The Autobot Brain, architecture

My summary of the autobot software architecture.  My stack:

• Navigation Logic - Open source implementation of driving rules for the bot
• Object Database - Tables of traffic objects and object features, including a final object map
• Smart Sensors - Vision, LADAR, as well as GPS, wireless, and static geo information.

The top level, Navigation Logic executes the driving rules over the final estimated object map.  Sensors are smart in that they deliver object and object feature information in the Bot's reference frame.  Search and match processes over the database generate the final object table.  Navigation Logic is via byte code interpretation.  Sensor interface is via industrial strength USB or equivalent

Wireless traffic is dedicate short range using location base link addresses. Secret passwords and keys are exchanged out of channel., With periodic human intervention in setting pass words.

The resulting hardware is a single PC style card, the same module occurring in infrastructure as well as mobile nodes.  Manufacturers should take care in controlling counterfeits to avoid piracy.  Traffic installations might resort to wired communications for out of band password exchange.

Total market size: 1 billion units

Still on business

The economy is in a waiting period, it don't need me!  Business for a while.

Trailerbot, the greatest invention of mankind

Trailerbot has simple driving rules on public roads.  Follow the master vehicle or come to a safe stop.

But this four wheeled flatboard, self propelled.  With its GPS and wireless DSRC it can follow a Prius out to the farm.  Give it a pedestrian detect and avoid, the Trailerbot will stop when you come near to load or unlood, a revolutionary farm vehicle  Safe enough to carry the grandkids around..
Trailerbot solves so many problems that it, itself, may be the ultimate technology for 20 years.

Still on the farm

Have we started negotiating on the public sector pension issue?

On the farm

As we speak, I am at the farm, the garden is great.  Here is what we have: lettuce, carrot, zuchini, melons of every sort, tomatoes of every sort. Sunflower, tons of pot, egg plant, peas, different varieties.  We have a total garden size of 1/2 acre.

And we have Internet, and we don't have to pay $100/month for flat rate city services.

Piling on with Government Sachs

Another lawsuit in the financial world, accusing Government Sachs of fraud.  Zero Hedge reports the details.

The Euro will survive and thrive, somewhat

Do not count me as a Euro skeptic.  As others have pointed out, austerity  measures, if they pass through the Euro system, will result in something approaching sustainability. Common currencies do not need much except sustainability and some common trade.  Labor immobility across Europe may be a problem, but as long as the currency can calculate the problem, the currency can continue.

What Autobot does not need from Android

I do lean toward the basic Android OS as a good fit for Autobot intelligence.  However, most of the User Interface is thrown away since Autobot will not likely be generating much display for the human. What does that leave us in terms of Android requirements?

Looking at the Android components, we need; the Linux kernel, the basic byte code machine, and some common libraries.  Most bots are likely to come equipped with real time database, which I consider essential so keep the standard SQLite that comes with Android..  Otherwise, most of the remaining parts of Android can be eliminated.

The point here is that Autobot wants nothing to do with user interface, except for a few warning lights.

More Obamacare problems

Part of the health care overhaul due to kick in this September could strip more than 1 million people of their insurance coverage, violating a key goal of President Barack Obama’s reforms.

Under the provision, insurance companies will no longer be able to apply broad annual caps on the amount of money they pay out on health policies. Employer groups say the ban could essentially wipe out a niche insurance market that many part-time workers and retail and restaurant employees have come to rely on.
This market’s limited-benefit plans, also called mini-med plans, are priced low because they can, among other things, restrict the number of covered doctor visits or impose a maximum on insurance payouts in a year. The plans are commonly offered by retail or restaurant companies to low-wage workers who cannot afford more expensive, comprehensive coverage.

Read more: http://www.politico.com/news/stories/0610/38219.html#ixzz0qHSZF9pW

Congestion pricing moves forward in Virginia

William B. Cassidy carries the story:

State breaks ground on control center for high occupancy toll lanes

Virginia broke ground Wednesday on a control center for high occupancy toll lanes on a stretch of the I-495 Capital Beltway that ranks as one of the worst U.S. congestion bottlenecks.
The 30,000 square-foot HOT Operations Center, not far from the Springfield, Va., "mixing bowl" interchange connecting I-495, I-95 and I-395, will be the high-tech nerve center for 14 miles of HOT lanes running from Springfield to just north of I-66.
That section of Interstate highway was the 20th worst congestion bottleneck in the nation last year, according to the American Transportation Research Institute's 2009 Bottleneck Analysis, released May 26. The section's average peak-hour speed is 33 mph, ATRI said.
The four Capital Beltway HOT lanes are the first public-private HOT initiative in the U.S., said Virginia Secretary of Transportation Sean T. Connaughton. The $2 billion project is nearly two years into construction and is expected to be completed in 2012.
The HOT lanes are also a bright spot for a state that is struggling to raise transportation funding. Virginia sold $492.7 million in transportation revenue bonds this month and Gov. Robert McDonnell wants to sell $293 million more next year.
....
The HOT lanes are also a bright spot for a state that is struggling to raise transportation funding. Virginia sold $492.7 million in transportation revenue bonds this month and Gov. Robert McDonnell wants to sell $293 million more next year.

 Note that congestion pricing makes transportation bonds attractive to the investor.  Local governments who have no cash left might consider selling their most valuable commodity. 

But, clearly a warning sign.  When the technology people want to build big data  and traffic control centers, they are mostly full of crap.  In the age of communications, we never need any big data centers.

Door Number One

Brad DeLong describes three reasons why deficits are currently affordable:

Whenever I build a model in which expansionary fiscal policy fails to reduce unemployment, it is for one of three reasons:

1. Expectations of the present and future deficits cause the price level to jump now, so that increased nominal spending does not translate into increased real demand (i.e., Mitterand ca. 1981)
2. The expansionary effect of higher deficits is offset by higher interest rates that crowd out private investment and exports, offsetting the stimulative effect of the fiscal policy (i.e., Kohl ca. 1982)
3. Households expecting higher future tax liabilities cut back on their spending and boost their savings now, thus offsetting the stimulative effect of the fiscal policy (i.e., I can't think of a historical episode).

I pick option one, we did have a price rise in energy, it reached $75 /barrel.  When was it that price before?  In Jun 2007, just before the very rapid run up.  This time around economy did the normal thing, it contracted a bit to conserve oil.  It is our third or fourth run at this problem since 2006.

Is Android a good OS for autobots?

Sure, why not.  The byte code execution is great for security.  I would hazard they Google is working on the Black Box in the lab.  They like embedded SQLite, and so do I.  So, sure, at the very core of the Navigation Logic is real time data base of object measurements, a byte code execution machine, and a rule book. The purpose of the autobot brain is to maintain a model of all the objects it knows about, and execute rules over this model.  But we get sort of an explosion of peripheral sensors based on this architecture, with  a measurement database between the senor and the Navigation Logic.

The tracking logic in the autobot looks at measurements over time, and leaving an object measurement in its original form in the database makes sense. Between the sensor and the database is a mild conversion, into the autobot reference, information preserved along the way and dispensed with after finite time.

Android works here just fine, good luck to Google.

OK, lets talk housing

Too many vacant neighborhoods.  Here is a government stimulus.  Get a vacant neighborhood, easily isolated, and legalize street bots.  I mean, people would pay a premium for houses that had robotic delivery slaves running about.  You would especially get house buyers from the pool of autobot inventors, producers and designers.  Microsoft would buy into housing.  Creative, and increasingly wealthy middle class neighborhood, populated by streetbot designers.

Government would turn a profit on the venture.  I mean, what is the government out of pocket expense here?  They need to, what, make sure the bots obey the driver's code.  The bureaucratic power of government is magnified, in this case, like a deregulation with huge multipliers. Liberating is the new technology.

I give you a better argument for raising government deficits

Before I give you a fake argument for deficits, everyone should be aware of my personal feelings toward stimulus.  Send me a $100 and the economy will boom.

The issue at hand, politicians and hysterical economists want a reason for Congress to borrow.  There is only one reason to borrow. to get a reasonable deal in disposing, for a long time, state pension obligations.  Taxpayers would borrow to get a deal that greatly reduced their pension payment obligations in the medium term. Meaning: Force the public sector unions to cut a deal and taxpayers might perk up.

What math describes the government channel out of balance?  Mis-matched entropy, hence the steep treasury curve. The flow rate of government goods, total transactions at all levels of the supply chain, does not have anything close to equal variance of inventory at each stage. We actually now have one entitlement too many, and we multiply less than one each go round.  The tax payer knows this, and the taxpayer knows that we will eventually have one entitlement less. 

Public sector unions are one of five in this heap, above widows and orphans, and well below Obamacare.  Now is the time for smart union leaders to cut good, cash out, deals.

The market is doing the W

The old double dip.

Sounds like a maneuver of the Republican Communist Party

"In a little-noticed provision in a 1990 law passed after the Exxon Valdez spill, Congress capped a spiller’s liability over and above cleanup costs at $75 million for a rig spill. Even if the economic damages — to tourism, fishing and the like — stretch into the billions, the responsible party is on the hook for only $75 million."

Tim Haab has the details.

Jeffrey Sach accepts reality

Hot Air reports:

'First, Sachs confirms — on MS-NBC, no less — that the Obama administration and Democrats in Congress had no strategy for long-term growth. The stimulus was a collection of short-term minor stimuli, combined with liberal hobby horses that Democrats had ridden for twenty years.'

Sound like a multiplier less than one to me.

Muslim Jihadists to hand out free bags

In there never ending quest to prove Muhammed was not a child molester, Islamic welfare agencies plan to leave free shopping bags around town. ABC is on the case:

A recent internal FBI report warns federal, state and local authorities to be alert for a potential new tool in the jihadi terror arsenal – the placing of suspicious, but harmless, bags in public places to inspire fear, disrupt public transportation and tie up police and bomb squads.

Geithner seems a bit confused

He wants our foreign trading partners to stimulate.  The problem is they cannot stimulate, because Tim Geithner has been promoting Congress to spur the US demand for oil.  We used up the surplus oil that the crash had recovered, and there is currently not enough oil for other nations to stimulate.

The real competition here is American's willingness to use police forces to extract oil debt payments from their citizens as Congress burns oil recklessly.  As long as Congress is willing to seize American property to invest in OPEC oil imports, then foreign trading partners will see opportunities to lend money to us.

Carpe Diem looks at Renyolds bubble theory of higher education

And Mark Perry finds the theory holds water, Good work Instapundit on bubble spotting.  Go look at the scary charts.

Congress gets constipated

Laure Kellman reports:

WASHINGTON (AP) - The 2010 elections have changed the direction of government only half way through the primary season, with voter anger and economic jitters causing lawmakers to balk at their most basic duties as well as key elements of President Barack Obama's agenda.
After betting their political future on a government-mandated expansion of health care to include millions more Americans, Democrats appear to have little appetite for more legislative showdowns given voter rebellion against government spending amid trillion dollar-plus annual deficits.
The solution in some cases is to simply not vote. Immigration reform is too politically toxic. Key bills with massive price tags are getting shelved.
Congress' core duty, exercising its power of the purse by passing a budget? Negative. A vote for it could be seen as a vote for deficit spending. There's no sign of the 12 annual spending bills that typically come up in June.

Congress will be incapacitated until Obamacare passes through the system. So teachers unions can forget their bailout.

Autobot Software!

What do we expect it to do?
1) Obey a written rule book for traffic.
2) Track the objects and object features observed by sensors.
3) Wireless communications with traffic and control.
4) Control by wire interface
5) And WIFI to the users handheld.


Of all these, "Obey the Rule Book" seems like the most important.

Maxinne Udall, I have a better idea.

Girl Economists describes the problem with "Stranded In Suburbia"

A private sector-inflated housing bubble resulted in a huge excess of housing, which Douglas Duncan, vice president and chief economist for Fannie Mae, is now suggesting might be better to bulldoze. Who will pay for the bulldozing I wonder? Not the same people who built or financed the now worthless houses, I'll bet (although it does have possibilities as a job creation program).

Clicking through the link about bulldozing houses, we find that places like Inland Empire in CA have transportation costs to high to maintain the Suburb.  And sure enough:

By Rex Nutting

MarketWatch Pulse

WASHINGTON - The vacancy rate for homes ready to be sold was steady at 2.7%. In the past year, the housing inventory rose by 1.14 million to 130.9 million, while occupied homes increased by 1.07 million to 111.9 million.

So, Girl Economist has identified that transportation costs have lowered the utility of suburban living.  That is an excess demand for cheap transportation.  Either that or an deficient supply of cheap transportation.  This does not sound like a General Glut to me.

Keynes wants to invest in teachers

That is the latest story, between the lines. If we save the teacher's union from adjustments then we have a multiplier greater than one. I doubt it, and Will doubts it:

Although the public education lobby's cry of "Parsimony!" is not much of an argument, it is persuasive to Democrats comfortable in a relationship of co-dependency with teachers unions. But before Congress is stampeded into spending yet more (borrowed) billions, it should read "The Phony Funding Crisis" in the journal Education Next by James W. Guthrie, a professor at Southern Methodist University, and Arthur Peng, a research associate. They say:
"For the past hundred years, with rare and short exceptions and after controlling for inflation, public schools have had both more money and more employees per student in each succeeding year." Indeed, public schools have been so insulated from economic downturns that "there have been 11 periods during which GDP declined but mean total real per-pupil revenues still increased."

I have documented a number of instances where federal aid to local schools has had a disasterous effect as adjustment costs outstrip subsidies.  The multiplier is not greater than one, except for Brown, Obama and Pelosi who rely on union donations for re-election.  One more bailout of Obama's favorite unions should result in a short four year term.

Government Motors on the Move Again

Cars are quickly becoming the new connected devices. Equipped with voice-command, streaming media centers, navigation displays and more, the newest line of vehicles out of major automakers are borrowing more from computers, the web and mobile technology than ever before. Now, riding this wave of rapid change, General Motors — a company still seemingly recovering from its bankruptcy — has launched its own venture capital arm. Called General Motors Ventures, this new entity will be distributing $100 million to smaller companies developing groundbreaking automotive features, starting on July 1.
It’s meaningful that GM is the first of its brethren to make this move. Its Chevy Volt has gotten a lot of good press for being one of the most technologically advanced cars to hit the marker — beyond is unique electric powertrain. Just last month, it announced that it would be using the Android operating system to provide navigation tools in addition to its OnStar system. The news has prompted the media and analysts alike to dub it the first “Android car” — a cutting edge distinction.

I notice Google has managed to weasel itself into the mix.

Has the Federal multiplier gone negative already?

The net GDP growth due to increased central government activities is the multiplier.  If Congress increases spending by 10%, then the total economy might increase by 10% multiplied  the ripple effect..  A negative multiplier means that totel GDP decreases with each increment of government spending. The first stimulus we had generated something like a multiplier a little less than one, the economy likely grew by .70 to 80 cents  for each 1.0 dollar spent by Congress.

What would a negative multiplier look like?  Well, we might see state governments go broke as Congress crowds out the government channel, taking the resources normally allocated to state government.  As it becomes clear that state government cannot meet their contracts, then we get the Greece effect, the entire economy goes back into a costly Recalculation about how to balance government..    As I have documented in this blog, state government are still paying billions of dollars in adjustment costs of No Child Left Behind. Because we do not suffer a General Glut (Krugman, DeLong, Thoma, and others have this badly wrong) the likelihood that more stimulus causes a break down in governance is very real. 

Another way to get a negative multiplier is through the oil channel.  Government is very inefficient with oil, as I have documented.  The oil bill goes up by 10% while government spending goes up by 5%, hence there is a real liklihood that the economy goes into a second dip because if increased oil inefficiency.

Congress can easily drive the economy into a second dip, resulting in a multiplier less than zero.

Are we Greece yet?

No, looks like we are the average of Greece, Portugal, Ireland. Spain and Italy.  The PIIGS likely got into trouble by following our pattern.

HT Krugman for the chart

States approach outright theft from taxpayers

Half a Dozen States Delay Tax Refunds

More optimistic on congestion pricing then Felix

Felix Salmon has been looking for a debater to take the opposing view that congestion pricing is no good, he really hasn't found an opponent, but took Meg McArdle shill for him.

I would have taking a slightly different approach than Felix, I would start with the total savings from congestion pricing, which is time spent at intersections waiting for traffic lights.  I would use per capita cost of labor and count that time saved as a total gain.

How do traffic lights help in moving traffic under congestion pricing?  Because traffic lights get the same technology, the little radio unit.  Hence, the congestion price seller has access to light changes and can synchronize traffic lights to match congestion buyers.  The total amount of time spent at an intersection should go way down, nearly to zero. A one hour commute in my home town would likely be reduced to a 1/2 hour commute.  Savings? With the two way commute time at 50 minutes, the total daily commute should decrease by 20 minutes, or $7 for a worker at $20/hour

Second, gas savings.  City driving, stop and go, causes an extra 30% of extra mileage, which should go away.  For the average ten mile commute, that should premium should go away, saving $4 on gas and maintenance.

So, $11 off the top, per day comes to $220/month, and that should approximate the relative cost drivers are willing to pay to eliminate congestion.

Actually, except maybe in NY or SF, the real issue  is that congestion pricing, being more efficient, will add utility to the auto and cause more people to commute by car than do now.

A photo gallery

Of how Turkish Muslims slaughtered millions of innocent Armenians.

Yes, repeal the 17th

Bruce Bartlett has the run down. If the Tea Party pushed the idea, they have my support.

Jerry Brown and the Union thugs extend dictatorial control over California

A bill that clamps down on municipal bankruptcy filings is headed for Gov. Schwarzenegger's desk, which is bad news for Los Angeles and other cash-strapped California cities.

It the governor signs Assembly Bill 155, it would place a hurdle in the path of filing for Chapter 9 municipal bankruptcy. The bill stipulates that a city may only file for bankruptcy with the approval of the California Debt Investment Advisory Commission, which provides information on debt to public agencies.

Mish is justifiably pissed.

Make no mistake, Brown is going after the power to use guns and police to rob innocent California tax payers, the man has gone off the deep end and should be watched carefully. The Gubinator would be an absolute fool to sign this thing.

From Virginia, New York and California, battle lines are being drawn and these Unions will not hesitate to use arrests, murder, and arson and corrupt politicians, like Jerry Brown. Just look at Greece, they even resort to throwing bombs.

OK, back to theory

I am  revisit  Economic Theory because DeLong wants  wants us to read Hawtry,lthe English banker who wrote books on the Art of Central banking, and Bank rates over a Century.  He is a good economist, and the books are good, I am half way through.  I am stopped when he takes up speculation, and up to that point have found no indication that medium term changes in bank policy had much effect on the Real Economy in Europe prior to the Great Depression.  I did find a struggle to convert from Gold to Fiat money technology in France.

But one point Hawtry makes is that during the 1920s run up in American productivity, long term rates fell.  Why did long term rates fall, if rates match economic yield?  It is because one has to integrate the entire yield curve to get aggregate yields.  In the mid 20s, America was using new technology to find outlets for smaller groups of consumers, extending the distribution chain to make it more accurate.  This was the age of the franchise or chain store and the age of increase economies of scale as electricity reduces transaction costs.

American industry was confidant in the technology and allowed themselves to increase the stages of production,  adding one more link in the distribution chain allows them to subdivide goods and add variety at the retail level.  This extra stage of production is the inflated state of production, and we expect less inventory at each stage of production but a total inventory increases as there is now one additional stage.  So, the yield curve should be flatter, but much wider, extending out 30 years where previous it extended realistically out 20 years.  So once we have adapted the technology, there is a period in which the total area of the curve is higher, the extra area coming, not from high long term yields, but a flatter and wider shape.

If I continue reading, which I will, I suspect the punchline will be about the relationship between speculation and banking.  This is the punchline I am supposed to get, but in the meantime, Hawtry actually confirms much of our theory of the economy as an orthogonalization procedure performed in stages of production.  Hawtry, in 1960, does not quite get the extra step the theory needs, that variances in everyday inventory events drive toward a biological constant over time.

Why do fake pious Christians rape teenage girls,

Tina Anderson was only 15 when she said she was forced to stand terrified before her entire Baptist congregation to confess her "sin" -- she had become pregnant. What she wasn't allowed to tell the group was that the pregnancy was the result of being raped by a church deacon, a man twice her age.

I cannot understand the Fundamentalist Christians who want religion and government involved.  Now I am beginning to figure it out, they are primarily pedophiles who rape children and want Presidential approval for the deeds.  If that is Christianity, then I am glad we hung the bastard who started it.

Mickey Kaus over Boxer

My recommendation, if I were a registered Democrat..

Is Knightian Uncertainty a Recalculation?

This post brings up the question, but I leave it to Kling to answer.

Am I invited to participate?

The Economist invites a few to discuss:

Is inflation or deflation a greater threat to the world economy? Should policymakers focus more on structural adjustments or aggregate demand?

Prominent economists are invited to discuss the topic.  I can be prominent, but I do not want to be an economist.  But here is my opinion.

Neither monetary inflation, nor monetary deflation is a risk, it seldom is.  By the time money is risky it is no longer money.  Money and finance did not cause this recession, though if we keep listening to the Money Illusionists it may soon be a cause.  Nor did government directly cause this depression, but government may make it much worse if we listen to the Fiscal Illusionists.

The proper economic response is for economic agents to solve their economic constraints (shortages), which up to now have not been government or money.  Faking us out with attempts at illusion, fiscal or monetary, will not work.

Adam Posen has the proper response to the folly of trying to fake out the Japanese with Money Illusion.

Balancing the government channel

Phillip Reese and Loretta Kalb have a great article about the woes and risk of county debt in California:

It's a statewide concern. California cities, counties, special districts and redevelopment agencies owed $185 billion in outstanding debt in 2008, about 55 percent higher than the amount of outstanding debt on their books in 2000, according to data from the state controller's office. Those figures do not include school districts, which saw an even bigger jump in debt.
Much of the new debt statewide was put to good use, said Tom Dressler, a spokesman for the state treasurer's office. "Our infrastructure was built to support 25 million people," he said. "We'll have 60 million by 2050."
Still, said Dressler, some local governments may have bitten off too much when times were good. "You've got to be smart and exercise good judgment," he said. "You've got to think about the long term."
Mandy Morello doesn't believe her local school board did much long-term thinking before putting two large bond measures in front of voters several years ago.
Proponents of Measure J in the San Juan Unified School District pointed to leaky roofs and dilapidated trailers when asking voters to approve a $350 million bond package in late 2002, promising about $4 million for each school. Four years prior, the district cited outdated wiring that hampered computer access when asking voters to pass Measure S, a $157 million bond measure.
The pitches worked, with voters overwhelmingly agreeing to pay an extra $85 in property taxes per $100,000 in assessed property value to fund the bonds. And the district followed through, pouring millions into nearly every school.
Then, it closed 10 of those newly improved schools between 2004 and 2009 because of declining enrollment, instituting a game of musical chairs that has required a lot of students to transfer, some more than once.

Read more: http://www.sacbee.com/2010/05/23/2770314/regions-officials-in-debt-headlock.html#ixzz0pkw9pY8w

What is my point here from the viewpoint of QM Theory?  What these lawmakers do is a very expensive process of balancing the government channel, (a Recalculation) making the government channel from Federal to State to Local look like a Shannon channel, optimized for the greatest throughput.  Notice they try one thing, upgrading schools, then a combination of low state funding and changing demographics mean closing those very schools. They are still stuck with the debt.  Local officials have to deal with local operations and they have little advanced warning about state or federal changes.

The current Congress has restarted this entire search for balance process by reforming health care.  Good or bad, Obamacare is a equilibriation process, a shifting of space on the government yield curve between state, local and federal government.  How long will this equilibriation take?  Probably two election cycles. four to six years before government gets anywhere close to balance.

Is this government restructuring worth the cost?  No one knows, conditions have been set and it will  four years before we get an inclination of the outcome.  But the more serious problem is that this government rebalance runs up against the Wall of Maturity that Congress has gotten itself into, with  some $5 trillion in debt due to mature over the next five years,


The shit is still hitting the fan for American government.

Economists in denial

David Leonhardt arguing that we need to increase government spending:

"There are two arguments for more stimulus today. The risk of a double-dip... remains [and[... the economy has a terribly long way to go before it can be considered healthy.... If the next four years were to bring job growth as fast as the job growth during the best four years of the 1990s boom — which isn’t likely — the unemployment rate would still be higher in 2014 than when the recession began in late 2007."

That is David Leonhardt speaking in favor of more government spending to boost the economy, doing the Keynesian I guess.  Unfortunately, the immediate counter-proof is that we are entering a double dip precisely because of crowding out.  The evidence is quite clear, we have had energy shortages since 2001, there has been no appreciable efficiency gains since the stimulus experiment started, and we  can watch oil prices, oil imports, and Keynesian spending; and each dollar Keynes spends there is now about 1.2 dollars gone from the economy do to increased oil imports at higher prices.

Why did the European sovereign debt crisis come to a head now?  The US Congress drove up oil demand and prices using debt.  Look at oil prices, up around $80, gas prices reaching $3.50 for three months.  Our oil imports went from a 30% decline over a year, then suddenly shot up by 20% over a month or two as Congress spent.  Then the  economy double dipped in the face of energy shortages.

These Keynesians are making things up at this point. 

Let's review that Paradox of Thrift thing again

Federal expenditures (blue) and personal saving (red)

Economists are so proud to have identified this idea that consumer save during hard times, and therefore make things worse.   Look closely and lets see if consumers began saving or politicians began spending.  Personal savings went up a bit, then declined, returning to $400 billion after a five year run at about $200 billion.  Note that leading into the recession, savings rates were declining.

Federal expenditures, on the other hand, went up, then up, then up and up.  Federal expenses are now $800 billion a year above what they were during the five year period prior to the crash.

I see no Paradox of Thrift. I see a cute little term that is supposed to justify over 4 times the rise in federal spending than anything matched by consumer savings.  Most of that consumer savings, by the way, went toward a 30% reduction in oil imports, a good result, a result that would have lead out of the recession.  The government expansion of $800 billion/yr, on the other hand seemed awfully correlated with the sudden 20% jump in oil imports, a very bad result that led to the second dip.

So we have Congress burning more OPEC oil, more  inefficiently and Keynesians blame the consumer for saving $200 billion a year.

Nutty economists

"Professor Krugman [ in a recent speech] argued that the current nightmare is one that wasn’t meant to happen especially given the conventional wisdom regarding the effectiveness of monetary policy as a means of controlling unexpectedly large demand-side shocks."

A sudden change in the variety of goods we demand is supposed to be handled by the monetary authorities? 

Even if central bankers could scale money up or down, the main problem remains, relative pricing.    How does a common scale factor help?  Real interest rates are set by economy to price the value of a new future different  than the current future.  They are low, not because some central banker dictated the rate, they are low because during this restructuring of the economy growth will be low and we do not know yet what the new future looks like.

I have no idea where the hubris comes from that made economists think that change has been tamed by them.

Greece is doing the California shuffle

NY Times:

PARIS - Greece announced a big sale of state-owned assets Wednesday, as the cash-strapped government moved to close a yawning budget deficit and fulfill the terms of an international rescue package.
The government will sell 49 percent of the state railroad, list ports and airports on the stock market and privatize the country's casinos, the Finance Ministry said after a cabinet meeting in Athens. The government will also sell stakes in water utilities serving Athens and Thessaloniki, sell 39 percent of the post office, and combine its vast real estate assets into a holding company to be listed on the stock market.

Volvo wins award with pedestrian detect and avoidance

The Plus X Award – the largest technologies, sports, and lifestyle competition in the world – honors manufacturers for products of particularly outstanding quality. More than 1,000 products from all sectors of technologies, sports, and lifestyle were submitted for this year’s competition. The categories judged were innovation, high quality, design, ease of operation/functionality, ergonomics, and ecology.

Pedestrian detection with full auto brake combines a newly developed radar unit in the front grille and a camera at the level of the rear-view mirror in an effective system that spots pedestrians on the road ahead of the vehicle. If the driver fails to respond in time in this situation, the system automatically activates full braking power.

Half of all accidents involving pedestrians occur at speeds of less than 25km/h. The new Volvo system can completely prevent accidents of this type up to a speed of 35km/h. At higher speeds the system ensures maximum deceleration and therefore substantially reduces the consequences of an accident.


2 June 2010

Why California will go broke

See the rising cost of government projected out to 2014. The ratio of government to the private sector is rising to 25%, and the yields we pay on general obligation bonds reflect that problem. We can't hold the 25% ratio, and will likely see further economic decline and rapid bankruptcy, likely this year. Los Angeles is already there, bankrupt. The talk among county governments is what kind of work out they can get from the public sector unions, not about paying them off, but about going through bankruptcy to get a workable deal

HT Chris Chantrill

One Third of Illinois governors end up in jail?

Says Politico:

But while the stakes are clear for Blagojevich — he could be the fourth Illinois governor in 40 years to retire to a federal prison — some of the most powerful Washington insiders are braced for potential political damage from the trial, which begins Thursday.

Read more: http://www.politico.com/news/stories/0610/38015.html#ixzz0piQAJeUE

The bold emphasis is mine. With that record, Illinois is not even a democracy, more like a bribocracy.

How will the stock market close? Updated

As it always does these past weeks, let the customers bid up the stocks with buys, then the major brokeragess take profits and we end up down. It is no wonder that investment funds have been drained of cash, the big banks are simply stealing from them.

Update!
The market closed up, up by 2 points.  So, you see how well I can predect, simply watch my day to day predictions and bet the opposite, you cannot go wrong.

Is California going to default this budget cycle?

Bob Moris at IVN says probably:

Schwarzenegger said eight years ago, the state was paying CalPERS $150 million a year. Now it’s over $6 billion a year. This is not sustainable, and he said major pension reform must be part of the new budget or he won’t sign it. This is probably while CalPERS flinched, temporarily forgoing $600 million in hopes of fending off pension reform.

Welfare is where the most drastic cuts will occur. The current plan is to completely eliminate the CalWORKs welfare-to-work program. If CalWORKs is killed, then California will become the only state without a welfare-to-work program, forcing many to quit jobs because they would no longer have child-care subsidies, as well as eliminating jobs for state workers who run the program.

California has reached the point where all parties feel better off with a default.

Russian security says what???

MOSCOW, June 2 (Reuters) - The chief of Russia's state security service said on Wednesday that terrorists were seeking access to nuclear materials across the former Soviet Union, Interfax news agency reported. Alexander Bortnikov, the chief of the FSB, the main successor to the Soviet-era KGB, gave no further details about the attempts or which groups had sought the materials.

As I understand it, Russian security is selling nuclear technology all around their periphery.

How much is metropolitan road space worth?

Let's look at the Oakland. CA Airport connector.

The airport carries 9 million passengers/yr, in bad years. Of those, 20% want rapid travel on BART connector. 1.8 million two way rides, net $3/ride and one has a $10 million/yr income stream. So, what kind of connector speed will make the connector successful. Well, we would like to run the system at 50 mph, get them too and from BART in 20 minutes, say.

So what is to lose from a BART offer to buy guaranteed road space? Just offer the county $8 million a year to run these passengers across surface streets.

That money, with Buy America subsidies, would generate $120 million in investment. What investment? Use the surface median, take it over and do the advanced tech BRT. Leave it to the tech folks to guarantee the 50 MPH safe BRT passage on a 2 hour basis.

The county gets enough surplus cash from the deal to put in a few of their own high tech BRT for local runs. The whole corridor should thrive.

I have said it before, these BRT connectors can bring millions of passengers to BART from cross sections of the east bay. In each connector, let the technology guarantee 15 minutes, constant velocity, scheduled congestion controlled routes. The remaining auto traffic would actually be less congested, the entire aggregate of flow being slightly ore synchronous.

Facing down the Public Sector Unions

By Steven Greenhut:

Orange County Republican Party Chairman Scott Baugh issued in January what OCers are calling the “Baugh manifesto”: a warning to local candidates who are seeking the party’s influential support that they must first reject union funding and also support a now-dead Paycheck Protection initiative that would have limited the ability of unions to tap members’ dues for political campaigns.

Baugh’s speech is “perhaps the riskiest and most courageous I’ve heard by a local politician – and I say that without passing judgment about whether he’s in the right,” reported Orange County Register columnist Frank Mickadeit. “No matter where you stand on the influence of public employee unions in elections, it’s undeniable the Baugh Manifesto has the potential to reverberate through O.C. politics for a long time.”

Sure enough, the reverberations are now being felt in Orange County and could well be felt statewide. Baugh has said that he has thrown down the gauntlet, but even in conservative Orange County, the unions have so much power that they have decided to throw the gauntlet back in Baugh’s face. The big showdown is ongoing in the run-up to the June 8 election that will fill the supervisorial seat vacated by Chris Norby, now an Assemblyman who represents a large portion of north Orange County.

HT Pension Watch

Felix Salmon getting the concept of Net Car

Felix gets the concept, he does live in NYC:

A GPS-based congestion-pricing system makes an enormous amount of sense: no gantries to build, and no weird artifacts like the ones you’d get in New York if you just charged everybody driving south of 60th Street. That’s the way to charge lots of money to drive on Avenue D, and no money to drive around downtown Brooklyn: it’s silly. And the technology is already up and running: Germany and the Slovak Republic are using GPS devices on trucks, and Singapore has announced it’s going to install it on all motor vehicles at some point. What’s more, the European Union is heavily invested in it, now that it’s spent $4 billion on a new GPS satellite network called Galileo.

I don't know why Felix wants to highlight just one vendor, which he does.
So, day by day we are gaining acceptance of the networked auto.

Another blow to the housing theory

The housing boom theory says that we became hysterical during the housing crash, the wealth effect. Here is a study on how much we used our houses for cash:

In this column, Federal Reserve Bank of Boston economist Daniel Cooper presents new evidence suggesting that the spending impact of equity extraction during the recent US housing boom was relatively small compared with the household balance sheet changes and residential investment. This finding contrasts with recent findings claiming that households consumed the vast majority of the money they extracted.

Within the paper:

My results suggest that equity extraction has a small consumption effect in the US. Unlike the Mian and Sufi or Disney and Gathergood papers, I use actual household spending data to track households’ equity extraction behaviour rather than inferring their consumption response to equity extraction based on other, non-spending results. In particular, a $1 increase in equity extraction between 2003 and 2007 led to a 10-cent to 20-cent increase in overall non-housing expenditures for homeowners who stayed in their original home. This effect was strongest in the two-year period between 2003 and 2005 that preceded the downturn in US house prices in late 2006. Equity extraction had a much smaller impact on household spending in late 1999 and early 2001.

Daniel Cooper did the work. My take away is that housing was treated more or less with care by the homeowner. Except in conditions where the homeowner was directly affected by an income shock, the home owner generally swapped debt, or simply upgrade the house with equity loans.

The whole housing theory has been debunked. House builders operated nominally, as did home owners. The only evidence we have of housing distortion was the run up in prices, but volumes were extremely low during the run up, and the price shock mainly came from inflation expectations.