Saturday, October 31, 2015

Roberto Patricio Korzeniewicz — The Logic of Global Capitalism

Why Nations Fail has been widely praised for its explanatory power. But it oversimplifies the workings of global capitalism.
The Logic of Global Capitalism
Roberto Patricio Korzeniewicz | Professor of Sociology at the University of Maryland

See also

Good history lesson of the development of capitalism.
Christian Parenti

Harold Meyerson — Can Bernie Sanders’s followers create a true leftist movement?

When Sanders says — as he does in every speech — that he’s seeking to build “a revolution,” that’s not just rhetoric. What Sanders understands in his bones is that every period of progressive reform in U.S. history has come as a result of massive street heat, of energized movements that push policymaking elites to the left. Abolitionists pressured the Lincoln Republicans toward a policy of emancipation. Militant workers and a socialist left, whose general strikes shut down several major cities in 1934, prompted Franklin D. Roosevelt’s Democrats to legalize collective bargaining and create Social Security in 1935. The civil rights movement enabled the Kennedy-Johnson Democrats to pass the landmark legislation of the ’60s. Progressive reform doesn’t happen absent a large and vibrant left.
A large and vibrant left, however, has been missing from the American political landscape since the ’60s. Precisely because Sanders has staked out the most distinctly leftist terrain of any major candidate in decades, and because so many Americans (young Americans in particular) have rallied to his cause, his campaign holds the promise of recreating that missing left.…
Both promise and problems. If he wins, much more promise and less problems than if he loses. FDR created a long-lived legacy. The McGovern left fizzled after his loss.

The Washington Post
Can Bernie Sanders’s followers create a true leftist movement?
Harold Meyerson

Lynn Stuart Parramore interviews Adair Turner — Want a Better Economy? Could Be Time to Unleash the Devil

Overt money financing.

Want a Better Economy? Could Be Time to Unleash the Devil
Lynn Stuart Parramore interviews Adair Turner

Ambassador Joe Wilson (ret.) and Valerie Plame — Back To The Dark Side: Dick Cheney's Pax Americana

Back To The Dark Side: Dick Cheney's Pax Americana

By Ambassador Joe Wilson (ret.) and Valerie Plame Exceptional, the new book from former Vice President Dick Cheney and his daughter, Liz, is not. It is nothing more than an unhinged rant that smacks of sedition."The children need to know the truth about who we are, what we've done, and why it is uniquely America's duty…

Sputnik International — Russia's New 'Liberals' Hark Back to the Worst Traditions of the Old USSR

Known in the US as, "My way or the highway."

Sputnik International
Russia's New 'Liberals' Hark Back to the Worst Traditions of the Old USSR

Chuck Spinney — Obama Keeps Pentagon Spigot Open

The left has been focusing on the cuts to social programs in the budget deal. Chuck Spinney zeroes in on the military spending increases. A one-two punch to the jaw of the public.
So, once again, Mr. Obama had a shot at leading from the moral high ground, and once again, he blew it. He had the Republicans on the ropes, with all their warts on full display, but then he squandered an opportunity to effect even a pretense of challenging a thoroughly corrupt system.
Obama’s most recent performance is yet more proof that he is no change agent. A better characterization would be that he is merely another Manchurian Candidate, whose role is to protect the interests of the factions making up the shadow government that is now running the show — what former Republican congressional staffer Mike Lofgren calls the U.S. “deep state.”
Consortiums News
Obama Keeps Pentagon Spigot Open
Chuck Spinney, former military analyst for the Pentagon who was famous for the “Spinney Report,” which criticized the Pentagon’s wasteful pursuit of costly and complex weapons systems.

Mike Lofgren — The ‘Anti-Knowledge’ of the Elites

In a previous piece, I described how the Republican Party and its ideological allies in the fundamentalist churches have confected a comprehensive media-entertainment complex to attract low-information Americans and turn them into partisans.…
Not just the GOP, but also the Deep State.
Think of Robert Gates, Ashton Carter, Timothy Geithner or Eric Holder. On the surface, they seem the very antithesis of the Tea Party fanatic, gibbering about ISIS training camps in America. The preferred pose of these establishment personages is that of the politically neutral technocrat offering well-considered advice based on their profound expertise.
That pose is nonsense. They are deeply dyed in the hue of the official ideology of the governing class, an ideology that is neither specifically Democrat nor Republican. Domestically, whatever they might privately believe about essentially diversionary social issues (“rube bait”) like abortion or gay marriage, they almost invariably believe in the “Washington Consensus”: financialization, outsourcing, privatization, deregulation and the commodification of labor.
Internationally, they espouse Twenty-first Century American Exceptionalism: the right and duty of the United States to meddle in every region of the world, coercive diplomacy, boots on the ground, and the right to ignore painfully-won international norms of civilized behavior. To paraphrase what Sir John Harrington said over 400 years ago about treason, now that the ideology of the Deep State has prospered, none dare call it ideology.
Let us consider some of the tenets of their faith
I would add that conventional economics based on the principles of economic liberalism is also an ideology based on assumptions derived from and supporting a POV. Conventional economists are agreed that Marxist are ideological economics are ideological, in addition to it being wrong, but they are also agreed that all "heterodox" economics is also either wrong or unworthy of consideration because "the debate over method is settled" — by them. Even though Marxists, Marxians, and Post Keynesians, for example, warned about the approach of the global financial crisis that conventional economists largely missed and haven't been able to address satisfactorily. Their response is denial.

Consortium NewsThe ‘Anti-Knowledge’ of the Elites
Mike Lofgren

Alexander Mercouris — As Merkel Crumbles Berlin Turns To Moscow and a response from Gilbert Doctorow

Germany wavering?

Russia Insider
As Merkel Crumbles Berlin Turns To Moscow

US, Russia escalate on the ground in Syria while talking in Vienna

Fort Russ
Russian elite units in Zabadani, Homs, Hama and Aleppo
Ollie Richardson

New Eastern Outlook
US Invasion of Syria Begins

What's surprising about this? These are the folks that Zbig got the president to arm in order to counter Russia in Afghanistan, and he still thinks it was a good deal for the US.

Oh, and did I mention that US violation of Syrian borders is illegal under the UN Charter?

David Keohane — Where are my (business cycle) dragons?

Did Keynes read the I Ching? There seems to be very little chance that the present Chinese leadership is unaware of it.

The Financial Times — FT Alphaville
Where are my (business cycle) dragons?
David Keohane

Noah Smith — Check Your Economics Bias

Noah makes a common mistake often made by those commenting beyond their field and level of expertise. The assumption that the mind is mirror of reality is called naïve realism in philosophy, and it has been shown to be erroneous in a number of scientific disciplines. 

In fact, the difficulty of disentangling the subject from the objective is a fundamental purpose of scientific method. There is no way to know for sure that results are completely objective for the simple logical reason that there are no absolute criteria available to humans, although different groups have declared them in their favor for ages and continue to do so. That's called dogmatism. The proper antidote, especially in science, is skepticism.

Healthy skepticism doesn't mean that everything is equally in doubt all the time. It simply means that the probability 0 (contradiction) and 1 (tautology) are logical and assert nothing substantial about the world. They are rules about using signs correctly.

When a conceptual model is interpreted are representing states of affairs, the test of the model is comparing it with facts. Here the probability lies between 0 and 1. There is also ontological uncertainty, affecting complex systems owing to emergence, for example, and epistemological uncertainty, for example, bounded rationality.

Analytic philosophy, on one hand, and anthropology, sociology and history, on the other, show that so-called human nature is a slippery concept and human knowledge is influenced by both nature and nurture. Philosophy of science reveals that even so-called facts are theory-laden to a great extent in important cases.

The reason I think that Noah is cavalier about his argument is the excluded middle, which in this case, is broad and nuanced. It's not a matter of whether economics is ideological or non-ideological, but rather about specific cases and conditions, and where method is too lax, logic too loose, and subjectivity creeping in.

There may be cases, usually simple, where the probability of conclusions about correspondence of models with facts and events is relatively high, and others where it is relatively low. In some cases, no probability can even be assigned owing to various limitations. One of the chief issues that economics faces is tractability, for example, which can lead to a tendency to over-generalize and to fall into the fallacy of false cause. Many logical fallacies have been identified historically, and now cognitive biases are being discovered.

Tractability is often addressed by assuming "all things being equal,"when all things are never equal in dynamic situations involving complexity, reflexivity, learning, adaptation, and emergence. For example, most conventional economists criticize Marx for missing the effect of technology, while being unaware of what they may be missing themselves.

Where ideology is most likely to enter is in assumptions, both factual and methodological. This also happens to be where there is much controversy. Macroeconomics is political economy, and where policy is involved, ideology is usually not far away.

The study of this is "meta," because it involves not the practice of economics but the study of the foundations of economics, foundations of social science, foundations of science, and foundations or knowledge.

Bloomberg View
Check Your Economics Bias
Noah Smith

Don Quijones — The CIA Connection: How US Spy Chiefs Co-Financed European Federalists

During research for an article on Brexit, which will be published on WOLF STREET in the next day or two, I stumbled across an undetonated bombshell of a pìece from the Internet 1.0 era. Written by the DT’s Ambrose Evans Pritchard, the article reveals documentary evidence of historic U.S. covert (read: CIA) support for Europe’s federalist project. Part of that support was funded by (cue drum roll…) the Ford and Rockerfeller Foundations.…
The usual suspects were involved.

Raging Bull-Shit
The CIA Connection: How US Spy Chiefs Co-Financed European Federalists
Don Quijones

Robert Waldmann — Worst Socialist Ever part MMMCCCCLXIII

I just notice that in the second quarter of 2015 US real gross private domestic investment surpassed US real government consumption expenditures & gross investment for the first time since the data have been collected (1947).
The long era of US socialism as lead by Eisenhower, Nixon, Reagan and the Bushs has ended under raging capitalist Barack Obama (and the insane Republican posse in congress and the 50 little Hoovers).
The New Deal just died after a long wasting disease.

Angry Bear
Worst Socialist Ever part MMMCCCCLXIII
Robert Waldmann

Barkley Rosser — VSPs Get Their Way With Budget Deal: Social Security Benefits Are Cut

Military spending increases, SS benefits decrease. Who's winning?

VSPs Get Their Way With Budget Deal: Social Security Benefits Are Cut
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

Brad DeLong — Weekend Reading: Diane Coyle (2012): Do Economic Crises Reflect Crises in Economics?

Insightful observations about what's wrong with the economics profession and why it matters to everyone else.

WCEG — The Equitablog
Weekend Reading: Diane Coyle (2012): Do Economic Crises Reflect Crises in Economics?
Brad DeLong

Marco Rubio gets backing from blood sucking financial predator Paul Singer

Marco Rubio backer, Paul Singer, the bloodsucker

We know who Marco Rubio is going to be working for if he is elected president. You can forget about all his bullshit rhetoric about empowering people and helping them to succeed. This water sucking slick talker is going to be handing over even more to the billionaires and plutocrats that he so transparently adores.

Check out his newest financial backer: Paul Singer. Singer is nothing more than a disgusting billionaire hedge fund parasite. His claim to fame? Making terrible, losing investments in Argentinian bonds, then getting the U.S. courts (he's a lawyer) to grant him mafia-style kneecap-busting "collection" power, which Argentina has courageously resisted.

This scum is also going after Puerto Rico now, demanding that the Commonwealth close schools and hospitals to make good on its debt. (So he can get whole on another losing position.)

This guy, Singer, is a blood sucking poster boy for why we should euthanize the entire class of these financial predators. They are a cancer on society

Happy Halloween from MNE!

Happy Halloween from Mike Norman Economics

Friday, October 30, 2015

Zap — Free Markets Ideology Is Making Society Sick | The Alternative Banking Group of OWS

Excepts and a link.

Political Reality
Free Markets Ideology Is Making Society Sick | The Alternative Banking Group of OWS

Scott Adams — Blog Economics and Expectations (with a Trump point)

When I was studying economics in college, the most surprising thing I learned is that economics is what happens when you combine psychology with resources. I had assumed economics was more of a math/formula sort of discipline. There is plenty of that too, but the core of economics is human psychology.
Let’s talk about that.
The reason I say economics is psychology plus resources is that every transaction is based on human expectations. Businesses will invest heavily today if they believe customers are optimistic and likely to spend. If the mood is pessimism, and people are saving their pennies, those expectations stifle business investment.

I could go on for an hour about how your expectations are what creates value in this world. For example, you only make deals with people that you expect to perform. You only hire people you expect to do the job well. You only spend money if you expect to someday make more. You only buy a home when you expect real estate values to be strong in the future. And so on.
Economies run on expectations. And expectations are the result of our complex human psychology.…
Scott Adams' Blog
Economics and Expectations (with a Trump point)
Scott Adams, creator of Dilbert

Pepe Escobar — The Caliph at the gates of Vienna

History has a jolly habit of repeating itself as surrealist farce. Is it 1683 all over again, with the Ottoman Empire laying siege to Vienna just to be defeated by the “infidels” at the last minute?
No; it’s 2015 and a Caliph simulacrum – Ibrahim, a.k.a. Abu Bakr al-Baghdadi — has prompted a gaggle of world powers, lesser powers and assorted minions to converge to Vienna to discuss how to defeat him.
Westphalians, we got a problem. None of this makes any sense if Iran is not at the table discussing a solution for the Syrian tragedy. Moscow knew it from the start. Washington — reluctantly — had to admit the obvious. But the problem was never Iran. The problem is the ideological matrix of goons who metastasize into Caliphs: Saudi Arabia.…
Asia Times
The Caliph at the gates of Vienna
Pepe Escobar

Brad DeLong — Must-Read: Marshall Steinbaum: The Unseen Threat of Capital Mobility

The race to the bottom. Unseen. It's blindingly obvious. Capital flows to where it can extract the maximum rent. Negative externality is a form of rent that involves socializing the expenses.

WCEG — The Equitablog
Must-Read: Marshall Steinbaum: The Unseen Threat of Capital Mobility
Brad DeLong

Jason Smith — Moral intuition versus logical intuition

This distinction is key to understanding economics.

A good contemporary macro example in political economy is German Ordoliberal debt-phobia and preference for austerity on moral rather than strictly economic grounds that is driving the EZ into a ditch not only economically but also socially and politically. 

The contemporary view of Ordoliberalism is based on "ordo" meaning "following the rules." People cannot understand how when Germany is prospering under the rules, others won't also — even though both economic theory and accounting shows why this assumption is wrong. The evidence is also overwhelming as the wheels come off in one country after another.

It is also foundational in general for assuming that sound money, sound finance, and a tight fiscal stance  are policy "goods." Almost all economic policy in the world today is infected with this view to some degree, so that the global economy is constrained by lagging demand and faces deflation.

Unless one knows that all money is credit-based and that credit implies an equal amount of debt on another's balance sheet as an accounting identity, the idea that more debt to solve the problem of debt is deeply counterintuitive logically. 

When combined with a moral (normative) view of debt as "bad," sound money, sound finance, and a tight fiscal stance as policy "goods" seem intuitively true and morally satisfying, even though both theory and evidence contradict this assumption.

Information Transfer Economics
Moral intuition versus logical intuition
Jason Smith

Stumbling and Mumbling
On misunderstanding economicsChris Dillow | Investors Chronicle

Here is the maximum level that the Fed can raise rates and no further. Your question is answered.

A lot of people have been saying the Fed can't raise rates that much or, the market won't let the Fed raise much or the economy won't or whatever. That's all bunk. None of those things matter, however, we can construct a model of just how far the Fed can raise rates, based on the knowledge that they must pay interest on reserves OUT OF THEIR OWN EARNINGS!

First let me mention that the Fed turned over $100 billion to the Treasury in FY 2015, so we know how much the Fed earns: $100 billion. That's how much it earns so that's how much it can pay.

On a portfolio of assets of $4.5 trillion, the Fed is earning about 2.2%. Actually, maybe a little bit more because its making most of its money on holdings of government securities ("those babies" in the words of Alan Simpson) and that amounts to $4.2 trillion so that's a return of 2.4%.

There's $4.5 trillion in reserves (equivalent to the Fed's assets by definition).

So the answer to how high the Fed can raise is 2.4%. That's it. After that it's out of money and you know DAMN WELL that there is no way Janet Yellen would go to Congress to ask for money to pay interest. NO WAY.

When the Fed didn't have to pay interest on reserves it was the Treasury's expense, but Ben Bernanke, in all his wisdom, convinced Congress back in 2008 that HE wanted that expense for some reason. Not exactly a Donald Trump, art of the deal, move. Before that, the Fed had the power to raise to infinity. Again, Treasury was on the hook to pay.

So, there's the answer to that question for anyone who is wondering. The maximum the Fed can raise is 2.4%. After that, it's literally out of money.

Feel free to distribute.

Projecting Budget Deal on Fiscal

Chart below that takes Mike's $340B 2-year projection and divides in half ($170B) and added to FY2015 totals to get the Projected FY 2016 image.

Upward slope of the graph potentially returning to that exhibited from the 2000 thru 2008 era.

Budget deal is unequivocally bullish for stocks, economy. Buy the S&P and take a vacation until March 2017.

The biggest negative factor that we have been talking about here--the debt ceiling--is now out of the way until March 2017. We are in the clear, having averted what could have been a disastrous default of the entire U.S. economy.

With this new budget deal the amount of fiscal stimulus will be significant. Not only does the Congressional Budget Office anticipate a spending increase of over $230 billion over the next two years, the additional spending of $112 billion implied in this budget deal means that spending over the next two years will rise by nearly $340 billion.

That is significant and it means two things for sure:

1) The economy WILL NOT go into recession

2) You can go buy stocks now (buy the S&P Index, it's simpler) and basically take a vacation until March 2017. You will be handsomely rewarded.

I don't care what anyone is telling you about the deficit, they are going to be wrong. And if I end up being wrong here in my prediction, feel free never to read this blog again or mock me from now until forever.

Oh, and one more thing...the dollar will fall because some pricing power will return to foreign exporters. And if and when the euro rises it won't be because it has become "harder to get." It's all about price, not quantity. People should know that.

P.S. If and when the Fed raises rates (and they will) that will be an added fiscal stimulus. Those who have been saying here, that it doesn't work that way, can also call me out as ignorant if it in fact doesn't end up to be bullish.

Russia keeps rates steady at 11%

Continued fiscal support in Russia.

Thursday, October 29, 2015

Paul Craig Roberts — US On Road To Third World

On January 6, 2004, Senator Charles Schumer and I challenged the erroneous idea that jobs offshoring was free trade in a New York Times op-ed. Our article so astounded economists that within a few days Schumer and I were summoned to a Brookings Institution conference in Washington, DC, to explain our heresy. In the nationally televised conference, I declared that the consequence of jobs offshoring would be that the US would be a Third World country in 20 years.
That was 11 years ago, and the US is on course to descend to Third World status before the remaining nine years of my prediction have expired.…
Paul Craig Roberts
US On Road To Third World

France 24 — Jailed Saudi blogger wins EU rights prize

A Saudi blogger sentenced in 2012 to 10 years in prison and 1,000 lashes for insulting Muslim clerics has won the European Union's prestigious Sakharov Prize for Freedom of Thought.
EU lawmakers said Thursday that they had chosen to honour Raif Badawi as a symbol of the fight for freedom of speech. The prize was to be announced publicly later at the European Parliament in Strasbourg, France.
France 24
Jailed Saudi blogger wins EU rights prize

teleSUR — Socialism vs. Neoliberalism: Ecuador’s Correa Debates Opposition

Correa, a trained economist who received his doctorate from the University of Illinois in 2001, was joined by the Ecuadorean Coordinating Minister of Political Economy Patricio Rivera and Finance Minister Fausto Herrera. Former Economy Minister Mauricio Pozo; former President of the Ecuadorean Social Security Institute Ramiro Gonzalez, and the former Ecuadorean Vice President Alberto Dahik represented the opposition in the debate.
Socialism vs. Neoliberalism: Ecuador’s Correa Debates Opposition

Sputnik — China to Create Super-Collider Double the Size of CERN's

China is planning to build the world's largest super-collider. According to China Daily, scientists have already completed an initial conceptual design of the mega facility. With construction slated to begin as early as 2020, the super, super-collider will be double the size of the Switzerland-based CERN LHC, with seven times the power.…
I guess they can "afford" it.

China to Create Super-Collider Double the Size of CERN's

RT — ISIS rooted in Arab Spring, gained momentum due to double standards - Russian Security Service head

Islamic State evolved from the Arab Spring and gained momentum due to the duplicity of certain world powers, the head of Russia’s Federal Security Service (FSB) has told a meeting of top security heads of ex-Soviet states (CIS) in Moscow on Wednesday.
There are world powers that are using Islamic State (IS, former ISIL/ISIS) as a kind of “terror battering ram” to ensure their interests in Asia and Africa, said FSB director Aleksandr Bortnikov. In pursuing their goals with IS, these countries have put the world on the verge of a global religious and civilizational crisis, he added.…
ISIS rooted in Arab Spring, gained momentum due to double standards - Russian Security Service head

Charles Hugh Smith — Untangling America from the American Empire

On the deep state.
For America to come home and untangle itself from the Imperial Project, it will have to do more than not meddle in everyone else's affairs; it will have to learn to live within its means--what it earns from producing goods and services, not what it skims from global financialization.
Extraction is a characteristic of empires. It's a raison d'être, although not the only one. Some are into wealth accumulation, and others into projection of power, some into both simultaneously. However, a particular characteristic of the Post WWII American empire is global financialization, a point that Michael Hudson has been making for some time.

Of Two Minds
Untangling America from the American Empire
Charles Hugh Smith

RT — ‘Game-changer’: European Parliament votes in favor of ‘dropping charges’ against Snowden

Smackdown for the US, especially the clandestine services and the deep state in general, which was exposed by Snowden's revelations.

‘Game-changer’: European Parliament votes in favor of ‘dropping charges’ against Snowden

Fabian Kindermann and Dirk Krueger — High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk

This paper argues that high marginal labor income tax rates are an effective tool for social insurance even when households have high labor supply elasticity, make dynamic savings decisions, and policies have general equilibrium effects. We construct a large scale Overlapping Generations Model with uninsurable labor productivity risk, show that it has a realistic wealth distribution and then numerically characterize the optimal top marginal rate. We find that marginal tax rates for top 1% earners of close to 90% are optimal as long as the earnings and wealth distributions display a degree of concentration as observed in US data
High Marginal Tax Rates on the Top 1%?
Lessons from a Life Cycle Model with Idiosyncratic Income Risk
Fabian Kindermann, University of Bonn and Netspar, and Dirk Krueger, University of Pennsylvania, CEPR, CFS, NBER and Netspar
January 23, 2015
ht Clonal

Daniel Little — Microfoundations and causal powers

Examining the new realism relative to causal explanation. 

How is this different from reviving Aristotle — and avoiding Hume's fork without assuming intellectual intuition, which itself calls for explanation, or invoking Kant, which makes causality a pure concept of understanding (category). 

Daniel Little's background is in philosophy but he doesn't mention the obvious philosophical issue involved in "the new Aristotelianism," which as the same as the old Aristotelianism relative to modern science.

I find "causal powers" cringe-worthy in a contemporary context without confronting longstanding issues. Without a satisfactory scientific explanation, it is handwaving when applied in science. And "mechanisms" is just another wave of the hand. 

Understanding Society
Microfoundations and causal powers
Daniel Little | Chancellor of the University of Michigan-Dearborn, Professor of Philosophy at UM-Dearborn and Professor of Sociology at UM-Ann Arbor

Mike Lofgren — GOP and the Rise of Anti-Knowledge

A bit of a rant, but interesting because Mike Lofgren wrote it. It conveys a sense of the deep disgust among traditional Republicans at what their party has become. Paul Craig Roberts is another on the warpath against both the crazy and the Establishment run amok.

Consortiums News
GOP and the Rise of Anti-Knowledge
Mike Lofgren, former congressional staff member who served on both the House and Senate budget committees

Alexander Korablinov — China, India offer Russia barter system for agricultural products

No brainer given balanced trade and comparative advantage, especially where Russia wants food produced in other countries and the other countries want natural resources and energy, and advanced weaponry produced in Russia. Russia is a major food producer, too, so there could be purely agricultural exchanges.
China, India, Iran and Turkey have offered to use the barter system in the food industry with Russia to avoid transactions in dollars, Russian agricultural watchdog aide Alexei Alekseyenko told Sputnik News.
“We have been getting suggestions from various countries that accounts should be handled in national currencies, or even using mutual goods, that is the barter system, “Alekseyenko told the news agency. “We’ve had negotiations in Tehran, Ankara, New Delhi, Beijing, and so forth.”
Russia Beyond the Headlines
China, India offer Russia barter system for agricultural products
Alexander Korablinov

Mike Whitney — Putin Makes Obama an Offer He Can’t Refuse

Putin calls Washington's bluff. Washington found to be holding no cards.

Putin Makes Obama an Offer He Can’t Refuse
Mike Whitney

Zero Hedge — Nigel Farage Rages At Modern Day "Brezhnev Doctrine" In Portugal's Democracy Crisis

Nigel Farage compares the EU to the USSR.

Zero Hedge
Nigel Farage Rages At Modern Day "Brezhnev Doctrine" In Portugal's Democracy Crisis


Bloomberg Business
Putin Tests English Debt Law as Ukraine Feud Heads to London
Natasha Doff

ht The Automatic Earth

Steve Keen — The Unnatural Rate Of Interest - Ultra Wonkish

Steve takes on Marx's labor theory of value, too. (It's not all that wonkish either.)

The Unnatural Rate Of Interest -Ultra Wonkish
Steve Keen

Sebastian Valdecantos Halporn and Gennaro Zezza — Reforming the International Monetary System: a Stock-Flow Consistent Approach

FYI. Links, if you have access or are willing to pay.
Reforming the international monetary system: a stock-flow-consistent approachSebastian Valdecantos Halporn and Gennaro ZezzaJournal of Post Keynesian Economics, vol. 38, n.2, 2015, pp. 167-191
Abstract: The emergence and persistence of large trade imbalances as well as the volatility of financial flows among countries have been attributed, at least in part, to the inadequacy of the current international monetary system after the breakdown of Bretton Woods. From a different perspective, the current eurozone crisis is also the result, in our view, of a flawed institutional setting. These problems call for reforms to mitigate or avoid the recessionary bias that is the outcome of current systems, as Keynes predicted in the discussion preceding the Bretton Woods agreements. In this paper we briefly review the evidence on international imbalances, and survey the rapidly growing literature on the subject. We introduce a set of models based on the stock-flow-consistent approach pioneered by Godley (1999) and Lavoie and Godley (2003). We discuss how to use these models to explore potential reform of the international monetary system.
The first version of this paper dates back to 2011… but it has been written to provide a benchmark model so that other researchers could expand on it, so it should not become obsolete too quickly!
Reforming the International Monetary System: a Stock-Flow Consistent Approach
Sebastian Valdecantos Halporn and Gennaro Zezza

Tom Phillips — China ends one-child policy after 35 years

The dragon just got a whole lot bigger. It was either that or expanding immigration. Japan can't get traction even with no limit on population. Whites in general are in the same boat, barely replacing themselves.
China has scrapped its one-child policy, allowing all couples to have two children for the first time since draconian family planning rules were introduced more than three decades ago.
The announcement followed a four-day Communist party summit in Beijing where China’s top leaders debated financial reforms and how to maintain growth at a time of heightened concerns about the economy.
China will “fully implement a policy of allowing each couple to have two children as an active response to an ageing population”, the party said in a statement published by Xinhua, the official news agency. “The change of policy is intended to balance population development and address the challenge of an ageing population.”
The Guardian
China ends one-child policy after 35 years
Tom Phillips in Beijing
ht Random in the comments

Global Steel Price down 26% YoY

Very bearish YoY report and projected continued bearish.

Flat product transaction prices in the United States have plummeted to lows not seen since the last recession in 2009. Global oversupply is leading to strong import competition, heightened by the strength of the US dollar. expect the negative price trend to continue. There is no urgency to build stocks since domestic mill delivery lead times are short and the availability of third country material at the ports is plentiful. Service centre inventories are on the high side, as a result of slow sales to end-users, who are keeping their stocks as low as possible.

People's Steel Company dumping on steroids as the People's Central Bank gladly changes them out of their foreign currency balances at a continuing fixed and favorable rate of CNY:

Chinese participants have now returned to the market... only to see steel prices continue on their negative path. The main issue is one of oversupply, as growth in the economy slows. Local steel demand appears to be peaking. We have yet to see any significant production cuts, despite many steelmakers operating at a loss. Producers are increasingly focussing on overseas sales. Export volumes are likely to remain high until anti-dumping duties start to bite.

Paul Robinson — What Putin got wrong

Western states have blundered spectacularly and repeatedly in recent years – invading Iraq, bombing Libya, supporting the overthrow of the Ukrainian government. Viewing all this, Putin, along with a lot of Russians, seems to be telling himself, ‘They can’t be that dumb. They must have some sinister motive.’ And that’s where he makes his big mistake. We are that dumb. If only Russians could understand that, they would realize that they don’t need to feel so threatened by us, and Russian-Western relations might become a whole lot better. 
What Putin got wrong
Paul Robinson | Professor, Graduate School of Public and International Affairs at the University of Ottawa

Wednesday, October 28, 2015

Donald Trump just retweeted one of my tweets!

That idiot John Stossel of Fox News called Trump "ignorant" because Trump said that manufacturing leaving the U.S.

Stossel put up a chart of the manufacturing sector that shows it growing and he called Trump ignorant, but Stossel neglected to provide any context. So I put some in there. Manufacturing as a percent of GDP has been shrinking for over 20 years.

Trump saw this and retweeted!

Bloomberg News — Territorial Disputes – Malignant and Benign

Some things are worth fighting for. What about a few desert islands occupied mainly by birds, goats and moles? China and Japan seem to think so, the rest of the world is alarmedand a look at other territorial disputes around the globe shows that stranger things have happened. There are about 60 such conflicts simmering worldwide. Most will bubble along, unresolved but harmless, 400 years after the Peace of Westphalia established the notion of national sovereignty. Others are more dangerous.
Bloomberg Quicktake
Territorial Disputes – Malignant and Benign
Bloomberg News

David Graeber — Britain is heading for another 2008 crash: here’s why

Not just the UK. The global economy is rolling over.

The Guardian — Comment is free
Britain is heading for another 2008 crash: here’s why
David Graeber

J. W. Mason — How Strong Is Business Investment, Really?

…the whole point of monetary policy is to stabilize output. For monetary policy to work, it needs to able to reliably offset lower than normal spending in other areas with stronger than normal investment spending. If after six years of extraordinarily stimulative monetary policy (and extraordinarily high corporate profits), business investment is just “where one would expect given that the overall recovery has been disappointing,” that’s a sign of failure, not of success.
Is the conclusion that monetary policy was wrong (should have been tighter), or that it was not up to the job. Those advocating for the primacy of fiscal policy would argue for the latter.

J. W. Mason's Blog
How Strong Is Business Investment, Really?
JW Mason | Assistant Professor of Economics, John Jay College, City University of New York

Chris Dillow — On expressive rationality

What is "rationality"? Are there boundaries demarcating rationality and differentiating cognitive bias?

Problems arise owing to the entanglement of the existential and essential, structural and function, static and dynamic, as well as of the cognitive, volitional, and affective, as psychological aspects of being human. 

It's called "the human condition." Assuming that humans are perfectly "rational," or even that they can be perfectly rational, is contradicted by both experience and psychology.

Humans are not only bounded rationally but also cognitively, and humans are also differentiated by different types of thinking and feeling. 

The assumption of a homogenous "rational agent" is more restrictive than the reality. This doesn't mean that it is useless for modeling. Just that such models are limited and extending them beyond the scope of the assumptions leads to over-generalization.

Stumbling and Mumbling
On expressive rationality
Chris Dillow | Investors Chronicle

Michael Hudson — How the U.S. Treasury avoided Chronic Deflation by Relinquishing Monetary Control to Wall Street

History lesson. This is a paper rather than a post.
As published in the Social Sciences Research Network
How the U.S. Treasury avoided Chronic Deflation by Relinquishing Monetary Control to Wall Street
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

China steel demand collapsing

This suggests more exchange rate adjustments (devaluation) as fiscal solutions are not considered anymore.

Tuesday, October 27, 2015

Eric Zeusse — AP/GfK Poll: Americans Want Gov’t. Shutdown Unless Federal Spending Is Cut

Like I've been saying, if you are living in the US, prepare your escape route.

Steven Starr — Nuclear War, Nuclear Winter, and Human Extinction

Nuclear winter would cause average global surface temperatures to become colder than they were at the height of the last Ice Age. Such extreme cold would eliminate growing seasons for many years, probably for a decade or longer. Can you imagine a winter that lasts for ten years?
The results of such a scenario are obvious. Temperatures would be much too cold to grow food, and they would remain this way long enough to cause most humans and animals to starve to death.
Global nuclear famine would ensue in a setting in which the infrastructure of the combatant nations has been totally destroyed, resulting in massive amounts of chemical and radioactive toxins being released into the biosphere. We don’t need a sophisticated study to tell us that no food and Ice Age temperatures for a decade would kill most people and animals on the planet. Would the few remaining survivors be able to survive in a radioactive, toxic environment?
It is, of course, debatable whether or not nuclear winter could cause human extinction. There is essentially no way to truly “know” without fighting a strategic nuclear war. Yet while it is crucial that we all understand the mortal peril that we face, it is not necessary to engage in an unwinnable academic debate as to whether anyhumans will survive.
What is of the utmost importance is that this entire subject –the catastrophic environmental consequences of nuclear war – has been effectively dropped from the global discussion of nuclear weaponry. The focus is instead upon “nuclear terrorism”, a subject that fits official narratives and centers upon the danger of one nuclear weapon being detonated – yet the scientifically predicted consequences of nuclear war are never publically acknowledged or discussed.
Why has the existential threat of nuclear war been effectively omitted from public debate? Perhaps the leaders of the nuclear weapon states do not want the public to understand that their nuclear arsenals represent a self-destruct mechanism for the human race? Such an understanding could lead to a demand that nuclear weapons be banned and abolished.
Consequently, the nuclear weapon states continue to maintain and modernize their nuclear arsenals, as their leaders remain silent about the ultimate threat that nuclear war poses to the human species.
Federation of American Scientists
Nuclear War, Nuclear Winter, and Human Extinction
Steven Starr | Director of the University of Missouri’s Clinical Laboratory Science Program, as well as a senior scientist at the Physicians for Social Responsibility

Ginger Gibson — Ben Carson pulls ahead of Donald Trump in national poll

The field seems to be firming up. More candidates will likely drop off fairly soon as money dries up for them.

Ben Carson pulls ahead of Donald Trump in national poll
Ginger Gibson

Lisa Pease — Checkmate on ‘The Devil’s Chessboard’

More on the creation of the deep state and the role of the Dulles brothers in it.
Talbot and his research associate Karen Croft, to whom he dedicated his book, have found all sorts of nuggets in Allen Dulles’s papers, his appointment calendar, oral histories, and other less-used sources. In addition, Talbot infuses his book with anecdotes from interviews he personally conducted. While I found some points I could nitpick in various episodes, overall this is a worthy addition and a much-needed perspective that elucidates how we came to have two governments: the elected one and the one that doesn’t answer to the elected one.
Scary stuff.

Consortiums News
Checkmate on ‘The Devil’s Chessboard’
Lisa Pease


Hillary up to her eyeballs. Et tu, Bernie? Tell us it isn't so.

Bowing to Silly US Propaganda
Rick Sterling

Melvin A. Goodman — A Close Call on Doomsday

The USSR believed that the US under President Reagan was preparing a first strike. The present Russian government likely does, too.

Itchy trigger fingers yet again.

Consortium News
A Close Call on Doomsday
Melvin A. Goodman

Antifashist — Ceasefire chronicles: Fierce fighting in Donetsk, "Aidar" battalion pulled fresh reserves

Cease fire is off in Eastern Ukraine.

Fort Russ
Ceasefire chronicles: Fierce fighting in Donetsk, "Aidar" battalion pulled fresh reserves
Translated by Kristina Rus

Henry J. Aaron — Can taxing the rich reduce inequality? You bet it can!

Two recently posted papers by Brookings colleagues purport to show that “even a large increase in the top marginal rate would barely reduce inequality.”[1] This conclusion, based on one commonly used measure of inequality, is an incomplete and misleading answer to the question posed: would a stand-alone increase in the top income tax bracket materially reduce inequality? More importantly, it is the wrong question to pose, as a stand-alone increase in the top bracket rate would be bad tax policy that would exacerbate tax avoidance incentives. Sensible tax policy would package that change with at least one other tax modification, and such a package would have an even more striking effect on income inequality.…
Can taxing the rich reduce inequality? You bet it can!
Henry J. Aaron
ht Mark Thoma at Economists View

Ellen Brown — How Obama Could Beat the Debt Ceiling and Go Out a Hero

Ellen lists the ways that the president could deal with the debt limit if he wished. Instead, he chose to politic it.

Web of Debt
How Obama Could Beat the Debt Ceiling and Go Out a Hero
Ellen Brown

Aaron Tovish — The Okinawa missiles of October

Another near miss.

Bulletin of Atomic Scientists
The Okinawa missiles of October
Aaron Tovish
ht Yves Smith at Naked Capitalism

More to think about. It's much more dangerous now.
The scientist elaborated that in a tornado a powerful anti-gravitational effect takes places. Remarkably, the effective height of this anti-gravitational phenomenon is not limited to the height of the atmosphere. In the event of multiple simultaneous powerful tornadoes, we may face a phenomenon of suction of the earth atmosphere into space.…
Dr. Sarg noted that Mars once had liquid water and purportedly an atmosphere that mysteriously disappeared one day.
"If the scenario described above takes place, the Earth will become a dead planet like Mars," the scientist stressed.
Then there is the Russian and Chinese doomsday strategy of exploding a nuclear device over Wyoming that would ignite the super-volcano under Yellowstone, burying North America in volcanic ash.

How the military mind works.
Apocalypse, Now? Nuclear War May Result in Loss of Earth's Atmosphere

Kathleen Maclay — Study finds climate change will reshape global economy

Unmitigated climate change is likely to reduce the income of an average person on Earth by roughly 23 percent in 2100, according to estimates contained in research published today in the journal Nature that is co-authored by two University of California, Berkeley professors.
The findings indicate climate change will widen global inequality, perhaps dramatically, because warming is good for cold countries, which tend to be richer, and more harmful for hot countries, which tend to be poorer. In the researchers’ benchmark estimate, climate change will reduce average income in the poorest 40 percent of countries by 75 percent in 2100, while the richest 20 percent may experience slight gains.
Berkeley News
Study finds climate change will reshape global economy
Kathleen Maclay
ht Brad Delong

Phil Butler — Ukraine Gas Ring: Western Oligarchs to Take Charge

As you can see, the circle of credit-insurance-low liability becomes a perfect money filtering machine. This is not new mind you, the system has been in place since the fall of the Soviet Union. As was the case with La Cosa Nostra, or the Sicilian mafia in US lore, the system resembles racketeering, with everybody involved taking a piece of the pie. In the case of Ukraine, the pie is in fact the hard earned livelihoods of every-single-solitary Ukrainian citizen. They are the ones “guaranteeing” the oligarchs’ investment, which is in fact no investment at all. Now for the interesting part, let me tell you about the part where Western oligarchs take over. This is where the battle for Ukraine has been settled, not at a conference in Minsk, but high atop some skyscraper owned by fabulously wealthy men.…
New Eastern Outlook
Ukraine Gas Ring: Western Oligarchs to Take Charge
Phil Butler

Lars P. Syll — Economics journals — publishing lazy non-scientific work

When there is little to no accountability for being wrong. This seems to differentiate the economics profession from many others. Then there is also ideology, as well as "the noble lie."

Lars P. Syll’s Blog
Economics journals — publishing lazy non-scientific work
Lars P. Syll | Professor, Malmo University

Winterspeak — The Housing Bubble involved banks

Where Amir Sufi and Atif Mian go wrong in their explanation of the different economic consequences of the dot-com bubble and the housing bubble,
In general, economics treats money as an "illusion" in that it facilitates the trade and exchange of real goods and services, but fundamentally does not impact or distort that exchange (at least to no great degree). A rose is a rose is a rose, and therefore a good is a good is a good regardless of whether it's prices in dollars or shekels. Therefore, money in general and banks in particular do not play a central role in macro monetary models, which instead focus on things like time preference, consumer expectations, etc. 
In reality, money, or more particularly credit, plays a central role in the economy because of how bank lending works. When banks lend, they lever up their balance sheet, and therefore create money out of "thin air", constrained only by capital requirements on the supply side, and the number of qualified borrowers on the demand side.…
These two $6T are not comparable. In the dot-com bubble, the loss wiped out venture accounts and household wealth in brokerage accounts, but neither was enabling additional lending (and therefore money supply). In the housing bust, $6T of bank capital (which collateralized the loans) was propping up an additional $120T or so (at a 5% capital requirements ratio) of money supply, so the impact on the economy was over an order of magnitude greater.…
The Housing Bubble involved banks

Michael Kirkwood — The End of Communism in Russia Meant the End of Democracy in the West – Alexander Zinoviev

Alexander Zinoviev, along with Solzhenitsyn and Sakharov, was one of the three great intellectual giants who became dissidents during the late Soviet period.

This remarkable and prophetic interview was originally published in 1999 in the French Figaro Magazine. Its original title was: ”The West and Russia - A Controlled Catastrophe”
An annual conference attended by Russian and foreign luminaries and Zinoviev fans in memory of Zinoviev's work will be held in Moscow on October 27.
Translated from Russian especially for RI by Sergei Malygin and Andrey Medvedev
Alexander Zinoviev was exiled from the Soviet Union with his wife and daughter on 6th August 1978, principally on account of his writings on the nature of Soviet communism.
They spent the next twenty years based in Munich. On 30th July 1999 they returned to Moscow, principally on account of his writings on the West. Zinoviev died in 2006 and his remains are buried in the Novodeviche convent.
These few lines suggest that he must have been a remarkable man. He was. Born in 1922 to a Russian peasant family, he was the sixth of eleven children who became an international phenomenon in a variety of fields: philosophy (particularly in the field of many-valued logic), literature (novels, novellas, poetry), politics, sociology, and painting. The two books which, for me, best illustrate the reasons for his exile and rehabilitation are, respectively, The Reality of Communism and The West.
This, Zinoviev’s last interview before returning to Russia provides an excellent example of his unmatched forensic gifts as a sociologist.
I look forward to sharing with friends of RI further details of the life and work of Aleksander Aleksandrovich in future columns.
Michael Kirkwood | Leading specialist on Zinoviev, professor emeritus, University of Glasgow.
Zinoviev was quite prescient in his day, but his conclusion that neoliberal globalization is the new totalitarian future may be overly pessimistic in light of recent pushback. Good read anyway, and a warning of the danger to be averted — the illiberalism of "liberalism."

Budget Deal is Suprisingly Not Terrible

Got the details of the budget deal this AM. It gets rid of the debt ceiling until March of 2017, lifts some of the sequester caps for both defense and non-defense items (which means slight increase in NFI for the future), patches over the Social Security Disability Fund, and a few other assorted items. There's no cuts to Social Security or Medicare that I can tell, but there are some nominal changes in how Social Security Disability is awarded, monitored, and administrated to make it "tougher."

Its clear that Boehner fell on his sword for this one. If he was still trying to be speaker, there's no way this would have come together. It will be interesting to see how many Republicans end up voting for this, but I'd be surprised if its more than just the bare minimum for passage. Crisis averted, for now.

U.S. liquidating SPR to "raise cash"

LOL!   (HT: Ryan)

Trump:  "We are led by very, very stupid people.... very, very stupid people..."

Ford earnings blow out

Gasoline prices collapse and F-Series sales go thru the roof as leading flow of USD withdrawals from the Treasury account remained slightly positive for the same YoY.

Mike was reporting some congruent US PCE data vs. the petroleum product prices in USD terms in time domain last week, seems to now show up in blowout YoY numbers from Ford who has crushed it and knocked it out of the park with bases loaded.

Revenue rose 9 percent to $38.1 billion. Ford’s global market share (7.6 percent) and automotive operating cash flow ($2.8 billion positive) both increased for the third consecutive quarter. Its pretax automotive operating profit more than tripled, from $686 million to $2.2 billion.

Nat Gas below $2

Potential bearish USD implications if the US producers start accepting lower bids from North American export customers in CAD and MXN terms.

While that could be offset by Canadian and Mexican oil producers further accepting lower bids from their export customers in USD terms.

Result would be price reductions in both nations for oil and gas with NO change in net terms of trade, ie the USD/CAD and USD/MXN pairs would remain stable.

Not sure of whether this is what macro-economists would metaphorically term "deflation" (who knows what those among the mathematically challenged think) but many commodities still continue to exhibit new lows.

Monday, October 26, 2015

Lyle Jeremy Rubin — Who Wants to Save Capitalism?

Soul-searching among the right-libertarian intelligentsia.

Who Wants to Save Capitalism?
Lyle Jeremy Rubin

Bill Mitchell — The tale of two nations – democracy dies in Portugal and lives in Canada

The tale of two nations – two monetary systems – two continents – Canada and Portugal. It is reasonable to assume that when voters in so-called free democracies elect members to their parliaments who then freely coalesce across ‘party’ lines to form an absolute majority that they will be given the right to govern irrespective of the ideology they represent and the policies that they have put forward to the voters to win their approval. That seems to happen in Canada. It definitely doesn’t happen in Portugal. The Portuguese President dropped his so-called “bomba atómica” last week when he refused to endorse the coalition of parties that held the absolute majority of seats in the Assembly as a result of the recent national election. He indicated that he would not allow a government that would relax the fiscal austerity and consider exiting the Eurozone. His motivation was that financial markets had to remain appeased. It was an extraordinary intervention and will come back to haunt the nation given that the conservative austerity government will lose its authority as soon as it puts its platform to the new Parliament for endorsement (within the next 10 or so days). Then the nation is in chaos and the President will be compelled to accept the anti-austerity left coalition or something worse will happen. But, happily, in Canada, the election of the Liberal Party is a rejection of the obsession with fiscal surpluses – at least for now.…
Bill Mitchell – billy blog
The tale of two nations – democracy dies in Portugal and lives in Canada
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Lauren McCauley — Top-Secret Pentagon Program Exploited Aid Workers as Covert Spies

Experts warn that Department of Defense espionage program places international NGOs at great risk
And the US government is all up in a tizzy about Russia and China clamping down on NGOs. More hypocrisy from the hegemon. More US soft power down the drain, along with US credibility.

Common Dreams
Top-Secret Pentagon Program Exploited Aid Workers as Covert Spies
Lauren McCauley, staff writer
ht Don Quijones at Raging Bull-Shit

David F. Ruccio — What’s class got to do with it?

Income inequality in the US — the figures. No worries. It's "just deserts."

Occasional Links & Commentary
What’s class got to do with it?
David F. Ruccio | Professor of Economics, University of Notre Dame

David F. Ruccio — Marx’s relevance today

David Ruccio amplifies Chris Dillow's recent post on the continuing relevance of Marx. He also links Marx's to the classical economics of the time that Marx was both extending and correcting.

Nice Adam Smith quote as a bonus, showing how ideas generally associated with Marx were already reflected in Smith.

Occasional Links & Commentary
Marx’s relevance today
David F. Ruccio | Professor of Economics, University of Notre Dame

Latest "Debt Ceiling" hijinks

Looks like they might kick it way past the next election.

Peter Radford — Debt Ceiling – Reminder

Peter Radford is betting that John Boehner will round up just enough votes to pass a clean bill at the last moment, like he did last time. Only this time it will require more arm-twisting.

The Radford Free Press
Debt Ceiling – Reminder
Peter Radford

Paul Waldman — The risk that America will default on its debts is now higher than ever

So there aren’t even 30 Republicans in the House willing to keep the United States government from defaulting on its debts. How did we get here?
The crazies are feeling their oats. 

Will President Obama just let then walk the plank on the political calculation that the fall out will destroy them?  Or will they blink at the end I don't think that the president will blink. It would be the end of presidential power and upset the balance of powers.
All this suggests that every force involved is propelling Republicans not just toward forcing a crisis, but forcing an actual default. At some point, they might realize that “Republicans are holding a gun to the head of the American economy and they’ll fire unless we let them slash Social Security and Medicare” isn’t exactly a winning political message to send. But who knows how much damage will be done before they realize that?
This is an opportunity that Democrats can't afford to miss. Everyone at the WH must be laughing hysterically. Especially after already declaring that the president will not use either the 14th Amendment or the platinum coin gambit that the right could howl over.
The Washington Post — The Plum Line
The risk that America will default on its debts is now higher than ever
Paul Waldman

Branko Milanovic — No one would be unemployed and no one would hold a job

Several days ago Steven Hill presented at the Graduate Center CUNY in New York his new book “Raw Deal: How the ‘Uber Economy’ and Runaway Capitalism Are Screwing American Workers”. It discusses (according to Steven’s presentation; I have not read the book yet) the decline of trade unions, the future of jobs and robotics. It struck me that there are (In his presentation as well as in most of what we read), when it comes to the future of work, two narratives that often seem contradictory. There is a narrative of job-automatization and robotics whereby most of our jobs end up taken by the robots. Then there is a narrative of people working more and more hours as work intrudes into their leisure time: instead of taking it easy throughout the day as the first narrative implies, we would use our “free” time to rent apartments we own or drive our cars as taxis. According to the first narrative, we are in danger of having too much leisure time; according to the second, of having none.
Let’s consider the two scenarios in turn, and separately.…
But perhaps it may be better to think of the two scenarios as just one scenario that would combine lots of labor substitution with heavy segmentation of tasks (and much more intense labor discipline made possible thanks to automation). In that case, jobs to which we have become accustomed would cease to exist: lots of today’s functions will be automated, and for many others, “amateurs”, not professionals, would do them.… 
Global Inequality
No one would be unemployed and no one would hold a job
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

Sunday, October 25, 2015

Steve Keen — Economists Prove That Capitalism Is Unnecessary

Actually they’ve done no such thing. But they do effectively assume that it’s unnecessary all the time...
Hayek’s main target here were socialists who believed that a complex economy could be centrally planned—thus doing away with markets institutionally. But he also criticized his mainstream rivals for assuming the existence of all-seeing, all-knowing “economic agents” to overcome mathematical problems in their equilibrium-obsessed models of the economy. Here he was actually in agreement with his great rival Keynes, since they both said that the only way equilibrium could be achieved would be if people’s expectations about the future were both shared and correct.…
Economists Prove That Capitalism Is Unnecessary
Steve Keen | 

Brian Romanchuk — Output Gaps And Inflation

The output gap is a key concept in mainstream economic analysis of inflation. Although I am not happy with the details of the standard analysis of what determines inflation, I use a weaker version of the standard output gap in my thinking. I refer to this version as the generalised output gap (GOG). In this article, I give a simplified summary of economic theories of inflation and how various conceptions of the output gap relate to this.
Bond Economics
Output Gaps And Inflation
Brian Romanchuk

Yanis Varoufakis and Alex Sakalis — “One very simple, but radical, idea: to democratise Europe.” OpenDemocracy interview

As he prepares to launch a new, pan-European movement for change, Yanis Varoufakis sits down with Can Europe make it? to discuss democracy in Europe, Brexit, and the other part of Plan X.

Yanis Varoufakis
“One very simple, but radical, idea: to democratise Europe.” OpenDemocracy interview
Yanis Varoufakis and Alex Sakalis

Tim Fenton — Don’t Menshn Portugal

Contra AEP and Jacques Sapir.

Zelo Street
Don’t Menshn Portugal
Tim Fenton

Jacques Sapir — Lisbon's silent coup d'etat

Not just AEP at The Torygraph.
A great deal has been said in the press, in France in particular, that the right coalition emerged victorious in the recent election for the legislature in Portugal. This is false. The right parties, led by Prime Minister M. Pedro Passos Coelho, won only 38.5% of the vote and lost 28 seat in parliament. A majority of Portuguese voters voted against the current austerity measures, in fact 50.7%. These voters cast their votes for the moderate left but also for the Portugese Communist Party and other factions of the radical left. De facto, the Socialist has Party 85 seats, the Left Bloc (radical left) 19, and the Communist Party 17. Out of 230 seats in the Portugese Parliament, this gives 121 to the anti-austerity forces, when the absolute majority is 116…

The socialists and the left bloc clearly said that this accord [imposing austerity] must be revised. This is what motivated President Cavaco silva in his decision to reject the program for governance presented by the Left. But the motivs went further. He said: "After all the sacrifices made in the framework of an important financial accord, it is my duty and within my constitutional prerogatives, to do everything possible to prevent false signals from being sent to financial institutions and international investors." It is this statement that poses the real problem. What M. Cavaco thinks about a government of the united left is his right, and it is very likely the case. But in a parliamentary republic, as Portugal actually is, it is not in his power to interpret future intentions in order to oppose the will of the voters. If a coalition of the left and extreme left has a majority in Parliament, and if it presents — as is the case — a program for government, he must give it a chance. Any other decision is as an unconstitutional act, a "coup d'Etat."
Lisbon's silent coup d'etat
Jacques Sapir

On a beaucoup dit, en France en particulier, dans la presse que la coalition de droite était sortie vainqueur des dernières élections législatives portugaises. Ceci est faux. Les partis de droite, emmené par le Premier-ministre M. Pedro Passos Coelho n’ont réuni que 38,5% des suffrages, et ont perdu 28 sièges au Parlement. Une majorité d’électeurs portugais a voté contre les dernières mesures d’austérité, en fait 50,7%. Ces électeurs ont porté leur vote sur la gauche modérée mais aussi sur le Parti Communiste Portugais et d’autres formations de la gauche radicale. De fait le Parti Socialiste portugais a 85 sièges, le Bloc de Gauche (gauche radicale) 19 et le Pari Communiste portugais 17. Sur les 230 sièges du Parlement portugais, cela en donne 121 aux forces anti-austérité, quand la majorité absolue est de 116[2].… 
Les socialistes, et le « bloc de Gauche » ont clairement dit que cet accord devait être révisé. C’est ce qui a motivé le Président Cavaco Silva dans sa décision pour rejeter le projet de gouvernement présenté par la Gauche. Mais, les attendus de sa déclaration vont encore plus loin. Il a dit : « Après tous les importants sacrifices consentis dans le cadre d’un important accord financier, il est de mon devoir, et dans mes prérogatives constitutionnelles, de faire tout mon possible pour empêcher de faux signaux d’être émis envers les institutions financières et les investisseurs internationaux[3] ». C’est cette déclaration qui pose véritablement problème. Que M. Cavaco Silva pense qu’un gouvernement de la gauche unie puisse conduire à un affrontement avec l’Eurogroupe et l’UE est son droit, et c’est même très probablement le cas. Mais, dans une république parlementaire, comme l’est le Portugal actuellement, il n’est pas dans son pouvoir d’interpréter des intentions futures pour s’opposer à la volonté des électeurs. Si une coalition de gauche et d’extrême-gauche a une majorité au Parlement, et si elle présente – ce qui était le cas – un programme de gouvernement, il doit lui laisser sa chance. Toute autre décision s’apparente à un acte anticonstitutionnel, un « coup d’Etat ».

Bernard Lietaer — Question the monetary system and you’re academically dead!

Regular readers of MNE will be familiar with this Bernard Lietaer clip, but if you haven't seen it or bookmarked it, here it is again.

Lars P. Syll’s Blog
Question the monetary system and you’re academically dead!
Lars P. Syll | Professor, Malmo University

Ben Aris — Has Russia's economy turned the corner?

The debate amongst economists is just how bad the contraction is going to be this year - and while everyone agrees there will be a contraction, there is little consensus on how severe it will be.
Uralsib estimates Russia’s economy contracted 4.9% y/y in September versus 5.1% y/y in August. Russia’s Economy Ministry is more optimistic, estimating that GDP dropped just 3.8% y/y in September after falling 4.6% y/y in August. And clearly this year is going to be tougher than most were thinking in January following a raft of downgrades in the last weeks.
MOSCOW BLOG: Has Russia's economy turned the corner?
Ben Aris in Moscow

Eric Michael Johnson — What Philanthropic Organizations Need to Know about Giving – Is philanthropy driven by morality or markets?

The notion that philanthropy resulted from the invention of money is a pillar of classical economics. It is also a myth. After more than two centuries of searching for an indigenous society that approximates Adam Smith’s parable of the original barter system, anthropologists have concluded that it can only be imaginary. “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing,” wrote Cambridge anthropologist Caroline Humphrey in a 1985 paper titled “Barter and Economic Disintegration” in the journal Man. Instead, researchers have discovered that philanthropy is far more central to human social organization than economists had ever imagined.

The notion that philanthropy resulted from the invention of money is a pillar of classical economics. It is also a myth.…
This suggests that Adam Smith wasn’t so much chronicling the evolution of modern market economies as he was observing what existed during his time and then projecting it onto the human past.…
What Philanthropic Organizations Need to Know about Giving
Eric Michael Johnson

Jafe Arnoldski — "Work, not propaganda!": Poles protest US-NATO regime before elections

More natives getting restless.
Mateusz Piskorski, the leader of Zmiana, presented the closing and conversion of Lodz's factories as part of the US-NATO subjugation of Poland since the collapse of the Polish People's Republic and the transformation of the country into a victim of imposed liberal schemes and a semi-colonial reservoir of cheap labor for Western corporations. The situation of Lodz is the same in many other Polish cities according to Piskorski.

Jarek Augustyniak, another of Zmiana's leaders and a long-time resident of Lodz who, like many others, was forced to migrate from the city due to harsh economic conditions, explained that Lodz was a city "built by an extremely exploitative and harsh capitalism in the 19th century, and destroyed by capitalism in the late 20th and early 21st century." Only an industrial, social Poland, with strong industrial cities like Lodz, can be truly independent, Augustyniak emphasized.
Fort Russ
"Work, not propaganda!": Poles protest US-NATO regime before elections
Jafe Arnoldski

Reuters — Portugal left vows to topple government with no-confidence vote

Portugal's opposition Socialists pledged on Friday to topple the centre-right minority government with a no-confidence motion, saying the president had created "an unnecessary political crisis" by nominating Pedro Passos Coelho as prime minister.
The move could wreck Passos Coelho's efforts to get his centre-right government's programme passed in parliament in 10 days' time, extending the political uncertainty hanging over the country since an inconclusive Oct. 4 election.
Coelho was named prime minister on Thursday after his coalition won the most votes in the national election but lost its majority in parliament, which swung to leftist parties.
This set up a confrontation with the main opposition Socialists, who have been trying to form their own coalition government with the hard left Communists and Left Bloc, who all want to end the centre-right's austerity policies.
Reuters (UK edition)
Portugal left vows to topple government with no-confidence vote
Axel Bugge and Sergio Goncalves

Don Quijones — Barcelona Threatens to Print Parallel Currency, Madrid Seethes

Barcelona will not be the first European city to launch such a scheme. Local currencies are all the rage these days. There could be as many as 3,000 forms of local money in use around the globe, says Community Currencies in Action, a global partnership promoting such schemes that is part-funded by the European Union’s Regional Development Fund. Which begs the question… 
Why’s the EU promoting parallel local currencies around the world?
Wolf Street
Barcelona Threatens to Print Parallel Currency, Madrid Seethes
Don Quijones

Chris Dillow — Marx's relevance today

In these senses, Marxian questions are relevant today: how does social change or government policy affect classes differently? Are individual choices consistent with aggregate well-being or not? Do capitalistic property rights increases economic growth or hold it back?
I'd add something else. Marx asked, and answered, a fundamental question: what is the point of economic life? For him, it was to increase real freedom and self-realization. Capitalism, he said, doesn't do this but instead alienates us:…
Like I have been saying. The fundamental issue for Marx, who was not only doing economics and political theory but also philosophy, is achieving personal freedom within a sustainable social, political and economic structure. Marx regarded "the sovereign state" acting though the government as the agent of class interests and not the people. In this respect, he was in agreement with classical liberals whose aim was to replace the feudal order under which monarchs and aristocrats had ruled Europe for centuries. This dialectic between different forms of liberalism continues to the present, and Marx still has important things to say about it.

Stumbling and Mumbling
Marx's relevance today
Chris Dillow | Investors Chronicle

Bill Totten — Trade is War

On June 3rd at De Balie in Amsterdam, ‘angry old man’ Yash Tandon presented his new book Trade is War: The West’s War Against the World (2015) – a new perspective in the debate on the Transatlantic Trade and Investment Partnership (TTIP), the controversial trade agreement which the EU is currently negotiating with the US. In Europe, opponents of TTIP are mainly concerned about transparency, ever-increasing corporate power and the impact on the environment. But what does the treaty imply for North-South relations and what are the geopolitical dynamics behind it?
The debate on Trade is War – organised by TNI, SOMO and Both ENDS – places TTIP in a broader perspective. Tandon passes a devastating judgement on free trade. “Since colonial times, global trade has been aimed at Western world domination”.…
The nascent US realized that the British system of "free trade" was for the benefit of the British Empire and not the countries it was supposed to benefit. Hence, the American system of tariffs and protection of infant industries under which the US prospered was developed, based on Alexander Hamilton's American School of Economics and the National School of Friedrich List and Henry Carey.

Now that the British empire has morphed into the American empire, the US is pushing the British system to maintain and extend Western dominance.
Bill Totten's Weblog
Trade is War
Bill Totten

Lars P. Syll — Did Keynes ‘accept’ the IS-LM model?

Why the IS-LM "gadget" is not a summary of the General Theory.

The post mentions that Keynes provided his own summary in a 1937 paper. Here's a link to download it.

Lars P. Syll’s Blog
Did Keynes ‘accept’ the IS-LM model?
Lars P. Syll | Professor, Malmo University

Saturday, October 24, 2015

Cameron K. Murray — Explaining everything explains nothing: Economics

Sure, humans often make calculated decisions, but the more I learn about the nexus between individual behaviour and how we behave in groups, the more I see very little value in rational-individualist views of economic systems that see all behaviour arising from God-given personal tastes. Without acknowledging the necessity of group-coordination mechanisms intrinsic in our behaviour, we are missing the main story.
Fresh Economic Thinking
Explaining everything explains nothing: Economics
Cameron K. Murray

Beatrice Cherrier — Theory vs data, computerization, old wine and new bottles: Morgenstern and Econometric Society fellows, 1953

[Oskar] Morgenstern proposed that candidates be required to“have done some econometric work in the strictest sense” and be “in actual contact with data they have explored and exploited for which purpose they may have even developed new methods.” Though remembered as the coauthor of one of economics’ most prominent theoretical treatise, The Theory of Games, Morgenstern also had a longstanding interest in statistical work. His feeling was that the Econometric Society and Econometrica editors overvalued “purely abstract work,” while stimulus should be give, to “papers involving data.”
The Undercover Historian
Theory vs data, computerization, old wine and new bottles: Morgenstern and Econometric Society fellows, 1953
Beatrice Cherrier

Corey Robin — Sheldon Wolin, 1922-2015

More than a tribute to Sheldon Wolin.

Corey Robin
Sheldon Wolin, 1922-2015