Saturday, April 30, 2016

I take DeLong's challenge

BERKELEY – For countries where nominal interest rates are at or near zero, fiscal stimulus should be a no-brainer. As long as the interest rate at which a government borrows is less than the sum of inflation, labor-force growth, and labor-productivity growth, the amortization cost of extra liabilities will be negative. Meanwhile, the upside of extra spending could be significant. 

Using quick and dirty search methods we get, productivity growth from the IMF:

Coming in at zero.  Then population growth is .75% according to World Bank.   And inflation is basically zero.  But Congress borrows at the ten year rate, they got a huge rollover problem and have long termed all their debt.  The ten year rate is 1.83%.

Borrowing costs are too high, and we see that in the erratic volatility of interest payments by Congress,they suffer huge rate risk.


Rates:  When Congress borrows short term, and gets growth!, then the curve is upward rising and lifts.  But rollover of the past due occurs about 3 trillion per year, and its all 5-20 year debt.  The total effective rate becomes the weighted peak of the term distribution of debt, and that measures to the ten year rate.

Inflation:  We have deflation in consumer goods (68% of GDP), less housing and medical.  But housing inflation is driven by Asian rebalance and may not be all new construction after revisions. Medical inflation is driven by Obamacare.

Productivity: It ranges from 0 to 1.5% depending on your source.

Friday, April 29, 2016

Instabiity from over-aggregation

Jim Bianco 

"Not only do the five largest financial institutions in the US have a higher concentration of assets than they did before the financial crisis but it’s the largest concentration ever. So we’ve made the too-big-to-fail-problem worse because we have bigger, more systemically important financial institutions now than we did in 2007 – and nobody seems to know what to do about it... [EU banks] are acting irrationally. They’re not acting that way because they don’t believe it or they don’t understand it. So we’re still all trying to feel around in the dark as to what this means. And that means that the chance of an accident is very high."
HT Zero Hedge

We have one issuer of massive government debt, Treasury.  As that single entity dominants, in the market, a minimization of costs require the debt market to equally aggregate.   The Swamp itself is the fountain of monopoly.

Saturday, April 23, 2016

Obama enforcing the New World Order

UK Express: The US President warned the UK would be “at the back of the queue” for a trade deal with America if it quit Brussels.
But his threat provoked outrage and scorn from pro-Brexit campaigners, who dismissed it as yet another scaremongering ploy from the pro-EU lobby.
Mr Obama, who will no longer be in office when decisions on a trade deal are made, delivered a lecture to the British people on why he thinks it is in the UK’s, America’s and the world’s best interests for Britain to vote to stay in the EU on June 23.
When the original government plan ignored side effects then a higher level of aggregation is needed to suppress the effects. 

Tuesday, April 19, 2016

Minimum wage wave pushes all the wage brackets

Public sector unions intend to push up all the wage brackets based on the new minimum wage law. This is called self adaptive statistics.   The unions will push the wage brackets up before Jerry can cry monkey's uncle, and local municipal hiring will freeze.  Jerry Brown is stuck, California unemployment rate is rising fast and soon.
The Sacramento Bee story proves that the state’s public employee unions will use the increase in the minimum wage at the bottom-rungs of a pay scale to push for across the board wage increases for most public employees.  And they will likely get it, given how public compensation practices work for public agencies in California.
During the New York public celebration, New York state’s AFL-CIO President Mario Cilento said, “When we raise the floor in wages, we raise the ceiling.  Those of you making 16 or 17 or 18 dollars an hour, the net time your union goes to negotiate, they’re going to ask for 19 and 20 and 21 dollars and up!” according to the Sacramento Bee report. (New York also raised its minimum wage)
J.J. Jelincic, a CalPERS board member and former state labor union president and negotiator confirmed that this “will certainly be the strategy for government unions in California,” according to the Bee report.
“My experience is that when you raise the floor, it creates tremendous pressure for raises at least a few rungs up,” Jelincic told the Bee.
There are an estimated 12,000 state employee from custodians to office assistants who earn $15 to $20 per hour, states the report.
The state firefighters union says the “ripple effect of higher minimum wages should flow all the way up the ladder at Cal Fire,” according to union spokesperson Terry McHale.  Otherwise, the state risks “compaction,” which occurs when wages for jobs that carry less responsibility get too close or even overtake salaries for higher positions with more responsibility.

Monday, April 18, 2016

Can states sue the federal government?

Texas and some other states are suing the federal government because they are forced to provide services to undocumented immigrants.  The answer is yes, since the key term is undocumented, meaning illegal immigrant.  That is a requirement outside of the Congressional immigration law, Congress did not call them  legal immigrants. Hence the suit is valid, the state of Texas has its state's sovereignty threatened.
Sotomayor ignores the fact that Congress has labeled them illegal immigrants, she seeks to grant them rights for pure political  motives, outside any Constitutional authority.

WASHINGTON — An eight-member Supreme Court appeared skeptical on Monday that President Barack Obama’s decision to defer deportation for millions of undocumented immigrants could be subject to a multi-state legal challenge in a court of law.
At issue in the 90-minute hearing in United States v. Texas — perhaps the most deeply political and consequential case the justices will decide this year — are the president’s executive actions on immigration, which have been on hold for more than a year as a result of a conservative challenge from Texas and 25 other states.
If Texas and the other states are allowed to sue, “then every case of political disagreement where states disagree [with the federal government] would come before the court,” said Justice Stephen Breyer.
At the heart of the case are two constitutional questions: Whether the states have legal “standing” to sue over how the federal government administers immigration policy, and whether the policy itself complies with the mandate that the president “take care” that the laws be faithfully executed. On this latter point, centrist Justice Anthony Kennedy, who in 2012 largely sided with the federal government in another immigration case, seemed to share the concern of the conservatives states that sued to invalidate the president’s programs.
“It’s as if the president is setting the policy and the Congress is executing it,” Kennedy said. “That’s just upside-down.

Mish gets chart of the day

He watches transportation, when freight is down consumption is down.  The freight index changes over the year, in a somewhat predictable manner.  The red line in the chart is predicting a bad year for consumption.

Yawker v Texan

Business Insider: With polls showing him maintaining a gigantic lead in his home state, he appeared to be attempting to run up the score, suggesting that Cruz "hates New York."
Among other things, Trump called out Cruz for voting against relief for Hurricane Sandy after the 2012 disaster hit New York. He also lashed out at Ohio Gov. John Kasich for his alleged support of the North American Free Trade Agreement.
"No New Yorker can vote for Ted Cruz," Trump said. "And no New Yorker can vote for Kasich, who voted in favor of NAFTA ... which is a total disaster."

Another recession indicator flashes

Business Insider: The capacity utilization is a measure of the output of existing factories. Measured as a percentage, if factories are cranking on all cylinders, so to say, utilization would be at 100%. As it drops lower, that means that factories are sitting idle or not producing as much as they could be. This could then be read as a measure of demand — if people are buying less than factories will not produce as much.
Klein's warning sign is the measure's substantial drop over the past few years. As of Friday, the reading stands at 74.8%.
"The reading has declined 4.8%  from its November 2014 peak," wrote Klein.
"Throughout the near five decade history of the series, a slip of a commensurate amount has always coincided with a recession. The second derivative of the chart has also turned more negative to counter any hope for an imminent shift upward in the data."

I was right abut the Swamp Gas

Death in the White House: President William Henry Harrison's Atypical Pneumonia.

Historians have long maintained that pneumonia killed William Henry Harrison (1773-1841) just 1 month after he became the ninth president of the United States. For more than a century and a half, it has been alleged that the aged Harrison caught a fatal chill the day he was sworn into office while delivering an overly long inaugural address in wet, freezing weather without a hat, overcoat, and gloves. However, a careful review of the detailed case summary written by his personal physician suggests that enteric fever, not pneumonia per se, was the disorder that carried off "Old Tippecanoe." Two other presidents of that era, James Knox Polk and Zachary Taylor, also developed severe gastroenteritis while in office. Taylor's illness, like Harrison's, proved fatal. In all 3 cases, the illnesses were likely a consequence of the unsanitary conditions that existed in the nation's capital during most of the nineteenth century.
I always joked that they need to check for Swamp gas in DC. 

Sunday, April 17, 2016

Business license are not out of bounds

SF Gate: For the first time, San Francisco is going to require the 37,000 Lyft and Uber drivers who work in the city seven or more days a year to obtain a business license.
City Treasurer Jose Cisneros wouldn’t fully explain why he is now requiring the license, which will cost drivers $91 annually, when the companies started operations years ago. But one reason, he said, is that the city launched its online business registration system in March — before, registrants had to go to City Hall to apply in person.
Having to get a business license is generally a service to the local tax agent. A pain, maybe they should be abolished.
But,but... Uber drivers are not any special case, they are either business owners or employees.

President Trump has New Yawk values

New York (CNN)
Trump instead offered up his definition of New York values.
"Number one: Honesty and straight talk," Trump said, also mentioning family and work ethics as part of the definition.
"It's the energy to get things done. Big energy," he added. "It's courage and community service."
As he did in his original response to Cruz, Trump also cited the September 11, 2001, terrorist attacks.
"New York values were on display for all to see in the aftermath of 9/11 -- a strike at the heart of our city and our nation. In our darkest moments, as a city, we showed the world the very, very best in terms of bravery and heart and soul that we have in America," Trump said.
New Yawk values, really, have one common theme, New Yawk values put New Yawk first in the  cookie line. 

Monopolies are a part of lower growth

Economists now worry about the concentration of corporate power.  

But monopoly concentration is simply part of lower growth.  See the chart?  The velocity, transaction rate is dropping, but real output, the red line, keeps on climbing.  How do we hav e fewer transaction over time but growth the economy over time?  Simple, we sell larger batches of goods per transaction, that is a monopoly effect.

Saturday, April 16, 2016

Friday, April 15, 2016

Thoughts on the climate change debates

My opinion is known, it has two parts.  We are in charge of the climate, and we follow the ice core measurements.  And with a bit of looking around, the answer comes back to humans controlling the carbon cycle via large scale algae farming.  Solar electric is a great bridge, and has a role. 

However, we have already tipped the scale, so the equilibrium climate state is our choice.  Algae technology is trekking along slowly, but surely.  It yields the greatest of all energy ideas, liquid fuel, no copper needed.  We do not need mammoth acreage, the numbers are not that bad, when the algae efficiency reaches some critical level this all seems plausible.  Think of us as adding a bit of a lung to small portions of the earth's surface.

Its not a bad world, we price the carbon with long term goals;  maybe drop a half point in temp and top off the glaciers, for example.  Once a generation winter carnivals to restore fresh water.  We have no other choice, and ice core religion says we hover about the mean, and that is quite a bit colder.   

Many questions to be asked, but because of the simplicity of liquid fuel, algae technology will eventually poke its head into the market and make it possible.  But its a dangerous world when the rich rig the energy markets, stockpile carbon and cover us with ice, while they ski the equatorials.

Like dominoes

WSJ: Ohio, a key economic bellwether for the 2016 elections, could be seeing trouble on the job front.
The Buckeye State’s unemployment rate rose to 5.1% in March, up from a postrecession low of 4.6% recorded last summer, the Labor Department said Friday. The rate has returned to its year-earlier level.
Emerging weakness doesn’t help the turnaround story touted by Gov. John Kasich, a Republican presidential candidate.
The state’s unemployment rate peaked at 11% in January 2010, and fell swiftly until last summer. But a slowdown in manufacturing and the energy industry appears to be causing the jobless rate to tick back up. Those same industries have been retrenching nationwide.
We previously saw the same in Texas.  These are the second and seventh largest states. 
And this:

Industrial production decreased 0.6 percent in March for a second month in a row. For the first quarter as a whole, industrial production fell at an annual rate of 2.2 percent. A substantial portion of the overall decrease in March resulted from declines in the indexes for mining and utilities, which fell 2.9 percent and 1.2 percent, respectively; in addition, manufacturing output fell 0.3 percent.
We are about to here more economists making the call. 

Daily Show stuck on Stork Theory

Huffington: On Tuesday’s episode of “The Daily Show,” correspondents Jessica Williams and Ronny Chieng took a humorous yet hard-hitting look at a form of bigotry not often discussed: sexual racism.
“Racism affects nearly every aspect of life, even — and it truly pains me to say this — f**king,” host Trevor Noah said as he introduced the segment.
Williams and Chieng specifically looked at how some groups, like black women and Asian men, faced undue discrimination in the world of online dating.
“There is kind of a systemic racial bias pretty much in every dating site I’ve ever looked at,” Christian Rudder, co-founder of OKCupid and author of the dating statistics book “Dataclysm,” told the duo. “We found that 82 percent of non-black men have some bias against black women… And Asian men get the fewest messages and the worst ratings of any group of guys.”
Isn’t it OK to have preferences when it comes to finding a partner?
Here is a clue.  We have races because we discriminate in choosing mates.  It has to do with sex and procreation, try a biology class. 

Climate denialists, like Bill Nye, sent to jail?

Daily Wire catches  science guy  talking about our half million year climate cycle.  So, tell me Bill Nye, how is mankind going to get us back into our normal ice age?  If the answer is, melt the ice, uplift the crust, and blow the volcanoes, if that is the answer, then Bill Nye needs to be in jail. You see that peak CO2 in the last two cycles?

Ultimately it is man's destiny to control the planet thermostat, and that means large scale CO2 farming.  We will be extinct or we will control the carbon process, our future lies in algae.

By the way, these ice age cycles should generate a magma pump, providing the connection between climate and geology. 

Federal agencies are the bottleneck

Yahoo: On Friday, President Barack Obama announced he would sign an Executive Order directing every relevant agency of the Federal government to take steps in identifying bottlenecks to competition and to create new ways to increase competition in the economy. The Executive Order puts agencies on a fast-track path to, within 60 days, identify the steps they’ll take.
“Competition is good for consumers,” Obama told Yahoo Finance in an interview at the White House on Thursday. “And ultimately it's good for business. That's the way the free market works. The more competition we have, the more products, services, innovation takes place.”
There are something like 200 volumes of rules generated byn federal agencies which bottleneck corporations and induce monopoly. Most of these bottlenecking, monopoly enforcing rules are endorsed by  progressives.

Obamacare death spiral

Premiums are set to rise again next year.

Hill: Health insurance companies are amplifying their warnings about the financial sustainability of the ObamaCare marketplaces as they seek approval for premium increases next year.
Insurers say they are losing money on their ObamaCare plans at a rapid rate, and some have begun to talk about dropping out of the marketplaces altogether.
“Something has to give,” said Larry Levitt, an expert on the health law at the Kaiser Family Foundation. “Either insurers will drop out or insurers will raise premiums.”
While analysts expect the market to stabilize once premiums rise and more young, healthy people sign up, some observers have not ruled out the possibility of a collapse of the market, known in insurance parlance as a “death spiral.” 
In the short term, there is a growing likelihood that insurers will push for substantial premium increases, creating a political problem for Democrats in an election year.
Insurers have been pounding the drum about problems with ObamaCare pricing.

Thursday, April 14, 2016

It makes us more volatile

Derik Scissors has a chart that  shows US expansion associated with deficit expansion. I notice the ups and downs, which get worse as the deficit accumulates. It also looks like the trade deficit has reached a peak.  And I might note, the deficit is being rebalanced with extremely skewed asset purchases from Asia, driving a west coast housing bubble.

Obamacare is a war crime?

Manhattan Institute: The ACA has stimulated dramatic changes to America’s individual health-insurance market. It has placed more restrictions on insurance pricing (i.e., charging individuals different premiums depending on their health and age), and it has mandated benefit increases for insurance plans. Such changes have caused premiums on the ACA exchanges to soar by 49 percent, on average; younger, healthier adults have seen their insurance costs rise the most.

Wait a  minute, we have plenty of evidence that capture of state governments by special interests can lead to mass migration.  Now we see that Obamacare hammers young folks, delays their household formation, Causes demographic pathology;  that is a war crime.  Politicans, namely Nancy Pelosi, deliberately using law and politics to foment mass migrations or generational genocide.  Like Hillary and Kerry doing the nanny foreign policy in Syria, how did that turn out?.

My hometown, in the news

Fresno’s former deputy police chief Keith Foster offered plea deal in drug-dealing case

Read more here:

The quota on corruption in Fresno, I think it has a lower and upper bound.

The anti-euro movement moves to France

(COMMONDREAMS) A police crackdown will not deter France’s burgeoning Nuit Debout (or ‘Up All Night’) movement that has swept across the country in recent weeks as the unifying call for change sparked protests in over 50 cities this weekend.
Riot police early Monday cleared the encampment in the Place de la Republique in central Paris after 11 nights of protest, but demonstrators have vowed to maintain their nightly vigil.Demonstrations this weekend were held in as many as 60 cities and towns across France as well as in Belgium, Germany, and Spain, according to reports, as an estimated 120,000 protested against austerity, globalization, increasing inequality, privatization, and the continent’s severe anti-migrant policies.

What do they complain about?

But that may not be enough as another protest has been announced for Monday evening. For months, ideological tensions have been on the brink of combustion across France and greater Europe, particularly in response to the European Union’s unpopular austerity economics and, more recently, the anti-migrant policies that have taken hold amid the larger crackdown on rights following the bombings in Brussels and Paris. Meanwhile, observers are connecting France’s leftist upsurge with similar pro-democracy movements taking hold across Europe and the United States. 

All of those complaints are anti-euro.  Austerity, certainly; control of their own borders, yes.   The nations having revolts are Greece, Spain, partially Portugal, and now France.  Germany, looking at long term gains or losses may well grant their wish.  The Germans see the migration problem as a problem with Euro. 

The borders are now returning to national borders as the nations build fences.  So this protest group will win, France controls its own borders.  If they want migrants, North Africa and the Middle East can deliver a 100 million.  Their economies are collapsing along with the commodity crash.

This group seems not to understand the situation, Germany will grant their wish. Germany would like nothing better then for France to take the refugees. And here is another clue, those refugees will be spending a bitter cold in Germany, and will themselves  trek on to France.

What is the global outlook?

Japan is insolvent, Europe disintegrating back to national rule. The American consumer broke. Middle East and North Africa collapsing, China having a very rough transition.  Global trade is miniscule, except the supply glut of oil. Italy's bad debt. Brazil critical, Venezuela gone.  India the only bright spot. The US is evacuating two major cities due to debt default. This is the generational debt cycle, and all the advanced economies have it, mostly because the mass slaughter of WW2 synchronized all the sex.


We been there, done this; once a generation.  Each time the technology of banking improves. We have the technology for a smooth and productive change in money.  We get the problem, the technology can generate fair helicopter pick up and delivery.

Smallest dictator in the world can't get it up

Bloomberg: North Korea failed in an attempt to launch a missile on the birthday of its founder, a day after South Korea said the regime might fire a ballistic device believed to be capable of reaching Guam.
The launch took place on North Korea’s east coast in the early morning hours of Friday, South Korea’s Defense Ministry said in a text message. It didn’t say how the launch ended up being a failure. North Korean rockets have in the past exploded in the air.
According to protocol, one of his girlfriends must be machine gunned. 

Yes, we have become nutty

The US Department of Education has banned chalk?

DePaul University will no longer allow students to chalk political messages on the sidewalks of its campus because of the “offensive, hurtful, and divisive” nature of pro-Trump chalking found on campus last week.
“While these chalk messages are part of national agendas in a heated political battle, they appeared on campus at a time of significant racial tension in our country and on college campuses. DePaul is no exception,” Depaul’s vice president for student affairs Eugene Zdziarski wrote in a campus-wide email obtained by Campus Reform. “The university has been addressing campus climate issues in an effort to provide an inclusive and supportive educational environment. In this context, many students, faculty and staff found the chalk messages offensive, hurtful and divisive.”
Consequently, Zdziarski explained that DePaul’s status as a 501(c)3 tax-exempt non-profit organization prohibits students from participating in any political activity that could be interpreted as a reflection of the university’s “views or opinions.” Political chalking on Depaul’s grounds, Zdziarski argued, fits this description.
We have gone into nutty. 

Yglesias is economically illiterate

He claims that Time magazine  is wrong in assigning n this debt bill ton each person.  He claims that the magic of the IRS insures  rich people may more than their share. Unfortunately, that is an incorrect Magic Walrus assumption.  

The economy is 70% consumption and the double entry accounting system ultimately assigns costs to consumption. The tendency is for middle class workers to slave away and generate about $461 billion/yr in extra consumer goods to feed the folks who hold government debt.  That is about $3000/yr in interest cost paid for with extra work hours for the majority of middle class workers.  It appears in  higher prices for essential goods, the accounting system guarantees it.

We know it is mostly bailouts because the taxes never rise sufficiently to pay the interest  costs, instead the potential growth rates drop, and potential growth has dropped as the Swamp takes on more debt.

Treasury rates are not too low

Look, what percentage of real goods are set aside as surplus to cover federal interest payments? Seven percent, and that number will not grow.  Take a look, with this economy, we exceed seven percent and we get severe volatility.

But wait, it gets worse.  The deficit has stopped dropping, its now getting worse, so if rates stay the same, the Swamp cannot budget, DC stops working at all.  The central bank has long since used up its resevoir of liquidity, it cannot mark to market as long as the US Senate is a member bank..

There is no inflation

All consumer prices index, unadjusted.  It has flatlined, found a  peak, won't go higher until the helicopter droppings.

Bubba Clinton did not lose the Black vote

He is appealing to the vast majority of Blacks who are sick of Black teenage violent gangs.  The Clinton's will say anything to get the Black vote, including the truth. 
Says Ben Carson's business manager:

Armstrong Williams, Ben Carson’s business manager, says that the Clintons “will say whatever they need to say and do whatever they need to do to get elected.”
During a panel at that Al Sharpton’s National Action Network conference in New York on Wednesday, Williams said, “We sit here, you hear the race speeches because they feel that’s what you want to hear today. Everything in America is not always about race.”
Read more:
Right, not always about race, sometimes its about common sense, and Bubba pushed common sense when bitching about Black Lives Matter.  A lot of differently colored people like common sense. 

White man's burden in the colleges

Universities Are Singling Out White Students For ‘Education      Sessions’Photo of Peter Hasson-PETER HASSON

Read more:

The story is about classes that teach us hpow to be a better white person.  But you have to self-identify as white, which I guess is the crime.  Self-identify as an asshole and you are home free.

Wednesday, April 13, 2016

What will the Supremes say?

A federal appeals court appears ready to declare the structure of the Consumer Financial Protection Bureau (CFPB) unconstitutional, a major blow to the first new agency created under President Barack Obama.
The possibility of dramatic action against CFPB arose in an oral argument Tuesday before the U.S. Court of Appeals for the D.C. Circuit. The National Law Journal first reported the hearing.
CFPB has been an aggressive regulator, allegedly bullying banks, mortgage companies and other financial institutions with costly actions designed to force compliance with the bureau’s anti-business rules on financial transactions. Many companies have fallen in line rather than contest the new bureau’s power.
Critics of CFPB have noted it is the only agency not accountable to congressional oversight and therefore violates the separation of powers set down by the Constitution. That principle provides that Congress have checks over the executive branch agencies like CFPB. Those checks do not apply to the agency.In creating the bureau under the Dodd-Frank Act, the Obama administration housed the agency in the independent Federal Reserve Bank. The bank’s budget and operations are immune to congressional oversight and independent of the president.
The bureau also is one of the few regulatory agencies managed by a single director. Other regulatory panels like the Federal Election Commission and the Nuclear Regulatory Commission have multiple voting members.
Congress does indeed have the power to delegate its authority, as long as it retains the power to recover its authority.   The consumer bureau adds to transaction costs, thus raising the cost of using the US dollar, it is contractionary I am sure.  But you and I have no plans to change the structure of the Swamp, and it is  very undemocratic.  We have to accept lower growth or change how we govern.

Delusional American diplomats

First, Hillary gets this idea that she has middle east answers, and sends in the CIA. Now we have these so called moderate rebels we need to support. But Hillary and Kerry forget that there are few alternatives to Assad, and thre nightmare in Libya and Egypt should be a clue. These bone heads created a 100,000 refugees which we have to take in, or let them be killed. Stupid is as stupid does.
The Obama administration is weighing a "plan B" for Syria should the cessation of hostilities currently in place between rebels and the regime begin to unravel,The Wall Street Journal reported on Tuesday.
Plans to supply the moderate-opposition forces with more powerful weapons, including surface-to-air missiles, are apparently being drafted by the CIA, along with a proposal to sendan additional 250 US special-operations forces into Syria to advise the forces.
"There has been a big debate inside the administration on how much to do to help turn the tide of the Syrian war," geopolitical expert Ian Bremmer, president of the Eurasia Group, told Business Insider on Wednesday.
He continued: "So part of this is a bunch of frustrated people inside the administration — and John Kerry is one ... floating their preferred option to get the rebels some support."

The central bankers are freaking

Zero Hedbe covers the current hysteria.

They have Japan and China doing this weird trilemma of death by  threatening FX trade manipulation.  Abenomics is not working, the national debt is not inflating away.  China stopped supporting its currency, it fell.  Chinese corporations cannot cover their interest payments.  The US has near zero growth and the American consumer is broke and we are in deflation.

The problem, it seems, is government monopoly control of the currency function.  Fiscal actions become unsustainable bailouts and debt is used to cover the losses.  The old fifty year debt cycle in the USA.  So Japan, no doubt has Obama's ear, China no doubt is currency warring with Japan and the USA, at the same time.  China is not intentionally malicious, but they have agreed with the global bank to trade their currency among a basket of traded currencies. But in that basket is this huge US economy, China wants the dollar to drop with the yuan, otherwise the currency spread, the distribution of currency trades, is too big for China's limited money markets.  Japan wants a strong dollar or it will die, it lives on exports to the USA.

How does banker bot do it?

We have the currency banker serving queue of deposits and a queue of loans.  The difference between the two queues generates a distribution of central banker float.   Any of the next trades cause the currency banker float to exceed two sigme from its last mean causes a rebalance.  The currency banker bot pays off this who guessed the actual mean, they got their futures right.

As a betting tree, the tree isn hte encoder for a finite windowed 'Huffman organizer''  That encoding tree is a deliberately limited sized version of the block chain ledger.  The adaptive Huffman encoder will see and innovative bet whohc causes then  adaption to exchange nodes on one of the branches because the bet was out  of variance, the currency bot rebalances that branch, back down, computed the 'compressed' quantities,ie the typical sequence recently observed.

The real issue is entry and exit of member banks. But even that might have a statistical definition, and the process can be made open via smart cards, everyone the opportunity to be a member bank.

The IMF thinks we have too much debt

Global policy makers need to guard against a self-reinforcing “spiral” of weakening growth and rising debt that could require a coordinated response by the world’s major economies, according to the IMF’s top fiscal watchdog.
Most countries are on a higher debt path than they were a year ago, the International Monetary Fund said in its semi-annual Fiscal Monitor report released Wednesday. Fiscal deficits in 2015-2016 in emerging economies are projected to exceed levels during the global financial crisis, as countries struggle with low oil prices, cooling investor sentiment and intensifying geopolitical tensions.
The warning on countries’ debt reinforces the fund’s message in two other reports this week that the world risks slipping to stagnation without strong action by policy makers, who are gathering in Washington for spring meetings of the IMF and World Bank. If gross domestic product growth in advanced economies slides further, that would raise public and private debt levels as a proportion of output, said Vitor Gaspar, head of the IMF’s fiscal-affairs department.
“In such circumstances you can imagine that households, firms, and governments will be tempted to cut further expenditures,” Gaspar said in an interview. “That puts further downside pressure on nominal GDP growth, and that would be a spiral that one must avoid.”
Debt is growing especially fast among oil producers, whose budget plans have been thrown into disarray by the collapse in crude prices. In the Middle East and North Africa, cumulative deficits are expected to widen by $2 trillion over the next five years, relative to 2004-2008, when oil prices peaked, according to the IMF.

And, reading between the lines what does the IMF recommend? More debt!

Tuesday, April 12, 2016

Go to college, become disabled

Obama is going full speed in paying off constituents before the election. 
Market Watch: Hundreds of thousands of student loan borrowers will now have an easier path to getting their loans discharged, the Obama administration announced Tuesday.
The Department of Education will send letters to 387,000 people they’ve identified as being eligible for a total and permanent disability discharge, a designation that allows federal student loan borrowers who can’t work because of a disability to have their loans forgiven. The borrowers identified by the Department won’t have to go through the typical application process for receiving a disability discharge, which requires sending in documented proof of their disability. Instead, the borrower will simply have to sign and return the completed application enclosed in the letter.
If every borrower identified by the Department decides to have his or her debt forgiven, the government will end up discharging more than $7.7 billion in debt, according to the Department.
“Americans with disabilities have a right to student loan relief,” Ted Mitchell, the undersecretary of education, said in a statement. “And we need to make it easier, not harder, for them to receive the benefits they are due.”

Obama did one other thing, called Yellen into his office and told her do not raise rate, according to James Rickards.

Late last night it was revealed that President Obama has summoned Janet Yellen to the White House today.
There’s nothing unusual in itself about the president meeting with the Chair of the Federal Reserve over lunch to discuss policy. Bush 43, for example, frequently met with Alan Greenspan to discuss the economy.
But this meeting is different…
This isn’t a casual lunch. It’s a high-profile, last-minute meeting Obama orchestrated. The last time something like this happened was in 1951, when Harry Truman summoned the entire Federal Reserve Board of Governors to the White House. Since this is something that hasn’t happened in almost 70 years, today’s meeting is a fairly extraordinary event.
Why did Obama order the meeting? There are a few factors to consider…
Number one, Obama does not want the Fed to raise rates. If the Fed remains on its path of interest rate hikes this year, it would give the Republicans the strongest chance at the White House in this fall’s election. That’s because rate hikes would likely lead to recession, and that would bode poorly for the Democrats.
Obama is deeply concerned about his legacy, which the Republicans would like to reverse. So the best chance the Democrats have in the upcoming presidential election is if rates stay low. Janet Yellen herself is a Democrat, with a background as a labor economist and a career at U.C. Berkeley. She’s not necessarily hostile to Obama’s message.
By bringing her to the White House, Obama is sending Yellen a highly visible public message. Don’t raise rates. You can consider this meeting more like an implied threat.
There are two openings on the Fed’s Board of Governors. Obama could nominate two of Yellen’s biggest policy opponents if he wanted to play hardball with her. Those two opponents could fight Yellen at every turn and threaten her control.

So, there we have it, the reason central banking is a bad idea. 

Bank of Canada loads up on government debt

Government bomds and bills are 92,000 and other investments (loans to member banks) 600.

That is a huge asymmetry which Nick Rowe makes light of.  Note that all of the investment returns (minus operating  costs) go to government.  So, effectively the Bank of Canada is attempting to set long term rates to nearly a half point.  The government is only some 21% of the economy,  maybe 35% if we include provincial spending.  Yet the Bank of Canada thinks all the gains are coming from federal government.   If Canada gets out of its jam it will only be when the Bank of Canada decides the member banks matter. Under the current scenario, member banks will wait until government spending shows results, but the likelihood of that government outcome is nil. So Canada, like all or central banking economies, is in permanent wait mode until the central bank gives up and helicopters fly.

Trump polls better than Cruz

Monday, April 11, 2016

Turn the US into Japan

Some former adviser to Bernanke wants Congress to run the Fed.  I can think of no shorter route to Helicopter Droppings.  Already our debt is at Italian levels and our growth is now at Italian levels, zero. But the Helicopter will not be flying where the progressives think it should fly.  
Business Insider: A former aide to Federal Reserve Chair Janet Yellen has broken ranks with his former employer and issued a blueprint for a sweeping reform of the U.S. central bank, including regular government audits and shorter term limits for policy makers.
Dartmouth College professor Andrew Levin targeted four areas of change for the Federal Reserve system: make the Fed a fully public institution; ensure the process of picking regional Fed presidents is transparent; set seven-year term limits for regional presidents and Board governors; and make the entire Fed subject to external review.
The proposals were taken up by the union-backed activist group Fed Up, which promoted them Monday in a conference call with journalists, and come during an election year where the central bank has been a campaign topic.
“There is one key principle in this document which is the Fed needs to become a public institution,” Levin said. “Pragmatic, reasonable Fed reform should be able to be passed by the Congress, by both parties. That is my hope.”
The Dartmouth professor worked two decades at the Fed, and was a special adviser from 2010 to 2012 to former chairman Ben S. Bernanke, and Yellen when she was vice chair, according to his biography page at the university.

Oliver says Japan could be in real trouble

Now the Blanchard has left the Keynesians palace of the IMF, he is having second thoughts about this whole QE thing in Japan. The Japanese government and central bank cannot inflate away public debt standing at 250% of GDP.   The Japanese government is thus insolvent.
Japan is heading for a full-blown solvency crisis as the country runs out of local investors and may ultimately be forced to inflate away its debt in a desperate end-game, one of the world’s most influential economists has warned.
Olivier Blanchard, former chief economist at the International Monetary Fund, said zero interest rates have disguised the underlying danger posed by Japan’s public debt, likely to reach 250pc of GDP this year and spiralling upwards on an unsustainable trajectory.
“To our surprise, Japanese retirees have been willing to hold government debt at zero rates, but the marginal investor will soon not be a Japanese retiree,” he said.
Prof Blanchard said the Japanese treasury will have to tap foreign funds to plug the gap and this will prove far more costly, threatening to bring the long-feared funding crisis to a head.  
“If and when US hedge funds become the marginal Japanese debt, they are going to ask for a substantial spread,” he told the Telegraph, speaking at the Ambrosetti forum of world policy-makers on Lake Como.
Analysts say this would transform the country’s debt dynamics and kill the illusion of solvency, possibly in a sudden, non-linear fashion.

This is most likely the discussion subject between Yellen and Obama. The real problem happens when voters finally understand that stimulus was all about bailing out, they then revolt, the Kanosian fraud discovered.

Sorry, deflation remains

Business Insider: Over the past year, slowing global growth, a precipitous decline in commodities prices and historically low inflation rates in developed markets all combined to foster fears of deflation. Recent data suggest these fears are unwarranted, however, at least in the U.S. More specifically, both the headline consumer price index and the core CPI measure, which excludes food and energy, have been on upward trajectories since the start of 2016. Part of the reason for this trend is that energy price declines in late 2014 are contributing to positive base effects today as they roll off from year-over-year data measures. Core inflation’s strength is also noteworthy. Core CPI increased at a 0.3 percent month-over-month rate in both January and February, bringing the year-over-year rate of growth to 2.3 percent, a level not seen since early 2012.

The authors are wrong:

Yes, deflation is still here.  Take away Chinese home purchases and we have deflation, about a 1.5% YoY drop in prices.  The temporary uptick in February was temporary and is dropping again in April.

Sunday, April 10, 2016

I apologize in advance

Banker bot for students

Loot is a start up with a smart phone app that manages money for students on a stipend (fixed income) .
BI: Loot declined to comment on the funding and new app features.
22-year-old founder and CEO Ollie Purdue only graduated in 2013 and had the idea for Loot at the University of the West of England. He told BI last year: "This is the thing with students, every three months they’ll get £1,000 [$1,580], or £1,500 [$2,370], so the total balance is less important because if I open up the app it could say I’ve got £2,000 [$3,160], but I don’t know if that’s £10 [$15] a day or if I’ve got loads of money."
Loot solves this by telling you how much you can afford to spend based on upcoming bills and the time till your next student loan instalment. Since launch the startup has attracted a lot of buzz. Our profile of Purdue and the company was picked up on by The Lad Bible, which is hugely popular with students, rival BroBiblenational student news website The Tab, and The Memo.
Purdue told us last year that the startup is in talks to partner with Royal Bank of Scotland (RBS) and other banks are reportedly interested. By using a pre-paid card, Loot can quickly sign up international students, something banks struggle with.
Purdue told us: "We can onboard a customer in two minutes. We just need date of birth, name, email address — really basic. Then we can do stuff like scan their passport and post them a letter to verify their address later." Loot initially imposes a £2,000 spending limit to comply with anti-money laundering regulation until it's sure you are who you say you are.

Re-thinking right to work laws

Looking through the arguments pro and con  in Wiki.  States have the right to restrict employer agreements to limit unions, but that is still power over individual rights.  Business should have the right to enter a variety of employment agreements, including union membership.  The Wisconsin ruling is still an error as it ignores states rights, but the judge makes a point.

But still

I am bugged, the burden of due process is on the state, and workers can appeal.    My membership in a professional organization enhances my knowledge of the trade.  I should get preferential treatment from employers.  My employer should pay my membership dues, and incidental membership activities.  My legal mind is stuck, here we need the pros.