California still crashing

I look at the Ceridian Index, regional view. Our state seems to have been in continual downturn for six months. There is a small Christmas effect, but the trend remains downward. Gas prices are inching up, I think California is coming out badly in the Fiscal Cliff deal. This is mainly California oligarchal politics ruining the economy.

San Jose Light Rail: An epic disaster

SAN JOSE, Calif. -- A $2 billion light-rail system built to serve San Jose and some surrounding cities in Silicon Valley has become among the least efficient in the country and suffers from low ridership and high operating costs.
As the Valley Transportation Authority rail line marked 25 years of service this month, the San Jose Mercury News reported Thursday that less than 1 percent of all Santa Clara County residents ride the trains daily and taxpayers subsidize 85 percent of the service, the second worst rate in the nation.
Critics are calling the system a failure, and even some optimistic supporters say it has not lived up to expectations. AP

Read more here: http://www.fresnobee.com/2012/12/27/3114493/silicon-valleys-light-rail-among.html#storylink=cpy

Norman Mineta, wherever he is, has inflicted a disaster upon San Jose.

Menzie Chen and multipliers

Your ergodic error, the same as always, getting nominal growth and real growth mixed up.

If we are ergodic in time, we optimize over fixed time periods and we use real growth, which may be negative or positive.

If we optimize the set of containers, we use nominal growth which is a positive definite variable.

Construct the stimulus theory in one frame or the other, not both.  If you are using time ergodicity, then you should have both negative and positive stimulus, show that in your work.  Explain how a time ergodic optimizer operates when the expected future real growth is negative.

Are we there yet?

Better unemployment stats, courtesey BLS:

Table B.  States with statistically significant unemployment rate changes
  from October 2012 to November 2012, seasonally adjusted
  -------------------------------------------------------------------------
                                  |          Rate         |
                                  |-----------|-----------| Over-the-month
               State              |  October  |  November |    change(p)
                                  |    2012   |   2012(p) |
  -------------------------------------------------------------------------
  Alabama ........................|     8.1   |     7.5   |      -0.6
  Alaska .........................|     7.1   |     6.8   |       -.3
  California .....................|    10.1   |     9.8   |       -.3
  Florida ........................|     8.5   |     8.1   |       -.4
  Georgia ........................|     8.7   |     8.5   |       -.2
  Hawaii .........................|     5.5   |     5.3   |       -.2
  Idaho ..........................|     7.0   |     6.8   |       -.2
  Iowa ...........................|     5.1   |     4.9   |       -.2
  Kansas .........................|     5.7   |     5.4   |       -.3
  Louisiana ......................|     6.6   |     5.8   |       -.8
  Minnesota ......................|     5.9   |     5.7   |       -.2
  Mississippi ....................|     9.0   |     8.5   |       -.5
  Nebraska .......................|     3.8   |     3.7   |       -.1
  Nevada .........................|    11.5   |    10.8   |       -.7
  New York .......................|     8.7   |     8.3   |       -.4
  North Carolina .................|     9.3   |     9.1   |       -.2
  Pennsylvania ...................|     8.1   |     7.8   |       -.3
  Tennessee ......................|     8.2   |     7.6   |       -.6
  Texas ..........................|     6.6   |     6.2   |       -.4
  Vermont ........................|     5.5   |     5.2   |       -.3
  Virginia .......................|     5.7   |     5.6   |       -.1
  Washington .....................|     8.2   |     7.8   |       -.4
  Wisconsin ......................|     6.9   |     6.7   |       -.2
  -------------------------------------------------------------------------

What does this mean? I am not an expert on unemployment rates, so how much of this is demographic and how much is stable real growth, is an uncertain question for me.

What about stable oil prices? That looks good, so far, when oil prices quit their periodicity then we know the supplier and demanders have agreed on stable distribution, and that is real growth. I expect much of the recent good news attributed to new oil supplies and stable oil deliveries.

What about fiscal multipliers? I have believed in multipliers less than one from DC, either banking or government. So, the fiscal cliff would be viewed as a multiplier greater than one, raising prices for shoddy Senate goods and shutting downs Ben's money pumper. As we approach fiscal cliff, I expect the economy to perform better. But how soon would we see this affect? Sooner than I expected, maybe. Much of the Christmas growth might be attributed to money leaving the bull bond market.

In summary: Get slightly optimistic, hope for the largest fiscal cliff we can get, and watch energy efficient machine technology.  But especially watch what happens in Jan, 2013 in DC; that is regime change month, the bond vigilantes have arrived.

Oakland, not yet evolved enough for self government

Oakland, California, the fifth-most crime ridden city in America, faced a $32 million budget deficit last year. It closed the gap by dismissing a fourth of its police force, more than 200 officers. Untouched was the $17.3 million that the city pays to stage 10 games a season for the National Football League’s Oakland Raiders and to host Major League Baseball’s Athletics in the O.co Coliseum. The funds cover debt financing and operations and are supplemented by $13.3 million from surrounding Alameda County, based on data compiled by Bloomberg from public records. Bloomberg

The 30 year bull bond market is done for

That market was a bet that our beloved government would drive the economy into negative growth, and has been a correct bet for 30 years.  It worked simply, the bond market placed its bet along the treasury curve and waited.  Sure enough, the US Snate would take the money, and deliver shoddy products. Bond prices rise as the real growth slows. So the bond market took gains.  The only time the bond market lost this trade was about four years of the Clinton administration when Bubba managed to get government multipliers above one.

What has happened since then?  Well, the upper income braket, which has been making this trade, was recently hired by the Senate to act as the purchasing agent for senatorial products, they now purchase US Senate programs after having bet on shoddy products from the Senate for 30 years.  The bond vigilantes are coming to Washington, how about that!

Why does this work?  Because the economy always shows positive nominal growth, and the real growth is not realized until a contraction. This is an artifact of the Shannon economy, the Shannon equilibrium is always positive definite, even when real growth is negative.  Take a look at real growth over the last 30 years.  Take the 30 year nominal rate today, subtract from  it the 30 year nominal rate of 1980 and get something like -2%, the real growth since 1980; and a sure bet.

What is causing this negative growth?  No democracy in the Senate.  Hence we have nothing but spectral interference between California and DC.  Consider the latest income tax hikes, they were queued up, first California then DC raised them.  That quick sequence is a sing of spectral intererence.

Now the bond vigilantes are in charge of the entire government chain, they are in Michigan, Chicago, all over California and will be flying into DC next month.  Welcome to regime change.

My hometown is a welfare state

Anything that President Barack Obama and Congress do to avert a looming financial crisis will have a profound effect on the central San Joaquin Valley. Last year, the federal government sent close to $12 billion to Fresno, Tulare, Kings and Madera counties in the form of, among other things, Social Security payments, Medicare, food stamps and unemployment insurance. In Fresno County, those government benefits accounted for about 23% of all personal income last year. In Tulare County, it was 24%; Madera County, 22%; and Kings County, 19% Read more here: http://www.fresnobee.com/2012/12/15/3103093/fiscal-cliff-looms-over-the-valley.html#storylink=cpy

Fresno also has the least Senate representation in the USA, with the exception of DC residents. In Fresno the two dingbat ambassadors to the DC oligarch almost never bother with us.

Can Japan maintain its fiat?

In simple terms, Abe’s plan is to flood the economy with cash, either from government coffers or the Bank of Japan (BOJ), to boost growth. The LDP advocates a plan to lavish a staggering $2.4 trillion on public-works programs over the next decade — a gargantuan stimulus equivalent to 40% of the country’s GDP. And where will Abe find the money to pay for all of that construction? The government itself, already posting huge deficits, doesn’t have the resources. So Abe figures he can extract the cash from the supposedly independent Bank of Japan.

Read more: http://business.time.com/2012/12/17/will-japans-new-prime-minister-start-a-debt-crisis/#ixzz2FLLSkOMs

Abe is guaranteeing a negative real growth rate for some period, a sure bet for bond investors. But he gets into the musical chairs game, when should bondholders exit and avoid the debt crisis. Foreign holders of Japanese debt can use it for exchange as long as Japanese real growth is negative  (bonds rise in price). But Japan cannot guarantee real negative growth forever, eventually Japanese disappear, not a pretty sight.

Republican Communist party Watch

House Speaker John A. Boehner has offered to push any fight over the federal debt limit off for a year, a concession that would deprive Republicans of leverage in the budget battle but is breathing new life into stalled talks over the year-end “fiscal cliff.” Boehner is a coward

Let the war begin

LOS ANGELES, Dec 11 (Reuters) - Wall Street bondholders have thrown down the gauntlet to America's biggest public pension fund, demanding similar rights as creditors in bankrupt San Bernardino, California - and they say they could take the fight all the way to the U.S. Supreme Court. A group of bondholders and bond insurers on Monday filed a 114-page objection to arguments by the California Public Employees' Retirement System (Calpers) that it should enjoy its historical primacy as a municipal bankruptcy creditor. Reuters

San Bernardino is just the warm up, the real battle is LA and its bankruptcy next year.