Retiring boomers replaced by young millenials

MarketWatch: The sharp decline in underemployment is the result of two trends, according to Anthony Carnevale, the director of the Georgetown center and a co-author of the report. The first is a “huge rush” of baby boomer retirements, which are freeing up jobs for younger college graduates. Over the next several years, two out of the three jobs that become available for college graduates will open up as a result of retirements, he said.

The article fails to mention one thing.  Those two of three jobs that open up have to cover the retirement cost of the two new boomers in Florida.

Inerest payments on DC debt and money velocity

 Money velocity, the red, tells us how many times money exchanged during one time period. The  more velocity, the greater is the economic transaction  rate.  The red  line  is dropping, as we see.

What happens when  money changes hands? DC collects a tax and pays interest on some 19 Trillion in debt, the blue line.. So the fewer times the DC collects the tax, the more volatile is the tax income. And we see interest payments become volatile. In fact, all sorts of measurements become volatile, relative to time. There are simply fewer transactions everywhere so aggregate measures, over time, will be more volatile.

Thus we have  an additional cost for using the government's money, about 1% in ATM charges, to cover the interest payment volatility as velocity dropped. So, the curve is flat out to a term that generates a positive yield, to cover the total transaction cost of ink and paper. The total cost of ink and paper is somewhere around 2%, remember all that roll over debt has become an ink and paper rental business for the debt cartel. Central banking is bad banking  and we have a  Kanosian/Republican mess.

How banker bot does it:

When the deposit and loan tree is out of balance, the bot rebalances and takes its gains or losses. The bot has no prior claim and shares risk. In the new system of pure cash, bankers have loads of opportunities to monetize transactions, as the total cost of ink and paper drops to nearly un-measurable levels.  Bankers just write python account managers, and these apps make virtual coins. No cost, the bots in our pockets are honest tree balancers, so the banker has a real time portfolio rebalancer, designed for some class of transaction  having high mutual entropy.

The bot, really, is just two sided, maximum entropy compression machine.  It finds the encode/decode probabilities that define the tree grammar.(Marcolli?) or the most likely bipartite graph (Keevash?). The user, owner of the bot card, sees the transaction space as a surface, a lens, to correct his vision for the unseen. And the unseen are the redundancies left in to cover variation from that lens.  Remember, self adapted statistics, the physics change to make a Ito compatible, nearly cotangent space.  The key to the TOE, ask how could nature make a yard stick, and you have the key to everything. The physics of everything is all about making Pi, a cotangent space, usin only local knowledge.

It's cold in California!

LA Tines: A record cold snap continued across Northern California on Sunday, including more below-zero temperature readings.
According to the National Weather Service, it was actually colder in Alturas, Calif., the seat of Modoc County in the far northeastern corner California, than it was in Barrow, Alaska, which lies above the Arctic Circle and is the northernmost city in the United States. Alturas registered minus-3 degrees, while Barrow recorded 3 degrees above zero. It was even colder in Alturas on Saturday -- minus-5, breaking a record set in 1931 -- and that was warmer than one spot in California, in the Lassen National Forest east of Redding, which checked in at minus-11.

Hillary goes for deficit fueled spending binge

Its a news York thing.  Hillary and Donald are New Yorkers first.  Trump started the spending race with his proposal for deficit fueled spending binge,; mainly to benefit New York.   Hillary is doing the same competing for the New York vote.

California environmentalists wants none of that.  California mainly intends to stuff its pension system with the dough.   Texas will take the money as long as no new taxes come with it. But you can be sure both Donald and Hillary are planning  large recession eight years from now.

Yet another data breech in credit card systems

MarketWatch: As the holiday shopping season kicks off, cyber threat intelligence experts have announced they have discovered the most sophisticated point-of-sale malware to date. It has already impacted multiple national retailers and millions of credit cards. Cyber threat intelligence company iSight Partners Inc. has been tracking the malware, called ModPOS, short for “modular point-of-sale system,” since it discovered early signs of its framework in 2012, said Stephen Ward, a senior director at iSight Partners.

“You could almost call this an evolution in the way cyber crime is being done at the point of sale,” said Jake Williams, an information security consultant.

The system is comparable to a Swiss Army knife because it is able to tap into shoppers’ information in many different ways, from determining what type of software a cashier is using to figuring out consumers’ usernames and passwords to tracking the keystrokes cashiers make during check-out, Ward says. Later, those using the malware can use that credit-card information in transactions for which a physical credit card isn’t required. 

Old time retail companies are collecting personal data about us and exposing it to web thieves.   is is the problem with cashlerss systems, there is always a clearing house that finds value in personal data. To yuse the data, the retail vendor must expose it somewhere.

SmartCard eliminates the problem since all transactions are encrypted, the transaction will be honest, double entry accounting; card to card.  No clearing house needed, the encryption key is valid and unknown by any human.  No personal data leaves the SmartCard encrypted network.

Congress, not the Fed is keeping the effective funds rate low

John Taylor is right, there is an indirect price control on short term rates.  The GSEs and reguated home lenders have  liquidity requirements mandated by Congress in the aftermath of the crash.

Here is the volume of reverse repurchase, or the deposits at the Fed by the GSEs and regulated home lenders. Note the volatility in the volume as ther Fed tries to raise the effective rate.   That volatility is indicative of a price control, Brad Delong.

Biometric security

Business Insider: Deutsche Bank is considering scrapping traditional passwords in favour of thumbprint technology, facial recognition, and smart tech that knows how you hold a phone.

The Financial Times reports that the bank is looking at replacing passwords with biometric security that measures 50 different factors including location data, how you hold your phone, thumbprint technology, and facial recognition. Deutsche Bank is working with company Callsign on the technology.

Good idea. One point, if the smart card is that secure, then it is secure enough to hold the digits and can exchange without accessing the bank account.  Second point.   Have the bank officer use the same card security when activating the on-line system each day  Much of identity theft occurs at the bank, and consumers need the same protection.  If all digits were held and valid only under tight security, then no humans anywhere has access to the encryption. Then add banker bot, we get distributed clearing and bankers become Python programmers, creating unique currencies. The unique currencies are virtual credit cards, complete with its own yield curve. 

Kanosian policy screws up an other economy

Sweden.  What did Krugman ask for?  He wanted and got, a sky high housing bubble. So now the Swedish Central bank tells us:

"Valuations on both the asset markets and the housing market in particular are unusually high at present [and] this means that the probability of a fall in prices is elevated," the bank says, adding that "together with increasing indebtedness in the household sector, this has made households, the financial institutions and the financial system as a whole more vulnerable."

In other words, centeral banking built upong the MIT Basket Weaver fraud is just that, a fraud.  Noe Sweden is frigged thanks to all the bozos at MIT that the defense department funded in the 70s.  Thease idiots think the world is filled with invisi le Euler police who have the perfect pricing menu for every living thing.

LA public sector now bankrupt

LA Times The Los Angeles Unified School District is facing a looming, long-term deficit that could force the system into bankruptcy, a panel of experts has concluded in a new report obtained by The Times.

The group, which met in private over the last several months, concluded that L.A. Unified will face a budget deficit of $333 million in the 2017-18 school year, an additional $450 million the following year and $600 million more the year after that.

This year’s general fund totals about $7.1 billion.

Supt. Ramon C. Cortinesconvened the panel in response to critics who said the district could not afford its recent contract agreements with employee unions. These critics included Chief Financial Officer Megan Reilly, who helped to oversee the work of the fiscal committee.

California begins the public sector spiral

LA Times: The board of California's largest public pension fund approved a plan Wednesday to lower its estimate of future investment returns — a move that will require taxpayers to pay billions of dollars more than expected over the next decades.

For years, the California Public Employees' Retirement System has estimated it will earn an average of 7.5% or more a year from its investments. Under the new plan, the pension fund will slowly reduce that rate to 6.5%.

The board voted 7 to 3 on Wednesday to approve the plan that will reduce the rate in small increments over the next 20 years.

With investment income contributing less to the cost of government worker pensions, taxpayers must pay more.
Those boosts are in addition to recently announced increases of 50% to the rates that CalPERS charges cities, the state and other government agencies. Fast-rising pension costs have already forced many cities to cut library hours, street repairs and other services. Three California cities — San Bernardino, Stockton and Vallejo — filed for bankruptcy protection in recent years at least in part because of rising payments to CalPERS.

This is just the opening shot.  Public sector hiring will take a hit, more taxes will lower growth, and the mandatory spending eats away at local government budgets.  

What is the cause of the liquidity trap?

Inflation, the red line, always precedes the recessions, grey bars.  And we can see the ten year rate drop after each recession until the rate has reached a limit, the transaction cost of paper money.

So, whatever nut who thinks inflation cures the liquidity trap has it backwards. Inflation precedes the recessions, and is generally caused my badly coordinated spending in DC.  The proof is in the phase of the recessions, mostly occurring at the transition points between presidents.

There is no avoiding the evidence, DC is the likely cause of the sec stags.

The dollar bill will be replaced by a fermion-boson statistics.

 FBR San Francisco: The substrate for our currency is a cotton-linen blend that gives it extra durability to withstand the banknote printing process in which ink is pressed into the paper. The extra durability of the cotton substrate also means extra durability in circulation. While the low-denomination notes of most nations that use a paper substrate last only a couple of years before they are removed from circulation owing to wear and tear, the U.S. one-dollar note, with its long cotton fibers and linen,lasts nearly six years in circulation. Some countries with a less durable cotton substrate or a harsh climate or circulating conditions have switched to a more durable but costlier polymer substrate. Meanwhile, other countries have replaced their low-denomination paper notes with a high-denomination coin. But because of the longer life of U.S. notes, there’s little reason to switch to a polymer substrate or to replace the one-dollar note with a one-dollar coin. But that’s our view. Tell us what you think.

The federal reserve at San Francisco musing about the future of counting digits.  What does it take to secure an arrangement of electrons and call it a dollar?  I mean, put the chip in my plastic card. Tell the chip it holds a dollar, and make the chip promise no cheating.  Techies do that stuff all the time.  Pure cash, no clearing house needed.

Big banks adopting Banker Bot

NEW YORK (Reuters) - Fidelity Investments is building an automated portfolio-management service for individual investors, joining a growing group of money and brokers that have bought or designed such "robo-advisers," a spokesman for the firm said Friday.

The platform, called Fidelity Go, is being piloted internally now and will be made available next year for a small group of clients to test, according to Fidelity spokesman Robert Beauregard.

Some investors "don't have the skill, will or time to manage their money, and so they turn to a partner," said Beauregard.

Fidelity's platform will make use of the company's own products, which include mutual funds. But the firm will also use funds managed by BlackRock, the largest manager of exchange-traded funds under its iShares brand and a business partner of Fidelity's.

The bot will end up in  our  Smart Cards, but for now Fidelity keeps the bot internal.

Who is bailing out Obamacare insurers?

WA Examiner: The Department of Health and Human Services attempted to reassure private insurers on Thursday that they'll be able to recover losses from participating in Obamacare by claiming it was an "obligation" of the U.S. government to bail them out.

At issue is a provision within the law known as the risk corridors program. Under the program, which runs from 2014 through 2016, the federal government is to collect money from health insurers doing better than expected and use those funds to provide a federal backstop to other insurers who incur larger than expected losses from rising medical claims. The idea was to provide training wheels to insurers in the first years of Obamacare's implementation, and to take away any incentive for insurers to cherry pick only the healthiest customers.

Republicans, fearing that this could turn into an open-ended government bailout in the event of industry-wide losses, included a provision in last year's spending bill that limited the program, requiring HHS to pay out only from the pool of money collected, rather than supplementing it with other sources of government funding. President Obama signed that bill.

Now that insurers have been able to look at medical claims, what they've found is that enrollees in Obamacare are disproportionately sicker, and losses are piling up. For the 2014 benefit year, insurers losing more than expected asked for $2.87 billion in government payments through the risk corridors program, but HHS only collected $362 million from insurers performing better than expected. Thus, the funds available to the federal government only amounts to 12.6 percent of what insurers argue that they're owed.

Well, either Texas agrees to bail out California or Republicans have to go deficit spending once more.

Obamacare becoming unpopular again

The poll from Gallup shows Obamacare disliked 52 to 44.  The article sums up most of the problems.

Krugman's worthless graph on austerity

He attempts to show a linear relationship between 'fiscal tightness' and GDP growth in Europe. But he has Portugal, Ireland andGfeece as the only economies proving the linear relationship.  All the important economies are bunched up and showno effect.

The problem is that once Krugman put's up crappy stats, all the uneducated commenters do not look carefully, and they just take Paul's word without checking the data.

Obamacare is bankrupt. Insurers may exit soon.

Bloomberg: Many people shopping for health coverage this weekend on the websites created by Obamacare are going to see double-digit percentage increases in their premiums. That’s still not enough for some insurers.

Anthem Inc. says there remain competitors in the government-run marketplace offering premiums that aren’t enough to profitably provide the coverage patients will require. Prices in some areas probably will have to climb in 2017 and even 2018 to reach levels that make sense, according to Chief Financial Officer Wayne Deveydt. Meantime, Anthem will sacrifice market share to keep its plans profitable, he said.

“When you have fewer national enrollees and you have price points that we don’t believe are sustainable, we’ve just made a conscious decision we’re not going to chase it,” Deveydt told analysts on a conference call on Wednesday. “We are going to need to be patient until this works itself out.”

Deveydt’s remarks spotlight a problem for the Patient Protection and Affordable Care Act’s marketplaces as the third annual sign-up period begins Sunday. Set prices too low to lure customers, and losses can mount. Some smaller firms already have closed, and some bigger insurers have withdrawn from markets -- such as Aetna Inc., which will offer coverage in two fewer states this year.

The conundrum has led to this year’s price increases, which have been higher, on average, than last year’s hikes. But the danger is that premiums are now too expensive for some families to afford coverage, especially the uninsured people the Obama administration is trying to persuade to shop on the exchanges for the first time.

“Exchanges have had their challenges,” said Ana Gupte, an analyst at Leerink Partners who follows health-care companies. “The growth has been reasonable, depending on where you priced, but the margins have been a little less compelling.”

Insurers have benefited in many ways since the Affordable Care Act was signed into law in 2010. About 17.6 million people have gained insurance coverage, mainly through the health-insurance marketplaces and an expansion of Medicaid, the U.S.’s program with states to cover low-income people. The insurance companies administer coverage for much of that population, and their stocks have soared in the past few years on the growth in their rolls.

But the remaining uninsured are poorer and younger than those who’ve already signed up, and they’re more difficult to reach, Health and Human Services Secretary Sylvia Mathews Burwell has said. That may mean slower growth for the insurers.

Faster Than Inflation

Prices on the Affordable Care Act’s marketplaces are going up faster than inflation or wages. By one measure, premiums for mid-level plans are climbing at least 7.5 percentin 37 states where consumers use the U.S.-run HealthCare.gov website to buy coverage.

Charles Gaba, who tracks the health law on ACASignups.net, estimates that the rate increases across the U.S. will average about 12 percent to 13 percent, based on a weighted average of current enrollment. That means there are lots of consumers who are seeing higher rates and could benefit from re-examining their options as the sign-up period starts.

Republicans prepare a massive debt fueled spending binge.

Bloomberg: Republican presidential candidate Jeb Bush elaborated Wednesday on his proposal to put a limited number of U.S. ground troops in combat against the Islamic State.

One day after the Florida governor told Bloomberg's Mark Halperin that the U.S. is "going to have to have ground troops" to fight the terrorist group, Bush, speaking at The Citadel, a military college in South Carolina, said the U.S. should immediately go beyond the bombing sorties already underway in the region.

"The United States—in conjunction with our NATO allies and more Arab partners—will need to increase our presence on the ground," Bush said.

Bush also told Halperin on Tuesday that a commitment by the U.S. need "not necessarily" be substantial. According to a prepared version of his Wednesday remarks, he believes that "the bulk of these ground troops will need to come from local forces." Bush did not specify the exact scope for U.S. involvement beyond saying it "should be in line with what our military generals recommend."

Obamacare creating nightmares for small businerss

NY Times: For some business owners on the edge of the cutoff, the mandate is forcing them to weigh very carefully the price of growing bigger. “There’s kind of a deer-in-headlights moment for those who say, ‘I have this new potential client, but if I bring them on, I have to hire five additional people,’” said Philip P. Noftsinger, the payroll unit president at CBIZ, a financial services provider for businesses. “They’re really trying to assess how much the 50th employee is going to cost.” 

Nearly all large companies provide health care benefits, but only 54 percent of businesses with three to 49 workers offered coverage to their workers this year, according to an analysis by the Kaiser Family Foundation. Paying even a portion of the cost can be expensive. The average annual premium for workers at small companies currently tops $6,100 for individual insurance and $16,600 for family coverage. That premium is typically shared between the employer and employee. 

Businesses that fall under the health care law’s mandate are required to offer their workers “affordable” insurance, which the law defines as individual coverage that costs less than 9.5 percent of the employee’s household income. (Because employers do not know how much money their workers’ relatives make, their options for compliance include basing their calculation on only their own employees’ wages.) For a full-time, minimum-wage employee making $14,500 a year, an employer offering an average-price individual plan would have to pay around $4,700 a year.  Added to that cost are the administrative requirements. Starting this year, all companies with 50 or more full-time workers — even those not yet required to offer health benefits — must file new tax forms with the Internal Revenue Service that provide details on employee head count and any health insurance offered. Gathering the data requires meticulous record-keeping. 

“These are some of the most complex informational returns we’ve ever seen,” said Roger Prince, a tax lawyer with the consulting firm Berry Dunn in Portland, Me. Some of his clients, even small ones, have spent months reconfiguring their human resources and financial systems to track the information that the new forms demand. The health care law defines a full-time-equivalent employee as someone who works an average of 30 or more hours a week — and the hours worked by some part-time employees count toward the calculation.

If it is this bad for the private sector then think how much adaptation the public sector needs. 

This homeless camp is easy to fix

MENDOTA Martin Hernandez had an apartment in this western Fresno County city for a dozen years until the drought dried up steady work in the fields and he couldn’t pay the rent. For the past year, Hernandez has lived in an encampment of shacks along a dry ditch just north of the city. “It’s hardest in the winter, when it’s cold,” he says of staying in his hut-like home. 

Hernandez, a tree pruner, is one of the newer inhabitants of the homeless camp, which sprang up about seven years ago. In the early days, about a dozen or so people set up residence. In the past two years, the number has mushroomed to 50 – by one estimate – and the camp has taken on the appearance of a shanty town, with people entrenched within its plywood walls. Hernandez has helped build or repair several of the structures that stretch like a rundown motel row for about the length of a half-block. The tarp-covered roofs of the shanties jut out of the dirt to catch the eye of drivers on Highway 33, the road between Mendota and Firebaugh.The shacks have caught the attention of government officials, too. A year ago, the Fresno County public works department, citing building code and other safety violations, ordered Westlands Water District to dismantle the camp, which is on the district’s property.

There is no potable water. Most of the people ride bicycles into Mendota to buy bottled water. If they have family nearby, they catch an occasional shower. And some risk bathing in a nearby irrigation canal. “There is nothing safe about that situation out there,” says Johnny Amaral, deputy general manager for external affairs at Westlands. The conditions are like those seen in developing countries, not in the United States, he says. 

They need two by fours, hammers, sheet rock.  They need to learn about simple sewage systems made for cheap.  And for potable water, why not get a donated tank and fill it every few days?

Christmas saves the day?

A recent November survey by Gallup found that US adults are planning on spending about $830 on average on Christmas gifts this year.

That's a huge jump from last year's $720 average.

Notably, American consumers haven't suggested a number that high since November 2007 when they were planning on spending $866 on average.

Hey, sounds good.  We might miss our regularly scheduled recession.

Charlie Sheen is a busy boy

CDC: US SEXUALLY TRANSMITTED DISEASE EPIDEMIC WORSENING

A source directly connected with Sheen says in the last 2 years, Sheen has had at least 200 partners, so the number of women who either will sue or plan to sue will almost certainly grow exponentially.

Read more: http://www.tmz.com/2015/11/17/charlie-sheen-hiv-lawsuit/#ixzz3rmtwQl2w

Corporate bond spread

Someone started freaking out a bit about the rate for the 20 year treasury(blue) and the corporate Baa bond yield (red).  Yes, the difference is increasing, but over a long trend. OK, corporations have to higher margins to stay alive.  That is bad news, sorry, must be a sec stag thing.

We've been NowCasted all around

The Atlanta Now Cast machine would have been a tough bet recently being jerked around.  But we are at 2.3% yearly growth.  We actually have a shot at potential growth for the year, 2.1%.

NY Post: We got ourselves an Obamacare death spiral

NY Post: ObamaCare is heading toward a death spiral.

The Obama administration is having trouble selling insurance plans to healthy people. That’s a big problem: When the young and healthy don’t enroll, premiums have to be hiked to cover the costs of older, sicker people, discouraging even more young people from signing up. 

Last Thursday, the administration predicted enrollment for 2016 will be less than half what the Congressional Budget Office predicted in March. 

Despite subsidies to help with premiums and out-of-pocket costs, most of the uninsured who are eligible for ObamaCare are saying “no thanks.” Only one in seven is expected to sign up. That’s despite a hefty increase in the financial penalty next year for not having insurance. 

The president sees the writing on the wall. You won’t be seeing the customary nationwide TV campaign to encourage sign-ups, as there were in previous years. Remember the young guy in plaid pajamas — “Pajama Boy,” to conservatives — well, he won’t be back this winter. 

Bad enough that healthy people aren’t buying. Worse is that the administration is spending billions of your tax dollars covering up the problem, paying insurers to keep offering the plans, even though they’re losing their shirts. But facts are facts — and there’s no hiding these.

So 15% of the economy has become an unsustainable government managed mess, and that is recession material, right on schedule. 

Obama can't find the Islamic Terrorists

NY Post: It’s beyond surreal that the president of France is making the American president look like a cheese-eating amateur.

The terror attacks in Paris Friday took scores of livesand thrust the entire civilized world into paroxysms of grief and despair. Then something unexpected happened.

French President François Hollande stepped up to the soccer goal. And he displayed the kind of leadership one normally does not associate with the randy politician presiding over the land of vintage Champagne and Brie.

No sooner had ISIS claimed responsibility for the butchery than Hollande got in front of TV cameras and told the traumatized public that the savagery was an “act of war.’’ He vowed to pound ISIS into submission.

Compare that to the American president’s initial reaction. President Obama, who once ridiculed ISIS (or “ISIL,” as he calls it) by comparing it to a junior varsity squad, was loath to point fingers. “I don’t want to speculate at this point in terms of who was responsible for this,” he said.

On Friday morning, just hours before Paris turned into ground zero, Obama declared on ABC’s “Good Morning America” that ISIS (ISIL, whatever) was not gaining ground and that the US military “has contained” it. The statement should become his epitaph.

Speaking in Turkey Sunday, he said the United States stood “in solidarity” with France — against “Daesh,” a derogatory Arabic term for ISIS-ISIL.

Where was his anger?

Obama flat out refuses to call the murderers what they are: Islamic militants. And he’s not alone.

I watched, incredulously, as all three contenders in Saturday night’s Democratic presidential debate — Hillary Rodham Clinton, Bernie Sanders and Martin O’Malley — refused to say the slaughter was the work of “Muslim” extremists.

How is the Phillips curve doing?

Here we have inflation, in the form is the implicit price deflator change YoY, in blue.  The red is the unemployment rate.  And we see how they relate in  the cycle.  The Urate goes down, along with inflation after the recession, but soon inflation jumps while Urate continues down. Then price distortion causes a recession.

This is a regime shift, folks, there is no linearity across the cycle.  Level matters less than change,



Right now, at the end of the chart, inflation  has run  its course and we seem to be entering recession territory.  Likely after the weak holiday season, the Urate will jump up and we will have a small recession, in early 2016.  Could this recession be much larger?  It depends upon how much fraud is uncovered in the current DC regime.

Nice trick at MIT but CalTech does it better

To work with computational models is to work in a world of unknowns: Models that simulate complex physical processes — from Earth’s changing climate to the performance of hypersonic combustion engines — are staggeringly complex, sometimes incorporating hundreds of parameters, each of which describes a piece of the larger process. Parameters are often question marks within their models, their contributions to the whole largely unknown. To estimate the value of each unknown parameter requires plugging in hundreds, if not thousands, of values, and running the model each time to narrow in on an accurate value — a computation that can take days, and sometimes weeks. Now MIT researchers have developed a new algorithm that vastly reduces the computation of virtually any computational model. The algorithm may be thought of as a shrinking bull’s-eye that, over several runs of a model, and in combination with some relevant data points, incrementally narrows in on its target: a probability distribution of values for each unknown parameter. With this method, the researchers were able to arrive at the same answer as a classic computational approaches, but 200 times faster. Youssef Marzouk, an associate professor of aeronautics and astronautics, says the algorithm is versatile enough to apply to a wide range of computationally intensive problems. “We’re somewhat flexible about the particular application,” Marzouk says. “These models exist in a vast array of fields, from engineering and geophysics to subsurface modeling, very often with unknown parameters. We want to treat the model as a black box and say, ‘Can we accelerate this process in some way?’ That’s what our algorithm does.”

They compare the task to a task of determining an approximation of the system as a board game with an unknown grammar representing probable moves.  They basically draw samples from the data to get an idea of the 'lattice' (the board game). b Then with an approximation, they re-draw a set of samples and refine the picture of the 'lattice'.

This is self adaptin g statistics, it is what nature does.  But Marcolli at CalTech and Keevosh at Oxford have taken this approach farther.  MIT still remains the center of Basket Weaving technology.

Texas sets up defense perimeter against deranged Belgian Islamics

Texas: Governor Greg Abbott today sent a letter to President Barack Obama informing him that the State of Texas will not accept any refugees from Syria in the wake of the deadly terrorist attack in Paris. Furthermore, Governor Abbott implored President Obama to halt his plans to accept more Syrian refugees in the United States entirely, as the federal government does not have the background information necessary to effectively conduct proper security checks on Syrian nationals. "Given the tragic attacks in Paris and the threats we have already seen, Texas cannot participate in any program that will result in Syrian refugees - any one of whom could be connected to terrorism - being resettled in Texas," Governor Abbott said in the letter. "Effective today, I am directing the Texas Health & Human Services Commission's Refugee Resettlement Program to not participate in the resettlement of any Syrian refugees in the State of Texas. And I urge you, as President, to halt your plans to allow Syrians to be resettled anywhere in the United States." "Neither you nor any federal official can guarantee that Syrian refugees will not be part of any terroristic activity," Governor Abbott continued. "As such, opening our door to them irresponsibly exposes our fellow Americans to unacceptable peril.

World leaders ditch Hillary and the Affirmative Action crowd.

Putin comes in from the cold:

Desperate world leaders cosy up to Russian President to get him to join the fight against ISIS 

When world leaders ditch Hillary because she is a delusional idiot, then  we know we are in trouble.

Deranged Belgians send terrorist wave into Europe

Suspected mastermind of Paris attacks reportedly identified as Belgian Abdelhamid Abaaoud

Experts tell us Belgians suffer from a bizarre religious affliction.

Quadruple dip in Japan

Zero hedge points put that Japan is in  contraction.  So who exactly was a big fan of Abenomics?

Blockchain security gets the nod.

The new secure pure cash smartcard should rely on block chain to manage the hardware keys in our smart cards. Here we have a leading expert on blockchains agree with me. The main transactions the smart card network needs is the transactions that update and secure the hardware keys inside the cards, which are unknown to humans. The block chain organizes the keys automatically so hiearchical security is acheived, and all commercial web sites can be handled by a pure cash device. Thus the entire smart card cloud is human tamper proof, managed automatically, and that makes pure cash because 'coin denominations' are maintained with honest accounting.

Coindesk: Smart contracts pioneer Nick Szabo has lauded the security benefits of decentralised monetary systems built using blockchain technology.

Speaking at Ethereum's DEVCON1 conference, held in London today, Szabo – often rumored to be the creator of bitcoin – gave an overview of the blockchain's history and highlighted the security inefficiencies of centralised systems typically used by traditional finance institutions.

Centralisation is insecure, said Szabo, before noting mainstream finance's reliance on government and law enforcement officials for security:

"This is one of the reasons why [traditional finance] is stuck and highly regulated."

Szabo also reflected on early decentralisation attempts and digital cash proposals commenting on how these had failed due to a lack of expertise and knowledge.

"There are a bunch of digital cash startups which either failed or became centralised systems like PayPal," he added.

During his session, Szabo urged the audience to think about security more broadly. "Let's try to secure everything, protect everything that is important to us as much as we can."

Organized by the Ethereum Foundation, a nonprofit that oversees development funding for work on the public blockchain, and ΞTHÐΞV, which conducts research that aims to further the underlying goals of the Ethereum network, DEVCON1 is a five-day developer conference aimed at promoting the project's work and larger vision.

Image via CoinDesk

Doomsday cultism drives the deranged islamic

Tobin Harshaw has a good review of ISIS and Al Qaeda. He points out the recruiting theme: 'The coming apocalypse of the west'.  It is a fabrication, but it appeals to the young, uneducated Sunni teenager.

All these developments may cut deeply into the narrative of scriptural inevitability that Islamic State uses to attract and keep its followers. The problem with a doomsday cult is that you have to keep your followers on edge, believing that the Apocalypse is just around the corner even though the sun keeps rising every day. As William McCants of the Brookings Institution put it in his excellent new book "ISIS Apocalypse," "end-time prophecies were an especially inviting target for fabricators." And while the group's current caliph, Abu Bakr al-Baghdadi, is in fact a scholar of Islam, the illiterate Zarqawi was nothing if not a fabricator.

It is all about the illusion of sudden collapse and re-birth.   The illusion provides a short  path to wealth and power, but it never works.  Terrorism's effect is mostly to extinguish the ignorant terrorists, and they never really achieve wealth and power.

What is the natural interest rate?

If I own a bike shop then over some period of time I maintain a unique stream of customers.   The rate of interest is the rate at which customers repeat their purchases without running into the same crowd at the shop.  Thus the bike shop keeper is keeping a unique set of customers over the typical inventory cycle.  The shop keeper does not want the same old crowd every month, he want innovation.

This is the problem of counting the number of schoolgirls when they walk abreast in groups of N when each school girl  never walks with anyone twice. This is really a queuing problem.
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It is right in  the hyperbolics, but it is the rate over the inventory cycle, and that must be converted to normalized yearly rate. Go talk to the pros who get this.

The reason we use yearly rate is due to the farming season and weather effects.

We do not have a two party system, we have a two state system

We flip political regimes between Texas and California. The two state systems govern 25% of the economy.  Take a look bonehead Kanosians, we switch between the two each presidential election, after the regularly scheduled Kanosian recession. Let me just grab a Fred chart:

Potential  growth, YoY % change, it is dropping according to Magic Walrus.  Look where potential GDP drops, right at presidential regime change and that is where the recessions occur.

Any Kanosian out there who fails to see the pattern? Go see an optometrist.  That is why Larry Summers says we are sick.  That is why Reinart-Rogoff say excessive debt lowers GDP.   That is why Euro periphery nations have low growth.

And no, there is no Kanosian stimulus that solves the problem, the problem is clearly a result of  debt cycle spending by DC with support by the Fed.

I correctly predicted that my cat will not solve world economic problems

So, that makes me as good as Krugman. Krugman predicted that foul government causes secular stags, he is right,

Alaska in a non-stop Obamacare spiral

Open enrollment in the federal health insurance marketplace started Sunday and runs through Jan. 31.

Most Alaskans enrolling in plans on the individual market won’t pay the high premiums. That’s because those who make between one and four times the federal poverty level can get subsidies, which have kept pace with premium increases.

But others, like Hess, who earn too much for a subsidy have seen their premiums go up year after year without sign of reprieve.

Insurers blame the increases on factors that include high medical costs in Alaska paired with a relatively small market and a small group of people in that market with very high medical bills. Only two insurance companies -- Premera Blue Cross Blue Shield and Moda Health -- offer insurance on the online marketplace in Alaska.

Alaska Dispatch News: Melanie Coon, a Premera spokeswoman, said insurers saw many members of the state's high-risk pool enroll in insurance through the online marketplace once it opened. There, they could get a subsidy toward their premiums. Premiums had been high outside the marketplace, she said.

Obama’s health care law barred insurers from turning people away because of pre-existing conditions.

Between the start of January and the end of September of this year, Coon said, 37 Premera members enrolled in individual health insurance plans generated $17.5 million in medical bills. In total, Premera had about 7,400 members during that time in the individual market with $68.3 million in claims.

“You have less than 1 percent of the pool generating a quarter of medical claims,” Coon said. She described the marketplace in Alaska as “unsustainable.” Coon said Premera lost millions of dollars last year in Alaska.

In August, the state Division of Insurance approved average rate increases for next year of nearly 40 percent for Premera and Moda. That came on top of double-digit increases this year.

“Since the beginning of the metallic plans in 2014, rates have increased by 91 percent,” Coon said. “That’s why we can’t keep going on at this point.”

On average in the United States, premiums for the second-lowest Silver plan (also called the benchmark plan) will increase by 7.5 percent in 2016 compared to this year. In Alaska, that plan will go up by 31.5 percent, Kaiser reported.

Hess said that while she supports Obama’s health care law and getting more people insured, she could only hang on to her health insurance plan for so long.

“You can only take one for the team to a certain extent and then you have to look at your own personal situation and say, ‘This is crazy. I can’t do this,’” she said.

If you are sick, go to California and we will Obamacare you.   California has a special deal, Texans have agreed to cover all the bills. 

Freench Muslims refuse to cover French entitlements

Paris shootings: 18 reported killed, hostage situation ongoing

-- At least 60 people have died in the attacks, CNN affiliate BFMTV reported.

-- At least six shootings took place in Paris and three explosions took place at the Stade de France in Saint-Denis late Friday, CNN affiliate BFMTV said. Two or three gunmen entered the Bataclan concert hall while opening fire on law enforcement, BFMTV reported. A source earlier told CNN there were six to six hostage takes, citing a person they were talking to inside the venue.

Kanosians claim a little migration makes them Magic Walrus work, and their simple minded equation have answers.  This is taking the Kanosian adjustment too far.

 If the Muslims do not like entitlement taxes, they should try voting, not murdering.

They are still shooting in France, let's see if these mohammed cartoons will draw their fire.

And the  military was deployed and border closed.  Sounds like Hillary causes chaos in Syria.

Obama pushes infrastructure fraud

America’s bold voice cannot be the only one, by Barack Obama, FT: ...Today the G20 faces another challenge. While the global economy is growing, it is growing too slowly. ... That is why, at next week’s summit, my message will be clear: we have to take action to strengthen growth in a way that benefits all our people.

Specifically, there are five areas in which we can act. First, our countries have to implement fiscal policy that supports short-term demand and invests in our future. ... Second, our countries have to take action to boost demand by putting more money into the pockets of middle-class consumers who drive growth. ... Third, our countries can foster more inclusive growth by lowering barriers to entering the labor force. ... Fourth, we can support more inclusive growth with high-standard trade agreements that actually benefit the middle class. ... Fifth, the world agrees on the need for greater public investment, especially where interest rates are low. That is why I am pushing Congress to create jobs today and tomorrow by adopting a long-term infrastructure plan this year.

He failed at the high speed train. He cancelled the Keystone Pipeline. And he opens the infrastructure spigot to bail out public sector states.  Obama is clearly fraudulent, and he will crash the economy. 

How well is the Kanosian ideal working?

NY Times: While Mr. Obama’s 2008 election helped usher in a political resurgence for Democrats, the president today presides over a shrinking party whose control of elected offices at the state and local levels has declined precipitously. In January, Republicans will occupy 32 of the nation’s governorships, 10 more than they did in 2009. Democratic losses in state legislatures under Mr. Obama rank among the worst in the last 115 years, with 816 Democratic lawmakers losing their jobs and Republican control of legislatures doubling since the president took office — more seats lost than under any president since Dwight D. Eisenhower.

Fitch downgrades Illinois to Cliff Dive

AP) — Pressure is building for Republican Gov. Bruce Rauner and majority Democrats to end their months-long stalemate over Illinois' budget, though lawmakers appear no closer to a deal as they reconvene on Tuesday for the first time in weeks.

Fitch Ratings on Monday downgraded Illinois' rating on $26 billion in outstanding bonds because of the crisis, and Moody's Investors Service warned that the state's inability to make its November pension payment could further hurt its already dismal credit rating. The United Way of Illinois said a survey of human service agencies shows more than three-quarters have cut services and almost one-third expect to run out of money within a month. Meanwhile business and labor leaders and some of Rauner's fellow Republicans — including former Gov. Jim Edgar — were stepping up calls for a truce.

"It doesn't help to continue fighting with each other ... We've got to get together, work together," GOP Comptroller Leslie Munger, a Rauner appointee, told reporters Monday. "Everyone has to give some and get a balanced budget with reforms in place. The sooner we do it, the better off we'll be."

Rauner and Democrats who run the Legislature have been fighting since spring over the budget for the July 1 fiscal year. Democrats want Rauner to agree to a tax increase to help close a roughly $5 billion budget hole, but the governor won't approve a hike until the Legislature approves changes he wants, such as a property tax freeze and curbs to public-employee union powers.

But have no fear as the Kanosian mass migration from Illinois will eventually balance the budget. 

China problems

Alpha Now: Contrary to the picture painted by the official statistics, we believe that China’s economic growth rate has more than halved since the beginning of early last year, from just over 6% to less than 3%. Indeed, our preferred measure of economic activity — our China Momentum Indicator (CMI) — slipped 0.2 percentage points to 2.8% in September.

Looking at the individual components of our CMI, rail freight volumes reached a six-and-a-half year low, while electricity production also fell — down 3.1% in the twelve-months to September. The third and final component, growth in bank lending, has been broadly stable at around 15% per annum over the past four years.

In response, the PBoC has eased policy on no fewer than six occasions in the past twelve months. We see further substantial cuts in China’s policy rates of interest over the next year, not least because in real terms they remain stubbornly high.

As benchmark interest rates continue to fall in China, capital outflows are likely to rise, putting further downward pressure on the currency. Back in August, the RMB was allowed to fall by 3.0% against the USD in the space of a week – the biggest one-week move in 20 years.
Last Friday’s appreciation aside, we view further devaluations as more or less inevitable. Accordingly, we see the RMB falling at a pace of 2.0% to 3.0% a quarter over the next two years as China attempts to export some of its pain.

We will lose a half point GDP to imports for the next two quarters.  

Reordering wages due to Obamacare

This chart shows the change in income due to Obamacare.   We can see the middle class take the hit.  And that explains the declining retail sales numbers domestically.  It is a spiral, the third decile, now purple, will join the blue next year.

This is also a huge transfer from Republican right to work states to Dem public sector states.  This is also a stimulus for more Kanosian migration as the transfer will fail and the large public sector states go spiral.

One year Treasury hits half point

Bloomberg Bonds

James Bullard slays Magic Walrus

Bullard: It is a pleasure to be here today to discuss this important conference topic, “Rethinking Monetary Policy.”  The financial crisis of 2007‐2009 and its aftermath turned monetary economics and policymaking on its head and called into question many of the conventional views held before the crisis.   One of the most popular and enduring views in all of monetary economics since the 1970s, and indeed since the 1940s, has been that a nominal interest rate peg is poor monetary policy, and that attempts to pursue such a policy would lead to ruin.  Yet, post‐crisis U.S. monetary policy could be interpreted as exactly that—an interest rate peg—and an extreme one at that, since the policy rate has remained near zero for nearly seven years.  In this talk, I will summarize some recent academic work on the idea of a stable interest rate peg and what its implications may be for current monetary policy choices.  I will argue that a stable interest rate peg is a realistic theoretical possibility; that it has some mild empirical support based on a cursory look at the data; and that, should we find ourselves in a persistent state of low nominal interest rates and low inflation, some of our fundamental assumptions about how U.S. monetary policy works may have to be altered.

Janet Yellen heard the speech and now wants a map of the DC-New York maze:

WASHINGTON (Reuters) - The U.S. Federal Reserve must weigh the effects of post-crisis financial regulations and new channels through which policy affects markets as it prepares to raise interest rates, Fed Chair Janet Yellen said on Thursday.

Yellen, kicking off a research conference on policy transmission and implementation after the 2007-2009 financial crisis, said the U.S. central bank also must weigh the disadvantages of its policy actions in light of new tools meant to help the Fed raise rates.

Fed "policymakers should be mindful of new channels for monetary policy transmission that may have emerged from the intricate economic and financial linkages in our global economy that were revealed by the crisis," she said in prepared remarks.

What is going on?

Central bankers have figured out that the banking network solves the schoolgirl problem, and they want to adopt the Theory of Everything.   They need banker bot to navigate the maze.