Sunday, November 30, 2014

Did demand collapse cause the crash?

This chart is oil consumption in the USA taken from Indix Mundi.  The peak years are:

2003 20,033.51
2004 20,731.15
2005 20,802.16
2006 20,687.42
2007 20,680.38

Now one would think that we would have had an oil consumption peak right at the point where we crashed, regardless of the cause.  That is true except that oil prices were the most volatile prices leading up to the crash.  In any event, one cannot claim that 2003 and 2007 were a period of reduced demand because of the housing collapse in 2006.  I serously doubt that depressed home owners serious reduced demand by importing more, not less, oil.

During the crash we reduced  consumption by 5.72% in 2008 and 3.73% in 2009, numbers that seem to match the reduction in GDP growth.

So, given this time series, what is the probability that a stimulus spending in 2009, that came after the oil price plunge, caused us to exit the crash? Oil consumption dropped during the first year of the stimulus, then rose 2.28% in 2009, and then dropped again in 2011 by 2.2%.

There is little proof either way, the stimulus advocates say we pulled out of the crash by mid-year 2009, yet we still dropped oil consumption over that whole period.  What we were doing in 2009 is increasing unemployment, yet none of the stimulus advocates claim credit for increasing unemployment in 2009!  What they do is pick and choose and require fraudulent economists sign pledges of Keynesian unionism.

Scott Sumner vs Jim Hamilton vs queue length

Scott: Rising oil production is likely to lead to faster global growth. Falling oil production is likely to lead to slower global growth. That's because oil is an important input into the production process.

However falling oil prices have no implications for global growth---it merely redistributes global wealth.

Jim: The world is awash in oil, I’m hearing. The problem is, it’s fairly expensive oil.

Take for example Canada. The country has managed to increase its production of oil by a million barrels a day over the last decade. But almost all of that increase has come from oil sands. If you consider only conventional crude oil, Canadian production today would be a third of a million barrels a day lower than at its peak in 1973.
Scot says oil pricing allocates oil over space. Jim says it also allocates over time.

How are these two different? They are, both really queue length. The real determinant are the degrees of motion available to equalize queue lengths.

Keynesians saved us from the crash? Where is the proof.

Tell me which one of these caused us to start growth again.  The Red line is oil prices the green is stimulus spending.

Have any of the stimulus promoters shown a single study that can differentiate between plunging oil prices and stimulus spending?

All they have shows are lists of thing government spent, never a list of things not spent, or lists of thing spent because of plunging oil prices. Not a single study, the only thing they have to show is a willingness of some economists to sign onto unproven conjectures.  The entire claim of Keynesian spending is that they learned it some school somewhere.  Romer's cutnpaste statistics are pure fiction. All those studies do is select the chosen period, then zero out the correlations that do not agree with the desired priors.

The red line shows a pretty good correlation with the crash (oil prices spiked) and the recovery (oil prices plunged).  Then the next two years we see growth go up and down with oil prices.  Over half of the rise and fall in CPI was characterized as a change in oil prices since 2010. 

My Bill and Melinda grant proposal

Bill and Melinda:

I propose we mass produce hundreds of advanced Voyager  spacecraft.  Get their, volume up, cost down, redundancy up.  Fling them out, in all directions and we humans will enjoy, nearly forever, a view of our home from the stars.

Fiat raffles

Have the Fed fund some big bets, between Congress and the banks. The Fed puts up as much as one trillion in ink and paper.  Congress and the bond traders bet on inflation, ten billion is the smallest bet. The Fed pays the winner, the loser is neutral.  Six year, one year straight up bets on inflation.

Congress, they are Republicans, naturally bet they can drive up inflation to the  moon. So, there you go bankers, take the other side. Prove Congress wrong.  If you can set consumer prices then you can take home some real cash.

Let's try stimulus and recovery, a fun topic

Red is stimulus spending, blue is total factor productivity. We have two measurements on TFP, one right at the start of stimulus, one at the stimulus peak whereupon we see it slope down, not up.

Productivity took a rise up before the stimulus and the next time we looked, right at stimulus peak, it dropped its rate.

Now we have GINI, showing failure of the stimulus. We have the double dip in all the large economies, right at the peak, and Illinois was hit severely. The second dip matching precisely with oil prices driven by mis-sallocation.  The error? Trying to drive into the network where there were no free connection. You shut down the Illinois crossroads by shipping gas where it less utility.

Let's look at other delays. Two years for the California flounder.  Pension problems in Illinois, screwed up medical regulations in New York.  Who was the shock absorber? Not the Swamp, but Texas and the frackers.

We have a moment of good growth now, after QE, after the sequester, after the tax deal, after the restructuring of the Flounder.

And the nonsense about the liquidity trap being six years old, for years we have stared at graphs showing all rates have been dropping since inflation tamed in 1985.

Low inflation, right now, high growth and waddya know, interest costs are only frightening at 11%, for Congress that is good.

This economy prices very well, and it has some very smart expectations operators.

It looks a lot like Bill Clinton time to me.

Lets compare graphs on the 92 recession.

First up, England.  Waldmann says that the Bank of England should have bought gilts and drove down the rates in 1992.

Paul Krugman says that Greenspan was right to drive down the effective yield in 92.

Were they right?

I am not sure, but in the USA, 92 was the last time the Fed actually entered the market and effectively drove down short term rates.  That red line in the second chart?  The is the Gini index, and it took a huge jump up, meaning more poverty right when Greenspan intervened in the market.

So, my reading is simple, the one time the central banker did the stimulus, there was a huge jump in the poverty rate. How did England do in poverty in early 1990.  Not good, but I could find no comparable graph. Unemployment rates are hard to compare because the two nations have very different motions.  But I can tell you that in the USA, the two largest jumps in Gini occurred in the 1992 Fed stimulus, and in the 2010 Romer stimulus, as you can see on the graph.  So, Keynesians are batting 0 for 2 in the 'help the poor' department.  Notice that once we got through the disaster of the stimulus in 2011, Gini began to flatten. In fact a close look hints that disinflation seems to help the poor since 2013, but it is hard to tell.

For 250 years the economists had assumed it was normal for government to effective foul up the accounting system every few years.  That is not normal behavior, you economists.  When was the last time government dictated the mass of the electron by decree?

About that famous liquidity trap.

Notice the federal funds rate has been on its way to zero since 1985.  Other than the 1992 attack on the poor, the Fed barely participated in the downward path at all, which I have been showing constantly by noticing the relationship between the target and the effective. The reason the Fed is a feckless worthless organization is because they give all the excess fiat to Congress so the shadow banking system has taken over its role. Goldman Sachs is the real central banker.

To this day some 90% of the economists have never actually looked to see how effective the Fed is in lowering interest rates.  They hand wave some assumption from 80 years ago.  Note also, the Fed has never actually raised rates, it can't, they have Congress recycling the Fed's excess fiat and the Fed has no corridor system.

Nuestros economistas favoritos, los keynesianos, siempre perjudican a los pobres. Es simple. Los republicanos no son mejores porque son hiper-keynesianos, tontos Mongering deuda, economía estrellarse, comunistas.

Saturday, November 29, 2014

Cochrane points us to

Frameworks for Central Banking in the Next Century

I am inerested, I wonder if they have a fiat theory of using money to count stuff.  You know, those numbers on the green papers, the double entries in the accountant books, a yield curve, anything.  Have they discovered the dynamics of a mud puddle, water in fills, water out empties.

I would expect, at least, economists would start with the stable theory of measurement, then add perturbations  on the stable model.    One would think that an economist, having observed stores using coupons, say, bitcoins even, or these:
S&H Green Stamps (also called Green Shield Stamps) were trading stamps popular in the United States from the 1930s until the late 1980s. They were distributed as part of a rewards program operated by the Sperry & Hutchinson company (S&H), founded in 1896 by Thomas Sperry and Shelley Byron Hutchinson. During the 1960s, the rewards catalog printed by the company was the largest publication in the United States and the company issued three times as many stamps as the U.S. Postal Service.[citation needed] 

Or perhaps they learned about the book, Good Money:
In Good Money, George Selgin tells the fascinating story of the important yet almost unknown episode in the history of money—British manufacturers’ challenge to the Crown’s monopoly on coinage.

In the 1780s, when the Industrial Revolution was gathering momentum, the Royal Mint failed to produce enough small-denomination coinage for factory owners to pay their workers. As the currency shortage threatened to derail industrial progress, manufacturers began to mint custom-made coins, called “tradesman’s tokens.” Rapidly gaining wide acceptance, these tokens served as the nation’s most popular currency for wages and retail sales until 1821, when the Crown outlawed all moneys except its own.

All of these, Green Stamps, Good Money, coupons, all of them have one thing in common, technology for counting stuff.  One would think that is the starting model, a model of the counting 'ruler', a technology that is adapted to count out objects which have a particular entropy function.  Not one money expert has figured out the simple idea.

I blame the mathematicians, they are not doing their job.  They need to show the match between counting units, transaction rates and measured entropy.

Rick Perry, Republican presidents always run up the debt and crash the economy

Rick Perry ramps up

Texas governor invites GOP donors to December sessions to discuss 2016.

It is considered a fact, now, in American history, a platform in the Republican party; Republican presidents run up the debt and crash the economy. Now that may not be the worst crime, it is also considered fact that Democratic presidents from Texas are genocidal killers.  It is also a fact that presidents from large states, like California and Texas, generally run up the debt and crash the economy. Republican presidents from California are also genocidal killers.

So, I doubt that rich donors are none to  happy about electing a Republican who will run up the debt and crash the economy.  Most likely, whatever poor fool Republican who runs will face that fact, day in and day out; Republican presidents run up the debt and crash the economy.

I like Rand Paul. I also like Patty Murray.  I would consider Rand Paul, except my mortal fear of someone who grew up in Texas.  Here is a suggestion Rick.  About half the citizens in Texas would love to exit the union, mainly because the union is full of Republican presidents who run up the debt and crash the economy.  You should stay in Texas and help out with the secession.  Going to the Swampland with the intention of running up the debt and crashing the economy is not a good idea.

Siempre, presidentes Republicanos corren hasta la deuda y hunden la economía.  Rick Perry quiere correr la deuda y hundir la economía.

Friday, November 28, 2014

Here is what bothers me about economics

Fiat banking has three things. a pile of ink and paper, a flow out and a flow in. That is three things, and if we apply symmetry, we get two possible symmetric things together. If we leave out symmetry we get six possible combinations. If we distinguish between the printing press and the recycle bin, then we get 24 possible combinations.

 Now, into that mix, add 250 years of some 1,000 economists trying to figure it out. And no one ever discovered balanced flow? I mean, I can only see 40 possible groups of economists, each group having one of the 25 combinations in their theory. Monkeys on a typewriter would have gotten this.

There is no magic with interest and principal, they are going to equilibriate, or you will end up slammed against a boundary. There is no magic with price theory, prices ultimately find equilibrium, as does principal and interest. There is nothing to confuse anyone. You are going to have balanced flow or you will slam up against a boundary, its that simple.

Think of it as a mud puddle, the toddler fills it with one trickle and empties it with another trickle. Gravity prevents the toddler from having just one trickle, he has to have two, an empty trickle and a fill trickle. Using government as an empty trickle is just adding a recirculation, you will still end up slammed against a boundary.  

Where the frig is George Selgin when we need him? Nor can I believe Chris Sims or Jim Hamilton missed this, not John Cochran. Maybe Uncle Milt kind of got it.

Thursday, November 27, 2014

The Canadians screwed their fiat system also?

Nick Rowe: If the Bank of Canada adjusts the nominal interest rate or monetary base to keep inflation at the 2% target, or if it changes that monetary policy target, it knows that this will affect the flow of seigniorage profits it pays to the government, and it knows that the government will sooner or later adjust taxes or expenditure so that the Long Run Government Budget Constraint remains satisfied. We saw this happen in 1995.
How much of the ink and paper does the government take up there, all of it?

This was my point, Those are not profits.  Money 'earned' by the fiat corridor banker becomes ink and paper.  If government steals the incoming money and recirculates then the fiat function will only go one way.  How many lending and savings banks will participate in the corridor banking function if they know government always has its hand in the till? None, the fiat banker up there, like the one we got, has never been able to gather excess inventory from the economy!  One might think the central bankers would mention this glaring error now and then. The central bank does not want to be in the tax business, especially performing tax duties for its member banks. So the fiat banker will keep its income low, and so the process of handling excess cash defaults to the shadow banking system. Excess inventory of the ink and paper is kept in the personal account of George Soros, and I guess Canada has hired him as Secretary of Money imbalances The government of both England and the US hire the guy on a regular basis.

When the Fed reduced rates

See this chart, the red and blue overlap.  The blue is the Fed target from 1990 to 1994. The red is the effective rate, the market rate. In 1991-1992, they over lapped.  How about that! I think this was the only time, since Volcker, that the Fed actually may have intervened in the market substantially.

All this hoopla economists talk about, the Fed doing this or that, boils down to this one last time the Fed was ever effective, 1992.  And it likely did this lowering of the rates because DC was borrowing heavily at the short end and threatening the economy.  (I did not look, at this point the assumption that Republicans screw the budget is usually fact). The result was a huge jump in the poverty levels.

So, what is all the money theory about central banking about?  Dunno, I think its about not looking at the data. Congress can and does screw up the economy, but they do that without the Fed's help.  Just watch the Republican Senate, they will screw up the economy.

Ricardo Lara, bonehead California Legislator

El Mesajero: The Democratic senator from Bell Gardens, Ricardo Lara revealed that he is about to introduce a bill to create in California, the Office of New Americans to help immigrants, regardless of their status, to integrate better into society.

"Ignoring our immigrant communities is irresponsible and unrealistic, especially for a state that has the largest population of undocumented immigrants in the country," said Senator Lara on his return from Washington, DC where he met at the White House with immigrant advocates to discuss President Obama's executive action.

He said that the Office of New Americans in California will help the undocumented population with resources, information, and assistance for the prevention of fraud, and better integrate economic, social and political status.

Since Jerry and Nancy instigated articles of secession, we are all New South West Americans.   For the first time in history, Californians can claim to be as confused as the California legislature.   It feels great to be free! So why brainwash us into returning to colonialism under a bunch of carpetbaggers 3000 miles away?

No queremos ser ciudadanos de DC. Tenemos nuestra propia nación.

Californians and Texans giving Mexico grief for murdered students

It is about time we heard from California students, keep pressing.
El Latino: Con gran pasión y descontento, decenas de mexicanos se reunieron el 20 de noviembre, el Día de la Revolución Mexicana, frente al Consulado de México en San Diego para protestar la desaparición de los 43 estudiantes universitarios del municipio Ayotzinapa en el Estado de Guerrero.

“Repudiamos este acto, como un acto de crimen de estado y queremos asegurar este Día de la Revolución, que aquí el consulado escuche que también el pueblo mexicano a este lado de la frontera estamos unidos, consientes, organizados para denunciar lo que viene siendo un estado que de violencia en contra de estudiantes”, dijo Benjamín Prado, con el grupo Unión del Barrio.

La desaparición de estos 43 estudiantes, desde finales de septiembre y que se teme estén muertos, se ha convertido en el “detonante de manifestaciones” en México, y ahora internacionalmente.
What is in the bold?
"This side of the border we are united, conscientious, organized in order to denunce what came to be a state of violence against students"

Great news, California may be unemployed, but we still have our priorities straight..

And the Rednecks in Texas!
Lo Hispano: Con rabia, frustración y vehemencia, centenares de activistas y ciudadanos del común, radicados en Norte de Texas, exigieron la renuncia del presidente mexicano Enrique Peña Nieto. Los manifestantes reunidos en las afueras del Consulado de México en esta ciudad, lanzaron arengas en contra de los gobernantes y exigieron claridad con respecto al caso de los 43 estudiantes desaparecidos en la localidad de Ayotzinapa. Las protestas que comenzaron el pasado 12 de noviembre en el Norte de Texas, continuarán hasta que aparezcan los estudiantes desaparecidos, asegura José Luis Flores. Flores agregó que es necesario tomar conciencia de la problemática que se vive en México, tras la desaparición de los estudiantes y prometió traer al Metroplex a familiares de los desaparecidos y al padre Solalinde, promotor de los derechos civiles en México. "Estamos frente a un problema de dimensiones internacionales, porque también nos afecta a quienes vivimos a este lado de la frontera. México está gobernado por políticos vinculados con el narcotráfico y esto genera corrupción e impunidad", precisó. 
Hey, Rick Perry, these are our people, not those welfare bums in DC.

This is why UC students are getting a tuition hike

WA Post: When officials at the University of California at Los Angeles began negotiating a $300,000 speech appearance by Hillary Rodham Clinton, the school had one request: Could we get a reduced rate for public universities?
The answer from Clinton’s representatives: $300,000 is the “special university rate.”
So what kind of education  is Hillary going to give?  I mean, seriously, if UCLA students need this bonehead to learn them something, then they are not qualified for college.

The Republican Communist Party may already be on a debt fueled spending binge

The blue line is absolute government spending. The red one is debt to GDP. Obama had a great idea, the sequester, and it worked.  Debt to GDP stable, and govenrment spending growth stopped.

But see that upswing in the last year? Those are Republican Communists in Congress. They are trying to grow government once again. We might have to elect Hillary to stop the Republican spending binge.

Wednesday, November 26, 2014

Obama habla claro sobre desaparición de 43 estudiantes de magisterio en Iguala (México)

El motivo de la llamada que este miércoles mantuvieron Barack Obama y Enrique Peña Nieto era discutir las acciones ejecutivas que el presidente estadounidense acaba de decretar para regularizar temporalmente la situación de casi cinco millones de indocumentados, muchos de ellos mexicanos. Pero según fuentes estadounidenses, en la conversación también surgió un tema en el que la Casa Blanca hasta la fecha había mantenido una llamativa discreción: la desaparición de 43 estudiantes de magisterio en Iguala (México), hace justamente dos meses.

Obama “manifestó su profunda condolencia a los familiares y amigos de las víctimas”, dijo a EL PAÍS una fuente oficial bajo condición de anonimato. Los dos presidentes discutieron sobre la “necesidad de seguir trabajando para atender cuestiones que afectan la seguridad” ciudadana de ambos países, añadió.

Conseguir una mejor clase de criminal

If Mexican mayors want to be corrupt, choose criminals other than meth deranged mass killers.

El Pais: El presidente de México, Enrique Peña Nieto, se está planteando crear una comisión especial y nombrar a un fiscal, según fuentes parlamentarias, para intentar esclarecer la desaparición de 43 estudiantes en Guerrero, una región del sur del país. El fiscal elegido por el Gobierno sería autónomo y tendría entre sus tareas la de revisar la investigación de la PGR –fiscalía general- que tantas dudas ha generado después de dos meses de no presentar resultados solventes.

La crisis abierta en el Gobierno por las críticas a la investigación ha llevado al Ejecutivo a replantearse desde cero la forma en la que se está abordando el asunto. Esta semana se ha enviado un contingente de unos 10.000 policías, según fuentes de seguridad, cuya principal misión es interrogar a todos los alcaldes de Guerrero, el Estado pobre y caciquil en la que desaparecieron los muchachos. En un estudio independiente, citado por las autoridades, se calcula que el 67% de los ayuntamientos mexicanos tienen algún tipo tipo de relación con el narcotráfico.

La fiscalía especial, en teoría, debería servir para tapar algunos de los huecos que todavía generan dudas. La falta de respuestas ha hecho que miles de personas salgan a la calle a manifestarse exigiendo justicia. La versión que ha dado la PGR, recopilada por los testimonios de los sicarios detenidos, es que los estudiantes de la escuela de maestros rurales de Ayotzinapa fueron detenidos en las calles de Iguala. Los agentes los entregaron a los sicarios del cartel de Guerreros Unidos, molestos por la invasión del territorio o confundidos por creerlos miembros de un cartel rival. Y los llevaron de madrugada hasta el vertedero, donde los ejecutaron y los incineraron en una pira que ardió durante más de 10 horas. La policía ha encontrado en un río cercano bolsas de basura con restos humanos que han sido enviados a un laboratorio de élite en Innsbruck, Austria. Los padres de los muchachos se han mostrado muy escépticos con la versión oficial y todavía algunos tienen esperanza de encontrarlos vivos.

Otra de las tareas pendientes del Gobierno que podría formalizar en breve es la de concretar el mando único. Uno de los grandes problemas mexicanos de seguridad es el descontrol de las policías municipales y estatales, algunas completamente infiltradas por el crimen organizado. El presidente anterior, Felipe Calderón, lo intentó sin éxito. Peña Nieto, en el primer año de mandato, habló en dos ocasiones de crear 32 super-policías, tantas como regiones hay, pero eso quedó a medio hacer. La intención ahora es sacar adelante el proyecto. La tragedia irresoluta de Iguala obliga a tomar medidas urgentes.

Outperforming California

California did well in the Pacific Union. Unemployment down there is 5.2%, as good as Texas. 

Bienvenido Mexicanos.
No me gusto los acaldes estudiantes asesinatos .

Patty Murray vs Rand Paul

That would be a fun and enlightening election. Let them debate, today. Two of the smartest with the most common sense. Both know small states. The intellectual debate alone makes them favorites.

Obama better than Bubba?

I criticize the guy, but check the record. He started with a mess, and has recovered from the mess with a miniscule down turn. No Republican could have pulled it off, and this may be a better recovery than Bubba was an expansion.
Who gets credit?
Obama had the right instinct. Government imbalanced.  He escaped the Keynesians, and may have beaten Bubba himself.

Obamacare scared us. But the numbers came in. Its cost is within the circle of lunacy.  Currently, smaller deficit, upward surprises in growth, and the three trillion in loose currency is not so scary. He sequestered and taxed, we survived the latinos, we cut the deficit. The numbers are getting bigger, inflation lower?

We can grow velocities up, and still have low inflation, higher growth.  The clue? Increasingly balance government spending.
So, go ahead and rank them for economic performance.  Tell me Obama is not number one.

Creo que Obama tuvo el mejor desempeño económico en los últimos 35 años.

Pulcro y Verde

Avión supersónico promete viajar de Nueva York a Los Ángeles en 2,5 horas

Another horror story from the stimulus

The red line measure inequality, the amount of extra wealth the rich get, generally taken from the poor. When the red line goes up, the poor get poorer and the rich richer. The blue line is the spending Keynesians order up in DC.  Notice that the Gini took a big jump up, right when the stimulus was at maximum spending.

Tuesday, November 25, 2014

Republicans have caused every single recession in the last 35 years!

Look at Bill Clinton's recession in 2002, it was revised away! Bean counters discovered Bill did even better than was initially measured.  Obama's downturn was the first quarter of this year, a 2% negative print, half due to weather.  That was it, it did not even qualify as a recession.  The deficit is now 2.8% of GDP, and no Republican has ever gotten the deficit that low in 35 years, except lil Bush bet he crashed the economy, and left office with a deficit of 10% GDP.
Obama will get the defict lower than lil Bush

Lil Bush had run the deficit up to 10% of GDP as the economy crashed on his watch, before Obama was in office. That was the worst recession, the second worse was Reagan, who could not even help himself, he ran government spending to its highest post war level, ran interest costs to 24% of the federal budget, ran federal employment up to the highest post war level, and caused one massive and one minor recession.  The Bush the Bigger, has his recession before Clinton took office. Notice, the 2002 grey bar should be removed and Bill Clinton outperforms every Republican, Obama coming in second place. The  Reagan record is simply Communist, no other words describe. Bush the Bigger, barely a dent.

Every single recession was caused by Republican Big Government Communists, every last one of them. The Republican Party has not even attended their first session and already they are planning a huge debt fiasco and a super depression.  Can we do the election over again? Please, the nation needs centrist Democrats.

And the friggen Tea Party has no right to co-opt that name as a front for what they actually are, Royalty Loving, Socialist rats. And the Tea Party complains about Mexico? Mexican unemployment is about 5.2%, folks,  as good as Texas. Their population expansion is about the same as ours, and they are much smarter than most Californians.  Mexico is our friend, California and Texas consider Mexico a sister nation. So Tea Party bums back in the East Coast of Swamp better get used to the South West, we are not paying Tea Party welfare payments anymore. We all might be leaving the union.

I would consider is Treason for any Texan to run for the Presidency of the Swamp.

¿Puede Obama salvarnos del Partido Comunista Republicano?

Las Ratas Republicanos, comunistas, ya están haciendo el cohete de la deuda pública. Casi toda la deuda en DC ha sido causado por los Republicanos.  Idiotez Republicano se colgará la economía. Pero la alternativa es el Partido Demócrata racista.  

Los Californianos necesitan repensar nuestro sitio en la unión, quizas es hora ti continuar nuestra secesión. Mexico parece estar funcionando mucho mejor, excepto sus alcaldes matan estudiantes.

Republican Communist Party causing skyrocketing debt

NY Times: WASHINGTON — With negotiators nearing an accord on permanent tax breaks for businesses worth $440 billion over 10 years, President Obama rallied Democratic opposition on Tuesday and promised a veto.
“The president would veto the proposed deal because it would provide permanent tax breaks to help well-connected corporations while neglecting working families,” said Jennifer Friedman, a White House spokeswoman.
The deal, negotiated by House Republicans and aides to Senator Harry Reid of Nevada, the outgoing majority leader, showed how much power has shifted since the Republican election victories this month. The negotiations fractured Democrats, and separated the Obama administration from Mr. Reid.
But Mr. Obama’s threat showed that he could still wield his authority as well. White House officials said the package, intended to avoid letting a host of politically popular tax breaks expire at the end of the year, is too heavily tilted toward corporations and will have deep repercussions for budget and tax negotiations far into the future.

So, who exactly was responsible for the trillion dollar debt  before and during the last crash?
Well, Obama took office in Jan 2009, and lil Bush, the other Republican Communist had already run up the debt to 10% of GDP.  Once Obama took office the deficit began reducing until it is now 2.8% of the economy.

So which of the dufas parties will run the debt back up and crash the economy? Why Mitt Romney's party, the party of communist, big government, big debt rats.

I was almost starting to believe the guy, but now its perfectly clear that Republicans are ready to ram the debt to enormous proportion in endless Communist Stupidity.

Monday, November 24, 2014

Should we fear a bout of inflation?

More than the 1.8% inflation rate we have suffered since the crash? Let's look at the numbers.

In actual Fed printing there is some 23% of GDP cash pumped into the economy.  Of that, about 9% is needed to support real growth with neutral prices.  The other 14% is accumulating in the accounts of wealthy individuals, large corporations and large Wall Street banks.

Next there is the additional 4T borrowed, not printed, by the politicians.  But the large Wall Street banks have been very careful to insure taxpayers pay market rates,  even rigging rates higher to cover future interest rate subsidies on the printed cash.

What about the previous 8T in debt run up by the Republican Communist Party?  The debt cartel likely insures the taxpayer is paying fair market value on those interest charges, some 12% of the federal budget.

So that leaves inflation in the hands of the wealthy individuals, large banks, and corporations who hold the 14% of printed NGDP,  the remainder of printed cash.  What is the likelihood they will freak and suddenly spend all that money on salaries? Not much.  I think there is little to fear from any prolonged bout of inflation for the next few years.

The fear is taxpayers who may simply tire of paying infinite interest costs for spending long since depreciated in the economy. A tax payer revolt would send Congress into a tizzy, and that may result in inflation.

Busted for racism, none other than: Education Department’s Office for Civil Rights

CNS News: Given a choice between following the law, and doing what a bureaucrat with power over them wants, many people will do what the bureaucrat wants, and ignore the law. That seems to be the lesson of the Minneapolis school system’s decision to adopt race-based school discipline.
The Minneapolis Star Tribune reports that “Minneapolis public school officials are making dramatic changes to their discipline practices by requiring the superintendent’s office to review all suspensions of students of color.” The Minneapolis school system will require prior review before “every proposed suspension of black, Hispanic or American Indian students” can occur, which means the superintendent may “take those suspensions back to” those recommending a suspension to “probe and ask questions.”
Meanwhile, suspensions of white and Asian students will occur without any impediment or scrutiny from the superintendent. This differential treatment is as unconstitutional as giving blacks two opportunities to pass their driving test, and Asians only one opportunity.
This is part of a larger push by the Minneapolis schools to impose racial quotas on suspensions, reportedly to resolve an investigation by the Education Department’s Office for Civil Rights. Minnesota Public Radio reports that “MPS must aggressively reduce the disproportionality between black and brown students and their white peers every year for the next four years. This will begin with a 25 percent reduction in disproportionality by the end of this school year; 50 percent by 2016; 75 percent by 2017; and 100 percent by 2018.” Some other school districts investigated by the Education Department have also adopted such “targeted reductions” by race.

Well, that commission on civil rights can join the other racists, Jerry Brown, Nancy Pelosi, Eric Holder and Kevin Drum. Its has always been the Democratic Party supporting political and policy racism.

Hilsenrath blunder at the WSJ

He says: The U.S. and U.K. appear to have gotten something right, while the eurozone and Japan have fumbled. Unemployment rates after the crisis peaked at 10% in the U.S. and 8.5% in the U.K., and are down to 5.8% and 6%, respectively. The eurozone rate has climbed in the past few years to 11.5%, while Japan’s economy has fallen back into recession.
Let's talk Japan.  Japan went into debt more than the UK and less than the USA since the crisis.  In other words, debt based budgeting was about the same between all three nations. Yet Japan stumbles  going into and out of negative growth as they have been doing for some time.

Here is their growth chart since 2000.  This economy has been dealing with a pension crisis, plain and simple.  Notice in 2014, the most recent reading, barely clear on the chart, that Japan has a spurt in growth just before the consumption tax hike and a drop in growth just after the tax hike.

This behavior is not unusual for a change in government policy.

Here is what Hilesnrath says:

Japan is a case in point. It has run up large government debts, amounting to 1.35 times national output, compared with 0.8 times in the U.S. and U.K., according to the International Monetary Fund. Efforts to lower that debt now are interfering with Prime Minister Shinzo Abe ’s campaign to push the Japanese economy out of its long-running funk. In November, the government reported Japan’s economy contracted for the second straight quarter due largely to a consumption-tax increase adopted to bring down the debt.

So, he claims the 'recession' is  a stumble in their debt based spending. Is it?  The most recent quarter of negative growth could just easily be Japan struggling with their usual problems.  What makes it a recession is that two negative growth in consecutive quarters.  But that is a definition, quite arbitrary.  We have no idea whether the consumption tax has permanently damaged the economy, all we know statistically is that  it caused a one time adjustment to consumption.

We saw the same thing in the US economy with Obamacare, a one quarter shift or adjustment in the health care industry.  Hilsenrath is simply repeating a standard story with no basis in fact.  Japan has done all the Keynesian crap that some Keynesian economists have demanded, to no effect as near as we can tell.

Sunday, November 23, 2014

The mayor and wife of Iguala ordered the murder of the students

And naturally the chief of police obliged.

LA Times: The capture Tuesday of a fugitive Mexican mayor suspected of ordering the disappearance of 43 college students raises expectations of progress in the unsuccessful five-week-long search for the missing men.
But it also is probably making several politicians and other officials nervous, given their long-standing tolerance of — even support for — the mayor and his wife, despite her well-known connection to drug traffickers.
Jose Luis Abarca and his wife, Maria de los Angeles Pineda, were arrested by an elite unit of federal police before dawn in a modest neighborhood of Mexico City, police spokesman Jose Ramon Salinas said. Their detention came more than a month after the mayor took a leave of absence in the Guerrero city of Iguala and the couple went on the lam.
 Y tambien:
NBC News: Drug gang members have described a horrific effort to make 43 teachers college students disappear, detailing an industrial-scale effort involving piling their bodies like cord wood on a pyre that burned for 15 hours and then wading into the ashes to pulverize, bag and dispose of remaining teeth and bones. Mexico's Attorney General Jesus Murillo Karam laid out Friday what investigators think happened to the students who have not been seen since being attacked by police Sept. 26 in the southern city of Iguala.
He played video of presumed gang members confessing, and another video showed hundreds of charred fragments of bone and teeth that had been dumped in and along the San Juan River in the neighboring town of Cocula. According to confessions, the students were driven to killing grounds in a dump truck so tightly packed about 15 of the young men suffocated to death. The others were then slain, apparently shot to death before being burned.
Authorities say the high level of degradation caused by the fire makes identification difficult, and they are sending remains to a specialized laboratory in Austria. Some 74 people have been detained so far in the case, including Iguala's Mayor and his wife, who have been found to have ties to organized crime. Parents reacting to Murillo Karam's report said they have lost trust in anything the government says.
"As long as there are no results, our sons are alive," said Felipe de la Cruz, the father of one of the disappeared. "Today they're trying to close the case this way ... a blatant way to further our torture by the federal government."

Meth gangs, including the political establishment of the state of Guerro. I do not get why Californians are not up in outrage about this crap.

No he escuchado una sola palabra de protesta por parte de nuestros propios políticos corruptos en California. Ellos complacer a nosotros los hispanos, y  luego una vez electos se sientan  en sus colillas en Sacramento dando miles de millones de dólares para ricos banqueros de Nueva York.

Kevid Drum is back to racial pandering

Kevin commenting on "How to pander to Hispanics":
And that's not even counting the energizing effect this has on Democrats, as well as the benefit they get from keeping a promise to Hispanics and earning their loyalty for the next few election cycles.

No tengo ni idea de por qué hispanos necesitan ser mimen. Ellos parecen perfectamente autosuficiente para mí. Los hispanos en mi país hermano, México, parecen saber lo que pasa. ¿Cómo hispanos en California se convierten en la clase dependiente?

Seems habitually Islamic to me

Suicide blast kills 50 :
President Ashraf Ghani, who came to power in September, swiftly condemned the attack, describing it as "inhumane and un-Islamic".
Why lie? Suicide blasting is what Islamics do.

Sin embargo, otro ataque suicida de Islamistas

DC send 5% of our economy to the New York bank cartel

What do I mean?  The US government recycles some 12% of our Federal budget through the New York bankers in interest payments.  The Fed also has sent some 2% of our economy through the New York bank cartel over the last five years.  Divide the federal budget by 5, then add them; we get nearly 5% of GDP is funneled through about five banks in NYC, Goldman Sachs being the leader. 
In California that means we send some 5% of our economy back to these New York bankers and they decide what to do with it.

How did we get into this mess?

The Republican Communist Party, Keynesians and the mid-management of pensions in California and Illinois.  These three things rob the California middle class and allow wealthy New York stock brokers to take a 5% cut. So political boneheads deliver on a yearly basis some .25% of the US economy to wealthy brokers in New York.

Y en Espanol, naturalmente, desde que espanol es le idioma nativo de California:

El gobierno de Estados Unidos recicla alrededor del 12% de nuestro presupuesto federal a través de los banqueros de Nueva York en los pagos de intereses. La Fed también ha enviado un 2% de nuestra economía a través del cártel banco de Nueva York durante los últimos cinco años. Dividir el presupuesto federal en un 5, luego añadirlos; conseguimos casi el 5% del PIB se canaliza a través de cerca de cinco bancos en Nueva York, siendo Goldman Sachs el líder.

En California eso significa que enviamos un 5% de nuestra economía de vuelta a estos banqueros de Nueva York y deciden qué hacer con él.

¿Cómo hemos llegado en este lío?

El Partido Republicano Comunista, keynesianos y la mitad de la gestión de las pensiones en California e Illinois. Estas tres cosas robar a la clase media de California y permitir corredores ricos valores de Nueva York para tomar un recorte del 5%. Así boneheads políticos entregan anualmente algún 0,25% de la economía de Estados Unidos a los corredores ricos en Nueva York.

How the stimulus nearly destroyed Illinois

Here we have the concluence of three graphs, oil prices (scaled) in red, Illinois unemployment rate in blue, and the spending for the federal stimulus in green. Now Illinois is the traffic hub of America, both rail and truck.  It is middle America.  So Illinois will be clobbered by high oil prices worst then border states.  The entire commercial network of the USA was bypassed with the stimulus, meaning, money sent to border states was spent in border states, not part of the regular commercial flow.  Oil prices, we see rose with the stimulus, and up to a point Illinois unemployment dropped. But notice that since the stimulus bypassed the normal network, that Illinois, the traffic hub, nearly collapsed in mid 2011, employment shooting back up.  For almost the next three years, Illinois unemployment stayed at 9%, it was the last economy to recover.

Now Illinois has the usual pension problems, as does California.  Neither California nor Illinois ever fixed the problem and that had contributed to the late recovery in both states.  But clearly, Illinois suffered a net negative from the stimulus.

Saturday, November 22, 2014

Bravo a los manifestantes

MEXICO (AP) - La embajada de Estados Unidos en México emitió un mensaje de seguridad Viernes advirtiendo a los ciudadanos estadounidenses para evitar el complejo de Acapulco a causa de la violencia y las protestas.

En otro golpe a una ciudad costera una vez favorecido por las estrellas de cine de Estados Unidos y del jet set en los años 1950 y '60, la embajada dijo que su personal "han sido instruidos para aplazar los viajes no esenciales a Acapulco, por aire o por tierra", y añadió que "advierte a los ciudadanos estadounidenses a seguir las mismas pautas."

La alerta ha señalado que "las protestas e incidentes violentos continúan en el estado de Guerrero, en respuesta a la desaparición de 43 estudiantes allí."
A contrario,los Californianos deben unirse a la protesta.
Jerry Brown hace campaña en la unificación con México, y luego abandona la protesta contra el asesinato de los estudiantes.

Sphere packing, Ito's Calculus, Weiner processes and Lucas polynomials

I am going to take a shot at the general solution. I start with what I think is he sphere packing equation:

The solution is tanh, but a change of boundary conditions makes coth another solution. Rather imporant since the Lucas numbers give cosh and sinh alternatively. I add the class of martingales:

P(x,t) will be the Lucas polynomial or order n, Ln and tanh(n*a) as Ln*tanh(n*a), a derived from the Lucas number.  t is a curcular angle about a local radial from the unit sphere to the center of the current shell, having derivative being the variance in density curvature.

I have the density gradient of the containing shell counting up from the perimeter toward the center, so the curvature of any concentric shell becomes more accurate toward the center. The Lucas polynomial restricts the range of motion such that the curvature is made accurate by motion. The problem is solve for each of the n separately, n going from 1 to Nmax, Nmax giving the energy level.  As n increases toward the center, the density increases by Lucas number, but the number of zeros in the Lucas polynomial increase at a circular angle relative to the line of site toward the shell center, for the particular n.  I think that under these conditions, the polynomial and tanh are separable.

So, the spiral motion, executed by the unit sphere realizes the variance in curvature. The motion is increasingly restricted as n increases. Tanh and coth are the almost invertible gradients at any phase change from n to n+1. Lucas motion is solved relative to the current centered radial, from the unit sphere, and perpendicular to it, doing the motion. But the motion of the unit sphere is never parallel nor perpendicular to the radial toward the center, the zeros of Lucas force the spiral motion.

So I have moved the uncertainty from the center of the outer shell to at density n, although it may be reflected back toward an uncertain center and solved equivalently.

Anyway, this look like it gets the orbitals. The remaining issue is how does the vacuum do a divide to get tanh and coth from the gradients? One way or the other, I still have a divide function  in here, though Pi is gone. However, I would not be surprised if a= ln(Phi) cancels the divide when second derivative of tanh is taken.

Friday, November 21, 2014

The Fed eliminated the loop in their plot

A month ago or so, I noticed that the reverse repurchase lend lease triple play maneuver allowed the Fed to take deposits from non-member banks. Unfortunately, the member banks also take deposits from non-member banks, while leaving excess reserves on deposit at the Fed.  The result was a loop, known otherwise as the unit root and would have been unstable. I gave them a week before they would fix the problem, and sure enough they did.

John Cochrane reports:
The simple version, as I understand it, seems like great news. Basically, a company can deposit money at a bank, and the bank turns around and invests that money in interest-paying reserves at the Fed. Unlike regular deposits, which you lose if the bank goes under, (these deposits are much bigger than the insured limit) the depositor has a collateral claim to the reserves at the Fed.

This is then exactly 100% reserve, bankruptcy-remote, "narrow banking" deposits.  I argued for these in "toward a run-free financial system" as a substitute for all the run-prone shadow-banking that fell apart in the financial crisis. (No, this isn't going to siphon money away from bank lending, as the Fed buys Treasuries to issue reserves. The volume of bank lending stays the same.)

A second function of such deposits is that, like the new repo facility, it's going to help the Fed to raise rates. When the Fed wants to raise rates it will pay more interest on reserves. The question is, will banks pass that interest on to depositors? If they were competitive they would, but that's not so obvious. If large depostitors can access interest-bearing reserves through the repo program, or now through this narrow-banking program, it's likely to more quickly transmit the interest on reserves to the wider economy.

The repo program will be eliminated entirely.  This has been part of my plot to get central bankers to play with mud puddles and learn: Water in fills, water out empties. Central bankers, quite confused by their own mis-education.

John W. Schoen at CNBC needs to look at the data before speaking

He says: Since the Great Recession lifted nearly four years ago, the economies of the developing world have been slowly getting back on their feet. The recovery has been fueled in part by massive monetary stimulus, chiefly from the U.S. Federal Reserve , which has pushed interest rates lower, and for longer, than at any time in its 100-year history.

OK, lets look and see if the Fed really pushed down rates leading through the crash.
The red line is the effective funds rate, the blue line is the target. Now, let's guide Mr. Schoen's eyes to the drop in rates from 2007 to 2009.  Explain to us why the blue line is always to the right and above the red line?  Is it because the Fed was chasing the market down hill? Yes, indeed it was. In fact, Ben was selling short term securities on the way down, trying to stabilize the drop.

Since then, the Fed has kept the deposit rate above the one year Treasury rate and above the market based overnight rate. But both the latter rates are held to zero by the market, Janet is doing nothing to suppress rates.

In fact, the Fed has very little power to raise rates at the moment, except to raise the deposit rate on reserves.  Will that raise the lending rates? I doubt it, most likely it will simply cause reserves to rise. The last time the Fed actually raised rates was in 1980 when Volcker raised the reserve requirements.

So, a message to  economists everywhere, you have to look at the data before speaking.  You just cannot assume the Fed has some knob it turns; nor can you assume the magic of expectations and forward guidance.  Actual evidence is required.

Eric Holder: Chief Racist of DC speaks

Weekly Standard: Ahead of the grand jury in Ferguson announcing whether it will indict a police officer for killing a man in Ferguson, Missouri, Attorney General Eric Holder has released a video announcement telling law enforcement to behave.
"The Justice Department encourages law enforcement officials, in every jurisdiction, to work with the communities they serve to minimize needless confrontation," Holder says.
"Over the past few months, we’ve seen demonstrations and protests that have sought to bring attention to real and significant underlying issues involving police practices, implicit bias, and pervasive community distrust.  And in most cases, these demonstrations have been both meaningful and responsible, and have brought vital issues to the attention of the public at large," the top cop says in a video.

I guess all those boarded up shops in Ferguson are for rioting, looting cops.

Thursday, November 20, 2014

Why does Bernanke think interest rates are low? Compared to what?

Here is the ten year treasury rate. It has fallen consistently since 1980. Why would Bernanke think they are lower today than they will be tomorrow?

He gave a speech somewhere and said interest rates are low and now is the time for DC to spend.  But the ten year rate is what DC pays for money, why not let it drop a little more?

What percentage of the GDP should be devoted to interest payments in DC?

Reagan was willing to devote nearly 5% of GDP to interest payments, but he was a communist. Obama has it at 2.5%, just right I think.

Interest payments are a flow from taxpayers to bond holders.

Wednesday, November 19, 2014

Schramm–Loewner evolution

Hero mathematician of the day, Oded Schramm.

In 1999 he moved to the Theory Group at Microsoft Research in Redmond, Washington, where he remained for the rest of his life.

Microsoft stole this guy! He dies in a climbing accident in 2008 and we will miss some great triumphs in theory. This guy cracked the code in the new math, the math of minimally redundant systems. But the lesson is, mathematicians are worth more than their weight in gold, find them, hire them.

I will be talking about his work and how it relates.

He had two partners;
Wendelin Werner (born 23 September 1968) is a German-born French mathematician working in the area of self-avoiding random walks, Schramm-Loewner evolution, and related theories in probability theory and mathematical physics.
and  Gregory Francis Lawler (born July 14, 1955) is an American mathematician working in probability theory and best known for his work since 2000 on the Schramm–Loewner evolution.
The work is important in that it identifies the property of a lattice that defines finite elements conformal to calculus and conserves system properties. Redundancy, is my conjecture, that finite elements which are not martingale, that is retaining a memory of the past requires redundant motion.

I deal with congested systems, optimally congested. Motion is to achieve separation  but the congestion gradient is established by local interaction. As separation increases the separation gradient becomes uncertain, and there is no non-redundant exchange at some point.  That point is the point of optimum congestion. At this equilibrium, elements will operate with their congestion gradients intersecting at some uncertain center which should be minimum phase, or normally distributed . The elements reach a stopping point where movements perpendicular to the local radius are indistinguishable to movements along the radius. The elements are at maximum entropy and the uncertainty is fixed to the Fine Structure constant; and the curvature of the enclosing sphere estimates a rational Pi with optimum error. The system is spherically adiabatic.

The gradient changes as 1/r, r measured from a probable center. Hence the system must quantize motion along r and angle to maintain the martingale condition everywhere. Hence the unit almost sphere, otherwise known as particles.

What is t?

Well the only requirement is that it be a variable globally known and is not x. Most likely is is the unit of uncertainty, a quantization of  the Fine Structure  for the system. It is quantized for minimum redundancy which sub-selects solutions for x. p(t,x) still generates the martingales, within the limits of uncertainty. It is globally known because the minimal unit of the system has it built in.

Monday, November 17, 2014

Economists: The long term unemployed are in Illinois

Economists can't find out where they are! They are the blue line of unemployment. The green is New York for comparison and red is aggregate unemployment. So we see the long term unemployed sitting in Illinois, the fourth largest state in the union and the major transportation hub of America.  Economists can do aggregate regression all they want but the error bars will be enormous when Illinois contains this many long term unemployed.

Why does the major transportation hub of America suffer long term unemployment?

The most immediate answer in the first rise of Apr 2011,  was the day the stimulus drove oil prices back to the moon. The second happens to coincide with another rise in oil prices.  Illinois finally got back on track in Feb of this year folks.  That was when oil prices finally deflated.

The second reason is the pension problems and the resulting taxes needed to cover them.  So we have two major causes, all of them Keynesian in origin. Waddya know? Ya think the Keynesians will actually find the problem? Don't bet on it, they will debate error bars from here until they retire, so forget about any of those bozos finding a thing.

Kevin Drum says White boys done this

JEFFERSON CITY, Mo. (AP) — Missouri Gov. Jay Nixon has declared a state of emergency and activated the National Guard in advance of a grand jury decision about whether a white police officer will be charged in the fatal shooting of a black 18-year-old in the St. Louis suburb of Ferguson.
Nixon said Monday that the National Guard would assist state and local police as needed, in case there is civil unrest when the grand jury's decision is announced.
There was no indication an announcement is imminent. There is no specific date for a decision to be revealed about whether Ferguson Police Officer Darren Wilson should face charges for shooting Michael Brown on Aug. 9. The St. Louis County prosecutor has said he expects the grand jury to reach a decision in mid-to-late November.

Bernadeia says the Black Boys done it.
Daily Caller: Superintendent Bernadeia Johnson told NPR, “I and all of my staff will start to review all non-violent suspensions of students of color, especially black boys, to understand why they’re being suspended so we can help intervene with teachers, student leaders and help give them the targeted support they need for these students.”

Which liberal racist pig are we to believe?

I think Kevin, Bernadeia and Jerry Brown make 250 years of racist pigs in the Democratic Party, that's quite a record.  If you ask them why, the liberals will say, "Its ok for us to racists, we are morally superior". Same excuse we have been hearing from them for 250 years.

Does the racist Eric Holder help out?

No, the Department of Civil Rights says the Black Boys done it and need special help.  He is in charge of official racist policies in DC. Now the FBI issues a memo saying crowds of violent African Americans will likely threaten lives and property.

Los Demócratas están en un concurso para ver quién es el cerdo más racista. Bienvenidos compañeros hispanos para el partido Demócrata de Estados Unidos racista.

The hyperbolic yield curve

I sort of done it on the fly.  Let's look where I was headed:

The outcome I wanted was: 1-tanh(n*a)^2 = balance ratio.

The balance ratio was principal amount deposits over loans. The n was the step size and a, if we use Lucas numbers, is ln(Phi), I think, without looking things up.
The sinh and cosh were rates plus unit balances, for one period. Tanh then was the ratio of deposit flows to loan flows.  1-tanh^2 is the first differential of the flow ratio.

So the idea was that as n stepped up, the flows go to one and the principal balances go to zero. The balance ratio is the ratio that results when a careful economists goes from the weiner equation to the equation above:
For p(x,t) = t*tanh(x), where t was the balance ratio.

Where I left off was wondering what Lucas polynomials divide to make p(x,t), and I have barely looked.  The Lucas numbers generate sinh and cosh alternatively with each step of a.

Why do we care? Because if this equation is true then we know the limits of an optimum monetary zone, that is the balance ratio when it is as close to zero as we can get, which is the fine structure constant in physics, naturally, because nature does sphere packing as an estimation method.

Do economists care if tanh is polynomial? Not at first, they should figure the rest out themselves, I am retiring from estimation theory. I am too lazy or need a vacation, one or the other.

Sunday, November 16, 2014

My take on the Japan economy

First, it looks like the five months of 3% inflation was due to the anticipated and then actual consumption tax.  Otherwise, inflation has been in the 1-1.5 range since the crash. Yet the ten year yield on government bonds have been .5%. How in the world do they do consistently negative rates?  Central bank bond buying, evidently. Someone has to take the loss since the rest of the economy needs positive interest rates to support positive growth. And yes indeed the Japanese economy has been going in and out of recession for some time.  Likely Japanese oil importers pay a premium and business lending pays a premium.

Someone selling oil to Japan is going to notice that the Yen loses money over time, so eventually Japan pays a premium in price.
Here we see the price of oil in Yen (blue) and the price of oil in dollars (red).  The conversion factor was based on the Yen/Dollar exchange rate.  But the dollar is still king and the US is still the major Japanese market.  So what we see is what we expect, the real price of oil has been rising for Japan. The result is intermittent recessions in Japan.

So this is the symptom, what is the cause?  Likely the Japanese government is stuck with huge pension payments.

The idea that the government and central bank can fool traders by faking low rates is horse manure, it never happens.  If trade is happening then you can bet that someone is making an accurate yield curve.

Japan makes it official

TOKYO (Reuters) - Japan's economy unexpectedly slipped into recession in the third quarter, setting the stage for Prime Minister Shinzo Abe to delay an unpopular sales tax hike and call a snap election just two years after he took office.
Gross domestic product fell at an annualised 1.6 percent pace in the July-September period, after it plunged 7.3 percent in the second quarter following a rise in the national sales tax.

Reinhart-Rogoff, where are you?

Nationwide alert for police forces?

BOSTON -- From Boston to Los Angeles, police departments are bracing for large demonstrations when a grand jury decides whether to indict a white police officer who killed an unarmed black teenager in Ferguson, Missouri.
The St. Louis County grand jury, which has been meeting since Aug. 20, is expected to decide this month whether Officer Darren Wilson is charged with a crime for killing Michael Brown after ordering the 18-year-old and a friend to stop walking in the street on Aug. 9.
So, goes the theory, nationwide large groups of African-Americans will form in protest threatening lives and property.   So who put out the alert? Evidently is was an outburst of preparedness from Boston to Las Vegas.  So we have four or five major police departments preparing in case large groups of African-Americans start threatening lives and property.  Well, let us see if large groups of African-Americans are that stupid, I would think not.

Egad, the vortex!

Accuweather: The coldest air since last winter is set to move over the Plains and the East during the first half of the new week.
The core of the cold air will focus over the northern Plains and the Great Lakes through at least Wednesday with overnight lows dipping down into the teens, and even the single digits in some normally colder spots.
I would say, come to California, but we have no more water.  What a choice, plenty water and cold cold air; or a drought.

Keynesian handwavers are at it again

This time Jack Lew gave a speech on behalf of his handler, Goldman Sachs, requesting more deficit spending from Japan and Europe. Since then the Keynesian handwavers start repeating the line, none of them checking the facts.

Japan with a debt to gdp ratio of 200% has deficited another 42% of GDP since the crash, with nothing to show for the effort.
The USA and UK deficited an equal amount, but only brought debt to gdp up to the 95% level, they show some growth.  But Spain was exactly in line, with an even higher amount of deficiting, 47% of gdp, and small debt to gdp, yet they performed miserably. France, with 92% debt,  was only 1/4 short in the deficiting arena and actually performed better than Japan.  Italy, 132% debt to gdp could do nothing.

Even within the USA, we see the same variance in result, Texas outperforming California consistently by 2%, and Illinois just barely getting out of trouble way late in the game. Yet all states participated in deficiting by DC.

All of the factors effecting growth swamp the deficit spending effect. Perhaps one exception might be Germany with low debt to gdp and low deficiting after the crash.  Once the economic units are broken down to comparable size we find a 2% variance in performance mostly uncorrelated with any deficit spending.

As near as I can tell, none of the handwaver economists actually looked at the data, save one; Simon Lewis in the UK seems to have actually looked. Further, I would claim that very few economists come out of Keynesian school with any data analyis capability what so ever.

  This is the usual typical handwaving by very badly educated economists, most of them in the USA.

Friday, November 14, 2014

Quarter by quarter budgeting in the Swampland

WA Post: Instead of passing a spending bill in the coming days that would fund the government through the end of the fiscal year, Republicans are considering a short-term measure that would expire early next year, according to more than a dozen top lawmakers and their aides who spoke on the condition of anonymity.

A fantastic idea.  Obama would embrace the idea if he had any brains.  Get the lazy Senate off their ass, roll up the sleeves, put on the eye shades and start budgeting quarter by quarter.  They would find short term savings, require less long term funding, move down the yield curve, save on save interest costs and accumulate some working cash.

Especially get those deadbeat affirmative action bimbos from California to start earning their pay.

The curve would straighten out, velocity increase and NGDP would grow by 4% a year.  This is the Bubba Clinton method, embrace it. To Democrats want to spend their time waving the Book and singing glory to DC?  Try being a friggen legislature and executive for once, worthless politicians in DC are a pain in the ass. The California legislature might watch, maybe their IQ will jump above five points for once.