The Senate goodie factory at work

The Senate wouldn't pass Federal Aviation Authority funding until the small airport subsidies were restored for small, over-representated states.

Senate Majority Leader Harry Reid (D-Nev.) indicated Tuesday that he would be OK with the Senate passing the House FAA bill, though one of three airports targeted in the Essential Air Service cuts by the House is in his home state of Nevada.

"We learned with this big deal ... sometimes you have to step back and find out what's best for the country and not be bound by some of your own personal issues," Reid said Tuesday. "And I'm willing to give that up. I hope the other senators will do the same." Hill

Now this means that small state senators need some compensation pretty quick, or else medium state senators will start feeling their larger goodies go away. This process is leading to the collapse of Senate operations.

By the way:
My point, all along, was that pilots could manage traffic control themselves with GPS enabled Android tablets.

Some serious flight to federal bonds

Everybody is talking about this, money is exiting European risk and landing in Treasuries. Meanwhile gains from trade crapped out and we are likely second dipping. Stocks are down a couple of points. Oil is own to the low $90s, and gold has jumped $20.

Is this a soft landing or a second dip?

My indicator is the gains from specialization, CPI/PPI. If that indicator shows a sudden rise then we know a large partition of goods producers have dropped out of the market. But the numbers do not come out until the 15th.  I can wait.

Banker's error again

The author argues that we misinterpreted the crash as a recession and caused our estimates to be over optimistic, hence the revisions and bouts of mass hysteria:

The Second Great Contraction 

Why argue about semantics? Well, imagine you have pneumonia, but you think it is only a bad cold. You could easily fail to take the right medicine, and you would certainly expect your life to return to normal much faster than is realistic.

In a conventional recession, the resumption of growth implies a reasonably brisk return to normalcy. The economy not only regains its lost ground, but, within a year, it typically catches up to its rising long-run trend.

HT Thoma
A lot of this had to do with referring to the crisis as cyclical so that Keynesian stimulus applies, that is, change the economy to fit the theory.

Folks who understood the impact of information technology got what was happening right away. The Internet is White Hot in McLuhan terms and high bandwidth, efficiently encoded  in the Shannon sense. Compared to the previous waves of information technology it was clear that major restructuring was going to happen.

Energy shortages are the primary artifact mainly because these information transformations effect transportation. From the beginning the model was the Great Depression with its Hot technology, broadcast radio; panic of 1907 and telephone switchboards, long depression and overseas cable, Gutenberg press and religious wars, rotary press and 1820 and so on and so on and so on.

Happily we have very deep reserves of technology and unlimited solar energy to solve the problem.  

Impossible chart

Not Congress, the household or firm plans losses as we seemingly have planned according to the red.  Those red losses will be moved forward, to the near term as government contractors hedge their prices and contract conditions.  It is as if Congress said to its suppliers, you have two years to do business,then we cut you off, it can't work. For state transfers, the red line tells states they will be curtailed shortly, meaning the states will start cutting back early in anticipation.   In other words, the budget structure simply creates very bad terms of trade for Congress, all new plans will report much higher costs.

HT DeLong
That red line will be hedged early and often.  I guess that is why it is called the static estimate.

Joe Weisenthal has a technical chart for us

He is working on transportation, considered a leading indicator as in the Ceridian. His point is that we are ready for a retracement beck to a lower level.

The point I want to make is that running the Adaptive Huffman encoder would find the aggregates in the chart, the retrenchment points. It is the Shannon equivalent of ray tracing, and more accurate.

And further, finding the mutual entropy between these stock selections and the Ceridian gives an indicator of how the stock market should be encoding these prices and locates arbitrage opportunity. This is a unique situation since the Ceridian provides field based measurements of transportation.

Another Cal City ready for bellyup

The city's independent auditor has questioned whether Compton can remain solvent. The general fund has used up its reserves and ended the fiscal year June 30 with a deficit of $23.8 million, about 40% of the budget, according to expenditure and revenue reports provided by the city.

That figure was increased by $11.6 million because of a transfer of funds from the general fund to pay off an accumulated deficit in the city's general liability fund. Last year, the city had a $15-million shortfall. LA Times

Good Grief

http://en.wikipedia.org/wiki/Transportation_theory
http://www.springer.com/mathematics/dynamical+systems/book/978-3-540-71049-3
http://www.springer.com/mathematics/dynamical+systems/book/978-3-540-71049-3

In the back of my mind

The abundance of fresh water.  I always thought that effect was missing in models.

Retail velocity still headed down

Going down now for 1 year.  Domestic consumption has been contracting for a year even as economists make rosy predictions.

Stall speed, what is it?

When banker errors are of the same magnitude as real growth. Money become volatile. Think of it as the central banker too dumb to make change.