Friday, August 30, 2013

Kerry Was For Assad Before He Was Against Him

US State Secretary John Kerry is of course most famous for being for things before he turns against them

So too with Bashar al-Assad whom Kerry had a friendly dinner with a few years ago (with their wifes)

We shouldn't be surprised if, in a few years from now, he'll be against the likely attack that he's now arguing for....

Irish Employment Continues To Rise

A reader has pointed out that the Irish statistics bureau has now released second quarter numbers on employment, and they show that it rose by 0.5% compared to Q1 2013 and by 1.8% compared to Q2 2012. This is further proof the assertion that the drop in unemployment in Ireland is "a mirage" is false.

The Misguided Intervention In Syria Can Be Stopped

A few days ago, a joint U.S.-U.K-French attack on Syria seemed almost certain. British PM David Cameron stated his intentions of participating in an attack in no uncertain terms. But because the Labour Party was basically united in opposing an attack, and was joined by many dissident Conservative MPs, the British parliament has snubbed Cameron by voting to stay out of any attack. The reaction from the Obama regime in America seems to be that they're disappointed by the decision but that it won't stop the attack since the U.S. is capable of carrying out the attacks withour British (or French for that matter) support. However, Constitutional scholar Barack Obama concluded back in 2007 that
“the President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation."
Another constitutional scholar, Joe Biden, agreed with his colleague Barack Obama, and said in 1998 that the constitution says
“the president could not use force without prior [congressional] authorization unless it was necessary to “repel a sudden attack.”
Since the Assad regime clearly does not intend to initiate attacks on the U.S., any U.S. attack on it without congressional approval is clearly unconstitutional according to Obama and Biden. If U.S. opponents of the war in Congress are really serious about their opposition, it seems clear that they could also stop it, by for example threatening to cut off funding or impeach Obama for doing what he himself in 2007 was unconstitutional.

Thursday, August 29, 2013

Debt By State

Below is a chart showing how debt levels vary between different U.S. states. States with relatively low house prices like Michigan, Ohio and Texas have relatively low debt level while high price California has a very high debt level. And do note the really dramatic increase and decrease in Nevada.
The causal connection between debt and house prices runs both ways. Easy access to debt and low price (interest rate) on it helps bid up house prices, but it is also the case that if for example building restrictions causes house prices to be artificially high, this will prompt people to take on more debt.

Wednesday, August 28, 2013

The Effects Of Intervention In Syria

The effects of the increasingly certain attack on the Assad regime by the U.S., the U.K. and France (and perhaps others) depends on what kind of attack is made. If it is only a few, or a few dozen attacks, like Clinton's attacks on targets in Sudan and Afghanistan in 1998 or the attacks on Iraq in late 1998 the same years, to send Assad the message that he has been a bad boy and this is the punishment, it won't have much effect.

But if it is meant to tip the balance in favor of the rebels then it will have serious implications, both positive and negative. Assuming it succeeds, the one positive is that it will weaken Iran and Hezbollah, as the Assad regime has been acting as a middleman for Iran's weapon deliveries to Hezbollah. But a Syria run by  a weak government or Sunni jihadists who despise Iran and Hezbollah (because they're Shi'ites and supported Assad) but hate Israel even more is unlikely to make serious efforts to stop such weapons deliveries.

The possible negative effects are more far reaching. A rebel victory would at best create another weak state plagued by low intensity civil war like in Iraq or Libya, with safe havens for Sunni jihadists. At worst, Syria could become another jihadist state, like Afghanistan under the Taleban or current day Gaza. Either way, it would represent a victory for al-Qaeda and other Sunni jihadists. And the Alawites and Christians of Syria would face constant persecution and attacks at best, and large scale massacres at worst.

The blame for that would lie entirely on Obama, Cameron, Hollande and other political leaders participating in this attack. But of course, for them, the increased strength of Sunni jihadists is simply convenient since it is their standard excuse for their large scale snooping.

Tuesday, August 27, 2013

Inequality, Savers & Monetary Policy

Mike Konczal at Rortybomb denies that what he calls "expansionary" and what the rest of us call inflationary monetary policy increases inequality. He does so with two arguments.

The first is that such policy increases growth, an assertion which is not really an argument against the causal connection, but merely against the possible conclusion that such a policy is bad. It is the equivalent of "denying" that eating a lot of food with high calorie content makes people fatter by saying that such food tastes really good. It may be an argument against avoiding such action, but it is not an argument against the existence of that causal connection.

The other is that opponents of inflationary policies allegedly contradict themselves by both claiming that it benefits the rich and that it hurts savers. Savers are rich, he claims, so both assertions can't be true, and he thinks that only the assertion about savers is true.

He is right that there are some rich people who are hurt from such policies, namely those who are too stupid, excentric and/or timid to have their wealth invested in anything but physical cash and/or bank accounts and/or treasury bills.

However, very few rich people are like that. Instead, they have most of their wealth in stocks or other assets that rise in value from such policies. Because of that , it is clear that the net effect of such policies is to increase inequality.

But doesn't this mean that most savers benefit from inflationary policies? No, because "saver" isn't synonymous with rich, and less well off savers have more of their savings in assets whose real value is reduced.

Moreover, it should be noted that though even for stocks, it isn't unambiguosly so that people with a preference for such investments gain. Existing stockholders gain as the value of their assets rise, but aspiring stockholders lose. Higher stock valuations today mean that people who wants to buy stocks will receive a lower dividend yield and limit future value increase.

Higher stock prices makes those who are already rich even richer, but it makes it more difficult for people who wants to become rich, or simply just secure a decent retirement. Because of that and the distinction between the existing rich and those who aspire to become rich, there is no contradiction between saying inflationary policies benefit the rich and hurts savers (even savers who invests in stocks or other fixed assets).
This implies that such policies, in addition to increasing inequality, reduces social mobility.

Monday, August 26, 2013

Obama & Cameron To Go To War On Al-Qaeda's Side?

As you know, the US and UK governments try to justify their increasingly authoritarian repression of civil liberties and infringement of privacy, by claiming it is necessary to fight al-Qaeda and al-Qaeda inspired jihadist terrorists.

There are many reasons for believing that is a lie, but in case you had any doubt, the reports that Barack Obama and David Cameron are planning to intervene militarily to attack al-Qaeda's opponent in the Syrian civil war should end those doubts.

If Obama & Cameron were really serious about fighting al-Qaeda, they clearly wouldn't intervene on its behalf. But as that seems to be what they plan to do, we must conclude that they just view al-Qaeda as an excuse for their power grab. And no ,"humanitarian concerns" is not a credible excuse seeing how the Sunni jihadist rebels massacre Alawites and Christians whenever they get the opportunity.

Thursday, August 22, 2013

Debate About Math In Economics

Noah Smith here criticizes mathematical economics. He points out that when math is used in physics, it is a representation of real things, which was he liked it so much there. By contrast, when it is used in economics it has no connection to reality, which is why dislikes it in economics.

Smith also suggests that the reason advanced math is used is because professors thinks it signals intelligence. Of course, taking IQ tests would be a far less time consuming and a lot more effective way of achieving that, and it wouldn't distort theories.

Paul Krugman responds by claiming that he used math when he came up with his Nobel winning trade theories (which unlike his macro analysis are mostly sensible). Perhaps that is true, but I don't see how they couldn't be derived using verbal logical analysis.

Bryan Caplan responds to Krugman by saying that even if that was true for him, for most people it has a negative effect on economic analysis.

What about the the remaining 5% who do understand some mathematical economics?  An optimist would point out that this 5% does the lion's share of original economic thinking.  Perhaps economath is vital scaffolding for intellectual progress despite its low pedagogical value.
Empirically, even the 5% gain most of their economic understanding via intuition.  Don't believe me?  Show a typical economist a theory article, and watch how he "reads" it: He reads the abstract and introduction, flips the theory pages, then reads the conclusion.  If math is so enlightening, why do even the mathematically able routinely skip the math?
You could reply that mathematical economics shows that economic intuition is often wrong.  I beg to differ.  My experience: When mathematical economics contradicts common sense, there's almost always mathematical sleight of hand at work - a sneaky assumption, a stilted formalization, or bad back-translation from economath to English.  
My main objection to this is mainly Caplan's use of words like "intuition" and "common sense" to describe the alternative to math. "Intuition" is a word which means "the ability to acquire knowledge without inference and/or the use of reason", but of course verbal economic logic does involve the use of logical inference and reason. "Common sense" is similarly misleading since it refers to things that almost everyone is aware of and think is obvious, something that is clearly not applicable to advanced economic theories drived through verbal logic.

Monday, August 19, 2013

"Terrorism" In Obama's Puppet State Britain

The definition of "terrorism" has certainly taken an odd turn in Britain. It doesn't mean the intention of killing a lot of innocent civilians anymore, but now it seems it means being in a sexual/romantic relationship with a journalist who has exposed the lies of a foreign leader. The journalist is Glenn Greenwald, who published Edward Snowden's revelations of how the Obama regime lied to the world and invades people. Despite the fact that they clearly didn't think that his partner David Miranda was a terrorist, they arrested him, detained and interrogated him for 9 hours and stole many of his personal possessions, including his laptop and cell phone. This was clearly criminal acts of kidnapping, harrassment and theft by the British puppet government, no doubt at the orders from their master, Obama. As Greenwald puts it:

At 6:30 am this morning my time - 5:30 am on the East Coast of the US - I received a telephone call from someone who identified himself as a "security official at Heathrow airport." He told me that my partner, David Miranda, had been "detained" at the London airport "under Schedule 7 of the Terrorism Act of 2000."
The stated purpose of this law, as the name suggests, is to question people about terrorism. The detention power, claims the UK government, is used "to determine whether that person is or has been involved in the commission, preparation or instigation of acts of terrorism."
But they obviously had zero suspicion that David was associated with a terrorist organization or involved in any terrorist plot. Instead, they spent their time interrogating him about the NSA reporting which Laura Poitras, the Guardian and I are doing, as well the content of the electronic products he was carrying. They completely abused their own terrorism law for reasons having nothing whatsoever to do with terrorism: a potent reminder of how often governments lie when they claim that they need powers to stop "the terrorists", and how dangerous it is to vest unchecked power with political officials in its name.
This is obviously a rather profound escalation of their attacks on the news-gathering process and journalism. It's bad enough to prosecute and imprison sources. It's worse still to imprison journalists who report the truth. But to start detaining the family members and loved ones of journalists is simply despotic. Even the Mafia had ethical rules against targeting the family members of people they felt threatened by. But the UK puppets and their owners in the US national security state obviously are unconstrained by even those minimal scruples.
If the UK and US governments believe that tactics like this are going to deter or intimidate us in any way from continuing to report aggressively on what these documents reveal, they are beyond deluded. If anything, it will have only the opposite effect: to embolden us even further. Beyond that, every time the US and UK governments show their true character to the world - when they prevent the Bolivian President's plane from flying safely home, when they threaten journalists with prosecution, when they engage in behavior like what they did today - all they do is helpfully underscore why it's so dangerous to allow them to exercise vast, unchecked spying power in the dark.

Friday, August 16, 2013

Irish Unemployment Decline Isn't A "Mirage"

Kenneth Thomas asserts that the decline in unemployment in Ireland from a high of 15.1% in February 2012 to 13.6% in June 2013 ( 13.5% in July) is a "mirage based on emigration". There are several problems with this assertions. First is that there's nothing wrong with unemployed workers emigrating from high unemployment areas, that's one of the ways by which labor market balance can be achieved.

Second, he uses numbers in a misleading way by counting emigration before unemployment peak. Since we're supposed to analyze the decline, that is misleading.

And thirdly, if the premise is it is a problem that emigration of workers still leaves the problem of a lower tax base of employed workers, he forgets to note that Ireland has a very high (by Western standards) natural population growth rate which more than compensates for emigration. Ireland's population is in fact growing, albeit slowly.

While Ireland's unemployment numbers are published on a monthly basis, its employment numbers are only available on a quarterly basis and second quarter numbers aren't available yet. But between Q1 2012 and Q1 2013 employment rose by 1.1%.

Thursday, August 15, 2013

Only The Unattractive May Be Elected

In shi'ite Islamic theocracy Iran, the clerical regime has come up with a new requirement for being elected, at least for women: being unattractive. Apparently the below face (you can't see anything else since she's wearing Islamic clothes) is too arousing to be shown in public. 

I wonder if female office holders in Iran who haven't been disqualified have realized what this suggests about them....

Wednesday, August 14, 2013

Financial Journalists Need To Learn To Translate GDP Numbers

Imagine if American media reported about a heat wave in Southern Europe, with temperatures of 35 degrees or more . Most Americans would find it odd that they characterice 35 degrees as hot, I mean that's only barely above the freezing point.

Similarly, if Europeans learned about a heat wave in Las Vegas, with temperatures above 100 degrees they would be chocked. 100 degrees, how is it possible to survive in such heat, many Europeans would ask themselves.

Such misunderstandings don't happen of course, because Meterological journalists know that they must "translate" from Celsius to Fahrenheit and vice versa. And so when American meterologists talk about heat in Europe they say that it is 95 degrees, which is what 35 degrees Celsius is in Fahrenheit. Similarly, European meterologists reporting to European audiences of course reports that the temperature in Las Vegas was 38 degrees, as that is what 100 degrees Fahrenheit is in Celsius.

Unfortunately, financial journalists are too lazy to do similar "translations" of GDP numbers. When describing quarterly changes, the American statistics authority, the BEA, expresses them in annualized rates, which is to say, the yearly change that would happen if growth remained at the same level. By contrast, European statistics authorities simply state the quarterly changes, without trying to annualize them. That means for example that if GDP is 0.5% higher in a certain quarter compared to the previous one in both America and Germany, the BEA will say that growth was 2% while the German statistics authority will say it was 0.5%. Even though growth was the same in both countries, it will appear for the layman as if growth was 4 times higher in the U.S.

That is of course where competent financial journalists should come in and, when reporting to American audiences, report both U.S. and German growth as 2%, and when reporting to European audiences, report both U.S. and German growth as 0.5%.

How this can mislead is apparent in the reports about second quarter growth this year, which was reported as 1.7% in the U.S. and as 0.7% in Germany by the local statistics authorities. If reported untranslated, one could get the impression that growth was 2.4 times higher in the U.S. even though in reality it was 1.7 times higher in Germany.

Monday, August 12, 2013

Yes, Friedman Was A Monetary Keynesian

As all long time readers of this blogg know, I am anything about a fan of Paul Krugman, But he is actually right when he has recently argued, in both his most recent column and in several blog posts, that Milton Friedman on monetary issues was essentially a Keynesian and that he therefore, had he still been alive, would have defended the QE-policies of the Fed and several other central banks.

Both Donald Bourdreaux and Senator Rand Paul disputes this, pointing to how Friedman wrote that in the absence of the Fed, private bank–clearinghouse associations, would have limited secondary monetary deflation (due to bank runs) during the 1930s more than what the Fed did. But the issue of whether the Fed or private bank–clearinghouse associations would have prevented deflation better during the 1930s is not really relevant for whether or not central banks should inflate now or not.

And on that issue, Milton Friedman was very clear. He explicitly advocated massive quantitative easing for Japan in the late 1990s, even though Japan's economy was less depressed than current Western economies. There can therefore be little doubt that he would have favored QE now.

The truth is that Friedman was on monetary issues essentially a Keynesian. He differed from Keynesians only in that he had even greater faith in it than them, believing monetary inflation alone could always revive an economy while Keynesians argued that it should be complemented with "fiscal stimulus" to be most effective. Both Friedman and the Keynesians was in favor of using monetary inflation to revive depressed economies, with the difference being that Friedman saw it as a substitute for fiscal stimulus while Keynesians saw it as a complement to fiscal stimulus.

Sunday, August 11, 2013

The U.S. Employment Boom In Low Paying Sectors

When measuring wage inflation, people usually use average hourly earnings. That indicator is relevant (together with two other indicators, namely average weekly hours and employment) when it comes to issues such as how aggregate and average income changes, but it can be misleading when trying to analyze wage inflation.

There are two sectors which really stands out when it comes to having low pay. Retail trade where average hourly earnings is just $16.58 and Leisure & Hospitality where average pay is just $13.48. Both of these sectors had employment growth above the average of 2%, with retail trade employment increasing 2.3% and Leisure & Hospitality increasing 3.4%. As a result "Leisure & Hospitality" increased its share of private sector employment from 12.3% to 12.45%.

Meanwhile, the three sectors where average hourly pay was above $30, Utilities, Information and Financial Services, all increased slower than average, 1.3%, 0.6% and 1.5% respectively. While this is partly offsett by the fact that the fourth highest paying sector, Mining, had somewhat above average employment growth, this doesn't change the overall picture, especially considering that only 0.8% of private sector workers were employed in Mining compared to for example 2.4% in information and 7% in Financial services, and as much as 12.45% employed in Leisure & Hospitality and 13.2% in Retail Trade

There is clearly therefore a structural shift in the U.S. economy towards lower paying sectors, something that of course lowers average pay and by doing so masks the extent that labor costs increases in every given sector.

Thursday, August 08, 2013

Bank of England Adopts Unemployment Target

With average inflation above 3% since 2005, it has been obvious for a while that the Bank of England has in effect unilaterally decided to abandon the 2% inflation target the law says it should follow. Now it in effect creates a target for the unemployment rate by say that they won't consider raising interest rates until the unemployment rate falls below 7%. To create the appearance that they're not completely ignoring their legal mandate, they say that if inflatin is likely to be above 2.5% (whatever happened to 2%?)in the next 18 months they might after all tighten even if unemployment is above 7%, but since they've been saying that inflation is likely to be 2% in that time range for the last eight years, that's not going to limit their inflating. This probably won't mean much change in actual policy, which was very inflationist to begin with, but the Bank of England now makes its deliberate flouting of its legal mandate to keep inflation at 2% explicit.

Monday, August 05, 2013

Leading Left-Liberal Admit Monetary Inflation Increases Inequality

Robert Reich accusses Republicans of wanting job growth to be weak, and brings up several alleged motives for this desire. The most interesting alleged motive is this:

Second, high unemployment fuels the bull market on Wall Street. That’s because the Fed is committed to buying long-term bonds as long as unemployment remains high. This keeps bond yields low and pushes investors into equities — which helps boosts executive pay and Wall Street commissions, thereby keeping regressives’ financial sponsors happy. 
Ignoring for a moment the fact that several leading Republicans, not just Ron and Rand Paul, have criticized the very quantitative easing that Reich claims they want to preserve, it is interesting to see how he here admits that it makes Wall Street fat cats richer. If he is truly serious about wanting to reduce inequality, he should stop endorsing inflationary policies.

Saturday, August 03, 2013

Russian Birth Rate Soars-For Now

Russia was during the 1990s considered a dying nation because of its low birth rate, but as Mark Adomanis points out its birth rate has soared, even as the U.S. birth rate has gone down, so it now actually has a somewhat higher birth rate:

Last year alone, the number of births increased 5.6% in Russia, and has had a cumulative increase of more than 50% since 1999, while the number of births in the U.S. was unchanged after falling for several years. For the first time in recorded history, the number of deaths now exceeds births among White Americans.

Putin of course wants to take credit for the baby boom in Russia and claims it is a result of his pro-natalist policies, that include publicly urging Russians in fertile ages to have more children and increasing financial subsidies for families/mothers with children. These policies have probably had some effect, but what is probably more important is the fact that women born during the baby boom of the 1980s have increasingly reached the age span, 25-34, when the fertility rate is at its highest.

When a few years from now the "baby bust" generation born in the 1990s (as you can see in the chart, Russia's birth rate fell dramatically in the 1990s) replace the "baby boom" generation of the 1990s in the age span 25-34, it seems very likely that the birth rate will fall again in Russia, unless Putin comes up with new pro-natalist policies a lot more effective than the current ones.

Friday, August 02, 2013

Krugman Distorts About "Openly Sexist" Editorial

Since Ben Bernanke will step down as Fed chairman, there is a discussion about who will replace him. The choice has unofficially been narrowed down to Janet Yellen and Lawrence Summers. I don't really care which one of them it will be, since from what I can tell they have more or less the same views on monetary policy.

However, because Yellen is a woman and Summers is a man, and because this is 2013, a year when feminist identity politics permeate the media and the liberal punditry in America (and many other Western countries) , the issue has switched to how Yellen has supposedly already become a victim from sexist bigotry.

Paul Krugman's latest column is a good example of this as he claims that the conservative publication The New York Sun's editorial "The Female Dollar" is "openly sexist". It is true that the title of the editorial is intentionally provocative to attract more readers, a goal that clearly has been succesful.

But if you actually read the leader, you can see that it nowhere says that Yellen is inappropriate as Fed chairman because she is a woman. What it does say is that there is no sign that Yellen would be an improvement over Bernanke and that it is ridiculous to make the choice an issue of gender. Far from advocating that the choice of chairman should be based on whether the choice is a man or woman, which is what Krugman wants us to believe, it is actually criticizing the use of gender as a criteria. Is Paul Krugman lying deliberately or has he just been sloppy and only read the title? I'll let you be the judge of that, but there can be no doubt that he is totally wrong.

Thursday, August 01, 2013

I'm Obama! How Dare Anyone Defy Me?

Yves Smith has written a good post about Obama's arrogance and narcissism regarding the Snowden affair. An excerpt:

Obama immediately rejected that possibility, by insisting that Russia was obligated under international law to hand over Snowden (funny how international law is operative when Obama needs it, and not in matters like Kalugin, the force-feeding of Gitmo detainees, or drone murders of children in Pakistan). He also said:
I’m not going to be scrambling jets to get a 29-year-old hacker…I have not called President Xi personally or President Putin personally and the reason is … No. 1, I shouldn’t have to.
No. 2, we’ve got a whole lot of business that we do with China and Russia, and I’m not going to have one case of a suspect who we’re trying to extradite suddenly being elevated to the point where I’ve got to start doing wheeling and dealing and trading on a whole host of other issues.
So what’s happened since then? Well, Obama didn’t scramble jets personally, but if you think the diversion of Evo Morales’ plane wasn’t America’s doing, I have a bridge I’d like to sell you. And even though Putin had said “no extradition” in the clearest manner possible, Obama wasn’t willing to get the message. I’ve pointed to this passage from Moon of Alabama a couple of times, but it deserves all the attention it can get:
Putin has made it clear from the very beginning that any extradition of Snowden is not going to happen. Fullstop. Russian officials have repeated that again and even today: Asked by a reporter whether the government’s position had changed, Dmitry Peskov told Russian news agencies that “Russia has never extradited anyone and never will.”
Is that so difficult to understand? Why then is the U.S. even trying?
It seems that this an Obama personality issue. He personally asked Putin to extradite Snowden even after Putin had publicly (thereby leaving zero chance to later change that decision) said he would not. Now Obama is miffed. How can HE get rebuked by country like Russia?
Two weeks ago, Obama phoned Putin and asked him to send Snowden back to the U.S., but Putin refused, according to one official who was briefed on the call. Following that perceived rebuke, the Obama team doubled down on its new policy to show the Russian government the cold shoulder.
“The Snowden affair is definitely affecting U.S.-Russia relations, no question. When you make it clear that something is very important to the U.S. and we are asking for cooperation and that request is rejected, that rejection is going to have an impact on the broader relationship,” said Samuel Charap, senior fellow for Russia and Eurasia at the International Institute for Strategic Studies. “There’s only so many times you can thumb your nose at a U.S. president and not expect consequences. When the president himself has gotten involved personally and been rebuffed, the rule book kind of goes out the window.”
Ahh – the rule book is out of the window. Screw public diplomacy. Just don’t care how the world sees the U.S.. It is all about Obama miffed that Putin is “thumbing his nose” at him. Who is this President of the Russian Federation that dares to do so to King Obama of the United States?
Apparently Obama forgot Russia still has nukes.
This is of course the reason Snowden had to go to a country like Russia instead of a reasonably free country. All such countries have leaders who are too spineless and/or too dependent on the U.S. to dare to say no to Obama.