a promoted tweet or hash tag, which can run up to $200,000. Once Twitter figures it out, it can pass that wisdom on to the newspaper business.
Why is the newspaper industry different from any other?
The Washington Post's Neil Irwin reminds us that nothing is permanent in the 21st century, even a job at a storied newspaper like the Post. Creative destruction is a fact of life, the way economies advance. If driverless cars become the wave of the future, taxi drivers could go the way of buggy-whip makers.
It's about time someone put tapering to music
That's exactly what Merle Hazard has done in his latest country-music video, "The Great Unwind."
(Caroline Baum is a Bloomberg View columnist. Follow her on Twitter.)