My view of the Great Depression

Herbert Clark Hoover (August 10, 1874 – October 20, 1964) was the 31st President of the United States (1929–1933). Hoover, born to a Quaker family, was a professional mining engineer. He achieved American and international prominence in humanitarian relief efforts in war-torn Belgium and served as head of the U.S. Food Administration before and during World War I.[1] As the United States Secretary of Commerce in the 1920s under Presidents Warren G. Harding and Calvin Coolidge, he promoted partnerships between government and business under the rubric "economic modernization". In the presidential election of 1928, Hoover easily won the Republican nomination, despite having no elected-office experience. Hoover is the most recent cabinet secretary to be elected President of the United States, as well as one of only two Presidents (along with William Howard Taft) elected without electoral experience or high military rank. America was at the height of an economic bubble at the time, facilitating a landslide victory for Hoover over Democrat Al Smith. Wiki

Simply put, this guy raced the US economy through one of the greatest technological shocks of history, and had the shocks beaten by 1933.
In eight years as secretary of commerce, he oversaw the standardization of auto traffic, near continuous construction of roads, the management of broadcast spectra, and development of the mass market. He was their, coordinating all of this.  Roosevelt could not have done a better job over those years, and we paid a mere three years in readjustment cost. I do not believe the Romer story on gold inflows and monetary stimulus. Rather, Hoover, and the success drew investment flows to the USA. The proof is in what we never stopped doing, build roads, roads and roads. This was Hoover, he pushed standardization in roads and funding. By 1933, everyone got it, the consumer got it, the retails and manufacturers got it; the mass market. The race was roads against radio, Hoover, in both places, integral. %Radio mismatched the other by three years, acceptable result considering the field advantage. A radio broadcaster cost a few dollars compared to the auto traffic it generated.

California legislature to shut down

Should government get into the business of judging people on the “efficiency” of their property? SB 1 would grant government that capacity — along with the power to take that property if officials decide it’s being “inefficiently” used. SB 1 is by Senate President Pro Tem Darrell Steinberg, D-Sacramento.

Two years ago Gov. Jerry Brown and the Legislature abolished redevelopment in California to transfer from local governments $1.5 billion to the state budget. Redevelopment allowed local governments to declare anything, even nice homes and businesses, as “blight,” seize the property and give it to big-box retailers. SB 1 would reintroduce property redevelopment. But this time, it only would apply to property that would comply with the “sustainable communities strategy” of SB 375, another Steinberg bill that became law in 2008 when signed by Gov. Arnold Schwarzenegger. SB 375, among other things, mandated Plan Bay Area and other regional transportation, housing and land use plans throughout the 18 regions of the state. - See more at: calwatchdog

Who is the idiot? Steinberg, naturally. Dallel has created poverty here in California on a massive scale, part of the Undemocratic Party Platform. He is not going to stop, and California is in danger as long as that bozo is in Sacramento.

Round three of Whodunnit

The great economic game we play is a detectives work. We go from closer to farther, identifying obstacles in our path. Starting with the crash we are moving to the third obstacle in our path. What is it?

I bet I predicted that

US second quarter growth, revised backward to 2.5%. Give a handshake to good energy management and a short term bout of sanity in California.

America's robotic community

Here it is.
It is small gated community of condos.  The roads are ten feet wide, the condos spread out. The owner leaves his car, just inside the gate and takes one of the plentiful taxibots, light weight electrics, to get home. Deliverbot, vendobot, trailerbot; all of them, light weights. A quiet, and very energy efficient community.

The bots only need one way roads, they coordinate, value of land and structure go up. A bot is always a few minutes away, more convenient than a drive to the quick stop. Deliverbot handles the last mile, allowing you can pre-order in bulk, the community buys whole sale, on line.  Deliverbot  completes the transaction function, order to delivery. Boom times, really. 60% reduction in transportation costs.

We are going to do it right here, in Fresno, California. All the political stars lined to to do this and very high speed bus transit.  We are charged.

But, but..lets see. The cost to build a 500 unit gated condo community, $20 million plus land.  Remember, construction is compact, and cheaper. The appeal doubles your building and land. Convert older communities, just keep the cars out.  Always make sure to capture safe parking.  The Policebots provides security.  Cheap, simple, smart, efficient, comfortable.  Need I go on?  

Ok, the lawn bots handle the basics, with a human helper. A few other humans service the deliveries, subdividing for deliverbot. So, efficiency is complete to the wholesale lever. Condo and consumables cost drop dramatically. Savings all around, low initial investment,high value added. The bots are coming off the line.

One of the biggest things ever launched

A satellite from Vandenberg on a North South orbit.

A lists of us doing things during the GD

Somewhere in the bowels of the NBER is a thing called macro history. It has time divided counts of various activities. How many farm buildings per year, how many permits, how many miles of a whole lot, covering 1915 to 1956. A treasury trove for a data geek.

Also a great place to play confirm my bias. I can tell you this, when the GD hit, we quit building railroads, for good, but kept on building roads at a fast clip.
I have to find that stuff graphed on line, or I will get it for my spreadsheet.

I will get a complete set of things we do, meaning, a set of time divided counts, each count assumed to be partially independent of each other, but complete to the economy.  My confirmed bias report will tell us thing activities that got us out of the GD, and it will be pro road building, anti rail building and most everything else is waiting for on roads. In fact6, I will list negative stimulus, rail by rail that was removed from municipal streets, per year.

fit and shan in Iraq

Bombings way up, mainly sunni car bombs. Though, I am sure the ruling shia are not angels.

uncertainty is our friend

when the future is uncertain, we become curious. Curiosity does not kill the evolved squirrel. Uncertainty is the time of possibility, opportunity.

Carry a little javascript in your json

Hello...
Make your json active, add a few lines of javascript, let your web bot mush the data a bit, as it does its json join thru the semantic net. Json is half way there, add the remaining operators. You are almost there.

Oh, the colon opetator, it is going to have some context grammar, a little. But, no problem, the join kernels we build handle the keyword within the expression graph.  Dump all the quote marks, let the quote be normal, the brackets redundant.

My new site: www.semantisoft.com

Who is wage rigid?

Those who do not receive wage cuts:

We are told that 16 % of the economy never received a wage cut during the recession, hence the rigidity requires that we reflate so the remaining 84% will catch up.

Who exactly are these folks who never receive wage cuts? Well, the 7% who work in government jobs. Take away those and we find that about 10% of the total receive no wage cuts, or roughly 11% of the private sector.

This is a classical rig, a composition fallacy.

As a side note, examine the Forbes article on the subject of government to private employ growth. There data shows quite clearly that Republicans are mainly socialist idiots, especially Reagan and Bush the smaller.

End of Term	Date	% Increase in GE	% Increase in P	GE/P Ratio
Obama	Dec. 2012	-2.8%	3.0%	6.9%
GW Bush	Dec. 2008	8.4%	7.9%	7.4%
Clinton	Dec. 2000	10.2%	9.8%	7.3%
GHW Bush	Dec. 1992	6.4%	5.0%	7.3%
Reagan	Dec. 1988	8.3%	7.6%	7.2%

Lets use an inaccurate proxy for total employment:

Inaccurate because government employment and government spending are not linear to each other. But the graph is interesting because it clearly identifies the maniacal Communism of the so called Republican conservative.
--------------------

But I digress.  The real hack job here is that the promoters of Keynesian wage rigidity have to identify any government employ who got a wage cut, because I have not found them.  Most of the wage rigidity is in government itself.  This is pleasing to me as it confirms my bias that government is horribly inefficient.  It is also a very good reason to doubt that reflation will work, mainly because all these government employees will get their wages indexed to inflation.

But most importantly, wage ridigity is not a Keynesian Theory, it is a conspiracy among government employees to successively steal a portion of private sector wages during each recession, and explains the mechanism behind the thirty year nightmare of government multipliers less than one.

Yet another monetarist from NRO

Cause for Depression A monetary history of our recent economic travails By Ramesh Ponnuru

Our dismal economic experience of recent years has been brought to us by the federal government, which has wreaked havoc through mismanaging the money supply.

Which is mainly Ramesh's diagnosis.

I am not sure how the Fed managed put oil at $140. Oil at $140 was the result of tight money? Why, would oil coincidentally peak at $140, just before the crash, when money was tight?

How long was money tight? About six more months than it needed to be, over a four year period.  The Fed is late to pull the punch because of central banking. If Ramesh doesn't like that, then Ramesh should spend more time advocating for the break up of the Fed.

I might also ask Ramesh to please look over the ten year yield for 30 years, why has it continually dropped? We did not suddenly arrive at Zero, we headed their intentionally, mainly with the debt spending hoards of Republicans leading the way.

Look, aniother clue from Mark Perry:

Based on today’s release from the BLS, here are the seven US metro areas (population of 50,000 or more) with the lowest jobless rates for July:

1. Bismarck, ND (2.5%)

2. Sioux Falls, SD (3%)

3. Fargo, ND (3.3%)

4. Midland, TX (3.5%)

5. Rapid City, SD (3.5%)

6. Billings, MT (3.9%) tied with Iowa City, IA (3.9%)

With the exception of Iowa City, all six other metro areas are within a few hundred miles of either the Bakken shale oil fields (Bismarck, Rapid City, Billings) or the Permian Basin shale oil fields (Midland) or in or near the booming state of oil-rich North Dakota (Fargo, Sioux Falls).

So, Ramesh explain hos a central banking error caused all these oil drilling jobs while the national unemployment rate is 7.5%. Look harder, Ramesh. Ramesh and the NRO, the big government wing of the Republican party.

Yet another delay on Obamacare

(Reuters) - The Obama administration has delayed a step crucial to the launch of the new healthcare law, the signing of final agreements with insurance plans to be sold on federal health insurance exchanges starting October 1. The U.S. Department of Health and Human Services (HHS) notified insurance companies on Tuesday that it would not sign final agreements with the plans between September 5 and 9, as originally anticipated, but would wait until mid-September instead, according to insurance industry sources. Nevertheless, Joanne Peters, a spokeswoman for HHS, said the department remains "on track to open" the marketplaces on time on October 1. The reason for the hold-up was unclear. Sources attributed it to technology problems involving the display of insurance products within the federal information technology system. Peters said only that the government was responding to "feedback" from the companies, "providing additional flexibility and time to handle technical requests."

Is this related to the technical snafus in California?

NYC Financial district losing their trade liquidity

NYC thrives on liquidity, and deficit reduction with Ben being 50% of the bond market has driven the associated stock market volumes down. Illiquidity is the harbinger of crash. If these low volumes continue, brokers will reduce the number of asset classes they maintain in NYC, and that is a contraction by definition. This time, however, it is delever time in DC. All the perfect storm indicators are arriving at the same time, how odd. Here is a solution:

(Reuters) - Until a few days ago, it looked like a sure bet that the U.S. Federal Reserve would announce the beginning of the end of its massive bond buying program in September. Now, investors are less certain. The prospect of Western military action against Syria has sent stock markets worldwide reeling. Emerging markets have sold off and oil prices soared to six-month highs. And another potential showdown over the federal debt ceiling limit is looming this fall. Taken together, the developments have eroded the conviction of most Fed watchers that the U.S. central bank would start backing off its $85-billion-a-month bond buying program, known as quantitative easing, or QE, at its September 17-18 meeting. "It's a really big decision to start tapering because it's really like an exit strategy from QE and that's very hard for the Fed to do as long as there is a lot of uncertainty in the market like we're seeing right now," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.

Do the same as Greenspan, demand federal subsidies for wealthy brokers in NYC.

Keen interest in the income migration research

I use the search engine well, and looked at recent postings regarding state migration by income. My post yesterday, regarding the Tax Foundation, looks at measures income income in net migrants for any particular state over a ten year period. The variety of responses since the study is amazing, almost every state had someone posting about wins and losses income. The consensus opinion is simple, states whose voters follow blindly the lead of the Undemocratic oligarch perform very poorly, and are facing increasing poverty. Mainly three states are taking the biggest hit, Illinois, New York and California. The New York governor says no problem because the stock and bonds industry in NYC more than makes up for the losses, but that business is driven mostly by federal debt lately. The NYC stock market has been losing business for quite some time. California is the new hegemon state in the party, and soon even the faithful Democrats around here will tire of making premium payments to DC, simply for the privilege of hanging out with the national party bosses.

The curve, a long view

Street Talk Live does a good job.

There is some interesting context when discussing Pre- and Post-WWII economies.   Prior to WWII the U.S. economy was primarily agricultural and primarily domestic with few exports.  This led to much more frequent recessions due to weather, lack of transport and infrastructure, etc.  However, after WWII ended, the U.S. became a massive power house of industrial production and manufacturing as domestic demand flourished and the U.S. engaged in rebuilding Western Europe and Japan. 

The steady climb in interest rates through the late 70's coincided with steadily increasing rates of economic growth.  The Federal Reserve began to become much more proactive in the management of monetary policy during this period and the steadily increasing strength of the economy, incomes and savings rates suggested that Keynesian economic theories were functioning properly.  Normal economic recessions, which began to occur at a slower rate, were softened by Fed policy.  However, it is important to notice that drops in interest rates to spur economic activity never dropped below the rate that existed prior to the last recession.

As the economic makeup shifted from one of production and manufacturing to a service, credit and finance based economy beginning in 1980, the economic cycle changed from one of steadily increasing to decreasing rates of growth.  This change in economic makeup potentially exposed the flaws in previous economic theories as each manipulation of interest rates has continued fall to lower levels.  This continued drive to lower rates has kept a weakening economy running from boom to bust and now, with rates near the zero line, there is no room left to soften the next eventual recession.

But why did growth drop after the 70s? The Great Stagnation?

I blame John Perez for California poverty

Rob Lapsley, president of the California Business Roundtable, said that the wage issue was an important measure that would affect all regions of the state. - See more at: http://www.foxandhoundsdaily.com/2013/06/wage-issue-overshadows-biz-moving-inout-of-ca/#sthash.rinFJ4Qj.dpuf
Joel Fox reviewing a UCLA research study

Carlos Bruno looks deeper:

Looking at age, we see the red flag: individuals are coming to California in their early 20’s and not sticking around. We find that only college-age individuals see a net in-migration into California; all other groups witness a net out-migration, with the 40-to-54 age group — those in the prime of their professional careers — having the highest level of net out-migration. Despite college age individuals experiencing a net in-migration, the drop-off in the 25-to-39 age group suggests that these individuals are not staying within the state, likely due to the high cost of living in California and/or the lack of employment.

Cost of living too high?

Cost of living is extremely high in California. A recent analysis on home prices and migration by Trulia chief economist, Jed Kolko, provides some useful insight. The California median home price per square foot in 2012 was $229. Texas’s median home price per square foot was $84 — just 37% of California’s median. While it’s more correlation than causation, the Trulia analysis shows just how closely connected relative home prices in California (to the nation as a whole) is to net out-migration.

I blame John because he is the clueless leader of the State House, he knows perfectly well that his policies are doing the damage, he and Darrel Steinberg.  The problem in essence is simple, our connection with the national Democratic party.  Things we do, call them progressive, are not that harmful.  But when Cal pols go to DC,  they recreate the  same crap as a national program then the crap boomerangs back here in mighty multipliers less than one..

California does not need wealthy people

That is our claim and we are sticking to it.  What California needs is for all those small states to fork over their tax bucks for our Obamacare infrastructure; California's main industry is implementing federal programs.

Look at the Tax Foundation and their map of income migration The map tells us that California and New York lead the country in wealth migration, losing 70 billion in taxable income together. Illinois is the one in trouble, losing 20 billion, a number that indicates near term bankruptcy. Look at the California numbers, 30 billion lost. At a tax rate of 15%, these are rich folk, the cost to the California budget comes to 4.5 billion. The California budget is effectively back into the red, relative to the bureaucrats' first order projections. These numbers do not bode well for the future security of municipal investing in large, high taxed liberal states.

The solution is fewer large scale federal programs, and keep California's tax rates as they are, for now. Our real cost is the inefficiency of making these federal programs, designed in the small states, work in huge, especially liberal, economies. Texas does better because Texas keeps a small state mentality, they get it. Where is Dan Walters, why is he not speaking to the problem of mixing federal programs into the morass that is California government.

Prediction, as Obamacare unfolds, NCLB continues to wreck havoc, DOT projects continue losses, and the legislature continues to micro-manage, California efficiency is headed down, down, down.

The stock and bond industry in NYC

Here's The Real Way New York Is Like Detroit

Ordinarily, I think these kinds of comparisons are off-base. But New York is, in one very important way, like Detroit: Its economy is dominated by one industry, and it doesn't have a good repositioning plan in place for when that industry falters. New York has the highest taxes in the U.S., providing very generous pension and health care benefits to public workers that now consume 1/5 of the city's budget, with a vast social services apparatus that in most other places would be left to the state government to manage. And that all works because Wall Street is a money machine. Bankers make way more money here than they could make if they moved their businesses elsewhere, and they love living here, so they will put up with high taxes, high rents, and all the other aspects of New York that make life here expensive. And they really do pay the city's bills. In 2008, 44% of wages earned in New York City went to people working in the finance and insurance sector; even in the depth of the financial crisis, that share only declined to 37%. Those figures actually understate finance's importance to the city's tax base — after all, who's hiring high-paid lawyers and going out to fancy restaurants and buying apartments in luxury towers that construction workers build? Bankers. Read more: http://www.businessinsider.com/heres-the-real-way-new-york-is-like-detroit-2013-8#ixzz2d8lZmsB9

Josh Barro
Now, how much of those business profits are driven by politicians in DC? Well, we roll four trillion each year, likely with whosale rates the bankers in NYC can move that for 100 billion. Then they get the private sector stocks, with high margins for rolling that. My numbers way conservative. What happens when DC stops borrowing? Well the infantile bankers sent Greenspan to DC when Clinton ran a srplus. They damn near cried and boo hood for months. When it is sequester time, pay less attention to bankers and fund managers who live and work in NYC, the bias is unavoidable for them. But here is the bigger point. California is your Obamacare state, or really, the LA basin. And Florida is your retirement state, Texas sells you oil.

All of this federally administered specialization in government programs, among three states and Texas. Who manages? We all report to 60 small state Senators from middle America. Why not? Whats wrong with specialization on a grand scale?

Well, for one, the airplane ticket whenever a small state citizen wants to partake in a federal program. Plus, by jingo, they all get taxed, but they all are too small to scale up, bummer. So, says some small state senator, you don't need us, leave us out completely and let four or five governors do quadralateral swaps. In other words, a large tax exemption for small states, to cover extra losses in the federal business.

Darrel Steinberg remains an idiot

Dan Walters: Steinberg's bills show his visions for California

This year, Steinberg, the president pro tem of the Senate, is once again attempting to alter Californians' lifestyles, this time through a new form of redevelopment and an overhaul of the California Environmental Quality Act. When Gov. Jerry Brown and the Legislature abolished local government redevelopment agencies two years ago, their overt motive was financial. The agencies were skimming off about $5 billion a year from local property taxes and the state was on the hook for about $2 billion of that diversion, which otherwise would have gone to schools. "We take from redevelopment and we put $1 billion into schools. That's a good thing," Brown said, later adding, "It's just a matter of making hard choices." From the broader perspective of public policy, however, the problem with redevelopment in California was that it had evolved from a program to reduce urban blight into a tool for local politicians to practice crony capitalism. Read more here: http://www.sacbee.com/2013/08/26/5680375/dan-walters-steinbergs-bills-show.html#storylink=cpy

Will Steinberg reinstate the corruption?

Quite a few proposals to resurrect redevelopment have been floated in the Capitol, and Steinberg's version, Senate Bill 1, is the most prominent. It would rename redevelopment agencies as "Sustainable Communities Investment Authorities" and focus their activities on high-density, transit-oriented housing, low-income housing, and "clean manufacturing," such as solar panels and trolley cars, with "prevailing wage" workers. The new agencies could issue bonds, levy sales taxes and seize land under eminent domain, but the old requirement to define blight in areas earmarked for redevelopment would be eliminated, thus vastly expanding their reach. Steinberg has paired the bill, rhetorically at least, with his version of CEQA reform, which also would give special treatment to public or private projects that meet similar criteria of political correctness. Steinberg holds visions of how Californians should be living their lives and wants state law and taxation to achieve those visions in ways that would discourage politically incorrect, albeit more traditional, lifestyles.

They are visions that may be shared by most of his fellow Democrats in the Legislature, but whether they're embraced by most other Californians – who may harbor more individualistic concepts of work, housing and transportation – is very uncertain.

Dan is much nicer than me, but the fellow is a jackass, Sacramento citizens should be ashamed. The California Undemocratic Party is a racist oligarch. California, with our current government is a wart on the butt of America.

Why doesn't more debt raise the ten year rate?

And no, it does not seem to be the Feds price deflator.  More likely, crowding out from a channel other than interest rates. It is, drum roll, the federal government does not realize its losses, it just keeps on subsidizing them. Hence, the second dip we are due will be the dip in which DC delevers. The crowding out channel as generally been imports, mainly oil. We are living with about 8 trillion of unrealized losses by the federal government, wish us luck!

The debate rages, is federal spending high

Evidently the Washington Post is having trouble with big and small regarding the size of central government. Rather than complain lets look.  DC spending, as a proportion of gross domestic product is the second highest in over 30 years, only Ronald Reagan, the Republican Communist, did worse. Of course, Obama manages to hold the peak record, but whose counting pennies when we are comparing to the great overlord of Big Government Republicanism.

In order to get federal spending down to a sustainable 20%, how much should we cut? To a first order, that would be 3/23 or about 10%.  So, Chait and Drum need to explain how we get another 10% cut in government, and quit complaining about newspapers.

Is Chait telling me that a 23% share for the federal government is sustainable? Or, as Drum implies, multipliers are always greater than one because,..well, Obama says so.

Simon Wren-Lewis needs to look in the mirror

This is why the argument is largely a no brainer for economists. [1] Most economists are instinctively against state subsidies, unless there are obvious externalities which they are countering. With banks the subsidy is not just an unwarranted transfer of resources, but it is also distorting the incentives for bankers to take risk, as we found out in 2007/8. Bankers make money when the risk pays off, and get bailed out by governments when it does not. Link

Here is what Ben has to say:

But the point of QE3 wasn’t just to keep rates down and encourage home buying. It was also intended to frustrate holders of conservative, low-yielding assets, pushing them to seek higher returns in riskier investments and thereby fund job-generating business activity — and it seems to be working. Read more.

So, what does Simon want? Central banks that push risk in a downturn, then bail them out in the crash. Or does Simon want banks to stay out of the stimulus business altogether?

Simon is one of the 'multipliers always greater than one' crowd. All solutions come from government stimulus. He cited a really bad study, here This is the typical rigged study. It uses the Cristina Romer method of isolating a set of conditions for research, in this case the study examined governments in which austerity was tried after a negative shock. Then the research concluded that economic estimates prior to the austerity were higher than the results, conclusively proving nothing since all economic estimates are off base after a crash. Then he continues to claim that we smooth consumption over time, which we do not, a well proven error that most economists make. Why do we have economists if all they do is rig research to justify their priors?

Jared Bernstein, find the problem, then fix it

Jared is talking about the long term destruction of the middle class.

Why is this happening?
Economists typically cite globalization and technological change, both of which increase the earnings prospects of skilled workers relative to the less skilled. But that’s far from the whole story. The E.P.I. report shows that the real wages of college-educated workers have been flat over the last decade as well, though workers with advanced degrees have done better.
Also, the college wage premium — the wage advantage held by college-educated workers over the less educated — grew much more slowly over the last decade compared to the prior 20 years, posing a challenge to the notion that skills can either explain or solve wage stagnation. To be clear, there is little question that more educated workers are likelier to capture some of the economy’s growth than those with lesser skills or training.  But the wage data show that upgrading skills alone is an incomplete solution.

Ok, he has ruled out one cause, so lets look at another cause? No, he goes right into the solution, having been unable to determine the cause.

Which policies would promote full employment? In the near term, there would be more fiscal stimulus (instead of the fiscal drag we’re getting), and the Federal Reserve would not be planning to unwind its monetary stimulus too soon. But in terms of aiming at the primary distribution, we need to be willing to think of the government as the employer of last resort, ready to step up direct hiring or subsidized employment programs in slack times.

Wow, what if the problem is exactly that, stimulus spending has a multiplier less than one. We have plenty of evidence that large federal programs are harming California due to the mismatched economies of scale. Yet, Jared wants to do more of the same. It is likely that Jared's policies are the problem. Look at middle income losses during the period in which his previous employer was VP, the greatest losses for the middle class in 30 years. Jerad needs a clue.

Immanuel Saez points out that the higher income losses are greater just after the crash, but they are ultimately restored to a greater proportion before the recovery begins. Saez is implicating the Fed, though he suffers denialism because of his priors. It is very likely that DC itself, the progressive portion of DC is causing this problem.

This is a debate between two liberals. How to mostly trash the middle class, and Obama is the worst offender.

Local government debt crisis continues

California Political Review
 
I should quote from the article, but it is simply a long and continuing story of the continued fiscal chicanery by local government politicians  hiding debt. Local governments, in general, are simply too much tied to tricks and gimmicks in adding more debt, more unfunded liabilities. Every municipal bond investor should read the report.

California educators, as stupid as they come

Education officials from nine California school districts are lobbying the US Department of Education this week in Washington, DC for waivers to the “No Child Left Behind” Act. Max Pringle reports from Sacramento. The superintendents represent a good chunk of the state’s population. They’re making the case that the “No Child Left Behind Act’s” focus on boosting test scores leaves instructors too little time to teach skills that students will need later in life. Troy Flint is with the Oakland Unified School District. VPR

This report reveals two points. Education administrators in California are deliberately stupid, and medical administrators in California are deliberately stupid. It is the Whocuddaknown syndrome.

I do not know about college educated school administrators, but a little long division (math anyone) reveals that these school administrators were short some eight Senators when Obamacare and NCLB were designed, so there is no way these folks could have figured out the problems before hand.

Here is another bit of stupidity at its worst:

Ironically, despite all the criticism leveled at for-profit colleges, only three are in this Top Ten lobbying list. Moreover, as recently as 2009, there was not one for-profit university listed in the Top Ten. The ten biggest university lobbyists for 2009 were: State University of New York, California State University, University of Texas, Johns Hopkins University, University of Colorado, Boston University, University of Southern California, Texas A&M, University of California and University of Washington. These ten institutions spent more than $10 million to lobby the government on their behalf.
But why are they spending this money?

"This is to make sure the university has a voice," said Gary Falle, an associate vice president of federal government relations for the University of California (UC) system. . "We liaison with the government on several different levels; after all, there is a huge partnership between the federal government and the University of California." Main Street

Now, I dunno about UC professors, but it is clear to me that the greatest federal impact on UC students is NCLB, the edcation system designed by the 60 small state senators.  How is it that UC hired a bonehead that cannot even get the connection between NCLB and UC?


So, why do they always miss the problem of undemocracy here in California? They are simply stupid idiots and parents should wonder out loud. I mean, it does not take a whole lot of brains to realize that California is not the same economy as the 30 small states that control the Senate. So, in all of these large programs from DC, a little trade theory applied to the disparates sizes of the states would reveal a problem. Did these idiots even make an attempt to understand the problem? How did California school administrators select 60 small state senators to design the California education system? Any answers? Easy, we have a bunch of clearly idiotic legislators who prefer the oligarch of a Senate to their own intelligence, perhaps with good reason.

Suggestion to educators in California. Rather than reveal your own stupidity, I suggest you concentrate on why the California political establishment is so intent on having this huge economy ruled by 30 small states.  Do that and educators might find some real stupidity to correct.

Baltimore society has gone insane, literally

In Baltimore, it’s not even front page news.  On Tuesday, July 2, 2013, the staggering stats of 36 people shot and 16 dead in one week only made it to the page 4 “Around the Region” section, the Baltimore Sun.; By Wednesday morning, that number had jumped to 40 shot and 18 dead making Baltimore one of the most violent cities in the country.  WBAL-tv reported that after factoring in population, Baltimore, Maryland is 10-times more violent than New York City. Crime Blog

This makes Baltimore worse than Oakland? Yet another case of a society unable to control the insanity of their own members. Perhaps mass insanity has come upon us via some chemical agent, perhaps methamphetamine?

This might be the case. We often assume it is black culture, but North Korea is an insane society, and we find this tidbit:

A new study published in the journal North Korea Review says that parts of North Korea are experiencing a crystal meth “epidemic,” with an “upsurge” of recreational meth use and accompanying addiction in the country’s northern provinces.
“Almost every adult in that area [of North Korea] has experienced using ice and not just once,” a study co-author told the Wall Street Journal. “I estimate that at least 40% to 50% are seriously addicted to the drug.” WA Post

Those addiction numbers are informal, but a detailed study does show a very worrisome problem with meth addiction. The drug does in fact cause nearly permanent insanity. In Fresno, meth heads are responsible for nearly 60-80% of crime. But more worrisome, what are we going to do when the little midget dictator over there gets hooked, and becomes insane? ere is this report:

In The Wilson Quarterly an article “Jumped up in Pyongyang” explains that the desperate need for hard currency influenced the North Korean regime to begin mass producing methamphetamines (crystal meth) and other counterfeit forms of drugs such as Viagra. At first crystal meth use among North Koreans was extremely rare since it was prohibitively expensive and the drug of choice was usually opium. Originally all the methamphetamines in North Korea were manufactured in state-owned factories but in the early 2000s the government abruptly closed many of the drug factories and made many scientists, technicians, and factory workers jobless. Some of the few entrepreneurs in the country recognized the opportunities presented and began to fund the private production of the crystal meth. Communist party officials were the first to experiment with the new supplies of inexpensive crystal meth but the use of the extremely potent and addictive methamphetamines quickly spread to other segments of North Korean society with the border areas next to China experiencing the greatest increase in drug abuse The Wilson Quarterly.

Read more: http://www.digitaljournal.com/article/356912#ixzz2d1TVnDaw

Tiny dictators doing the stupid.

But African Americans are not stupid tiny dictators, as of 2004:

Race/ethnicity: The largest numbers methamphetamine users are white. However, the highest rates of methamphetamine use during the past year were those for Native Hawaiians or other Pacific Islanders (2.2%), American Indians or Alaska Natives (1.7%), and person who reported 2 or more races (1.9%). Past-year use among whites (0.7%) and Hispanics (0.5%) was higher than among blacks (including African Americans) (0.2%). 4. CDC

New data might change the stats but has not yet surfaced. Ten years from the last study is a long time.

Complex variable and Tobin asset theory

Why The Post-Lehman Reflation Is Reaching Its Limits

It’s ironic, or it seems that way to us, that two of the least understood financial markets by equity investors are two of the most systemically important – repos and gold. Even more ironic is how so many investors don’t even consider them to be all that important. In our view, stability in both markets is a pre-requisite for maintaining confidence in the financial system and keeping the credit/asset bubble inflated.

Gold and Repos is the extreme form of dividing the market into equities and bonds. Together the two category division is derived from the necessity of complex variables in a time smoothed investment practice. Tobin states, without explanation, that two characteristics make this division, we balance risk and yield. The explanation lies in a fundamental truth about smoothing over time, that norm requires complex variables to maintain the cycle.

Consider, in its fundamental form we are trying to make flow have two components, a regular order of goods arrivals with an associate phase shift in arrival times. They are the same variable. The problem is that the economy is not time smoothed, it is container smoothed. We care less about keeping arrival times synchronous and care more about filling up the shipping containers. It is the basic difference between container ergodic and time ergodic systems; DSGE vs Trade theory, the fundamental dichotomy of our economy, the dual normed system. The reason the yield curve is sloped upwards is because we are primarily container ergodic, and that means the long end of the curve is sparse and illiquid.  Banks have to model the yield curve as a bell curve with the long end of the bell hidden from view.  The implied losses on the long end of the curve do not become apparent until we crash. At the crash point, the curve becomes bell shaped as long term losses reveal themselves.

Dual normed behavior is fundamental to the economy.

Cancel HSR says Contra Costa Times

Having concluded that the authority abused its discretion, Kenny will next decide what to do about it. The answer: Apply the brakes. Contra Costa Times

This conclusion is based partly on the recent judicial ruling that the HSR has violated is founding law. But notice where the opposition comes from, the SF bay area newspapers. But the bay area was supposed to be the major destination of the HSR, it was proposed for quick transportation between LA and SF. LA was the first to opt out, then the bay area, both the terminal points of the whole project. Ask folks in the bay area why and they will tell you that airplane rides are cheaper and faster.

My theory of the Industrial Revolution

Simple: We beat the plague so children mainly survived. Because of that, parents invested more in early childhood. The first generation after the plague were much more experimental. Why did it start in Northern Europe? Cold weather put the kids indoors staring at the fireplace. With nothing else to do, these youngsters figured out energy processes as a result.

Bill Gross always made me suspicious

Pimco Lawsuit Alleges World's Top Bond Fund Manager Engaged In Shady Practices

Based in Newport Beach, Calif., Pimco manages about $2 trillion in assets. Its founder, William Gross, is a near-constant presence on business television and each month pens widely read, long-winded newsletters. As a measure of Pimco's influence, the U.S. government regularly employed it to help mop up after the financial crisis. At the time, many observers grumbled about the apparent conflict of interest inherent in the world's biggest bond-fund manager being in charge of keeping an eye on huge piles of bonds on behalf of the taxpayer.

When I first started looking at data after the crash, I was surprised to here Bill constantly spouting off. I wondered why, being naive at the time.

Emerging markets fail

U.S. Stocks Beat BRICs by Most Ever Amid Market Flight

Investors are favoring U.S. stocks over emerging markets by the most ever as fund flows and volatility measures show institutions are increasingly seeking the relative safety of American equities. Almost $95 billion was poured into exchange-traded funds of American shares this year, while developing-nation ETFs saw withdrawals of $8.4 billion, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index (SPX) trades at 16 times profit, 70 percent more than the MSCI Emerging Markets Index. A measure of historical price swings indicates the U.S. market is the calmest in more than six years compared with shares from China, Brazil, India and Russia.

This is about money fleeing from the US bond market and the US bubble stock market, looking for real growth. They are coming back sadder but wiser. Emerging markets are not quite there, rife with corruption and poorly written laws. They so not have the liquidity structure to keep US fund managers happy. Now with tapering coming up, the load is put right on our legislatures in DC. To keep the money here, the DC politicians are going to have to live with a 2-3% ten year yield. Ant that depends on whether California can avoid major screw ups, and we all know the California legislature, one of the worst.

Get a talking head for your toddler

New technologies, like the digital language processor developed by the LENA Research Foundation, whose work focuses on language problems in young children, can aid in this effort by letting parents receive feedback on the frequency and nature of their verbal interactions with their children. (Think of it as a box score for those interactions.) Providence, R.I., has won a $5 million grant from the Bloomberg Philanthropies for a Providence Talks program to use these kinds of techniques to improve school readiness for low-income children.

More on Nudge thingies.

Ultimately we get this robot mom, a talking head posted on the crib like a guillotined queen. When the toddler is let loose from the crib, he can discover that mom really does have legs and arms.

Cancel HSR, says the San Jose Major Daily

The paper looked at the recent ruling from judiciary on whether HSR meets its legal goals. It concludes:

The plan is a financial wreck. Polls show voters would not pass it today. The first planned segment would stretch from Fresno to just north of Bakersfield, but that would be of little use unless the line is extended either north to San Jose or south to the San Fernando Valley. Kenny ruled that the measure voters approved required the authority to line up money for a "usable segment" before starting work -- "to identify sources of funds that were more than merely theoretically possible, but instead were reasonably expected to be actually available when needed." This was not the case. As for environmental review, Kenny concluded that also should have been completed for the entire usable segment before approval of the spending plan. It was not. Having found that the authority abused its discretion, Kenny next will decide what to do about it. The answer: Apply the brakes.

Neither the bay area not the LA basin really want the train, yet that is the ultimate destination supposedly.

The Federal Reserve Wealth Pump

Courtesy of Zero Hedge

Notice the phase shift between the QE program and interest rates. They seem opposite. The monopoly arrangement of the bond dealers cause the problem.

The bond market is composed of small and large groups, the big guys are first to trade in large volume. So they front run the announcements, pick up nickels in front of Ben. They make consistent money, the first to sell in a QE and the first to buy back in after it terminates. This is what Mish calls first access, riding the waves. The Fed is between Treasury and its supply and the big players that deal in volume. Think of it as social security for the wealthy, paid by the middle class. Go see Immanuel Saez, he knows the score.

Bots and the depression

I defined depression, the restructuring that extends the length of the curve, frequent to rare, the old six sigma event.  Mostly driven by the effect of information technology on transportation; the sudden appearance of the former catches the latter off guard.

Is that bad?
No, I thought, great, lets do the Vee. I simply reasoned that the effect of tech on transportation would be to simply deploy bots on surface roads, easy. Not like the GD, where broadcast technology demanded freeways, almost overnight. So a technical depression is not bad.  Even in the GD, once the word got out, folks settled in to road building and we moved on. Depressions are not bad things, something else are bad things.

What is that something else?
That is the 30 year question. This thing that is bad has been slowly depressing our potential for 30 years.

My favorite indicator

Tells me when to expect a recession.  Not now, we are remaining at sub 2% growth.

Income growth during the recession

Emmanuel Saez Uneven recovery from the Great Recession

From 2009 to 2011, average real income per family grew modestly by 1.7 % (Table 1) but the gains were very uneven. Top 1% incomes grew by 11 .2 % while bottom 99% incomes shrunk by 0.4%. Hence, the top 1% captured 121% of the income gains in the first two years of the recovery. From 2009 to 2010, top 1% grew fast and then stagnated from 2010 to 2011. Bottom 99% stagnated both from 2009 to 2010 and from 2010 to 2011. In 2012, top 1% income will likely surge, due to booming stockprices, as well as re timing of income to avoid the higher 2013 top tax rates. Bottom 99% will likely grow much more modestly than top 1% incomes from 2011 to 2012. This suggests that the Great Recession has only depressed top income shares temporarily the dramatic increase in top income shares that has taken place since the 1970s. Indeed, excluding realized capital gains, the top decile income share in 2011 is equal to 46.5 %, the highest ever since 1917 when the series start.

How does this work? Flow says Mish:

Consider the housing boom and bust. By the time easy credit was universally available (with sensible income and down payment requirements flying out the window), the party was nearly over. The root cause of boom-bust cycles (and the associated income inequality distortions) is the Fed's inflationary and reflationary policies. Simply put, the Fed has sponsored bubbles and busts of increasing amplitude over time, and those with first access to cheap money have come out ahead at the expense of everyone else. It's even worse than that. The Fed's policy of "too big to fail" encourages rampant speculation if not outright manipulation in both directions.

His theory, first access to money. Money which is not needed, never gets delivered. It hangs in the accounts of wealthy people and they earn short term gains, then after the regime change at the Fed, it is returned, having done nothing but restore yields to the wealthy. This is what the Fed is think, as DeLong asked, how does the Fed fulfill its legal mandate the top 1% getting first access to the Fed?

  More later, mainly I am wondering why the Fed does this. After all, a bad idea repeated many times sound like a really broken record.  I think it less a Fed problem than a failure of democracy, mainly in the Senate.

Brad Delong, New Monetarist

And I Do Not Understand the Federal Reserve's Current Thinking at All...

There are no signs in the pace of technological progress, in the level of investment, in the pace at which the American labor force educates itself, in measures of capacity utilization, in signs of upward wage pressure due to labor quality bottlenecks, or in surging commodity prices due to supply bottlenecks to suggest that the path of growth of U.S. sustainable potential GDP is materially lower today than was believed back in 2007.

He wants to know what the Fed is going to do about this. Brad identifies the problem, DC is a snake pit with multipliers less than one:

It is true that fiscal policy is and has been sub-optimally tight due to Republican Congressional obstruction and the Obama administration's turn in January 2009 2010 to deficit reduction as job #1 with Obama's call that since "families across the country are tightening their belts… the federal government should do the same".

So, Brad's new monetarism theory suggests that loaning a snake pit in DC will help the economy. That is some kind of Money Illusion when cheap money for DC causes more efficiency in DC?

 At least Krugman has given up on the idea that DC can do anything rational. His theory is that cost benefit analysis is impossible, so random acts of government work just as well. BBoth of these theories are wrong. The correct theory is to make DC efficient, possibly by using some theory of democracy. Unfortunately, the UC system are believers in undemocracy, its in the school charter, no real democracy allowed.

The nation suffers another problem, California. The nation is waiting for a huge economy, whose government has been floundering for 20 years, to construct, in the next month, a completely revamped medical industry. If Brad worries about the swamp we call DC, then Brad might worry that he has only two official senators, and that is why Brownocare is a unglorious mess. Brad has only two Senators because Brad signed an oath, when he was employed by UC. That oath: No one talk about the lack of Senate democracy because UC lives on that margin of undemocracy.

acromakilliac

According to google, that is not a word.  Google is right, I just made the thing up.  I and all 50 of my loyal readers are going to ping the google search engine. Is the google engine perceptive enough to find that 50 people have looked at that bizarre word? An IQ test for the bots.

My view of aggregate science

It is the study of countable agents restricted to a limited set of actions.

 I claim, the agents interact and produce outcomes and there exists a probability distribution of these actions, which will have stable points. All economic models follow this rule. My unproven claim.

My proof would first state that the requirement of any model is some gross linearity, so the agents in their limited actions can be measured by sorting them at least. But a sorted set is an equilibrium, in that it is a very limited selection from the larger group of unsorted agents..

Racism in the Undemocratic Party of California

Dan Waters writing about the desire to spend state school funds focusing on large schools or not. The legislature is concerned that without controls, the small districts will spend more on salaries, and less on, rather than devoted to the students who needed extra academic attention to catch up with their more affluent classmates. I am not sure what this means, doing this is labor intensive, small or large districts; and that means competitive wages.

Here is a clue:

That had the effect of shifting the high-stakes battle for control of the money to the board, which is appointed by the governor, but advocates for the poor kids, including the American Civil Liberties Union and some Latino rights groups, concluded that the legislation itself contained too many potential loopholes. Read more here: http://www.sacbee.com/2013/08/21/5667717/dan-walters-big-school-money-row.html#storylink=cpy

Latino rights are best preserved in large schools, because latinos congregate there I presume. But Latinos are a plurality here in California, they are simply using their plurality to fund their special race, at the expense of other races.

I suggest they change their name to Poor Rights, that is who really ends up in large schools, poor kids. Otherwise, sooner or later California will have a hellava lawsuit on its hands.

Arnold, say it isn't so

The coordination problem also can be given a classical reading, as I do with PSST. However, I totally reject the notion of a “steady-state equilibrium.” The economy is constantly creating new opportunities and destroying old business models. It is in the midst of these dynamic changes that workers become unemployed. Arnold Kling

Wow, how does one determine a sustainable pattern without an equilibrium baseline? How does one maintain How do we make shipments if the trading patterns constantly change? Without an end point, the point at which the entrepreneur executes his plan, without that conclusion, the entrepreneur wanders the waste land. So there must be a monotonic march toward the end point, and that march must connect to a starting point. A connection is made, it is fixed, until the next Recalculation (a better metaphor).

John Nolte is freaking

Outside of the federal government's Bureau of Labor statistics, the Gallup polling organization also tracks the nation's unemployment rate. While the BLS and Gallup findings might not always perfectly align, the trends almost always do and the small statistical differences just haven't been worthy of note. But now Gallup is showing a sizable 30 day jump in the unemployment rate, from 7.7% on July 21 to 8.9% today. This is an 18-month high. At the end of July, the BLS showed a 7.4% unemployment rate, compared to Gallup's 7.8%. Again, a difference not worthy of note. But Gallup's upward trend to almost 9% in just the last three weeks is alarming, especially because this is not a poll with a history of wild swings due to statistical anomalies. Gallup's sample size is a massive 30,000 adults and the rolling average is taken over a full 30 day period. BeerBurp

Yes, I noticed the creep up in California, tax receipts crept down a little here also. Emerging markets freaking, volatility in US markets. Its all a bit creepy, but one thing going in our favor: A watched pot never boils. Keep a close watch, please.

Bubblidelicious

In a city where skyscrapers sprout like weeds, none grew as high as the Sapphire tower in Istanbul.Today, it stands as a symbol of how far the mighty may fall.Like a vast majority of new buildings that have blanketed the Istanbul hills in recent years, the Sapphire — at 856 feet it is the tallest in Turkey and among the loftiest in Europe — was built on the back of cheap loans, in dollars, that have flooded Turkey and other fast-growing markets like Brazil, India and South Korea. The money began to flow when the Federal Reserve and other major central banks cut interest rates to the bone in 2009 and cranked up the printing presses in a bid to spur recovery in the United States and other advanced industrial nations.Landon Thomas

Well, that explains where the bubble went. Can Obama guarantee negative growth in America so this lending can realize its full potential?

Whoops on Obamacare

Here’s the bloodless, robotic response from HHS to the decision by United Parcel Service — a decision UPS at least partly blames on Obamacare – to drop 15,000 spouses from its health care plan because they’re eligible for coverage elsewhere.

“The health care law will make health insurance more affordable, strengthen small businesses and make it easier for employers to provide coverage to their workers,” said Joanne Peters, spokeswoman for the U.S. Department of Health and Human Services. AEI

Karl Smith!

Government borrowing changes the game... because the government is... always a good credit risk. Indeed, in a world where reserves are swapped for government bonds [because the government can always print reserves] the government can’t not be a good credit risk. Thus a rise in government borrowing suddenly makes overall lending safer and the BL curve moves out. Governments which may directly default (rather than inflate) lose traction.... It is not at all clear that Greece can move the BL curve... Brad quoting Karl Smith

Folks, it is great to borrow from DC as long as DC can guarantee lower interest rates in the future. This is a safe asset, a government bond guaranteed, by our government, to rise in value above is current NPV. This is the negative growth trade, Karl, it has worked for 30 years, as we can see by the steady drop in yields since 1980. Unfortunately, rates have dropped to Zero, right at the same time we hit approximately zero growth, and been there for five years. We ran out of middle class to guarantee bond traders a sure thing. As we all know, the decline of the middle class correlates with deficit spending, been doing that for thirty years. The government credit risk is just fine, denominated in dollars, but at some point, the middle class chooses another currency, or begins to barter, or government goes into hyperinflation then restructures. We are at zero, if DC wants a negative growth rate, is has no more middle class to pay for it.

I blame the Lithuanians

Citing evidence found on YouTube, Turkey’s Islamist prime minister, Recep Tayyip Erdogan, claimed on Tuesday that Israel was behind the military takeover in Egypt last month.
In remarks broadcast on Turkish television, Mr. Erdogan scolded Western democracies for failing to condemn the military coup that deposed Egypt’s elected, Islamist president, Mohamed Morsi, and blamed Israeli influence. “What do they say in Egypt? ‘Democracy is not the ballot box,’” he said. “Who is behind this? Israel.”
Telling his listeners, “We have evidence,” Mr. Erdogan cited comments made two years ago by the Algerian-born French philosopher Bernard-Henri Lévy, who “is also Jewish,” as supposed proof of a longstanding Israeli plot to deny the Muslim Brotherhood power in Egypt, even if it won elections. Hot Air

I also have evidence that Islamic nations are fairly stupid.

Who caused the inflation of 1973

From Wiki.

Can the Fed really stop inflation coming from an oil shock? Notice the inflation adjusted price, much higher than the nominal, almost a sure bet the inflation was driven by oil prices. What could the Fed do? Pull the trigger as if this were purely monetary inflation.
OK, so add this problem, Republican debt:

The Federal Reserve board led by Volcker raised the federal funds rate, which had averaged 11.2% in 1979, to a peak of 20% in June 1981, and finally oil prices subsided.

California is screwing with energy markets

The have yet again inserted price controls, prefering to buy renewable sources as a priority, with subsidies, and fossil fuel sources secondarily. The result is that traditipnal power sources will be back up. Hence traditional power canmot set a future price for intermittent power generation. That is unprofitable, so umder the current scheme, California rate payers will pay a huge price for traditional power.

We will get Emron all over again, and we know, ahead of time, who caused the next fiasco in emergy, the California Undemocratic Party. Cal Watch has the details.

The blogging economists are censoring

Theory is still undergoing revisions, and economists with large priors get real sensitive, so they start cherry picking comments. One thing bothering the Dismal Scientists is why did we have the recent rise in interest rates. The answer, as near as I can tell, is growth somewhere in the global economy.

But the possibility of growth now seems rather frightening, mainly because economists have figured out that we likely will hit a ceiling on growth. The same ceiling that has depressed yields since 1980, is still there. We are likely to hit the ceiling again and we do not know what that ceiling is.

 So what happens if we hit the ceiling? This time around, we will discover what the problem is. We are at zero interest rates, meaning it is very difficult to have negative growth and a dollar bill based money at the same time. So, it will be obvious what is out long term growth problem.

 I think the problem is trying to fit this big fat wart of a state called California into the American system, it won't fit anymore. So, methinks, most of the political class and a large plurality of economists are watching to see how DC and Sacramento interact when rates are high and Obamacare is moving forward. We are at the moment of truth. I think, on this thirty year problem we suffer from.

What would the UC Law schools know about transportation?

Tuesday's report was produced by the law schools at the University of California, Berkeley and the University of California at Los Angeles.
The report coincided with a panel discussion that begins at noon Tuesday in Fresno where representatives from agriculture, development and the California High-Speed Rail Authority will discuss how to manage the economic and environmental impacts of high-speed trains in the Valley.
The panel discussion is at The Grand on 10, 1401 Fulton St. in downtown Fresno.
The high-speed train project, which would link San Francisco and Los Angeles by way of the Valley, presents the region with both challenges and opportunities, writes Ethan Elkind, the report's author. Elkind is a climate policy associate with the UCLA School of Law's Environmental Law Center and the Center for Law, Energy and the Environment at the UC Berkeley law school.

Read more here: http://www.fresnobee.com/2013/08/20/3451545/uc-report-explores-high-speed.html#storylink=cpy

The web makes us all experts at everything, I think. But I see no report, mostly handwaving and story telling, and a lot of propaganda by the Fresno Bee

Zero Hedge and Denialism

If you caught the NBC Nightly News segment last week about one of the unintended consequences of the Affordable Care Act (ACA), you’ve probably guessed where I’m going with this. For those who missed it, NBC’s Lisa Myers reported speaking with “almost 20 small businesses and other entities around the country” and that “almost all said that because of the new law, they’d be cutting back hours for some employees.” Of course, NBC was merely adding to the extensive media coverage of organizations reducing workers’ hours to limit ACA costs. But the Obama administration doesn’t see why there’s such a fuss.  According to Myers:

The White House dismisses these examples as “anecdotal.” The president’s top economic advisor [CEA Chair Jason Furman] told us “he sees no systematic evidence the health care law is having an adverse impact on the number of hours employees are working.”

So, should we take our government’s word and dismiss the examples as anecdotal?

James Pethokoukis, pretty good

But not good enough when all his blame comes down to the fed. 

Here he shows, correctly that the housing crash did not spur the recession.  Unemployment was just fine for a while.  Then he shows an equivalent graph with monetary policy for comparison.  Not good enough, many thing were correlated with the crash, simply proving housing was not one of them proves little about the others. Further, the Fed will certainly, within six months, will correlate anyway (which is my unproven theory taken, I think from Mark Thoma)
 

Jared's case for the stimulus

Jared would claim that this graph proves the stimulus works.  In this graph, the blue line is stimulus spending, inverted. it represents the amount of stimulus money spent from the fixed size pot.

The orange line is GDP. What would a libertarian say about this chart? A libertarian would say that my properly proportioned democracy made some good purchases at low prices just after the crash, but prices had equilibriated after three quarters, so why did my government keep on purchasing.

What was cause and effect here? The cause is low prices, mis-pricing just after the crash. No one, not even a libertarian would dispute a positive correlation when government takes advantage of a buying opportunity. But to a libertarian, the continued buying after prices stabilized is just bad government.

Did Ben have a good monetary policy? Within 15%. likely. It does not take much brain power to adjust interest rates to the real yield curve, even if one is six months late to the party.

Regarding Krugmam's claim that the cost benefit ration favors increasing the budget, then why did GDP stabilize before stimulus spending ceased? Is Paul claiming the second differential, stimulus depends on the rate of increase in spending? I would say it would, just after the crash, when DC was going after low prices before the financials stabilized. But, also look closely at the crash period, the yield curve was guassian.  Crashes are the few times we get to see Guass, and that is also the time Warren Buffet is staring at peoples asses.

Krugman and writing styles

I don't write well, but I don't care. I am willing to pundicize about writing well. When I read economists, I look for completeness. Let's listen to Jared for example:

The question is whether the interventions will promote fairness, opportunity, and growth. Too often, our political economy debate tries to preclude these choices in the defense of some pristine vision of unfettered markets. Jared Bernstein

I know his audience, and his audience has no concept of completeness. What I mean is this: Fairness, opportunity and growth are not the complete set of results from government intervention. Self protection, greed, unknowledge and corruption on the part of government officials count also. Then there is arbitrage by private actors as well as the free rider problem, yet he fails to list them. One can make no comparison between side effects when Jared is speaking to his base, his writing will be deceptive. On seeing a post like Jared's, it seems he is deliberately failing to list a complete set of outcomes. He is likely contained within a limited vision. semantic bubble, hence fails completely on completeness.

Does it matter? His approach, and the other side does the same, but the approach sours the readers on the issue of political economy. It fails to educate, leaves the wider set of readers with the impression that economists are all liars; ruins the reputation of the economics profession.

Inspector General trashes Fannie and Freddy accounting

Fannie Mae and Freddie Mac are masking billions of dollars losses because of the level of delinquent home loans they carry, a federal watchdog said in an internal report, and it said the companies should be required immediately to recognize the costs of some bad mortgages. The report, written by the inspector general for the Federal Housing Finance Agency and reviewed by Reuters, said the FHFA's timeframe for mortgage finance companies Fannie and Freddie to have up to two years to recognize the cost of mortgages delinquent at least 180 days was "inordinately long." The change in the accounting treatment of these delinquent loans potentially could require Fannie and Freddie, which have rebounded to enormous profitability in the past two years as the housing market recovered, to "charge off billions of additional dollars related to loans," the inspector general's report stated. Read more: http://www.foxbusiness.com/industries/2013/08/19/watchdog-fannie-freddie-mask-billions-in-losses/#ixzz2cRkgzZhQ

Funny business?

They have arrived

Here in the United States, automakers are working tirelessly to get autonomous cars on roadways. We could even see the infamous driverless Audi TT hit showrooms as soon as 2015. But by 2015 driverless vehicles just might be old-hat — at least in Singapore. The Navia is an eight-seat shuttle with a profile that can't quite shake its golf cart aesthetic, which doesn't prevent it from being a fully-loaded bundle of awesome. As well as being fully autonomous, the Navia features touchscreen navigation and an electric motor. It even parks itself atop its charger when not out ferrying folks around town. A system of lasers and sensors detects anything that might be in the Navia's way and allows the vehicle to properly avoid obstacles in real time.Dvice

About five years sooner than predicted, so good for the auto engineers. They are deploying this in a big university campus environment. Soon it will arrive at gated communities across the country.

Japan stumbling

Japan's trade deficit worsened in July, almost doubling from a year ago, as a weak yen boosted import costs. The deficit for the month rose to 1.02tn yen ($10.5bn; £6.7bn), as imports surged 19.6% from a year ago. The yen has fallen nearly 25% against the US dollar since November 2012, as policymakers unveiled a series of aggressive measures to revive growth. BBC News

Their main import? Oil. The game for Abe was to produce, yet again, the Japanese miracle of a jump in energy efficiency.

John Perez, you have horrible timing

I will dig out the reference, but John (House Speaker) recently wrote a mea culpa about government inefficiency out here. He promised that the Secretary of State would finally get this system software problem solved. At the same time, I might add, Chiang, the controller just presided over a quarter billion dollar software boondogle. Total failures in tech boondogles by the state of California amount to about 2 billion dollars in total losses. Step aside, John Perez, I am going to fix your problem and create a booming software industry. I am proposing the open software government standards group. And, this group an handle all of your problems without to much ado. All we need is for bureaucrats starting the project work with this group, using a public blog. An inclusive group of software geeks, without to much trouble, would use a slashdot style message board to define an architecture, made up of open software components. Seriously, California should never have to pay more than a million for5 working software and full support from multiple vendors. Consider the market. Not only California government, but all state, local and moderate sized governments world wide, working from open architecture with a standards group active. It is a no miss market for the open software industry, California government participation would be a great boost to the state economy.

Are we past the debt limit?

The total debt outstanding seems to have over run the debt limit, but the treasury daily statement indicates some accounting shifting has kept the debt at just under the limit. One source, the Treasury Direct, has debt exceeding the limit, but that may be a different debt than the one specified by the debt limit law. On the other hand, the Treasury Daily Report shows the debt subject to the limit holding steady. Obviously there is some accounting, valid or not, that has treasury shifting debt from the public to intra government. That is, I am speculating that Treasury has found some government account filled and is able to borrow these. Who is going to dig through the daily balances? Me? I am not a CPA, hey, Zero Hedge, you like charts and accounts, look into this. I found the answer in The Hill. Basically the idea is to lever up on some other non-debt limit program.

But Yurp is our hero

The planned high-speed rail line connecting London and northern England may cost as much as 80 billion pounds ($125 billion), more than projected by the government, according to the Institute of Economic Affairs. Lobbying from local officials for new links to the line, known as HS2, and changes to the route due to opposition from residents will probably add about 30 billion pounds to the project’s total cost, the institute will say in a report to be published tomorrow. The government now estimates expenses at 42.6 billion pounds, according to the report. Enlarge image Chancellor of the Exchequer George Osborne "The British economy is on the mend -- but there is still a long way to go and I know things are still tough for families," Chancellor of the Exchequer George Osborne said yesterday. Photographer: Simon Dawson/Bloomberg HS2 relies on a “flawed” business case and there are better options for improving U.K. railroads, according to the website of the HS2 Action Alliance, a nonprofit organization working with community groups to oppose the project. Alistair Darling, a former Labour head of the U.K. Treasury, has said he is an “HS2 skeptic.” Bloomberg

Kevin Drum needs to check the lead levels in Oakland

(CBS News) OAKLAND, Calif. - There has been 61 murders so far in Oakland, California. And with crime on the rise, some neighbors are taking extraordinary steps.
Gunfire has become so common on the streets of Oakland, California -- that even in neighborhoods that once seemed immune to the city's violence, residents are no longer shocked."It's like, 'Oh, another shooting,'" said Jan Hetherington, who has lived for 14 years in the Oakland neighborhood of Maxwell Park. It's a place with glorious views across San Francisco Bay, neat houses and friendly neighbors. "This is the most wonderful neighborhood I've ever lived in," she said. Yet she acknowledged she has to bring in private security to feel safe. With budget cuts forcing Oakland to trim its police force by a third, residents decided to pay themselves for private security patrols, which is understandable when you hear this from Hetherington. "A car came down the street, three guys got out with a gun. There was a gun battle three blocks over. And I did hear actually a bullet went through somebody's house." That routine gunfire turned tragic last month."Our neighbor Judy, who lived in the next block to me, was shot and killed," said Hetherington. CBS News

But its OK, I guess because the thugs look just like Obama's son would look.

Yet another California government tech fail

Long time readers of my blog know that I mention each and every technology failure accomplished by our state officials. Billion dollar web site for the judiciary, two or three failure to upgrade DMV systems. Now we currently have state Controller Chiang fucking things up. Soon the California department of State will fuck up their attempt to upgrade corporate charter applications.
Dan Walters: $250 million failure is sadly common

A scathing report came out last week from California Senate President Pro Tem Darrell Steinberg’s personal investigative staff on a new state payroll system that so far has cost a quarter-billion dollars, but remains inoperable. The Senate Office of Oversight and Outcomes report used uncommonly harsh language to describe the debacle. “Unlike other big state computer failures, the 21st Century Project collapsed not once, but twice, despite multiple layers of oversight designed to spot trouble early and keep the complex and massive undertaking on track,” it said. “A review of hundreds of pages of documents and interviews with many of those involved show the project suffered from lapses in due diligence, a failure to resolve core issues raised early and often, chronic turnover in leadership and what may have been unrealistic expectations.” The report basically accuses Controller John Chiang’s office of misleading the Legislature and the public. Chiang finally canceled the project. Dan Walters

Look at Dan Walters title. We all knew that Chiang would fuck this up way before the project was even funded. 100% of these programs get fucked up. What's the problem? Chiang has been around long enough to know California bureaucrats always fuck these things up. Why didn't Chiang simply tell the legislature not to bother, the program will be fucked up, they always are, he knew that. Chiang is a corrupt idiot.

 What is the real solution? California government should not be allowed to touch anything tech until until the project is vetted by the open source software community. And California software engineers should insist, in fact, they should refuse to work with any idiot from the government until the project plan is released in total to the open software community. Otherwise, don't bother, California government idiots always fuck up.

If you want to track the bonehead government in California, I recommend you stay tuned to Dan Walters, he has been the goto guy for California fuck ups for 40 years.