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.