Saturday, August 30, 2014

Xinhua Business — China's fast-moving consumer goods market saturating, less room for new products

China's fast-moving consumer goods market is becoming saturated with a wide variety of good products for consumers and it was more difficult for new product launches to achieve incremental growth, a latest research has found. 
Fast-moving consumer goods (FMCG) refer to food and non-food everyday consumer products that are sold quickly and at relatively low cost. 
FMCG brands should aim for innovations that can bring incremental growth, rather than launch the biggest seller in the market, according to the research, sent to Xinhua on Saturday. 
The research was jointly conducted by research company Kantar Worldpanel China and pollster TNS, which analyzed 210,000 new products launched in 77 categories over the past three years in China.
Xinhua Business – English
China's fast-moving consumer goods market saturating, less room for new products


Max Fisher — Why no one wants to call Russia's invasion of Ukraine an invasion


ROFLMAO

VOX

Al Jazzera — Top EU official says sanctions will be tightened as he warns Ukraine conflict with Moscow threatens peace in Europe

Top EU official says sanctions will be tightened as he warns Ukraine conflict with Moscow threatens peace in Europe.
European Union leaders are poised to impose new sanctions against Russia as Ukraine's president warns the conflict with Moscow threatens peace and stability for Europe as a whole.
European Commission President Jose Manuel Barroso said on Saturday the EU was prepared to toughen sanctions against Russia but added that the bloc also wanted a political deal to end the confrontation.
Al Jazzera
EU leaders to impose more Russia sanctions

Zachary Keck — China Eyes Russia’s S-400, Taiwan Seeks New Air Defense System

China and Taiwan are both seeking significant upgrades to their air defense systems in the years ahead...
The Diplomat
China Eyes Russia’s S-400, Taiwan Seeks New Air Defense System
Zachary Keck

Foreign Policy — Preparing for War with Ukraine’s Fascist Defenders of Freedom

On the frontlines of the new offensive in eastern Ukraine, the hardcore Azov Battalion is ready for battle with Russia. But they're not fighting for Europe, either.

MARIUPOL, Ukraine - Blue and yellow Ukrainian flags fly over Mariupol's burned-out city administration building and at military checkpoints around the city, but at a sport school near a huge metallurgical plant, another symbol is just as prominent: the wolfsangel ("wolf trap") symbol that was widely used in the Third Reich and has been adopted by neo-Nazi groups.
 
The Azov Battalion -- so named for the Sea of Azov on which this industrial city is located -- is one of dozens of volunteer battalions fighting alongside pro-government forces in eastern Ukraine. After separatist troops and armor attacked from the nearby Russian border and took the neighboring town of Novoazovsk, this openly neo-Nazi unit has suddenly found itself defending the city against what Ukrainian President Petro Poroshenko called a Russian invasion.
Foreign Policy

See also, How can you tell whether Russia has invaded Ukraine? ClubOrlov by Dmitry Orlov, ClubOrlov .

Edward Lambert — Blanchard & Krugman are trying to understand Effective Demand

…Effective Demand. This is a term so rarely used in economic discourse. It is not understood. For me, effective demand sets a "definable" limit upon the utilization of labor and capital. So it follows that lower effective demand leads to lower investment, lower output, lower productivity, lower taxes and less ability to pay debts.
Effective demand is based upon labor's share of a national income.…
…sufficient Effective Demand depends upon labor receiving a larger share of national production than they currently receive. No one is going to just give it to them. Labor will have to fight for it.  
Effective Demand
Blanchard & Krugman are trying to understand Effective Demand
Edward Lambert
Domestic private sector over-saving (hoarding), which is due to the ratio of capital share to labor share being excessively high since unspent income increases proportionally with income and wealth, results in insufficient effective demand to sustain output at full employment unless offset by the sum of the government and external balances.

Consolidated domestic private sector balance + government balance + external sector balance = zero (by accounting identity).

Given output of production is less that its aggregate potential using available resources including labor, if the capital to labor share in the consolidated domestic private sector is not reduced by giving labor a greater sharer and capital a lesser, thereby reducing unspent income (saving), then the sum of the government fiscal balance and the external sector balance must increase to offset the shortfall in consumption that would otherwise send a signal to firms to reduce output to less than aggregate potential at full employment in order to prevent an increase in unplanned inventory.

Keynes defined effective demand as the point at which the the aggregate supply curve and aggregate demand curve intersect. Aggregate demand falls when decreasing demand in one industry is not offset by increasing demand in another. As demand spreads across industries, effective demand drops blow the point at which the the aggregate supply curve and aggregate demand curve intersect at full employment.
Let Z be the aggregate supply price of the output from employing N men, the relationship between Z and N being written Z = φ(N), which can be called the Aggregate Supply Function.[5] Similarly, let D be the proceeds which entrepreneurs expect to receive from the employment of N men, the relationship between D and N being written D = f(N), which can be called theAggregate Demand Function. 
Now if for a given value of N the expected proceeds are greater than the aggregate supply price, i.e. if D is greater than Z, there will be an incentive to entrepreneurs to increase employment beyond N and, if necessary, to raise costs by competing with one another for the factors of production, up to the value of N for which Z has become equal to D. Thus the volume of employment is given by the point of intersection between the aggregate demand function and the aggregate supply function; for it is at this point that the entrepreneurs’ expectation of profits will be maximised. The value of D at the point of the aggregate demand function, where it is intersected by the aggregate supply function, will be called the effective demand. Since this is the substance of the General Theory of Employment, which it will be our object to expound, the succeeding chapters will be largely occupied with examining the various factors upon which these two functions depend. — General Theory, 3, I
What this says when worked out is that if consumption demand is insufficient to result in production at potential output using available resources, then for output at full employment to occur, the domestic private sector saving desire must either reduced, or be accommodated by an offsetting combination of the government fiscal balance (by running a deficit) and the external saving desire in the currency (increasing net exports).

One way to reduce private sector saving is by reducing capital share to distributed labor share, since consumption is inversely proportional to income and wealth. If capital and labor share are such that saving is nil so that all output at full is purchased, then the government and external balances can be zero. However, this is unrealistic since some saving is required for future use and also to hedge against uncertainty. Some some desire to save must be accommodated to achieve full employment. But excessive saving at the top will result in social, political and economic asymmetries.

From this it follows that either the capital to labor share of income decreases, thereby reducing income that flows to wealth at the top, leading to asymmetrical social status and political power, or that this saving desire be fully or mostly accommodated with the resulting increase of these asymmetries.

From a purely economic perspective, which of the two takes place is more or less irrelevant unless the asymmetries can be shown to introduce inefficiencies owing to income and wealth inequality. Economically, distributional effects are not relevant unless they can be shown to have economic consequences.

However, from the social and political perspective, bringing labor share in line with productivity would result in greater income and wealth equality, hence, greater social and political equality, which are arguably more conducive to democracy than social and political asymmetries based on income and wealth inequality that lead to de facto oligarchy through capture.

It can be argued that simply accommodating consolidated domestic private saving without regard for capital and labor share achieves full employment that the expense of social, political and economic asymmetries that tend toward oligarchy and disrupt democracy and democratic processes. This results in legal and other institutional effects that have economic consequences that create augmenting feedback loops.

Optimal economic policy would balance growth, employment and price stability, and also encourage distributed prosperity. It would also promote social (class), political (power), and economic (income and wealth) symmetry conducive to liberal participatory democracy.

The way to achieving this is by inquiring into how to live a good life in a good society, which has been the basis for ethical, social and political inquiry since the dawn of the Western intellectual tradition. This requires an integrated and balanced approach, which necessitates using a systems approach that draws on all relevant inputs.

Problems arise when economics and economies are abstracted from the societies that they serve as material life-support systems, which is only one aspect of holistic community.

Lars P. Syll — Original sin in economics


Tony Lawson on the ontological poverty of rationalism as the conflation of the logical and the real, the abstract and the concrete, the sign as symbol and what it symbolizes.

Lars P. Syll’s Blog
Original sin in economics
Lars P. Syll | Professor, Malmo University

Ludwig Wittgenstein, Philosophical Investigations:
109. Philosophy is a battle against the bewitchment of our intelligence by means of language. 
133. It is not our aim to refine or complete the system of rules for the use of our words in unheard-of ways. 
For the clarity that we are aiming at is indeed complete clarity. But this simply means that the philosophical problems should completely disappear 
The real discovery is the one that makes me capable of stopping doing philosophy when I want to.—The one that gives philosophy peace, so that it is no longer tormented by questions which bring itself into question. Instead, we now demonstrate a method, by examples; and a the series of examples can be broken of.—Problems are solved (difficulties eliminated), not a single problem. 
There is not a philosophical method, though there are indeed methods, like different therapies. 
255. The philosopher's treatment of a question is like the treatment of an illness.
In Lawson's analysis of economic methodology, the rationalistic approach of constructing mathematical models involves modeling possible worlds. The scientific question is how closely does the model fit the actual world of experience.

Based on results there seems to be discrepancy between modeled worlds and the actual world. How does do these discrepancies arise? Is it due to measurement, for instance, or does it arise from assumptions not being semantically true?

On one hand, measurement can be an issue if an unrealistic degree of precision is assumed, or poor data selection or construction resulting in GIGO.

On the other hand, conflation of thought and reality may lead to false assumptions about the method itself, e.g., stock-flow inconsistency or ignoring complexity, or methodological assumptions, such as a presumption of individual choice independent of institutional influences and other system relationships.

This is often based on at least a tacit assumption of essentialism, in which intuition is presumed to capture the essence of things so that the thought is identical with the essence of reality and therefore necessarily reflects reality. The praxeology of Ludwig von Mises is an explicit assertion of this relationship between thought and reality on Kantian assumptions.  In the absence of empirical warrant, it would appear that neoclassical assumptions based on logical pedigree are similarly rationalistic, although tacit.

One of the knottiest issues is that of causality, especially since Hume's challenge to provide an empirical basis for assuming causal connections, in order to avoid the post hoc ergo propter hoc fallacy, for example, or mistaking a residual effect for a cause, like the so-called money multiplier.

Friday, August 29, 2014

Mark Blyth and Eric Lonergan — Print Less but Transfer More


Actual helicopter money.
Why Central Banks Should Give Money Directly to the People
Foreign Affairs
Print Less but Transfer More
Mark Blyth, Professor of Economics, Brown University, and Eric Lonergan, hedge fund manager living in London and the author of Money.

BBC — News Ecuador gives details of new digital currency

The Ecuadorean government has released more details of its plans to create what it calls the world's first digital currency issued by a central bank. 
Central bank officials say the electronic money, as yet unnamed, will start circulating in December. 
The new money will be used alongside the existing currency in Ecuador, the US dollar. 
President Rafael Correa has said the digital currency will help those who cannot afford traditional banking. 
Central bank officials say the electronic money will be used to pay government bureaucrats in a "hygienic manner". 
The electronic currency is also designed to help poorer Ecuadoreans make and receive payments using mobile phone technology.…
BBC News
Ecuador gives details of new digital currency

Ron Jacobs — The Rational Unreason of Imperial War

I’m not one to disparage the potential and real violence of the entity calling itself the Islamic State. Then again, I am also not one to call for the unleashing of violence by the entity calling itself the United States. As the entire world knows, it is due in large part to the latter’s violence that we are where we are today—in Iraq and elsewhere. Those champions of US military violence who insist on its innate humanitarianism also want us to believe that the violence is undertaken with no economic or hegemonic designs real or implied. Of course, this is nonsense. Powerful states do not intentionally act against their own interests, especially when it comes to military intervention. 
Instead of humanitarianism, one should always consider power and money when it comes to the machinations of empire.…
Psychopaths are highly rational.
By pretending war is reasonable, the possibility of preventing it becomes ever more remote.
Dissident Voice

The Guardian — Putin likens Ukraine's forces to Nazis and threatens standoff in the Arctic


Amping up the rhetoric.

The Guardian
Putin likens Ukraine's forces to Nazis and threatens standoff in the Arctic
Shaun Walker in Mariupol, Leonid Ragozin in Moscow, Matthew Weaver and agencies

The world situation is now pretty clearly focused on the West's addiction to energy. China is a major consumer, too, and it will be serviced by Russia and Iran, likely creating an economic alliance opposed to Western interests.

BBC News — Russia warns EU of Ukraine gas shortage

Russia says there is a risk that gas shortages this winter could force Ukraine to siphon off supplies of Russian gas meant for EU customers. 
Ukraine's gas reserves have reached a "critical" state, Russian Energy Minister Alexander Novak said. 
He was speaking after talks in Moscow with EU Energy Commissioner Guenther Oettinger. The EU is anxious to ensure secure gas supplies for the winter.
Well played.

BBC News
Russia warns EU of Ukraine gas shortage

Owen Jones — It's socialism for the rich and capitalism for the rest of us in Britain

Who are the real scroungers? Free-marketeers decry 'big government' yet the City and big business benefit hugely from the state – from bailouts to the billions made from privatisation. Socialism does exist in Britain – but only for the rich.
Class war in the UK.

The Guardian (UK)
It's socialism for the rich and capitalism for the rest of us in Britain
Owen Jones

McClatchey — Treasury hits Iran with new, wide-ranging sanctions


Ramping up economic war.

Expect retaliation in the form of cyber warfare.

McClatchey
Treasury hits Iran with new, wide-ranging sanctions
Kevin G. Hall

Reuters, U.S. slaps more sanctions on Iranian banks, firms

‘Hollywood techniques used to create pretext for war between Ukraine and Russia’ — RT interviews Daniel Schechter

It is very suspicious there are no facts or proof of the activities Russia is blamed for in Ukraine, areas that are subjected to a high level of surveillance by satellites and all kinds of technology, author and media analyst Daniel Schechter told RT.
RT
‘Hollywood techniques used to create pretext for war between Ukraine and Russia’
RT interviews Daniel Schechter

Max Fisher — How Putin backed himself into a Ukraine invasion he never wanted


A Western view.

VOX
How Putin backed himself into a Ukraine invasion he never wanted
Updated by Max Fisher

Stephanie Nebehay — U.N. urges U.S. to stop police brutality after Missouri shooting

The U.N. racism watchdog urged the United States on Friday to halt the excessive use of force by police after the fatal shooting of an unarmed black teenager by a white policeman touched off riots in Ferguson, Missouri.
Minorities, particularly African Americans, are victims of disparities, the U.N. Committee on the Elimination of Racial Discrimination (CERD) said after examining the U.S. record.
"Racial and ethnic discrimination remains a serious and persistent problem in all areas of life from de facto school segregation, access to health care and housing," Noureddine Amir, CERD committee vice chairman, told a news briefing.
US shredding moral authority and soft power, reversing the direction of the election of the first person of color.

Reuters

Simon Maloy — What their next shutdown will really be about


Yes, they are going to do it again, because — Obama.
Republicans know shutdowns are toxic, but that doesn't mean they won't do one. They'll just blame you-know-who
Salon

Lee Fang — Charles Koch Personally Founded Group Protecting Oil Industry Hand-Outs, Documents Reveal



‘Lifestyles of the Rich Environmentalists,’ produced by a group called the Institute for Energy Research, is a slick web video campaign designed to lampoon Leonardo Dicaprio and will.i.am as hypocrites for supporting action on climate change. The claim is that wealthy celebrities who oppose industrial-scale pollution supposedly shouldn’t fly in airplanes that use fossil fuels. The group, along with its subsidiary, the American Energy Alliance, churns out a steady stream of related content, from Facebook memes criticizing the Environmental Protection Agency, to commercials demanding approval of new oil projects like the Keystone XL, to a series of television campaign advertisements this year attacking Democratic candidates in West Virginia, Colorado, North Carolina and Alaska. On Capitol Hill, IER aggressively opposes any effort to repeal tax breaks afforded to the oil and gas industry.
 
Documents obtained by Republic Report reveal for the first time that the group was actually founded by none other than Charles Koch, the petrochemical, manufacturing, and oil refining tycoon…
Republic Report
Charles Koch Personally Founded Group Protecting Oil Industry Hand-Outs, Documents Reveal
Lee Fang

DSWright — Ukraine Seeks NATO Membership As Putin Addresses Separatists As ‘New Russia’

The question that remains, and one that is of great consequence, is whether or not NATO will accept Ukraine as a member. If they do and follow their own rules the head to head military exchange between the US and Russia that was successfully avoided during the Cold War could take place. Managing to keep a ground war between Russia and the US – which NATO membership would likely lead to – limited to conventional weapons may prove impossible.
Firedoglake
Ukraine Seeks NATO Membership As Putin Addresses Separatists As ‘New Russia’
DSWright

See Reuters, Ukraine seeks NATO membership in response to Russia joining war, by Richard Balmforth.

The proxy war with Russia is heating up.

Jay Riestenberg — Seven Disturbing Quotes From the Koch Summit Speeches

Today, The Nation and The Huffington Post published speeches from Senate Minority Leader Mitch McConnell and three other GOP Senate candidates, Rep. Tom Cotton (AR), state Sen. Joni Ernst (IA), and Rep. Cory Gardner (CO), at a secretive donor summit hosted in June by billionaire industrialists Charles and David Koch.
The candidates make the case for overturning Citizens United and getting big money out of politics better than we ever could.
Truthout | Op-Ed

Dean Paton — Poverty Is Not Inevitable: What We Can Do Now to Turn Things Around

Having poor people in the richest country in the world is a choice. We have the money to solve this. But do we have the will?
Some good points, but he needs to read Warren's Seven Deadly Innocent Fraud.

It's the capital share to labor share ratio, stupid. He gets this right.
Between 1945 and 1973, [Hedrick] Smith notes, U.S. workers’ productivity grew by 96 percent, and they were rewarded with a 94 percent increase in their wages. Between 1973 and 2011, years that parallel a collapse of the middle class, U.S. workers’ productivity grew by 80 percent, yet those evermore-productive employees saw only a 10 percent increase in their wages. Millions who created that wealth were thus pushed into poverty or to its precipice, while those who fancy a neomedieval economic system transferred billions in profits, generated by that labor, upward to themselves.
Yes!
Poverty Is Not Inevitable: What We Can Do Now to Turn Things Around
Dean Paton | Executive Editor

The Vineyard of the Saker — August 29th 15:35 UTC/ZULU Ukrainian SITREP


Status update. Very different story from the one told by the US.
The Ukrainian civil war has reached a turning point and a lot of separate facts point to this conclusion:
The Vineyard of the Saker
August 29th 15:35 UTC/ZULU Ukrainian SITREP
VineyardSaker

Edward Hadas — The colour of money


MMT to the rescue. Excellent post. Short, too.

Read the whole thing. It's happening.
Breaking News
The colour of money
Edward Hadas | Economics Editor at Reuters Breakingviews
(ht Charles Hayden)

Dmitry Orlov — Propaganda and the lack thereof


With regard to the goings-on in Ukraine, I have heard quite a few European and American voices piping in, saying that, yes, Washington and Kiev are fabricating an entirely fictional version of events for propaganda purposes, but then so are the Russians. They appear to assume that if their corporate media is infested with mendacious, incompetent buffoons who are only too happy to repeat the party line, then the Russians must be same or worse.
The reality is quite different. While there is a virtual news blackout with regard to Ukraine in the West, with little being shown beyond pictures of talking heads in Washington and Kiev, the media coverage in Russia is relentless, with daily bulletins describing troop movements, up-to-date maps of the conflict zones, and lots of eye-witness testimony, commentary and analysis. There is also a lively rumor mill on Russian and international social networks, which I tend to disregard because it's mostly just that: rumor. In this environment, those who would attempt to fabricate a fictional narrative, as the officials in Washington and Kiev attempt to do, do not survive very long.
There is a great deal to say on the subject, but here I want to limit myself to rectifying some really, really basic misconceptions that Washington has attempted to impose on you via its various corporate media mouthpieces.
ClubOrlov
Propaganda and the lack thereof
Dmitry Orlov

Paul B. Farrell — Opinion: 7 reasons women will lead the new world order

“Men are losing their grip,” wrote Jennifer Homans in her New York Times review of “The End of Men and Rise of Women,” Hanna Rosin’s bestseller. “Patriarchy is crumbling. We are reaching ‘the end of 200,000 years of human history and the beginning of a new era’ in which women, and womanly skills and traits, are on the rise.” Warning guys, this is the last gasp of your male-dominated patriarchy.
I always enjoy Farrell's writing. This is a good one.

Market Watch
Opinion: 7 reasons women will lead the new world orderPaul B. Farrell

Thursday, August 28, 2014

Noah Smith — Thursday Roundup, 8/28/2014

15. All MMT people should watch Chris Sims talk about how he thinks money and inflation work. Also, all MMT people should dress in gold spandex and throw tomatoes at cars while playing "She Loves You" by the Beatles on kazoos and doing a little bow-legged jig.
Noahpinion
Thursday Roundup, 8/28/2014
Noah Smith | Assistant Professor of Finance, Stony Brook University

Not MMT, but interesting comparison of the monetarist theory of the price level and fiscal theory of the price level. A step in the right direction though.


BBC News — India's Narendra Modi launches bank accounts for all

Officially launching the project on Thursday, Mr Modi said it would give the poor "renewed strength to fight poverty". 
"When a bank account is opened, it's a step towards joining the economic mainstream." 
Under the banking scheme, account holders would receive a debit card and accident insurance cover of up to 100,000 rupees ($1,654; £996). They would also get an overdraft facility of up to 5,000 rupees

But one of the main impediments to the plan could be the lack of identity documents among the poor - people have to produce a number of papers, including birth certificates and proof of address, to open a bank account in India.
 
"For the common man, the opening of a bank account is a Herculean task," NSN Reddy, chief manager of the state-run Andhra Bank said. 
BBC News India
India's Narendra Modi launches bank accounts for all

RT — Russia’s Defense Ministry ridicules NATO’s photo-proof of invasion in Ukraine

It makes no sense to comment in detail on the satellite imagery released by NATO as “proof” of Russia’s military involvement in Ukraine, Defense Ministry’s spokesman said, pointing out that even high NATO officials were hesitant to put their names on it.
Referring to NATO Secretary General Anders Fogh Rasmussen, Supreme Allied Commander Europe Philip Breedlove, and NATO Spokesperson Oana Lungescu, Russia’s Defense Ministry spokesman Major-General Igor Konashenkov ridiculed the so-called NATO proof.
“You know, it has become ridiculous… If earlier, someone would at least put their names on those images, be it Breedlove, Rasmussen, or even Lungescu, now, they are hesitant,” Konashenkov said as cited by RIA Novosti. “It makes no sense to seriously comment on this.”
The General also criticized western media outlets for accepting such images and anti-Russian stance at face value.…
RT
Russia’s Defense Ministry ridicules NATO’s photo-proof of invasion in Ukraine

Neil Wilson — Scottish Independence Myths - How to buy imports?

I've been amazed at how poor the understanding is on how cross border trade actually work in a modern financialised world. It's almost like they've never spent any time at the sharp end of a firm's invoicing and payment operation, and exposed to the constant stream of marketing from banks.
The introduction of an independent free-floating Scottish currency is no barrier at all to cross border trade - because the banks are already setup to support it and make money doing so. It's very straightforward.…
3spoken
Scottish Independence Myths - How to buy imports?
Neil Wilson
Neil also sends up to, The euro has failed to boost trade between the countries that adopted it, By Allister Heath at The Telegraph.

Neil: "an interesting post here about how the introduction of the Euro has not changed the amount of trade one jot - which of course means that an independent currency can therefore be no barrier to trade."