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Information for accountants and accounting companies: "Obama’s War on Inequality"

There were two big economic policy stories this week that you may have missed if you were distracted by Trumpian bombast and the yelling of the Sanders dead-enders. Each tells you a lot about both what President Obama has accomplished and the stakes in this year’s election.

One of those stories, I’m sorry to say, did involve Donald Trump: The presumptive Republican nominee — who has already declared that he will, in fact, slash taxes on the rich, whatever he may have said in the recent past — once again declared his intention to do away with Dodd-Frank, the financial reform passed during Democrats’ brief window of congressional control. Just for the record, while Mr. Trump is sometimes described as a “populist,” almost every substantive policy he has announced would make the rich richer at workers’ expense.

The other story was about a policy change achieved through executive action: The Obama administration issued new guidelines on overtime pay, which will benefit an estimated 12.5 million workers.

What both stories tell us is that the Obama administration has done much more than most people realize to fight extreme economic inequality. That fight will continue if Hillary Clinton wins the election; it will go into sharp reverse if Mr. Trump wins.

Read more: Information for accountants and accounting companies: "Obama’s War on Inequality"

Information for accountants and accounting companies: "Time to End the Greek Debt Tragedy"

It’s the season when Greece’s continuing debt saga approaches what has now become a familiar summer climax, with citizens protesting austerity cuts and international creditors squabbling over the terms of loans. It’s time to exit this cycle and face reality: Without relief, Greece’s economy will never recover, with repercussions the European Union can ill afford.

Last July, the government of Prime Minister Alexis Tsipras was forced to accept a raft of austerity measures imposed by international creditors in order to receive a bailout. This has taken a toll, and around a quarter of the population is unemployed.

Still, on Sunday, Greek legislators approved an additional 5.4 billion euros in austerity measures, the day before European finance ministers met in Brussels to discuss whether Greece was meeting the terms of last year’s bailout program and could qualify for an infusion of 5.7 billion euros. Greek citizens were in the streets protesting the idea of more cuts. .

Read more: Information for accountants and accounting companies: "Time to End the Greek Debt Tragedy"

Information for accountants and accounting companies: "Trump and Taxes"

This seems to be the week for Trump tax mysteries. One mystery is why Donald Trump, unlike every other major party nominee in modern times, is refusing to release his tax returns. The other is why, having decided that he needs experts to clean up his ludicrous tax-cut proposals, he chose to call on the services of the gang that couldn’t think straight.

On the first mystery: Mr. Trump’s excuse, that he can’t release his returns while they’re being audited, is an obvious lie. On the contrary, the fact that he’s being audited (or at least that he says he’s being audited) should make it easier for him to go public — after all, he needn’t fear triggering an audit! Clearly, he must be hiding something. What?

It could be how little he pays in taxes, a revelation that hurt Mitt Romney in 2012. But I doubt it; given how Mr. Trump rolls, he’d probably boast that his ability to game the tax system shows how smart he is compared to all the losers out there.

So my guess, shared by a number of observers, is that the dirty secret hidden in those returns is that he isn’t as rich as he claims to be. In Trumpworld, the revelation that he’s only worth a couple of billion — maybe even less than a billion — would be utterly humiliating. So he’ll try to tough it out. Of course, if he does, we’ll never know.

Meanwhile, however, we can look at the candidate’s policy proposals. And what has been going on there is just as revealing, in its own way, as his attempt to dodge scrutiny of his personal finances.

Read more: Information for accountants and accounting companies: "Trump and Taxes"

Information for accountants and accounting companies: "The Making of an Ignoramus"

Truly, Donald Trump knows nothing. He is more ignorant about policy than you can possibly imagine, even when you take into account the fact that he is more ignorant than you can possibly imagine. But his ignorance isn’t as unique as it may seem: In many ways, he’s just doing a clumsy job of channeling nonsense widely popular in his party, and to some extent in the chattering classes more generally.

Last week the presumptive Republican presidential nominee — hard to believe, but there it is — finally revealed his plan to make America great again. Basically, it involves running the country like a failing casino: he could, he asserted, “make a deal” with creditors that would reduce the debt burden if his outlandish promises of economic growth don’t work out.

The reaction from everyone who knows anything about finance or economics was a mix of amazed horror and horrified amazement. One does not casually suggest throwing away America’s carefully cultivated reputation as the world’s most scrupulous debtor — a reputation that dates all the way back to Alexander Hamilton.

The Trump solution would, among other things, deprive the world economy of its most crucial safe asset, U.S. debt, at a time when safe assets are already in short supply.

Of course, we can be sure that Mr. Trump knows none of this, and nobody in his entourage is likely to tell him. But before we simply ridicule him — or, actually, at the same time that we’re ridiculing him — let’s ask where his bad ideas really come from.

First of all, Mr. Trump obviously believes that America could easily find itself facing a debt crisis. But why? After all, investors, who are willing to lend to America at incredibly low interest rates, are evidently not worried by our debt. And there’s good reason for their calmness: federal interest payments are only 1.3 percent of G.D.P., or 6 percent of total outlays.

These numbers mean both that the burden of the debt is fairly small and that even complete repudiation of that debt would have only a minor impact on the government’s cash flow.

Read more: Information for accountants and accounting companies: "The Making of an Ignoramus"

Information for accountants and accounting companies: "Truth and Trumpism"

How will the news media handle the battle between Hillary Clinton and Donald Trump? I suspect I know the answer — and it’s going to be deeply frustrating. But maybe, just maybe, flagging some common journalistic sins in advance can limit the damage. So let’s talk about what can and probably will go wrong in coverage — but doesn’t have to.

First, and least harmful, will be the urge to make the election seem closer than it is, if only because a close race makes a better story. You can already see this tendency in suggestions that the startling outcome of the fight for the Republican nomination somehow means that polls and other conventional indicators of electoral strength are meaningless.

The truth, however, is that polls have been pretty good indicators all along. Pundits who dismissed the chances of a Trump nomination did so despite, not because of, the polls, which have been showing a large Trump lead for more than eight months.

Oh, and let’s not make too much of any one poll. When many polls are taken, there are bound to be a few outliers, both because of random sampling error and the biases that can creep into survey design. If the average of recent polls shows a strong lead for one candidate — as it does right now for Mrs. Clinton — any individual poll that disagrees with that average should be taken with large helpings of salt.

A more important vice in political coverage, which we’ve seen all too often in previous elections — but will be far more damaging if it happens this time — is false equivalence.

Read more: Information for accountants and accounting companies: "Truth and Trumpism"

Information for accountants and accounting companies: "The Diabetic Economy"

LISBON — Things are terrible here in Portugal, but not quite as terrible as they were a couple of years ago. The same thing can be said about the European economy as a whole. That is, I guess, the good news.

The bad news is that eight years after what was supposed to be a temporary financial crisis, economic weakness just goes on and on, with no end in sight. And that’s something that should worry everyone, in Europe and beyond.

First, the positives: the euro area — the group of 19 countries that have adopted a common currency — posted decent growth in the first quarter. In fact, for once it was better than growth in the U.S.

Europe’s economy is, finally, slightly bigger than it was before the financial crisis, and unemployment has come down from more than 12 percent in 2013 to a bit over 10 percent.

But it’s telling that this is what passes for good news. We complain, rightly, about the slow pace of U.S. recovery — but our economy is already 10 percent bigger than it was pre-crisis, while our unemployment rate is back under 5 percent.

And there is, as I said, no end in sight to Europe’s chronic underperformance. Look at what financial markets are saying.

When long-term interest rates on safe assets are very low, that’s an indication that investors don’t see a strong recovery on the horizon. Well, German five-year bonds currently yield minus 0.3 percent; in fact, yields are negative out to eight years.

How should we think about these incredibly low interest rates? Recently Narayana Kocherlakota, the former president of the Minneapolis Fed, offered a brilliant analogy. Responding to critics of easy money who denounce low rates as “artificial” — because economies shouldn’t need to keep rates this low — he suggested that we compare low interest rates to the insulin injections that diabetics must take.

Such injections aren’t part of a normal lifestyle, and may have bad side effects, but they’re necessary to manage the symptoms of a chronic disease.

In the case of Europe, the chronic disease is persistent weakness in spending, which gives the continent’s economy a persistent deflationary bias even when, like now, it’s having a relatively good few months. The insulin of cheap money helps fight that weakness, even if it doesn’t provide a cure.

But while monetary injections have helped to contain Europe’s woes — one shudders to think of how badly things might have gone without the leadership of Mario Draghi, president of the European Central Bank — they haven’t produced anything that looks like a cure. In particular, despite the bank’s efforts, underlying inflation in Europe seems stuck far below the official target of 2 percent.

Meanwhile, unemployment in much of Europe, very much including my current location, is still at levels that are inflicting huge human, social and political damage.It’s notable that in Spain, which these days is being touted as a success story, youth unemployment is still an incredible 45 percent.

And there’s nothing in reserve to deal with a fresh shock. Suppose that Greece blows up again, or the British public votes to leave the European Union, or China’s economy goes off a cliff, or whatever. What could or would European policy makers do to offset the blow? Nobody seems to have any idea.

The thing is, it’s not hard to see what Europe should be doing to help cure its chronic disease. The case for more public spending, especially in Germany — but also in France, which is in much better fiscal shape than its own leaders seem to realize — is overwhelming.

There are large unmet needs for infrastructure and investors are essentially begging governments to take their money. Did I mention that the real 10-year interest rate, the rate on bonds that are protected from inflation, is minus 0.8 percent?

And there’s good reason to believe that spending more in Europe’s core would have big benefits for peripheral nations, too.

But doing the right thing seems to be politically out of the question. Far from showing any willingness to change course, German politicians are sniping constantly at the central bank, the only major European institution that seems to have a clue about what is going on.

Put it this way: Visiting Europe can make an American feel good about his own country.

Yes, one of our two major parties is poised to nominate a dangerous blowhard for president — but it has been obvious for a while that the G.O.P. was in the process of going mad, and the odds are that he won’t actually end up in the White House.

Meanwhile, the overall economic and political situation in America gives ample grounds for hope, which is in very short supply over here.

I’d love to see Europe emerge from its funk. The world needs more vibrant democracies! But at the moment it’s hard to see any positive signs.

The Opinion Pages/By Paul Krugman

Information for accountants and accounting companies: "The 8 A.M. Call"

Back in 2008, one of the ads Hillary Clinton ran during the contest for the Democratic nomination featured an imaginary scene in which the White House phone rings at 3 a.m. with news of a foreign crisis, and asked, “Who do you want answering that phone?” It was a fairly mild jab at Barack Obama’s lack of foreign policy experience.

As it turned out, once in office Mr. Obama, a notably coolheaded type who listens to advice, handled foreign affairs pretty well — or at least that’s how I see it. But asking how a would-be president might respond to crises is definitely fair game.

And military emergencies aren’t the only kind of crisis to worry about. That 3 a.m. call is one thing; but what about the 8 a.m. call – the one warning that financial markets will melt down as soon as they open?

For make no mistake about it: The world economy is still a dangerous place. Financial reform has, I’d argue, made our system somewhat more robust than it was in 2008, but fumbling the response to a shock could still have disastrous consequences. So what do we know about the shocks we might face, and how the people who might be president would respond?

Right now there are two fairly obvious potential economic flash points: China and oil.

Read more: Information for accountants and accounting companies: "The 8 A.M. Call"

Information for accountants and accounting companies: "Stiglitz: Strengthen European Cooperation"

Europe has lost a decade, according to Nobel Prize winning economist Joseph Stiglitz. In an interview, he called for an end to austerity and more public funding. He defended ECB President Mario Draghi but warned the central bank's quantitative easing policy has reached its limits.

Joseph Stiglitz photograph by Erik Luntang for Handelsblatt

Handelsblatt interviewed Joseph Stiglitz, American economist and professor at Columbia University and winner of Nobel Prize in Economic Sciences. Source: Erik Luntang for Handelsblatt.

Handelsblatt talked with Joseph Stiglitz, the Nobel-Prize winning economist, in Brussels where he was addressing a conference.

Mr. Stiglitz said he was happy to be in Europe but had little joy in the topic he was here to discuss: “Europe can do better” was the title of his talk at the Hans Böckler Foundation, which is aligned with the DGB, the organization of German labor unions.

The 73-year-old economist, who served as top economic advisor to former U.S. president Bill Clinton, took the European Central Bank under his wing in the face of serious criticism from German politicians in recent weeks, but he also warned that monetary policy in the 19-nation euro zone is reaching its limits.

Mr. Stiglitz described what he wanted to see from Germany, said Europe should grow closer together and explained why it’s now up to governments to take on more of the load for bringing the continent out of its funk.

Read more: Information for accountants and accounting companies: "Stiglitz: Strengthen European Cooperation"

Information for accountants and accounting companies: "Sanders and Kasich Should Ignore Any Pressure to Quit"

New York’s primary has rarely been more than a footnote in presidential history. But on Tuesday that all changed. Donald Trump won his home state by a substantial margin, while Hillary Clinton defeated Bernie Sanders, son of Brooklyn.

A prediction: The minute the results are final, Republican stalwarts will crank up the volume on calls for Gov. John Kasich to leave the race. He should ignore them. Mr. Sanders also has no reason to give up his fight.

Mr. Trump and Ted Cruz both want Mr. Kasich out of the competition. Mr. Trump figures that if it’s a two-person race, he’s more likely to start winning more contests with an actual majority of votes.

Mr. Cruz knows it is now nearly impossible for him to win the nomination outright, particularly with Mr. Kasich still around. So the thoroughly unlikable Texan, who has proved he will do or say nearly anything to win, has been raising weak ballot challenges aimed at disqualifying Mr. Kasich from various state contests, and fanning rumors that Mr. Kasich is angling to be a Trump vice president. The Kasich camp denies this.

Read more: Information for accountants and accounting companies: "Sanders and Kasich Should Ignore Any...

Information for accountants and accounting companies: "Banks Still Too Big to Regulate"

Regulating the big banks has become a race against time, with bank regulators still too slow at enforcing legal requirements under the Dodd-Frank financial reform law.

This week’s example involves “living wills” — detailed plans from the banks, required by Dodd-Frank, on how they would dismantle their operations and financial contracts in an orderly way in the event of impending failure. On Wednesday, nearly six years after the passage of Dodd-Frank and four years after the biggest banks submitted the first drafts of their living wills, the Federal Reserve and the Federal Deposit Insurance Corporationrejected the plans of Bank of America, Bank of New York Mellon, JPMorgan Chase, State Street and Wells Fargo.

Read more: Information for accountants and accounting companies: "Banks Still Too Big to Regulate"