Literature

Reports of the death of psychoanalysis are exaggerated, as Adam Phillips’ elegant, elusive writing shows

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Wednesday, April 3, 2024

Psychoanalytic ideas were dominant in several academic fields, held in esteem by intellectuals, and well known, if notorious, among the general public.

Key Points: 
  • Psychoanalytic ideas were dominant in several academic fields, held in esteem by intellectuals, and well known, if notorious, among the general public.
  • Boiled down to its essence, psychoanalysis is an approach to understanding the mind’s dynamics and treating its ailments.
  • Review: On Giving Up – Adam Phillips (Penguin) But although its influence has shrunk, reports of the death of psychoanalysis are exaggerated.
  • Almost all are in humanities fields: screen and cultural studies, gender studies, criminology, linguistics and history and philosophy of science.

A celebrated literary figure

  • The prolific writings of Adam Phillips epitomise this modern day humanistic expression of psychoanalytic thinking.
  • Phillips, who has worked for many years in England as a psychotherapist, is also a celebrated literary figure.
  • He has received high praise as “the best living essayist writing in English”, “one of the finest prose stylists in the language” and “our greatest writer in psychology”.
  • The hallmark of Phillips’s work is taking an idea or phenomenon, often ordinary or obscure, and patiently investigating its hidden complexities.

On Giving Up

  • On Giving Up is not, in fact, about giving up in any systematic way.
  • The lead essay inspects the many forms of giving up, from renouncing a vice to abandoning all hope.
  • Giving up can be a form of “enlightening disillusionment”; failure at one task but success at something else.
  • There are a few false notes: is suicide really the “only paradigm” for giving up and is it true “no one writes in praise of giving up”?

Hypnotic style

  • Phillips’s style throughout the book is almost effortlessly fluent and erudite.
  • The theoretical dimension of his work musters a variety of literary critics and French writers, but always circles back to Freud and his commentators.
  • For psychoanalytic aficionados, he is especially drawn to the British and French mystics: Wilfred Bion, Jacques Lacan and D.W. Winnicott.
  • After a while, despite the simple words and the smooth sentences, the experience becomes hypnotic.

Curiosity versus knowledge


Clues to why Phillips’s work is so clever and thoughtful in the reading but also so insubstantial in what it leaves behind can be found in two ideas he presents at each end of the book. In the prologue he cites with approval the psychoanalyst Marion Milner’s distinction between narrow and wide attention and near the conclusion he develops a distinction between curiosity and knowledge.

  • A related issue arises when Phillips draws a distinction between curiosity and knowledge.
  • A true psychoanalyst, after all, “is someone who is, above all, curious about curiosity.” It is hard to argue against the value of curiosity, but to place it in opposition to knowledge is odd.
  • Normally, we might think curiosity drives us towards knowledge and knowledge rewards and reinforces curiosity rather than dulling it.
  • It is not obvious why psychoanalysis or any other approach to studying the mind could not aspire to be both a form of (widening) curiosity and a form of (narrowing) knowledge.
  • But in Phillips’s work we see a highly developed psychoanalytic curiosity that abstains from making clear knowledge claims.

Psychology versus psychoanalysis

  • I’m sure he would agree what he is doing is not psychology in the usual senses.
  • Psychoanalysis of Phillips’s variety doesn’t aspire to be any kind of science and it sets itself up as a radically different approach to the study of mind and behaviour.
  • A psychology of giving up, for example, would be less astute in unravelling the inner complexities of self-sacrifice and renunciation than Phillips’s psychoanalytic account.
  • Such an approach is not inherently preferable to Phillips’s form of psychoanalysis, but it is decidedly different, and not because it is deficient in curiosity.


Nick Haslam receives funding from the Australian Research Council.

Isabel Schnabel: R(ising) star?

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Wednesday, April 3, 2024

This box investigates how households have responded to the 2021-23 inflationary episode using evidence from the ECB’s Consumer Expectations Survey.

Key Points: 
  • This box investigates how households have responded to the 2021-23 inflationary episode using evidence from the ECB’s Consumer Expectations Survey.
  • The findings suggest that households have primarily adjusted their consumption spending to cope with higher inflation.

How have households adjusted their spending and saving behaviour to cope with high inflation?

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Wednesday, April 3, 2024

The findings suggest that households have primarily adjusted their consumption spending to cope with higher inflation.

Key Points: 
  • The findings suggest that households have primarily adjusted their consumption spending to cope with higher inflation.
  • The decline in the saving rate in 2022 and 2023 was mainly attributed to increased spending on recreation and travel, mostly driven by high-income consumers.

How geopolitics is changing trade

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Wednesday, April 3, 2024

Yet, empirical evidence that geopolitical concerns are already materially affecting trade patterns is scant.

Key Points: 
  • Yet, empirical evidence that geopolitical concerns are already materially affecting trade patterns is scant.
  • The impact of geopolitical distance on trade is heterogeneous: in particular, geopolitical considerations mostly affect European trade in strategic products.

US monetary policy is more powerful in low economic growth regimes

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Tuesday, April 2, 2024
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Key Points: 

    The impact of regulatory changes on rating behaviour

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    Abstract

    Key Points: 
      • Abstract
        We examine rating behaviour after the introduction of new regulations regarding Credit Rating
        Agencies (CRAs) in the European securitisation market.
      • There is empirical evidence of rating catering in the securitisation market in the pre-GFC period (He et al.,
        2012; Efing and Hau, 2015).
      • Competition among
        CRAs could diminish ratings quality (Golan, Parlour, and Rajan, 2011) and promotes rating shopping by
        issuers resulting in rating inflation (Bolton et al., 2012).
      • This paper investigates the impact of the post-GFC regulatory changes in the European
        securitisation market.
      • In 2011, in addition to the creation of
        European Securities and Markets Authority (ESMA), a regulatory and supervisory body for CRAs was
        introduced.
      • We examine how rating behaviours have changed in the European securitisation market after the
        introduction of these new regulations.
      • We utilise the existence of multiple ratings and rating agreements between
        CRAs to identify the existence of rating shopping and rating catering, respectively (Griffin et al., 2013; He
        et al., 2012; 2016).
      • We find that the regulatory changes have been effective in tackling conflicts of interest between issuers
        and CRAs in the structured finance market.
      • Rating catering, which is a direct consequence of issuer and
        CRA collusion, seems to have disappeared after the introduction of these regulations.
      • There is empirical evidence of rating catering in the securitisation market in
        the pre-GFC period (He et al., 2012; Efing and Hau, 2015).
      • Competition among CRAs could diminish ratings quality (Golan, Parlour,
        and Rajan, 2011) and promotes rating shopping by issuers resulting in rating inflation (Bolton et
        al., 2012).
      • This paper investigates the impact of the post-GFC regulatory changes in the European
        securitisation market.
      • In 2011, in addition
        to the creation of European Securities and Markets Authority (ESMA), a regulatory and
        supervisory body for CRAs was introduced.
      • We find that the regulatory changes have been effective in tackling conflicts of interest
        between issuers and CRAs in the structured finance market.
      • Rating catering, which is a direct
        consequence of issuer and CRA collusion, seems to have disappeared after the introduction of
        these regulations.
      • Investors who previously demanded higher spreads for rating agreements for a
        multiple rated tranche, did not consider the effect of rating harmony as a risk in the post-GFC
        period.
      • Regarding rating shopping, we find that the effectiveness of the changes has been limited,
        potentially for two reasons.
      • Additionally, we also find that rating over-reliance might still be an issue, especially
        Rating catering is a broad term and it can involve rating shopping.
      • They re-examine the rating shopping and rating
        catering phenomena in the US market by looking at the post-crisis period between 2009 and 2013.
      • Using 622 CDO tranches, they also observe the existence of rating shopping and the diminishing
        of the rating catering.
      • Firstly, our main focus is the EU?s CRA Regulation and its effectiveness in reducing
        rating inflation and rating over-reliance.
      • To the best of our knowledge, this paper is the first to
        examine the effectiveness of the EU?s CRA regulatory changes on the investors? perception of
        rating inflation in the European ABS market.
      • Hence, the coverage and quality of our dataset constitutes significant addition
        to the literature and allows us to test the rating shopping and rating catering more authoritatively.
      • The following section reviews the literature
        on securitisation concerning CRAs and conflicts of interest, and outlines the regulatory changes
        introduced in the post-GFC period.
      • Firstly, ratings became ever more important as the Securities and
        Exchange Commission (SEC) 5 began heavily relying on CRA assessments for regulatory purposes
        (i.e.
      • the investment mandates that highlight rating agencies as the main benchmark for investment
        eligibility) (SEC, 2008; Kisgen and Strahan, 2010; Bolton et al., 2012).
      • issuers) as one of the main explanations for the rating inflation (He et al., 2011; 2012; Bolton
        et al., 2012; Efing and Hau, 2015).
      • Bolton et al., (2012) demonstrate that competition
        promotes rating shopping by issuers, leading to rating inflation.
      • The last phase, CRA III, was implemented in mid-2013 and involves an additional
        set of measures on reducing transparency and rating over-reliance.
      • As mentioned above, rating inflation can be caused by rating shopping
        In order to be eligible to use the STS classification, main parties (i.e.
      • The higher the difference in the number of ratings for a
        given ABS tranche, the greater the risk of rating shopping.
      • Alternatively, the impact of the new
        regulations could be limited when it comes to reducing rating shopping.
      • This is because, firstly,
        the conflict of interest between securitisation parties is not necessarily the sole cause for the
        occurrence of rating shopping.
      • L is a set of variables (Multiple ratings, CRA reported, Rating agreement) that
        we utilise interchangeably to capture the rating shopping and rating catering behaviour.
      • Hence, issuers are incentivised to report the highest possible rating and
        ensure each additional rating matches the desired level.
      • All in all, our results suggest that
        the new stricter regulatory measures have been effective in tackling conflicts of interest and
        reducing rating inflation caused by rating catering.
      • Self-selection might be a concern in analysing the impact of the
        new measures and investors? response with regard to the rating inflation.
      • This
        result is in line with the earlier findings suggesting that regulatory changes have reduced investors?
        suspicion of rating inflation and increased trust of CRAs.
      • Conclusion
        Several regulatory changes were introduced in Europe following the GFC aimed at tackling
        conflicts of interest between issuers and CRAs in the ABS market.
      • Utilising a sample of 12,469
        ABS issued between 1998 and 2018 in the European market, this paper examined whether these
        changes have had any impact on rating inflations caused by rating shopping and rating catering
        phenomena.
      • We find that the
        effectiveness of the changes has been more limited on rating shopping potentially for two reasons.
      • Tranche Credit Rating is the rating reported for a tranche at launch.

    Business as usual: bank climate commitments, lending, and engagement

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    Key Points: 

      Consumer participation in the credit market during the COVID-19 pandemic and beyond

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      Tuesday, April 2, 2024
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      We find that credit demand is highest when

      Key Points: 
        • We find that credit demand is highest when
          the first lockdown ends and it drops when supportive monetary compensation schemes are implemented.
        • Credit is more likely to be
          accepted under favourable borrowing conditions and after the approval of national recovery plans.
        • We also find
          that demographic, economic factors, perceptions and expectations are associated with the demand for credit and
          the credit grant.
        • First, it adds to a rapidly growing literature on household
          borrowing behaviour during the COVID-19 pandemic; see, for example, Ho et al.
        • We provide evidence that credit applications and credit acceptances display a different pattern over
          time.
        • Credit is more likely to be accepted under favourable borrowing conditions and after the
          approval of national recovery plans.
        • In almost all countries
          households are significantly less likely to apply and to get their credit approved than in Germany.
        • In line with literature, we show that
          demographic and economic factors affect the probability for credit applications and credit approval.
        • In addition,
          the paper shows that consumer perceptions and expectations matter when they decide to apply for credit.
        • Introduction

          The participation of households in the credit market receives wide attention in the consumer finance literature
          because consumer credit enters the monetary policy transmission mechanism through the so-called ?credit
          channel?: changes in credit demand and supply have an effect on consumers' spending and investment, which in
          turn affect economic growth.

        • We use microdata from the ECB?s Consumer Expectations Survey (hereinafter CES), a survey that
          measures consumer expectations and behaviour in the euro area.
        • Its panel dimension allows for an assessment of
          how consumer behaviour changes over time and how consumers respond to critical economic shocks.
        • This way we can gauge how credit applications and credit acceptances change under different, almost
          opposite, borrowing conditions.
        • We also distinguish between the demand for long-term secured loans (mortgages) and for short-term
          uncollateralized loans (consumer loans).
        • ECB Working Paper Series No 2922

          3

          We use probit models to estimate the probability of the consumer to apply for credit and the credit being granted.

        • The rate peaks in 2020Q3 which reflects the rebound in the demand for loans when the first lockdown ended.
        • In almost all countries households are significantly less likely
          to apply and to get their credit approved than in Germany.
        • However,
          when it comes to credit acceptance, we observe that the two groups of households are more similar.
        • Finally, we find some heterogeneity with respect to the type of credit, particularly between secured and unsecured
          debt.
        • The demand for
          consumer credit is insignificant for liquid households and decreases significantly for constrained households in
          the last two quarters of our timespan.
        • The first consists of a recently growing literature which
          explores consumer behaviour in the credit market during the COVID-19 pandemic, mostly in the United States.
        • Sandler and Ricks (2020) show that consumers did not use credit card debt for financial liquidity in the early stage
          of the COVID-19 pandemic.
        • (2020) report that credit card applications and new mortgage loans
          declined during the first months of the pandemic in regions with more unemployment insurance claims.
        • Lu and
          Van der Klaauw (2021) show that there was a sharp drop in consumer credit demand, especially for credit cards.
        • (2022) document that there was a substantial decrease in the usage of credit cards and home equity lines
          of credit by Canadian consumers.
        • Our paper is also consonant with studies on the association between financial and demographic factors and
          consumers? participation in the credit market as well as on the demand for specific types of credit.
        • January 2020 ? October 2020 - The two main events are the outbreak of the COVID-19 pandemic and the
          consequential lockdowns in the euro area.
        • 4 If the
          respondent has applied for more than one type of credit, she is asked to refer to the most recent credit application.
        • Between 2021Q3 and 2022Q3 the acceptance
          rate stays above the average values, mirroring the easing of credit standards for consumer credit and other lending
          to households during this period.
        • Second, we can investigate the presence of nonlinearities in how liquidity and the credit type interact in explaining credit applications.
        • (2023) ? who show that in the United States the local pandemic severity had a strong
          negative effect on credit card spending early in the pandemic, which diminished over time.
        • First, we select mortgages and consumer credit as the two mostly reported categories for secured and

          13

          The full estimation results are reported in Table 3.

        • The right-hand side panel of Figure 6 shows that the demand for consumer credit is insignificant for both liquid
          and illiquid households.
        • It also shows that
          subjective perceptions of credit access, financial concerns and expectations on interest rates matter for the demand
          for credit.
        • In Bertola, G., Disney
          R., and Grant, C. (eds) The Economics of Consumer Credit, Cambridge MA, MIT Press.
        • Horvath, A., Kay, B. and Wix, C. (2023) The COVID-19 shock and consumer credit: Evidence from credit card
          data.
        • Magri, S. (2007) Italian households? debt: The participation to the debt market and the size of the loan.

      Shocked to the core: a new model to understand euro area inflation

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      Tuesday, April 2, 2024

      The pandemic's disruption of global supply chains and the spike in natural gas prices following Russia’s invasion of Ukraine were significant drivers of surging inflation.

      Key Points: 
      • The pandemic's disruption of global supply chains and the spike in natural gas prices following Russia’s invasion of Ukraine were significant drivers of surging inflation.
      • Traditional inflation models often ignore such supply-side shocks, even though they can have a significant and persistent impact on core inflation in the euro area (as measured by rates of change in the Harmonised Index of Consumer Prices excluding the energy and food components).

      Ancient scrolls are being ‘read’ by machine learning — with human knowledge to detect language and make sense of them

      Retrieved on: 
      Wednesday, March 13, 2024

      Using a non-invasive method that harnesses machine learning, an international trio of scholars retrieved 15 columns of ancient Greek text from within a carbonized papyrus from Herculaneum, a seaside Roman town eight kilometres southeast of Naples, Italy.

      Key Points: 
      • Using a non-invasive method that harnesses machine learning, an international trio of scholars retrieved 15 columns of ancient Greek text from within a carbonized papyrus from Herculaneum, a seaside Roman town eight kilometres southeast of Naples, Italy.
      • The work of reading and analyzing the new Greek and Latin texts recovered from the papyri will fall to human beings.

      Buried in ash

      • Like Pompeii, Herculaneum was buried by the catastrophic eruption of Mount Vesuvius in 79 CE.
      • But in 1752, excavation uncovered hundreds of papyrus scrolls in the library of an elaborate Roman villa.

      Carbonized papyri


      Starved of oxygen, the intense heat of Vesuvius’ pyroclastic flow carbonized (but did not ignite) the papyri. Resembling lumps of coal to the eye, 18th-century excavators did not immediately recognize them as ancient books.
      The papyri are so brittle that many were destroyed by early attempts to access their texts. Studying them has therefore always required ingenuity. In 1754, a conservator and priest at the Vatican library devised a machine for slowly unrolling them.
      More recently, multispectral photography has dramatically improved their legibility. But until now, a non-invasive method that would leave the scrolls intact remained out of reach. Its development marks a significant breakthrough. McOsker notes there are 659 items in the catalogue listed as “not unrolled,” but some of these are parts of scrolls.

      Sparking innovation

      • The latter are essential as a reference point (or “control”) for innovative approaches.
      • The competition’s design encouraged transparency and collaboration: data published in the pursuit of smaller goals benefited all competitors.

      Text mentions music, taste, sight

      • A PhD student studying machine learning, an engineer studying computer science and a robotics student were declared
        the victors.
      • According to McOsker, the text they retrieved mentions music twice, as well as the senses of taste and sight.

      Hundreds of rolls to be studied

      • With hundreds of rolls yet to be studied, the new method of recovering the contents of the Herculaneum papyri is only getting started.
      • The production of scans at sufficiently high resolution can’t be done via ordinary equipment, but requires access to a facility with a particle accelerator.
      • Via current techniques, which involve a fair bit of manual manipulation, fully segmenting one scroll would cost US$1–5 million.

      Critical minds needed

      • Their role is to analyze the model’s output of legible ancient Greek — and in so doing determine which approaches are most effective.
      • It requires mastery of ancient languages and ideas as well as the puzzle-solver’s ability to fill in the inevitable gaps.
      • For the challenge truly to succeed, we’re going to need critical minds as well as whizbang technology.


      C. Michael Sampson receives funding from the Social Sciences and Humanities Research Council of Canada for 'the Books of Karanis,' a project that studies fragmentary Greek literature from the Egyptian village Karanis.