Tuesday, October 13, 2015

Man in a Box

Is it just me or is this trend really humiliating:

...recalls the 24-year-old. “But I started visiting a friend of mine living here and started to like the place. Then I moved in and I realised how good it was. I’m really comfortable in my container..."

Poor Layne must be rolling over in his grave:

J&J plans $10B share buyback

Ka-ching!!!  $265B market cap, just under 4% buyback.

Total Treasury account withdrawals for Medicare and Medicaid last FY totaled over $1 Trillion.

Obama wants Paul Ryan as Speaker

Obama wants Paul Ryan as Speaker

In case you had any doubts that Obama was a fiscal hawk, a true fiscal conservative, who has done more to harm working people and the Middle Class than anyone before him (maybe with the exception of Bill Clinton, but he's close), then just look at who that backstabbing traitor in the White House wants as Speaker of the House. None other than Ayn Rand poster boy, Paul Ryan.

“The White House would like that idea,” Allen said during an interview with Laura Ingraham on her radio show today. “Because they would like one more win … what they’ve always told me is that they admire Paul Ryan for being a substantive, smart guy.

Yeah...right...a substantive, smart, guy. He thinks the government ran out of dollars.

Ryan, of course, is for cutting Social Security, ending Medicare and turning it into a voucher program and cutting taxes for the wealthy.

Obama never ceases to amaze how far to the right he can go and how deeply tied to the interests of the wealthy and big corporate he really is.

Monday, October 12, 2015

Joris Luyendijk — Don’t let the Nobel prize fool you. Economics is not a science

Business as usual. That will be the implicit message when the Sveriges Riksbank announces this year’s winner of the “Prize in Economic Sciences in Memory of Alfred Nobel”, to give it its full title. Seven years ago this autumn, practically the entire mainstream economics profession was caught off guard by the global financial crash and the “worst panic since the 1930s” that followed. And yet on Monday the glorification of economics as a scientific field on a par with physics, chemistry and medicine will continue.

The problem is not so much that there is a Nobel prize in economics, but that there are no equivalent prizes in psychology, sociology, anthropology. Economics, this seems to say, is not a social science but an exact one, like physics or chemistry – a distinction that not only encourages hubris among economists but also changes the way we think about the economy.

A Nobel prize in economics implies that the human world operates much like the physical world: that it can be described and understood in neutral terms, and that it lends itself to modelling, like chemical reactions or the movement of the stars. It creates the impression that economists are not in the business of constructing inherently imperfect theories, but of discovering timeless truths.…

The Guardian — Comment is free
Don’t let the Nobel prize fool you. Economics is not a science
Joris Luyendijk

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Jason Smith — Economics as and versus social science

My blurb on how I think that the whole "economics is too complex to make neat mathematical models" argument really just tends to assume itself (i.e. the original meaning of question begging) was picked up over at Mike Norman Economics, where it was put in an interesting way. Sociologists et al say economists need to prove economics is not too complex to model and economists say sociologists et al need to prove it is too complex to model.

That is to say we have sociologists and economists making a play for the null hypothesis.

My personal view is that economists should get the null hypothesis in this case, but not for reasons that economists think they should.…
Information Transfer Economics
Economics as and versus social science
Jason Smith

Jason Smith — Noah is stealing my material

More on econ as science.

Noah says to prove the assumptions are wrong. Lars says show that they are correct. Who has the better case?

The issue is how well a theoretical model works. Assumptions are always simplifications for economy and tractability of explanation. 

There is nothing inherently wrong about assumptions not being precise. They only need to be precise enough to yield results within an acceptable degree of tolerance.

The proof of the pudding is though hypothesis testing more than verifying assumptions, although if assumptions are not reasonably correct, then the model is questionable as an explanation that is generalizable. 

It is possible that a dodgy model can sometime yield positive results (pace Friedman's instrumentalism), as broken clock is correct twice a day. The test of theory is how well the model performs as an explanation of how things stand over time, that is, taking change into account. Theoretical models that don't reliably predict as not generalizable explanations. They are only generalizable in terms of restrictive assumptions that may or not hold in specific cases. That is to say they are models of special cases. 

I would say that scientific method is applicable in econ as it is in other social sciences and also in philosophy, since even speculation must take established truths into account. The question really is whether econ is a natural science like physics, a hybrid science positioned between natural science and life and social sciences, a narrative explanation of occurrences like history, or speculation based on principles grounded in intuition, like speculative philosophy. 

I would say that econ as practiced is some of each, and all approaches make their own contributions to the field. Defenders of econ as science can cite examples to make their case, and opponents can do likewise.

Jason Smith has written on this previously, to which I have linked here at MNE.

There are more posts there, but these are representative.

The title,  Is human agency Noah's big unchallenged assumption?,  hits the nail on the head. The social sciences are about human agency, and so are behavioral psychology and motivational psychology and some other branches of psychology. So is theory of history. And in philosophy, so are theory of man, ethics, theory of action, and social and political philosophy.

Economics is based on a theory of man and theory of action. The theory of man and of human action are not subjects of study in the field of economics, or at least not exclusively so (pace Ludwig von Mises).

There is no agreed upon general theory of man or of human action in either the sciences or philosophy. Why? Foundational disagreement is often due to lack of criteria that are agreed upon, or failure of agreed upon criteria to determine a definitive result. It is also possible that data or method are insufficient. 

As a result, general agreement is usually limited to quite specific cases under particular conditions that are not generalizable, that is, special cases. As a result, the case method is generally used in business schools, for instance, that than theoretical economics.

Information Transfer Economics
Noah is stealing my material
Jason Smith

Covering my short USDTRY. Made money on this quick overnight trade.

I am covering my short, dollar/Turkish lira trade. Made a few percent on a quick overnight trade. That's how its' done.

Early Treasury data not encouraging for economy, stocks, dollar

We're only six statement days into the new fiscal year, however, Treasury data is not encouraging. Employment tax deposits collected by Treasury are 5.5% below where they were at the same time last October and total withdrawals (spending) is 9.1% below last year. Short dollar. Stock market upside limited from here as I said.

Zero Social Security Increase for next year

Not helpful. Interesting chart.

We should have rebuilt the Twin Towers

Nicole Gelinas, a columnist for the New York Post, who I never agree with on anything, but on this I am 100% in agreement.

"Al Qaeda set out to mutilate our skyline. They succeeded. New York could have rebuilt new, modern Twin Towers after 9/11. And we could have done it quickly. But we did not. We spent more than a decade and $4 billion building a tower that could fit on any generic skyline."

I miss the old skyline of Manhattan with those increible and imposing Twin Towers. The new, One World Trade Center tower does nothing for me. I wish we would have rebuilt those towers. Donald Trump proposed this in 2005, but politicians ignored him.

Which skyline do you prefer?

Twin Towers One World Trade Center
I think the choice is clear.

Obama Says Russian Strikes on ISIS are “Strengthening” ISIS

You read that right. Venturing beyond Orwellian double-speak.
Welcome to Obamaland, the mysterious, schizophrenic world where the truth is inverted. Washington is rapidly losing the microscopic amount of respect it had around the world, as US propaganda is becoming more childish by the week. Any rational person who is even remotely informed just sits back in amazement at the volume of deceptive, deceitful, and outright ludicrous statements constantly spewing from the mouths of top US officials. One of the latest comical episodes was when the US President, Barack Obama, actually tried to argue that Russian airstrikes against the so-called Islamic State (ISIS/IS/ISIL) are “only strengthening ISIL”:

“The moderate opposition in Syria is one that, if we’re ever going to have a political transition, we need. And the Russian policy is driving those folks underground or creating a situation in which they are [debilitated], and it’s only strengthening ISIL.”
So in Obama’s mind, Russia pounding key ISIS positions and other affiliated terrorist groups isn’t halting the groups rise, but “strengthening” it.…
Obviously, the Western narrative that there are “moderate” terrorists fighting in Syria which we can trust and we should arm, is (and always has been), a total fallacy. “In reality, from the beginning, there were never any moderates,” as Tony Cartalucci wrote in his article for New Eastern Outlook: US Complains As Russia Bombs its Terrorists. “The Salafists, the Muslim Brotherhood and AQI (al-Qaeda in Iraq), are the major forces driving the insurgency in Syria,” was the assessment of the Defense Intelligence Agency in their declassified intelligence report from 2012. Just in case Obama doesn’t understand his own intelligence reports, al-Qaeda does NOT qualify as a “moderate” rebel group, they are as extreme as you can possibly get!….
New Eastern Outlook
Obama Says Russian Strikes on ISIS are “Strengthening” ISIS
Steve McMilan

Sunday, October 11, 2015

Xinhua — China sees 10,000 new firms every day: official

China sees more than 10,000 firms born every day amid government support for entrepreneurship, a vice minister said on Saturday.
Most of the firms are small enterprises. Data was collected last March through the end of August this year and about 6 million firms were registered during the period, said Xin Guobin, vice minister of Industry and Information Technology.
The government has been cutting taxes and fees, helping small firms save about 48.6 billion yuan (7.93 billion U.S. dollars) in the first half of the year, Xin said.
Lending to small firms stood at 16.2 trillion yuan at the end of June, up 14.5 percent from last year, Xin said.
However, he admitted small firms are facing challenges amid economic slowdown, slumping product prices, rising costs and production overcapacity.
China sees 10,000 new firms every day: official

teleSUR — Rousseff Warns Brazil Could Face a 'Paraguay-Style' Coup

In 2012, Paraguay's then-head of state, Fernando Lugo, was ousted by an opposition-led parliament that blamed him for a violent clash between peasants and police that left 17 people dead. Paraguay’s neighbors initially refused to recognize the new government.

Like Lugo before her, Rousseff is currently facing calls for impeachment. Opposition lawmakers in Brazil allege she violated the law and doctored the state budget to allow for more public spending ahead of her 2014 reelection.
​Following the impeachment and ouster of President Lugo, Paraguay’s was suspended from both the Union of South American Nations and the Southern Common Market. The country’s membership was restored after it held a new election in April 2013.

Lugo was the first president of Paraguay in over 60 years who did not come from the right-wing Colorado Party.
Rousseff Warns Brazil Could Face a 'Paraguay-Style' Coup



The BRICS Post
Brazil to deal with new international reality: Finance Minister

TASS — Putin pledges Russia will keep to liberal course in currency regulation

Russia’s government will keep to the liberal course in currency regulations and will impose no restrictions on capital movement, Russian President Vladimir Putin said on Sunday at a meeting with Pirelli CEO Marco Tronchetti.
"We are not going to drop the liberal course in the sphere of currency regulation," Putin stressed, adding that investors could be sure "we are not going to restrict capital, currency proceeds movement."
The president also pledged the Russian government would carry out a balanced budget and social policy to preserve stability in this sphere."
The Russian president pledged the government would take efforts to keep the budget deficit the lowest possible with further bringing it to the zero level. He said the Russian government would do its best to ensure stability in the budget and social spheres and would continue to target inflation. "And, of course, we will keep a narrow profile of the budget deficit and will try to reach a zero level and even a surplus as soon as possible," Putin said.
He said he was sure the situation in the Russian economy would be stable. The Russian leader said the government and the Central Bank were working in close coordination with each other. In his words, the country’s currency and gold reserve had been growing and the government’s reserve funds were rather high.
"It gives grounds to think that the situation in the Russian economy will be stable and, despite the current decrease in domestic demand, we will work to bring it up to make it a weighty factor to ensure high economy development rates," Putin stressed.
He also pledged Russian would continue to diversity its economy, which was being necessitated by the current situation. "Russia’s economy will preserve a good development potential," he underscored.
Putin pledges Russia will keep to liberal course in currency regulation

Inequality is the great concern of our age. So why do we tolerate rapacious, unjust tax havens?

Examine democratic and budgetary crises across the world and you’ll find a running theme – tax havens. Let’s take a look: in the last three years alone, in France the budget minister has had to resign because he had cheated on his taxes for 20 years through unreported offshore accounts. In Spain, the former treasurer of the party in power has gone to jail after having revealed a hidden system of financing through Swiss banks. In the United States, Congress has revealed that Apple avoided tens of billions in taxes by manipulating the location of its profits, at a time when US infrastructure is crumbling.
Accepting the status quo seems irresponsible.…
There have been numerous journalistic investigations, which have pushed forward our understanding of the tricks used by multinational firms, but from careful case studies it is hard to infer the overall cost to government coffers.
In my new book, The Hidden Wealth of Nations, I try to fill this gap. I gathered the available data sources on the international investments of countries, the balances of payments, the on- and off-balance sheet positions of banks, the wealth and income of nations, the accounts of multinational companies and more.
Some of these statistics have never been used before and this is the first time that all this information has been collected, confronted and analysed with a single objective: to expose the true activities of tax havens and their costs to foreign nations.
Longish but definitely worth a read.

The Guardian — Comment is free
Inequality is the great concern of our age. So why do we tolerate rapacious, unjust tax havens?
Gabriel Zucman | Assistant Professor of Economics, University of California Berkeley
ht Mark Thoma at Economis'ts View

Adele Peters — This Robot-Run Indoor Farm Can Grow 10 Million Heads Of Lettuce A Year

The robots are here. And it's awesome.

This Robot-Run Indoor Farm Can Grow 10 Million Heads Of Lettuce A Year
Adele Peters

Lars P. Syll — The Nobel prize in economics is a disgrace. Dump it!

Georgescu-Roegen and ecological economics have turned against the neoclassical theory’s obsession with purely monetary factors. The monetary reductionism easily makes you ignore other factors having a bearing on human interaction with the environment.
I wonder if this isn’t the crux of the matter. To assert such a thing really is to swear in the neoclassical establishment church and nullifies any chances of getting the prestigious prize.
Twenty years ago, after a radio debate with one of the members of the prize committee, I asked why Georgescu-Roegen hadn’t got the prize. The answer was – mirabile dictu – that he “never founded a school.” I was surprised, to say the least, and wondered if he possibly had heard of the environmental movement. Well, he had — but it was “the wrong kind of school”! Can it be stated much clearer than this what it’s all about? If you haven’t worked within the mainstream neoclassical paradigm — then you are more or less excluded a priori from being eligible for the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel!
Lars P. Syll’s Blog
The Nobel prize in economics is a disgrace. Dump it!
Lars P. Syll | Professor, Malmo University

See also

Serious smackdown.

Real-World Economics Review Blog
Key member of Swedish Academy of Sciences calls for immediate suspension of the “Nobel Prize for Economics”
Edward Fulbrook

Turkish lira drops sharply against dollar because of horrific events, but I am buying it right now.

The Turkish lira has just opened up sharply lower against the U.S. dollar because of the horrific bombing that took place yesterday. However, the dollar's fundamentals are weakening so I am buying the Turkish lira right now. (Selling, USDTRY.)

Remember, my online Forex course is coming up, Oct 19-23.

The Arthurian — Völkerwanderung

Some history of mass migrations.

The New Arthurian Economics
The Arthurian

Simon Wren-Lewis — One reason why monetary policy is preferred by New Keynesians

The interest rate variable as tool. Does it work the way monetarists assume in affecting the IS-LM model?

Mainly Macro
One reason why monetary policy is preferred by New Keynesians
Simon Wren-Lewis | Professor of Economics, Oxford University

Jonathan Coppage — The terrible cost of universal basic income

Backdoor argument for a JG by implication rather than mention. But the rationale is there.

And, no, the "terrible cost" is not inflation. Jonathan Coppage | Associate Editor

Ramanan — United States’ Net Wealth, Part 2

This is a continuation of my previous post, United States’ Net Wealth. There I pointed out a new table which has been included in the Federal Reserve Statistical Release Z.1, Financial Accounts of the United States – Flow of Funds, Balance Sheets and Integrated Macroeconomic Accounts. This table in flow of funds report is B.1: Derivation of U.S. Net Wealth.
In the meanwhile, the Federal Reserve has released a note U.S. Net Wealth in the Financial Accounts of the United States which is worth your time.…
The Case for Concerted Action

Zerohedge libertarians blast Govt fiat and then complain that they cant get their Govt fiat

"In the last 24 months, Canada, Cyprus, New Zealand, the US, the UK, and now Germany have all implemented legislation that would allow them to first FREEZE and then SEIZE bank assets during the next crisis.

These moves will be sold as “for the public’s good,” when they happen. But the reality is that it’s all about stopping people from moving their capital into actual physical cash."


I'm confused, I thought that QE and fiscal deficits (DEBT!!!!!!!) were evil Govt manipulations of the monetary system that would lead to fiat currency collapse and hyperinflation. And now those idiots are complaining that the big bad Govt is going to prevent them from getting their Govt fiat out of the bank. Its just little pieces of paper anyway, not a real man's currency like gold bricks or something. 

This is another perfect example of why Govt IOUs are on the top of the money pyramid, we are on the US currency standard. The thing that makes the entire private banking system run smoothly even in times of crises is the guarantee the Govt makes that keep commercial bank IOUs trading at par with Govt fiat. Instead of bank customers having piece of mind because they can always withdraw their deposited value worth of commercial bank promises in gold or gold certificates, now you get something even better, US Govt tax credits in paper form. Your welcome.

Brad DeLong — Must-Read: Matt Phillips: Bernanke: I’m not really a Republican anymore

I didn’t leave the Republican Party. I felt that the party left me.
The interesting thing is that many of the current crop will say, Good riddance to a RINO.

WCEG — The Equitablog
Must-Read: Matt Phillips: Bernanke: I’m not really a Republican anymore
Brad DeLong

Saturday, October 10, 2015

Things are getting very tense. The dollar is headed down, big time. Sign up for my Oct 19-23 Forex course and cash in on what will be some very big moves!

Things are very tense. The debt ceiling. Syria. ISIS, Russia. American neocons. Very scary indeed and to me, it looks like one major casualty will be the U.S. dollar.

If you haven't already taken my course, now is the time. October 19-23. Online.

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Will Huttton — The world economic order is collapsing and this time there seems no way out

You noticed.

The neoliberal paradigm is imploding. Hutton may be out of paradigm with MMT but he is correct about order breaking down, confidence declining, and risk off in the rush to safe havens. His solution is application of snake oil, though.
The world needs inventive responses. It needs a bigger, reinvigorated IMF whose constitution should reflect the global balance of economic power and that can rescue the EMEs. It needs proper surveillance of global finance. It needs western governments to launch massive economic stimuli, centred on infrastructure spending. It needs new smart monetary policies that allow negative interest rates.
Ok, granted, he is right about fiscal for infrastructure.

Bill Gross asks who will buy the Treasuries the Fed accumulated on its balance sheet during QE. Well, there's a clamor for them now as yield plunge along the curve, with T-bills matching ZIRP.

The Guardian — Comment is free
The world economic order is collapsing and this time there seems no way out
Will Huttton

The Saker — Week One of the Russian Military Intervention in Syria

Where things stand now in the eyes of one of the most credible analysts in the blogsphere.

The Unz Review
Week One of the Russian Military Intervention in Syria
The Saker

Also a good read:
Furthermore the long interview granted by Assad to Iranian state television brings new elements, to some extent favorable ones for those who say they want to find a political solution to the lengthy Syrian crisis. While appearing very conscious of renewed military strength on the ground, in fact, Assad for the first time talked about his possible departure from the scene: "If it could be of help, I wouldn't hesitate to resign."
Fort Russ
Russian intervention -- a brand new ball game
Translated by Tom Winter

Links on Syria

Looking like WWIII is getting closer with the US sending ships to challenge China's territorial claims, NATO building up Europe and continuing to try to destabilize Russia, and the apparent commitment to confront Russia by proxy in Syria.

No offsetting good news here. US hawks seem to be in charge of US policy.

Phil Butler

US and NATO Launch Disinformation Terror War
Jim Dean


The US propaganda is fierce. Russia is not aiding ISIS!
Business Insider claims that ISIS is advancing towards Aleppo, thanks in part to Russian air strikes targeting ISIS.
Russia Insider
Desperate Western Media: Russia Is Helping ISIS!

Tyler Cowen — Lawrence Dennis on what is wrong with economics

Lawrence Dennis states:
"The trouble with most of our social thinking is that, being done in terms of eighteenth century rationalism, it takes dynamism for granted and assumes that the chief social problems are those of knowing what you want and how to get it. The chief social problem is that of generating and unifying the social will that creates activity, change and what we have been wont to call progress."
Tyler Cowen asks:
That is from his 1940 book The Dynamics of War and Revolution, p.53. It’s an ever so slightly fascistic version of a common critique of neoclassical economics. Is it entirely wrong?
See my comment there.

Marginal Revolution