In your opinion, what does this blog need more of?

Wednesday, August 16, 2017

All the CEOs say he's a waste of time. Sad!

Breaking news:

NBC - literally every CEO quits Trumps council. No, not just that one, but the other one:

"As our members have expressed individually over the past several days, intolerance, racism and violence have absolutely no place in this country and are an affront to core American values...We believe the debate over Forum participation has become a distraction from our well-intentioned and sincere desire to aid vital policy discussions on how to improve the lives of everyday Americans," a statement from members of the Strategic and Policy Forum council read.

"As such, the President and we are disbanding the Forum," it added.

They understand Trump will be a lot more mellow about it if they share credit with him.

The Campbells CEO stated it in the most simple way possible, just so all the Nazis in the south fucking well get it:

Within minutes, Campbell Soup Co. president and chief executive Denise Morrison issued her own statement, in which she said, "Racism and murder are unequivocally reprehensible and are not morally equivalent to anything else that happened in Charlottesville."

Wah, say the butthurt Trumptards! Racism and murder are not unequivocally reprehensible! They're exactly as bad as taking down a statue or saying that black lives matter!

Think the Republican clowns are actually going to get their corporate tax breaks now?

Criticizing Democrats in 1980

New Deal Demoncrat - 1980's "The Changing of the Guard". Wherein he argues that the Democratic Party's turn away from the working class was evident even back in 1980. It's a good read. Here's his conclusion:

Even now, two generations later, as we have seen that when you take economic equity for granted it goes away, Chuck Schumer in 2016 and Mark Penn this year have continued to laud a strategy grasping for suburban Republicans and eschewing the traditional Democratic urban working class. As it turned out, bill Clinton had the priorities of voters fundamentally wrong: social conservatism was categorically more important to a critical mass of (especially white Southern) voters than economic conservatism.

But the ideology that Bill Black spoke of in June was already flowering 40 years ago -- the turning away from traditional Democratic power centers, and from broad government programs anchored in economic populism, in favor of social issues and a commitment to lower taxation and more efficient fiscal prudence -- espoused by a group that grew up in the post-war middle class suburbs and sought to appeal to those suburbanites first and foremost, taking for granted that the broad prosperity that those programs forstered would continue.

I'd add two things though.

The Republicans have followed a long strategy of changing the narrative for the working class/rural/southern Conservative voter. Firstly, they got involved in swinging Christian fundamentalism hard-right, to the point that now apparently American Jesus believes in hating black people and letting poor people suffer.

Secondly, through the Mont Pelerin Society, the right wing has worked tirelessly to brainwash people into thinking that radical right-wing policy is supported by economic theory and brings wealth to all.

The Democrats seem to have not bothered trying to speak to the rural, conservative, working class voter, or to address the predominant narrative in his political stance in any way.

And maybe that's because American progressivism has always considered rural, conservative voters to be susceptible to the most odious forms of populism, and they considered themselves above populist manipulation.

NYT on low-skilled immigrants

NY Times - the danger from low-skilled immigrants is not having them. It's an argument from empirical reality, which means it's probably not going to convince Republicans.

It's a much better argument to ask a bunch of Republican employers who happily profit from hiring immigrants what they're going to do when they have to hire an American instead, and where they're going to find these people.

Larry Summers reminds us how fucked the US really is

Larry Summers - this is precisely how fucked the US is. Quote right from the start:

With the term of Janet Yellen as Federal Reserve chair ending next February, the president will have to nominate and the Senate will have to confirm a new head of the central bank in coming months.

Yup. The US is going to have to rely on Trump (or Pence, ahem) to nominate the next Fed Chair.

As an economics student, let me tell you that the next Fed Chair could royally fuck up the entire planet for a hundred years if he's so much as a fan of Prescott & Sargent.

Boring details:

If history is any guide, it is more likely than not that the economy will go into recession during the next Fed chair’s four-year term. Recovery is now in its ninth year with relatively slow underlying growth for demographic and technological reasons, very low unemployment and high asset prices. Even without these factors, experience teaches that recessions are almost never forecast or even rapidly recognised by the Fed or the professional consensus forecast, but there is at least a 20 per cent or so chance that if the economy is not in recession, it will be so within a year. So the likelihood that the next Fed chair will have to address a recession is probably about two-thirds.

Historically, the Fed has responded to recession by cutting rates substantially, with the benchmark funds rate falling by 400 basis points or more in the context of downturns over the past two generations. However, it is very unlikely that there will be room for this kind of rate cutting when the next recession comes given market forecasts. So the central bank will have to improvise with a combination of rhetoric and direct market intervention to influence longer-term rates. That will be tricky given that 10-year Treasuries currently yield below 2.20 per cent and this would decline precipitously with a recession and any move to cut Fed funds.

As a result, the economy is probably quite brittle within the current inflation targeting framework. This is under-appreciated. Responsible new leadership at the Fed will have to give serious thought to shifting the monetary policy framework, perhaps by putting more emphasis on nominal gross domestic product growth, focusing on the price level rather than inflation (so periods of low inflation are followed by periods of high inflation) or raising the inflation target. None of these steps would be easy in current circumstances, but once recession has come effectiveness will diminish.

But now that you've been put to sleep by blah blah technical stuff, let's scare you back to full wakefulness:

There must be more risk now of presidential interference with the Fed than at any time since Richard Nixon. In dealing with international matters, the Fed is partnered with an understaffed and amateurish Treasury and a president who is dissipating US credibility. Most fundamentally, the temper of the times has turned against technical expertise in favour of populist passion and the Fed is the quintessential enduring apolitical institution.


Some economic news

Market's wondering whether it's still rolling over, or whether this past week's action was just a 2% freakout on an upward path.


Calculated Risk - LA port traffic increased in July. So I guess the economy is doing great, if imports keep increasing.

New Deal Demoncrat - real retail disappoints the doomers. With lots of charts for you, because data is king. Not Twitter.

By the way, Kim Jong-Un should really get himself a twitter feed. He needs to be able to talk to more idiots.

And, on the other hand:

Calculated Risk - Goldman on the debt limit. It'll be interesting to see if the Republicans are still interested in sabotaging the United States, what with their party still in control of Congress, and now also the White House. My bet is on yes, but I'm okay with being surprised.

The time Ninja and Kanye played basketball with Drake

Ninja from Die Antwoord talking about... well....

With hilarious animation.

Monday, August 14, 2017

Your daily Nazi news

The story of an American Nazi going on a murderous rampage has taken the focus off North Korea, so stocks are up:

Reuters - Charlottesville violence tests Trump's presidential mettle. And, of course, Piddles responds by blaming the people who don't like Nazis for making Nazis want to commit mass murder. Good work, Piddles!

Reuters - victim in Virginia melee wept for social justice. A story about the person who the Nazi ran over and killed. Which prompted this:

Reuters - Godaddy boots white supremacist website. And of course the right-wingers scream "censorship!", because censorship is what you call a company choosing to quit working with you because you're odious - and censorship is not what you call murdering people at a political counter-rally against Nazis.

And, of course, Trump responds by refusing to offend the Nazis who campaigned for him. So:

Reuters - Merck CEO resigns from Trump council because he's scum. And you should see all the hate being aimed at Frazier right now in the comments sections at popular neo-Nazi Russian-funded propaganda website Zerohedge, because dontcha know Frazier is black.

But, like I said, at least people have quit selling on the North Korea news, and are now buying on the American Nazi news because Nazism doesn't negatively impact expectations of future earnings.

Friday, August 11, 2017

Friday video: Alvvays

From among the surfeit of new indie bands with superfluous vees in their names, here's Canadian band Alvvays with a fun corker that I'm sure Alan McGee would love:

Unfortunately they're not noisy like this all the time.

Thursday, August 10, 2017

And on the topic of Bitcoin....

I find it funny that I post one single snark on Bitcoin, and all of a sudden I get a massive influx of traffic from Russia.

I wonder how much money the Russian central bank has invested in Bitcoin?

If WWIII wasn't bad enough....

Hey, here's another thing you can worry about as you sell all your stocks!

Calculated Risk - Goldman on the debt limit.

The Krugginator - how bad will it be if we hit the debt ceiling?

Personally, I don't think the Republicans are stupid enough tohahahaaa I just realized what I wrote there wtf is wrong with me.

VIX bulletin

As of noon today, $VIX futures are still contangoed.

So this right now is just bullshit selling by people who want to puke into empty bids because they think other people are going to puke into empty bids later.

By the way, on the topic of Republicans:

The "Trump Bump" was the result of Republicans, who avoided getting into the market thru 8 years of Obama because sociamalism, suddenly deciding to go long US equities because they were going to get Obamacare repeal and tax breaks.

Now, they see that Obamacare repeal is never going to happen, thus tax breaks are also less likely, they're scared of losing the House in 2018, and instead of delivering unicorns and lollipops they think Trump is going to start World War 3 with Norht Korea instead.

Thus the shine has gone off the Trump administration among Republican investors.

If that's so, $SPX should go back down to 2000-2200 or so.

Which is a 10 percent drop and nothing to piddle your frilly pink girl-panties about.

Wednesday, August 9, 2017

Bitcoin math

So there's apparently about 16 million bitcoins.

Each one is supposedly valued at about $3280.

Thus there's approximately $53 billion theoretically supposedly worth of bitcoins.

That's a lot of laundered Chinese money and crypto ransoms!

I wonder when the total theoretical value will exceed the total possible demand? I mean, Bitcoin is only worth what people will pay for it. And everything's demand always has an upper limit.

McAfee promised to eat his own dick on TV if Bitcoin didn't hit $500,000 in 3 years. That'd require somewhere around $10 trillion stored in bitcoins worldwide.

So I guess we get to watch John McAfee eat his own dick on live TV in 3 years.

A small economics lesson

So when it comes to buying university textbooks on Amazon, you have to buy them out of season. The minute that university bookstores' book lists come out, every single Amazon seller jacks his price up so that there's almost no reason to buy from them.

But that's how "perfectly competitive" markets really work - the market leaders collude to set a high price, and then all the smaller sellers decide to follow their lead to maximize profit. I know, really that's an oligopoly, but in undergraduate economics they say you can't have oligopoly with a hundred sellers.

Anyway, so I had to buy my Metrics 2 textbook, and I know the book the prof wants to use, so I went online to find it before bookstore season.

Hey, someone's selling it for $70 CDN including delivery! That's cheap!

So I bought it.

#1, it's weird that it got to me in like 3 business days even though I only paid for standard shipping.

#2. stranger, it came from Malaysia.

#3, as it turns out, they sent me the "Global Edition". That's the edition released outside the US and Canada for students in third-world countries who would never pay $300 for a textbook because ffs you can buy a year's worth of rice for your family for that kind of money.

So should I return it?

Well, as an economics student, I know that a rational consumer should maximize his utility by profiting from price differentials across segmented markets. And the $200 I saved is worth a lot, utility-wise. So, according to undergraduate economics, I did the right thing and if they want me to send it back they can refund me 2 years of tuition for pumping me full of libertarian fantasy lies.

And the textbook can't be that much different, since it only costs $20 to print anyway, and the company wouldn't be keeping its third-world customers if they short-change them on educational content.

So fuck it! I don't owe the publishers anything at all, since they've fucked me over by charging 10x the production price for textbooks since forever. And since the government allows publishers to fuck me over by legalizing predatory pricing, I don't owe them any import/export law obedience either.

After all, it WAS a Metallica concert....

I just don't get these sissy people of today....

Consequence of Sound - New Mexico man arrested for urinating on family at Metallica concert. Sigh:

Rather than missing a song or two to visit the restroom, 44-year-old Daniel Daddio allegedly urinated on a family of three seated in front of him.

According to Arizona’s ABC15, a man, his wife, and their 10-year-old daughter “felt warm liquid washing over their backs and legs” while taking in the concert. When the husband turned around to confront Daddio about the act, he merely shrugged.

I mean, I guess he figured, you're at a Metallica concert, right? This is the band that sued you for using Audiogalaxy 20 years ago, and you're at their concert. You must enjoy getting pissed on, right?

Wonder how long it'll take for Zerohedge to blame this on Zionists liberals....

Tuesday, August 8, 2017

where I plug Jim Wright's blog, and warn of another 9/11

Stonekettle Station - blah blah Trump blah blah.

I love reading him, though unfortunately he only posts a couple times a month now. But he always comes up with gems like these:

As the so-called Sage of Baltimore, American satirist and pundit Henry Louis Mencken, once said, “democracy is the theory that the common people know what they want, and deserve to get it good and hard.”

Huh. My dad said that was Truman.


I’m not the first to note that Trump is what stupid people think a smart person sounds like

Well... he does sound like Zerohedge, or the comments section for a political Youtube video.


There has never been any depth to anything Trump has ever said. Not once. His responses to every question – every single question – are nothing but rambling non sequiturs. Trump is not capable of critical thought at any level.

Yeah, actually, we knew that already. But what I'd like to note is this:

Remember the last time you guys had a brainless idiot president, who was an utter complete joke, who couldn't even string together a coherent sentence, who was a laughing stock throughout the world?

Then a bunch of terrorists attacked and suddenly everyone thought he was the nation's hero. He even got a second term.

I await this fall's terrorist attack on US soil.

Zerohedge isn't even funny anymore

I was checking Zerohedge today to look for a hyperbolic, world's-about-to-end reason for today's 0.2% plunge in the markets, and I realized that the lunatic libertarian-kleptocrat fringe isn't even funny anymore.

Here's two stories, and no I'm not giving you the real links because the point of this is for me to kill my own brain cells so you can protect yours:

Zerohedge - "I have a right to express my concerns": fired Google engineer will pursue legal action: Assange offers job.

This is funny in so many ways. #1, some dick writes a memo complaining about the "left bias" at his employer (whose employ he was free to leave at any time), adding that women are inferior, and then complains that his employer fired him for being a dick.

Even more funny, this whiny girl-boy then supposedly gets offered a job by a guy hiding in the Ecuadoran embassy who now works as a disinformation agent for Vladimir Putin.

Right-wingers are such gutless whiny fucking pussies. I mean, at least my daddy's right-wingers were... well, no, actually I just looked up Joe McCarthy and William F. Buckley, and both of them were also gutless whiny fucking pussies who never even did real wartime service because they were scared of being shot at for their country.

Zerohedge - agricultural work visas soar as farmers struggle with labour shortages amid immigration crackdown.

Is it a story about the stupidity of Republican racist immigration policy? Is it a story of how the American immigration system is set up to unfairly subsidize monopolistic agricultural producers by allowing them to hire cheap labour? Is it even a story about how American right-wing states are full of fat-assed whiny gutless Republican-voting sissies who can't handle picking fruit in the sun for 12 hours a day?

Meanwhile, the cost of that progressivism is an economy that has ~95 million people who have voluntarily taken themselves out of the labor force, many because they simply don't possess the right skills or are unwilling to take jobs that they've been convinced are 'demeaning.'
Yup, it's the ebils of progressivism! Those damn progressives are the reason that 95 million over-65s and under-16s don't do manual labour anymore!

And by the way, if you really cared about free-market economics, you'd understand that people have a reservation wage for labour. It's probably at least $10-$12/hr for manual farmwork, because if you offered them any less then they would turn you down in favour of a job at a less-physical, air-conditioned environment indoors - like a Piggly Wiggly.

And if farmers don't offer the market-clearing reservation wage, then the market doesn't clear and you get a "labour shortage". This is free-market, libertarian, undergraduate economics, people!

So obviously Zerohedge hates free-market capitalism, and would prefer a fascist socialist totalitarian government marching people into the fields at gunpoint.

As long as it's only black people being marched into the fields, I guess, right?

Fucking Zerohedge is such a fucking joke, they can't even get their politics right anymore.

No surprise, the IMF is back to covering up corruption

WSJ RTE - IMF doesn't want to uncover state corruption.

The problem is that the IMF is the beast of its member countries, and its member countries are corrupt, and its member countries don't want to be called corrupt.

Thus endeth your ten second political economy lesson.

Krugman calling a thing bullshit, Tuesday edition

The Krugginator - turns out "structural unemployment" was bullshit. Quote:

It seems like ancient history now, but five years ago there was a remarkable Beltway consensus that high unemployment was structural, the result of a mismatch between the skills workers had and the skills the economy needed. What made this consensus remarkable was that all the evidence pointed the other way: none of the telltale signs of a skill mismatch, like rising wages for some groups despite high unemployment, were in sight. Meanwhile, lots of other evidence – like the fact that unemployment was falling fastest in the same places and occupations where it rose most – pointed to a cyclical story, that is, that the economy was simply suffering from inadequate demand.

Yet so strong was the groupthink that news analyses often presented the structural story as if it were the known truth, without even acknowledging the contrary case.

So here we are, with no obvious up-skilling of the work force, but with unemployment now below pre-crisis levels, with prime-age employment not too far below where it was, and still no wage pressure. People got mad when I called the structural story humbug, but humbug it was.

Why does this matter now? Well, the people who were sure that it was structural are still out there, opining on economic policy. And while we all make mistakes, is there any sign that any of these people have so much as admitted getting this wrong, let along learned from the experience?

BTW, unless you live under a rock you know that right wing economists hate and despise Krugman even more than they hate the Satanist bisexual pervert Keynes. After all, you can just not talk about Keynes (aside from saying "oh, he believes in money printing! he causes inflation" - which is funny because they need to use a Keynesian model to "prove" it), not teach him in undergraduate (despite him having invented macroeconomics and monetary policy), and jump through hoops to cut all of his theory out of macro to replace it with idiotic 19th-century mathematical fantasy that rivals a D&D simulation of orcs vs trolls.

But you can't simply ignore the Kruggatolah because he is read by more people than all other economists combined. And that makes right-wing fruitcakes angry.

But now, even leftist economics professors (I met one! - well, at least he seemed a bit leftist on a few things) are beginning to hate Krugman for his hardcore partisanship.

Me? Far as I'm concerned, most of these other folks are gutless wimps, and at least K-dog is using the bully pulpit at NYT to lob grenades. Let's see these other fucking sissies grow a pair, get a real job in the press, and start fighting back against the 50-year wave of right wing kleptocratic mythology that their field has perpetuated.

Monday, August 7, 2017

Yeah, about that colony collapse disorder thing....

Tim Taylor - colony collapse disorder news: bees learn how to reproduce. Fuck, even I know how to do that:

Despite the increased mortality rates, there has been no downward trend in the total number of honeybee colonies in the United States over the past 10 years. Indeed, there are more honeybee colonies in the country today than when colony collapse disorder began.

They seem to be doing this thing called "reproducing".

As far as the rest of the article, though, I don't see how "capitalism is staving off colony collapse disorder." Unless, of course, the queen bees are being paid to reproduce.

Beekeeping is actually slavery, btw, not capitalism.

The Phillips curve is flat

Jared Bernstein - more job growth, but still no inflation. And he includes this helpful pic:

I.e., the Phillips curve is now horizontal.

What I don't get it why this is a fucking surprise. Governments can easily flatten the Phillips curve through policy, can't they? Or don't macro models incorporate policy in them?

NDD's weekly indicators

New Deal Demoncrat - weekly indicators.

Yup, still nothing to worry about, but go read it anyway so you can be familiar with what counts as an "economic indicator", instead of (say) relying on the blog of some idiot with a cheap newsletter.

If you want to play a miners ETF, watch out

So, normally, I'd go long miners with on the TSX. It's double-long, and it used to follow the GDX in the US.

But now, with the change in the composition of GDX, I've noticed that's correlation to it has been greatly damaged. Some days, GDX and HGU move in opposite directions.

This makes trading via HGU far more difficult, and something I'll avoid from now on as I don't need the extra work of quanting everything out.

By illustration of what a double-long ETF is supposed to do, just look at HSU vs SPY:

That black line along the bottom is kinda like what correlation is supposed to look line (though the past week's wobble away from 1 looks a bit concerning). Correlation between HSU and SPY should be nearly exactly 1.

Here's HQU vs QQQ:

Even better. Correlation is almost always 1.

But here's HGU vs GDX:

The big wobble in correlation at the start of June, and the bigger wobble throughout all of July, mean HGU is no longer a vehicle for trading GDX. I mean, a correlation dropping to 0.35 or so? I may as well trade Magna or Royal Bank to get exposure to gold miners.

I know this is because of the radical repurposing of GDX that happened in the US. And maybe that actually means you should use a non-repurposed Canadian gold miners ETF to do TA on gold miners from now on, and avoid looking at the GDX chart altogether.

It just surprises me, because I thought gets its double-GDX correlation-one movement through trading of GDX forward options. I guess not. And I thought the purpose of HGU was to yield double the performance of GDX. Again, I guess not.

I could look up the details of how HGU works by looking at its info circular, but frankly until gold miners go on a tear, why bother opening the hood of another ETF? I won't have time to day-trade in September anyway.

But here's the warning for you Canadian readers. If you were wondering why your Canadian goldbug ETFs were all screwy, this is a clue as to why.

Friday, August 4, 2017

Friday videos: The War on Drugs

I really, really don't like Tom Petty, or 80s singer-songwriter stadium rock, but this song has something in it that overcomes those very strong reactions:

Tuesday, August 1, 2017

Scaramucci's conversation with Lizza was so crazy...

It was so crazy that Lizza saved the audio of the interview under the filename insane_scaramucci_interview.mp3.

Really. Jump ahead to 2:40 if you don't believe me.

Trump is pretty bad at screening new hires, if Scaramucci is any indication

So Anthony Scaramucci is fired as communications director after just a few days, and here's why:

New Yorker - Anthony Scaramucci called me to unload about White House leakers, Reince Preibus, and Steve Bannon. Quote:

He responded by threatening to fire the entire White House communications staff. “What I’m going to do is, I will eliminate everyone in the comms team and we’ll start over,” he said. I laughed, not sure if he really believed that such a threat would convince a journalist to reveal a source. He continued to press me and complain about the staff he’s inherited in his new job.

Sounds like someone who has no clue how to deal with the media, which makes him a bad choice for WH comm director. Also, he sounds like someone who either runs on empty bluster or destroys organizations on a whim, either of which makes him a bad director of anything.


Monday, July 31, 2017

In lieu of market commentary, here's a stupid cat video

The volume comes to sell QQQ, but then the volume goes and QQQ stops doing anything. Meanwhile people are buying $DJIA because who the fuck knows it's not as if any of those companies were ever worth shit to begin with.

So in lieu of any sort of real commentary, here's a video about a stupid cat:

Saturday, July 29, 2017

Catnip update

The catnip is growing great this year, thanks to our very wet spring and early summer. In fact, it's even sprouting up in the lawn, which is almost dead from last year's several months of drought.

Even better, it looks like the rain has suppressed the aphid farming ants, so there are no aphids on my catnip this year. There do seem to be aphid farmers around, but it looks like they've moved on to farming large red aphids on the majestic 4-foot-high thistles that come up everywhere because of the rain.

As usual, the catnip is attracting all sorts of bees - some honeybees, some small grey bees (i.e. they have grey stripes instead of yellow), tiny needlebees (about as small as a large mosquito but definitely beeish), and yet again stupid cabbage butterflies. And strangely, some carnivorous wasps (i.e. the wasps that truly, no shitting you, eat the dead animals my cat brings home) and hornets.

But not to worry, all insects are very happy and placid when they are drinking catnip nectar. Stupid the cat even swats at the damn things when he's out there.

Strangely, I've seen absolutely no bumblebees all year - except today, where there are what look like smaller bumblebees on the flowers. But the big fat zeppelin-sized ones that we normally have everywhere have been completely absent this year.

Hopefully it's just a population cycle thing, maybe cos of the extremely abnormal weather we've had this year.

Now all I have to do is learn how to re-seed a fucking lawn properly. Cos all I've been doing is growing bigger and bigger weeds.

Friday, July 28, 2017

Philosophical mathematics and economics

Way beyond most of the readership, but this is a blog post I wish I'd read 3 years ago:

Magic maths and money - why mathematics has not been effective in economics.

Suffice to say, modern mathematical economic models try to generate synthetic a priori knowledge (like the relation between A and B).

But if you have some philosophy background, and maybe also know a bit about how math works at the differential equations level and above, then you know that's impossible.

Slapping together a bunch of axioms can't create one whit of knowledge, unless you also know how those axioms work with each other, which (if you're trying to build a model that corresponds in any way with the real world) requires empirical (not synthetic) knowledge.

E.g., a macroeconomic model does these things:

1. assume you can model a labour market in isolation, assume it has certain characteristics, and assume an equation modeling how it works;
2. assume you can model a firm's production in isolation, assume it has certain characteristics, and assume an equation modeling how it works;
3. assume you can model an asset market in isolation, assume its characteristics, and assume an equation modeling how it works;
4. assume there are actors, assume how homogeneous they are, assume different homogeneity doesn't change the results, assume they act a certain way, assume how homogeneous their way of acting is, and assume an equation modeling how they behave;
5. assume you haven't missed anything that changes how this network of countable infinite equations works;
6. assume that none of the above assumptions, if changed, sends the solution off in a completely different direction;
7. if you like, also assume productivity magically increases over time with something we call "A", which is completely exogenous and don't ask us what "A" really is.

Each of those assumptions is wrong, thus the model is prima facie wrong according to any mathematician or philosopher out there. All you're doing, essentially, is modeling a battle between an army of orcs and Chuck Norris. Thus every math prof shits himself laughing whenever he reads an economics paper.

So why do this?:
The answer is rooted in the observation that the 'mathematical' approach is powerful rhetorically: you can use it to convince everyone of almost anything, providing you can make the chain of arguments tricky enough to follow. From a philosophical perspective, Kant distinguished the ‘lower faculties’, such as mathematics, that would consider matters of pure reason independently of the concerns of the state from the ‘higher faculties’, engineering, jurisprudence, medicine and theology, were concerned with matters of authority and would be regulated and monitored by the state. If economics is mathematical it should inform the state, not be directed by the state, if it is not then it will have the same status (and funding) as theology (and, one would suppose, other modern social and human sciences).
Exactly. Economics is meant to order politicians around. That's the whole point of neoliberalism: the death of state sovereignty and the rise of the kleptocratic elite back to their traditional position of absolute power.

It's easier to boss politicians and the government around by using math than by using data, history, and informed judgment.

Friday videos: Alex Jones, no really

Alex Jones rants, turned into a folk song by Bon Iver:

Thursday, July 27, 2017

News for thinking about

Thus assuring nobody will click through and read the stories:

FT Alphaville - on juggernaut companies and profit margins.You can't have economic growth in a kleptocracy: if everyone's not sharing in the winnings, then you end up with a zero growth world.

Reuters - Ohio Democrats know what's wrong with their party. Turns out, Americans don't like elitist plutocrats, even when they're Democrat!:
Many of those interviewed said the party's national leaders have not learned the lessons of last year's defeat, when many voters rejected the party as too elitist and out of touch with working Americans.
No shit Sherlock:
Since Clinton’s defeat in November, Tom Perez, the head of the Democratic National Committee – the body which runs the national party – has conducted a nationwide “listening tour” to hear why so many traditionally Democratic voters defected to Trump last year.

Yet when he came to Ohio, some Democrats said, he didn’t do much listening – just a lot of talking.

In June, the listening tour came to Youngstown. About 75 party stalwarts paid $25 each to attend a “Pizza with Perez” event at a local pizzeria.

“What I saw was a typical campaign event, with the audience doing the listening while Democratic operatives touted their positions,” said John Russo, the former co-director of the Center for Working Class Studies at Youngstown University and a political analyst. “We paid $25 to be told by Perez what he thought we were thinking.”
Which is typical. And when asked if they're being elitist, what did state Democrats say?:
"While some may find it politically advantageous to engage in a circular firing squad, Leader Pelosi isn't in Congress on a shift. She's on a mission to protect the Affordable Care Act," said Hammill, referring to Obama's healthcare reform law which Trump wants to repeal.

Joyce Beatty, a congresswoman from central Ohio, also defended Pelosi. "To just blame Nancy Pelosi is not only wrong, but it's wrong for Democrats to do it.
So the Dems seem to have been taken over by an elitist vanguard who want to lead an army of lemmings, not respond to the interests of the masses. Just like most left-wingers you'll meet in the intellectual elite nowadays, actually. I mean, I'm hardcore left wing, and yet I really just want to punch a lot of these bratty Brampton pseudo-Gramscian bourgeois stormtrooper fucks of today.

If it's one thing elitists want, it's absolute unquestioning obedience from the mouth-breathing masses.And they don't get that the mouth-breathing masses can see this attitude from a mile away. Cos they never grew up among the mouth-breathing masses. So they don't even know how to behave around them.

BBC - interview with Lana Del Rey. Apparently she wrote the entire new album with Rick Nowels? If so, I should go give it another listen. He's one of the most underrated songwriters of our era - kind of like a cool teen angst Instagram-girls version of Max Martin. The only Lana Del Rey songs I ever liked were Nowels co-writes, and the only Lykke Li songs I ever liked were Nowels co-writes. And so on with a lot of stuff that's come out in the last few years. He's really good.

Short $VIX comment

I'm just sitting here wondering when we're going to start seeing the articles screaming that an intraday $VIX of 9.26 is too low.

Cos you know that's going to happen.

And no, I'm not going to go look at Zerohedge.

Wednesday, July 26, 2017

Feel-good Afghanistan story... wait, WHAT?

der Spargel - Afghanistan's young liberal elites challenge the Taliban.

There is a young educated liberal elite in Afghanistan, as there is in every country. (Actually, I worked with an Afghan engineer, who was educated in Moscow, and he was definitely the type of person you would wish there was a million more of in his old country.)

The problem in all of these countries is getting the young elite to quit fearing their idiotic elders and start building a new country for themselves:

The members of the new, educated elite pursue different goals than the old fighters. They are no longer willing to prolong the ethnic enmities of their fathers, which have shaped the country. These young people are no longer willing to listen to old men and militias who own weapons, but are unable to read or write.

Maybe that's what spurred western Europe into its own enlightenment hundreds of years ago - rejecting the stupidity and hatred of their elders.

And that is why the West is the greatest culture in the world, and why it's a good idea to encourage globalization and Westernization and denigrate traditionalism.

The incentives to exercise problem... economists solved it

Remember my utter shock at the idea that undergraduate social science students could actually get something useful out of first-year economics classes?

The idea being that if you do a study where you offer to pay people $30 for 9 exercise sessions, then of course they're not going to exercise more because you're not paying them enough to meet their reservation price?

Thus social science studies that pay a tiny amount to participants should expect to get little to no result?

Well, this year I had a really great summer prof who actually engages with students, and he's let me know that economists did already talk about this:

Gary Charness & Uri Gneezy - incentives to exercise.

The reservation price for exercise is around $50-$75/hr.

Tuesday, July 25, 2017

Weekly indicators again

New Deal Demoncrat - weekly indicators.

Everything's alright forever, quit piddling yourselves, Trump and the Republicans haven't destroyed the US economy yet, just buy the S&P and go away for a few years.

In fact, this whole Obamacare repeal fiasco is suggesting that the Republicans have become too incompetent to even be able to destroy an economy anymore..

I mean, how many times did they vote to repeal when Balrog HUSSEIN Taxbongo was in power? But they suddenly can't do it now?

How pathetic is that?

Sunday, July 23, 2017

If Hillary had won: a horror story!

Nate Silver - If Hillary Clinton had won. And y'know, in the long run, that hallucinating shitstain of a failed state south of me might have been worse off:

These storylines — Trump tweeting something inflammatory about Clinton, Republicans investigating Clinton, Clinton feuding with the press — keep repeating themselves. It sometimes seems as though we’ve spent the six months of Clinton’s presidency trapped in the Most Annoying News Cycle Ever, with no chance of escape. But the truth is that there hasn’t been a whole lot else to talk about. With Republicans in charge of both chambers of Congress, Clinton has little hope of enacting her legislative agenda. And although North Korea’s increasingly ambitious nuclear tests are a major concern, Clinton’s foreign policy has largely been a continuation of Barack Obama’s and so has seldom made news. At this month’s G-20 summit in Hamburg, Germany, for instance, the media devoted more coverage to Clinton’s choice of pantsuits than to the G-20’s reaffirmation of the Paris climate accords. So let’s tune out the noise of the news cycle and consider Clinton’s first six months from a historical perspective.

I actually don't think she would have been allowed to fill the Supreme Court vacancy either. The Republicans would be content to spend years setting fire to shit.

As it stands, the Rethuglicunts get four years to pursue tax cuts for the super-rich and inability to accomplish any fucking single thing else. If the Democrats somehow find things to stand for, they might be able to sweep the lunatic fringe out by 2020.

Saturday, July 22, 2017


That stupid country below me is just getting mor and more fucking retarded:

Bloomberg - The Sinclair Revolution Will Be Televised. It’ll Just Have Low Production Values.

Looks like we'll need some other country to lead the world in the 21st century, cos the USA continues to turn into a fucking shitstain.

Breaking news: little blonde white girl gets justice

First they came for the little girls running lemonade stands, but I did nothing:

Evening Standard - Five year old girl left in tears as Tower Hamlets council officers shut down her lemonade stand and issue £150 fine. It's an outrage because she's white:

A five-year-old girl selling lemonade to revellers heading to a festival in east London had her stand shut down by council officers who slapped her and her father with a £150 fine.

Andre Spicer said his daughter burst into tears and told him “I’ve done a bad thing” after enforcement officers read out a lengthy legal letter before issuing him the notice.

The five-year-old and Mr Spicer, a professor at City University, were given the fine for "trading without a permit" after they set up the make-shift stall near their home in Mile End.

After it was contacted by the Standard, Tower Hamlets Council promised to cancel the fine "immediately" and said it would contact the family to apologise.

Though if she wasn't a white girl, and oh also the daughter of a professor, they would have just burned her and her family to death in a building designed to be a fire hazard.

A spokesman for the council said it expected its enforcement officers "to show common sense" when using their powers.

But they don't expect common sense from the architects building council flats cladded with flammable material.

Friday, July 21, 2017

Friday videos: The Black Ryder

Apparently a band from Australia or something, they've opened for the Jesus & Mary Chain on tour, and their music is a nice mainstream version of Spiritualized:

Thursday, July 20, 2017

Your research is flawed, here's why

My god, I just found a reason for sociologists to study intro economics.

Next Big What - people don't exercise more even if you pay them to go to the gym. But the study has a big problem:

690 people who joined a private gym in an unidentified Midwestern city from September 2015 to April 2016 were divided into four groups. A control group received a $30 gift card after six weeks regardless of attendance.

The others received gift cards of either $30 or $60, or a gift worth about $30, only if they went to the gym at least nine days in their first six weeks of membership.

The study noted new gym members were “extremely overoptimistic about how often they will visit the gym, and there is a fast decline in their visit frequency over the first few months of membership.” On average, they said they’d go about three times a week, but started off going twice a week and after a couple of months were exercising just once a week.

Differences between people who were and weren’t paid to work out were “quite modest,” the researchers wrote.

The paid participants went, on average, 0.14 more times per week than the control group. That difference largely disappeared after the six-week program ended.

The problem is, your study only found that their reservation price for going to the gym is higher than $30/9 or $60/9.

If you'd paid them $50 per gym visit you'd have found more people going.

This is such a simple error, from the standpoint of bloody first-year bullshit economics, that I wonder why every single sociological/psychological study has been structured to give out such a shitty low reward.

Wednesday, July 19, 2017


The market story of the past month was the massive puking of tech stocks, and the supposed rebalancing into banks. The idea was, interest rates are going up, so you want to own banks, and tech has "gone too far", so you have to puke tech.

Well, compare and contrast:

CNBC - Netflix smashes earnings estimates.

Marketcrotch - banks' earnings languish due to the inherent stupidity of the elite.

And now QQQ is advancing into blue sky again, while owning bank stocks now makes you look as stupid as the coke-snorting arrogant bourgeois morons who are losing a fortune for these banks on their prop desks.

Why was the June thesis stupid?

Because since 2002, you would have made a goddamn fortune if you'd owned AAPL, GOOG, NFLX and AMZN (and some biotech, railways and the consumer leaders, like DIS, MCD, MC, SBUX etc).

Meanwhile, even in the 2004-2006 heyday of banking ponzi, where they literally were allowed to print money, you wouldn't have made anything owning the big banks.

Past performance is not an indicator of future success; but it is a pretty damn good bet in the case where entire industry #1 has been a business failure for decades, while entire industry #2 has made the USA the undisputed world leader in 21st century internet technology.

Don't invest in banks, because they themselves don't know how to invest.* Invest in tech because that'll always be the future.

* - actually, Canadian banks are good granny stocks. So Canadian banks are okay.

Tuesday, July 18, 2017

John McAfee will eat his own dick on national television

Breaking news!:

ibankcoin - John McAfee will eat his own dick on national television.

Unless, of course, bitcoin goes to $500,000 in 3 years, which ha ha, ha ha ha ha, haha ha ha hahaha.

And despite his going flaccid after ten years of meth enemas, he is still an interested party, since his new business venture (ha ha) is a bitcoin miner (haha, ha ha ha, hahaha), which is as close as you can get to an undergraduate-level economics free-entry zero-profit model of a company.

I literally cannot wait for Izabella Kaminska's reaction to this.

Monday, July 17, 2017

Here's how to defeat a Russian-made killer robot

Some loony libertopian website - AK-47 manufacturer builds killer robot.

No, don't click through.

It can still be defeated the way you defeat real Russians - give it a liter of cheap methanol-laced sink cleaner and the keys to a shitty Lada with no ABS and a bunch of stupid religious icons on the dashboard to convince the driver he's invincible.

Kid Rock for Senate

Bob Lefsetz - Kid Rock for Senate.

Wait, what now?


The Democrats have to get a new strategy, just bitching about the right wing isn’t working. It’s like a Gen-X’er yelling at a boomer, telling him Pearl Jam is the best band ever and the boomer shrugging his shoulders. Better yet, a millennial raving about Migos to both of those elder groups. You don’t win by yelling at somebody, changing hearts and minds is a long term process that the Republicans have been good at, with the Federalist Society and right wing talk radio and Fox News, and now the Democrats believe they can sway the converted in an instant, by telling them how inane and stupid they are?

Not gonna happen.

Meanwhile, Kid Rock, i.e. Bob Ritchie, is not stupid.

This is one of the great publicity stunts of this era. A guy who’s in his forties, who works in a moribund format, i.e. rock, suddenly got the whole nation’s attention when that’s nearly impossible to do. I don’t care if he runs for Senate or he doesn’t, that’s not the point, he can decide later. Kinda like Trump, he just wanted your love and attention, but he tapped into something that appealed to people. As does Rock… It’s about the underclass celebrating their uniqueness. Yes, it is a dying tribe, the white uneducated blue collar workers, but the truth is Rock has always employed a multiracial band which is better rehearsed than most and he gives 110% at his shows and if you think you can convince his audience otherwise, you must be a Democrat.

Meanwhile, Rock is smart. Literally. And upper middle class. His father was a Lincoln dealer. It’s all an act. Sit down with him long enough and you’ll find he’s almost a Democrat, it’s just that he’s got a brother living on welfare who doesn’t work and it drives him nuts. All I’m saying is if you’re bitching about the rube, you’ve missed the point. Rock is smarter than Trump, and he doesn’t want to be in politics, but he wants to sell tickets, in an era where I told someone I was going to Dodger Stadium tomorrow to see the Eagles and they were unaware they were playing.

Sunday, July 16, 2017

Meanwhile, Jojo's opinion on gold and silver

Get back Jojo - a look at gold and silver sentiment. Lots of charts and stuff.

I'd remind him that this is the first time in a while that silver hasn't made a lower low in 18 months.

And that CoT drop from 0.55 to 0.12 only resulted in a 20% drop in price.

Weekend news and goldbug blogger gossip

Gasp! Jojo apparently said something bad about Otto Rock in his mailer this week, and now Otto's all pissy pants!

FWIW, I've never found Jojo to be arrogant, pompous, or an asshole. He also doesn't reccie his subscribers into stocks that get delisted right off the fucking TSX-V and almost lose all their properties in a power struggle just because he likes their indigenous community, unlike certain other newsletter writers I could mention.

Then again, Jojo was part of the "massive repudiation of debt" crowd 4 or 5 years ago. Though apparently he's gotten better.

Anyway, 2 bits of news:

New Deal Demoncrat - weekly indicators. M1 & M2, tax withholding, rail, and Johnson Redbook all look fine; and of course rates are going up, there's this thing called the Fed.

Marketcrotch - financial ETFs see worst day in 2 months after weak bank results. Here was everyone dumping NASDAQ and piling into banking, because that's just what you do when rates are going up. But, as they've now learned, US banks are a fucking joke, just like they were in 2004-6. You can't make money on them because they squander all their winnings on prop trading. Good to see there are still idiots in banking.

Friday, July 14, 2017

Friday videos: Boyd Rice (I'm not even surprised by this sort of thing anymore)

So... of course someone on YouTube makes a video for Satanic Nazi Boyd Rice's "Total War" using a wartime Donald Duck cartoon.

Wednesday, July 12, 2017

So apparently....

So apparently, the whole "Donald Jr. admits he was contacted by the Russians last year and offered info damaging to the Clinton campaign" story that was supposed to tank markets instead has sent US equities higher.

Proving, again, that you don't get trading cues from Reuters headlines.

Tuesday, July 11, 2017

Jobless rates for blacks and hispanics back down

Well, this is a nice piece of news:

WSJ - jobless rates for blacks and hispanics fall to all-time lows. They're the last ones to get hired back after the job losses of a recession, and by the way undergraduate economics fails to explain why.

So with all of them back to work, I guess it's about time for the Fed to start raising rates to drive them all back out of work, right?

I mean, that's what happens when you raise rates to choke off employment growth, right?

The Fed knows this, right?

So therefore it's explicit Fed strategy to keep blacks and hispanics underemployed,, right?

On Democrats getting their shit together

There's pretty much no theoretical justification at all for Democrats to always show so poorly in working-class states like Tennessee, Mississippi, Alabama, Oklahoma and so on.

So it must be that Democrats have no clue how to speak to working-class people.

Which is actually not true. Really, the problem in the US is a strong rural/traditional-urban/liberal divide, and so what you have is the Republican party successfully pandering to the atavistic countryside, and the Democratic party not wanting to sully their name by associating with neo-Dixiecrats.

But the Democrats could at least be trying to guide rural/traditional voters away from Republican nonsense. It's possible: Jimmy Carter was a fundamentalist Christian who was also a very nice guy, for example, so why can't the Democrats find more like him?

And that probably does boil down to the essential problem: before the Democrats can make inroads in Jesusland they have to work to change the character of that society, the way the Republicans did through the 70s and 80s.

Anyway, with all that in mind, here are two grossly simplistic articles written by a Conneticut university-educated lifelong journalist, and a twenty something university-educated lifelong gay journalist:

GQ - the Democrats will never get their shit together.

Slate - Democratic centrism is silly.

But seriously, apparently the Democrats are reviving the 50-state strategy of Howard Dean, who they cut loose 8 years ago, and that revival bodes well for Democrat fortunes.

In, oh, maybe another 8 years, when they've undone the damage of cutting Howard Dean loose.

Money isn't what you think it is

This is an interesting article that you need to read to disabuse yourself of the idea that gold is money, or even that money is what undergraduate economics says it is:

BBC - what tally sticks tell us about how money works.

This is already discussed in Graeber's Debt: the First 5,000 Years,  but as Graeber's one-a them anarchists, most people in economics completely ignored his book and kept blathering on about money as some sort of thing that keeps its value which all other things must be measured against, and thus it was originally silver or gold, and thus blah blah fiat Weimar Zimbabwe.

No really, "fiat Weimar Zimbabwe" is one thing we learn in undergrad econ.

I think it's also interesting from a social constructionist point of view: money is not even remotely based on the exchange price of goods, we have centuries of proof that is has nothing to do with the exchange price of goods, and yet we've constructed a massive mythology based on utterly zero evidence and utterly zero scholarship that economics professors will spout off with zero thought and zero doubt.

Bitchy micropost #2, now with more micro

Hey, remember when Industrials were 15% lower?

Like, a year ago?

Silver consipracy theory du jour

For your consideration:

Macro Tourist - there's no such thing as a bad tick.

Where the wharrgarbl is advanced that the fat finger yesterday in silver was an attack on the silver price by the JCB in an attempt to protect their bond yields, because of course it is.

Just typing this right now, the theory looks utterly fucking childish. Really? Japan is going to pursue a monetary policy strategy of selling silver calls into an illiquid market?

What does that accomplish? Silver is a fucking industrial metal. And its futures market is fuck, I dunno, must be something like 4 to 6 orders of magnitude smaller than the market for JGB or yen. A half a billion silver notional can be traded by some bro at a prop desk, and he'd definitely have the psychological makeup necessary to think it clever to pull that stunt at an empty book time of day; but a central bank?

You fucking serious?

He offers this as evidence:

Somehow, and I am not sure of the exact details, the Japanese government is using precious metals as part of their monetary policy. Now they might be doing it through the Postal Service Pension plan (GPIF) - after all, they have openly admitted to the BoJ buying JGBs from the plan, and the postal service pension investing in foreign stocks with the proceeds. There might be some sort of similar arrangement with precious metals. Who knows?

The fuck?

Gold doesn't matter to Japan. Japan's money supply is larger than the value of all the gold ever mined in the history of the world. Look it up.

Dude, you have no fucking clue about how monetary policy is conducted if you think Japan is going to go around cratering commodity prices to defend their bonds.

Monday, July 10, 2017

Jojo still thinks gold sucks

Let's check in with Jordan Roy-Byrne for his take on the technicals and intermarket for gold:

Get back Jojo! - July could be ugly for gold stocks.

Get back Jojo! - gold is weak in real terms.

Get back Jojo! - gold awaits fundamental shift.

Dude, you really hate gold right now.

I agree btw, the SPY:GLD chart does look either bad for gold or good for SPY. Hopefully you've gotten your subscribers into SPY.


Bit of long-term interest rate thinking

Been reading a first-year geography text, and in the section on demography there's an interesting point made:

All the countries in the world are aging right now. Median age is going to go up in every single country over the next 30-40 years.

I immediately realized this means interest rates will continue to go down for decades to come.

Here's why:

1. Younger people are borrowers, older people are lenders. More older people per young person means more lenders attempting to lend to fewer borrowers. Supply and demand means the neutral rate has to go down to make that market clear.

2. Older people are austerians (except when it comes to government largesse towards old people of course), and they vote. Thus, with a larger fraction of the population made of old people, governments will pursue more and more austerity, meaning government debt goes down relative to savings. Again, supply and demand means interest rates go down.

3. Old people spend less than young people on goods, and they exhibit no yoy growth in spending; and by (2) above they'll also be voting for more and more constraints on young people's spending. Thus, consumer demand will remain weak, so no investment demand by corporations, thus less borrowing again.

4. And so on.

You'll have a few intelligent governments spending a fortune on growth capital because lending is so cheap, and they'll be all that keeps the entire world from plummeting deep into negative rates.

Think about it, it makes sense: when did we last see high rates? When the baby boomers started their families.

Demography is a major fucking input into rates, I think.

Bitchy micropost suitable for twitter

Hey, remember when Transports were 20% lower?

Like, a year ago?

Bit of comment, bit of news

I'd like to see if this AM's strong morning spike in GDX lasts through the day, cos gold's RSI is <30 and gold has been stuck on the -2SD Bollinger for long enough. If GDX claws back, then now's a good time to get in.

Anyway, one bit of reading to pass on:

Worthwhile Canadian Initiative - never mind the bollocks, here's the Phillips curve. He makes a very simple point that makes me think that anyone in central banking who even talks about the Phillips curve anymore must really have no fucking clue what they're doing:

As a lot of people in different countries have noticed, the observed Phillips Curve now looks very flat. Certainly a lot flatter than it did in the past.

And I've been saying of course it looks flat; that's because central banks are now targeting inflation and were doing all sorts of different daft things in the past. The whole point of targeting 2% inflation is to try to make the observed Phillips Curve as flat as possible at 2%.

Obviously. I mean, no matter what the unemployment rate, the Fed is targeting inflation of 2% or less (let's not beat around the bush, their target isn't symmetric). Thus, u is a straight line at i<.02.

Add rational expectations, and people now rationally expect the Fed to raise rates when i>.02, which is rationally expected (whether or not it's true) to strangle inflation growth at 2% by causing unemployment.

Makes you wonder why anyone would even talk about the Phillips curve anymore.

Oh wait, they're trying to justify rate rises so they can strangle the working class yet more while raising the rentiers' profit on owning capital.

Sunday, July 9, 2017

reality sinks in for GOPers

New Deal Demoncrat - reality sinks in for GOP confidence. Quote:

But it appears that after half a year of accomplishing absolutely nothing legislatively, the reality that the economy really hasn't changed at all -- in fact it may be waning just a bit -- is beginning to sink in.

In other news I've had a bad cold for over a week now.

Friday, July 7, 2017

Friday videos: the insane Ed Ball

Ed Ball was a Creation Records fellow traveler who used to make 3-4 albums a year under many different band names. As Alan McGee put it, Ed would record the album for a small budget, deliver it to the label, and they'd put it out knowing he'd always sell enough for the label to break even.

Here's his song "I Helped Patrick McGoohan Escape":

Monday, July 3, 2017

Monday news

Gold looks like it's going to hit $1200 before it hits $1300, to the dismay of amateur bloggers everywhere.

Elsewhere in the news:

New Deal Demoncrat - weekly indicators. Nothing interesting happening.

Tim Taylor - from what direction is the next recession coming? Either from the Fed purposefully fucking the economy, or from yet another credit bust.

FT Alphaville - remember to thank China for preventing a global recession in 2016. Inventories are the standard cycle indicator, and it looks like Chinese inventories are now the be-all and end-all of the world economy.

Business Insider - demonizing progressive liberals has gone to a new level. There's now an American wrestler working as "The Progressive Liberal". His finishing move is called "The Liberal Agenda". And once again rasslin' proves itself the prism thru which we can view American mass society.

Thursday, June 29, 2017

Chris Dillow doesn't get libertarianism

Chris Dillow - why libertarians should read Marx. All good points, but:

There’s astonishingly little in Marx about a centrally planned economy: if you want an argument for central planning, you should read that hero of the right, Ronald Coase instead (pdf). Marx was admiring of capitalism in some respects. It has, he wrote, given “an immense development to commerce” and has “accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals.” And I think you’d be surprised by just how much attention Marx paid to the facts: once you get past the first few chapters, there’s massive empirical work in Capital volume I*. And there are many differences between Marx and social democrats – not least of them being that Marx was no statist.

What’s more, many of the ideas associated with Marx were largely elaborations of his predecessors: Paul Samuelson called him a “minor post-Ricardian”. The labour theory of value, the interest in the division of income between classes and the idea of a falling rate of profit are all as Ricardian as Marxian.

The problem is, Chris, that libertarians don't give a shit about resisting state power. If they did, they wouldn't be advocating transvaginal ultrasounds, criminalizing labour bargaining power, and so on.

Libertarians are libertarians because they hate the poors. So if Marx is advocating for the poors, he's the enemy of libertarianism. Full stop.

Wednesday, June 28, 2017

Welcome back to the middle ages

It's not really as bad as the middle ages, but zero productivity growth is something that should really truly concern anyone who believes in investing in equities:

NY Fed - low productivity growth: the capital formation link.

Unfortunately, one problem is that this kind of investigation requires growth accounting, and if it's one thing I learned last semester it's that growth accounting requires such insane assumptions that it's hard to tell if the numbers it yields are worth anything at all. (For example, are you generating the capital stock through an assumed depreciation rate and by assuming investment equals capital? Or, if a brand name is "capital", are you including advertising as investment?)

Basically these exercises require making up a shit-ton of numbers and assuming variables remain constant, and their inability to work across countries (i.e. if you use a method to generate capital stock and depreciation rate for Belgium, that same method will generate nonsensical numbers for Japan and Sweden, and I know cos I did the work). The method always fails dismally out-of-sample, so I don't see how you can write a serious article on the topic.

There's also an ideological impurity in this work, in that it asserts a worker should only see an increase in real income if their productivity improves: that's nice, except if employers have increased market power in the labour market due to say 30 years of anti-labour legislation, they won't be passing much of their improved earnings to workers.

And actually, that reminds me of the one argument for why the Industrial Revolution happened in England. The idea is that with labour being scarce and with cheap coal able to drive machines, the English industrialists invested heavily in capital to substitute away from labour; the result of this was that the scarce labour being employed became more and more productive because it was combined with more and more capital, and a positive feedback loop caused the English economy to spiral up to a high-capital equilibrium.

In that case, the problem with the US is lack of effects from labour scarcity: partially from labour being replaced with overseas labour, and partially from existing labour scarcity not causing a higher labour price (wage inflation) due to anti-labour political policy at home.

Basically, there's a completely different argument for why capital formation in the US is still poor.

Wednesday, June 21, 2017






BBC News - personal political details of 200 million Americans in giant database! Quote:

Sensitive personal details relating to almost 200 million US citizens have been accidentally exposed by a marketing firm contracted by the Republican National Committee.

The 1.1 terabytes of data includes birthdates, home addresses, telephone numbers and political views of nearly 62% of the entire US population.

Including political views! Two hundred million Americans have had their political views catalogued by the evil Republican thought police!

The information seems to have been collected from a wide range of sources - from posts on controversial banned threads on the social network Reddit, to committees that raised funds for the Republican Party.

The information was stored in spreadsheets uploaded to a server owned by Deep Root Analytics. It had last been updated in January when President Donald Trump was inaugurated and had been online for an unknown period of time.

Donald Trump himself has been secretly collecting information on you! Your own private political opinions are now the property of the Nazi thought elite!

Apart from personal details, the data also contained citizens' suspected religious affiliations, ethnicities and political biases, such as where they stood on controversial topics like gun control, the right to abortion and stem cell research.

Yes! Because the authoritarian plutocracy needs to know your race and religion! So they can decide which death camps to send you to, no doubt!

The file names and directories indicated that the data was meant to be used by influential Republican political organisations. The idea was to try to create a profile on as many voters as possible using all available data, so some of the fields in the spreadsheets were left left empty if an answer could not be found.

Their goal is obviously to enslave the entire USA! This is like that really bad Captain America movie where the Nazis build an armada of aerial gunships to exterminate all thoughtcrime! And it's here today! And it's the Republican Party!

Freedom my ass, they want to enslave all America, stamp each of you with a number so you can be properly coded for extermination, and we now have the proof! 

There are fears that leaked data can easily be used for nefarious purposes,


Why isn't Berwick all over this already? This is a much bigger story than that idiotic Jewish Armageddon bullshit he's been pumping.



Three dissents with the Fed

A fair number of people think the Fed is being far, far too aggressive with rate hikes:

Larry Summers - 5 reasons the Fed may be making a mistake.

Jared Bernstein - is the Fed fighting an old war?

Neel Kashkari - why I dissented again.

FWIW, I'm one of the guys who likes to point out

(1) recessions don't start on their own and we have no forward indication of a recession starting for the next few years, so there's no reason to be in a hurry to raise rates just so we can drop them later;

(2) we (or those of us who aren't idiot RBC theorists) actually know for a fact that Fed rate hikes can cause recessions, and those aren't in the Fed's mandate;

(3) a tight employment market can easily produce zero upward wage pressure if labour has zero market power;

(4) we're not seeing any inflation pressures either, so there's no reason for the Fed to do anything;

(5) the Fed's employment numbers are pretty useless anyway.

Though at the same time, I'm strangely OK with the idea that an IS curve can be vertical for upward rate hikes (what we're seeing now) as well as downward ones (which is one theoretical reason for downward rate drops having no positive impact on investment).

Monday, June 19, 2017

Jojo is incredibly bearish gold

Jordan Roy-Byrne - man oh man so incredibly bearish gold. As in a retest of the Dec 2016 lows bearish:

Both the technicals and fundamentals argue there is increasing downside risk in the precious metals sector. Real interest rates are rising and as the rate of inflation continues to fall, Gold will come under pressure even if nominal rates don’t rise. From a bird’s eye view, the price action in Gold and Silver so far this year is corrective, meaning it is a correction of the sharp downtrend seen in the second half of 2016. There is a strong risk of that downtrend reasserting itself and metals ultimately retesting their bear market lows before the end of this year. With respect to the gold stocks, the initial downside target is the December 2016 lows which could be reached in the next month.

Then again, I remember watching him call for $3000 gold (upon a massive repudiation of debt) a few years ago. So....

Four by New Deal Demoncrat

Four bits of data worth looking at:

New Deal Demoncrat - household permits and starts a long leading negative. Um, actually, I wonder why you think that? Because a turndown in housing construction would be an effect of a recession, not a cause. Unless, maybe, you think the next recession will be a Volcker due to the Fed forcing a yield curve inversion, in which case I'd ask how likely it is that housing contractors plan their work according to Fed policy. Basically, I'm unconvinced, though I have now studied enough economics to believe in time travel and inverse causation now.

New Deal Demoncrat - real wages make new high. Which is a good thing. So maybe this plus the previous, plus Trump's evisceration of the safeguards put in place to protect against the last crisis happening again, means an imminent housing bubble? There's been a lot of consumer deleveraging, right?

New Deal Demoncrat - weekly indicators. Real estate, M1 & M2, and tax withholding all look fine.

New Deal Demoncrat - every little thing that you say or do, I'm hung up: hung up on you. Hey, it's not my fault you're quoting Madonna, buddy.

Sunday, June 18, 2017

Realistic Mortal Kombat

Somehow I've come across comedy videos at YouTube. I guess they exist!

Friday, June 16, 2017

Friday videos: Jesus and Mary Chain

It would have been better if they'd been murdered by Charlie Manson in 1986:

Hey, they said the same thing about the Rolling Stones.

Thursday, June 15, 2017

economics post

Noah Smith - summing up my thoughts on macro. He seems more hopeful than most. Also,

Noah Smith - is economics a science? Short answer: no. Understanding the long answer would require you to have studied philosophy and structure of science and to have seen some advanced undergrad econ, but basically the long version of the short version of the long answer is again no, at least when it comes to macro.

Basically, macroeconomics never works out of sample, and there is no such thing as a falsifying empirical result that causes you to throw out your theory. They compensate for that fucking joke by saying "oh, well every macro theory is wrong, we know this", which begs the question of why academic macroeconomists always arrogantly asserts that their patent fucking nonsense should inform policy.

From what I've seen, though, economics seems to behave well as a science (a) when it's as far away as possible from politics (like, calculating where your company should hedge prices, or figuring out the demand curve for soybean meal) and (b) when real money is at stake, like doing corporate micro or central bank policy.

But once you put the economist near a politician, he turns into a fucktard.

Thursday news

Some reading stuff:

Calculated Risk - rail traffic increased in May and LA port traffic increased in May. Quit piddling yourself.

FT Alphaville - tech tantrum shows how the market has changed. Everything's algorithmic now, and the computers tend to all puke stocks at the same point, which explains the nutbar volume bars we're seeing in QQQ. It's as if they want to lose money. Well, maybe it's just that the kids programming these algos are dumb brats who just finished a Master's in quant at university, and they don't actually have a clue about anything.

NY Times - the Conservative plan to cause the next market crash. Every single thing the party is doing is explicitly intended to destroy the USA.

Simon Wren-Lewis - Conservative zugzwang. With the election result, the UK conservatives are now backed into a corner and can't win no matter what they do. Good job!

Wednesday, June 14, 2017

post-Yellen post

Calculated Risk - 25bp rate hike. The only one voting against was Neel Kashkari, who if you remember I was very nasty about a few years ago but who turns out to be the only one on the Fed board who has sufficient common sense.

Gold miners get hammered on a 0.25% rate hike, but what's really weird is people selling SPY down on Yellen's statements.

It's as if it's a dudebro fad or something. Like getting a barbed wire tattoo.

so today, re GDX....

So today, everyone thinks Janet Yellen is going to raise rates another quarter point, despite inflation being nonexistent in the US.

Of course, she has to make her decision based on future expectations a year out, not based on what's happening today.

But all previous one-year-out future expectations that have come from the Fed have proven to be a joke, and maybe at some point the Fed hawks will realize this.

Then again, Trump is supposed to pursue inflationary policy.

But then again, it's not like the Republican House, Senate and WH have demonstrated any ability to accomplish a single fucking thing so far, and who says Trump is even going to be around 6 months from now?

So there's no way to pick a direction.

I would have bought gold miners yesterday at an RSI of 50 and at SMA(200) support, except then I caught myself hoping that the trade would come out positive. If your trade involves hoping for a positive result, you should get the fuck out of that trade.

So I'd like to see what happens today before taking much of a position.

Friday, June 9, 2017

And they called Corbyn a terrible leader

During their 2016 palace coup, the Labour Party mandarins let anyone who could walk in the door vote against Corbyn for £25, because they wanted to replace him with a damp cloth.

I guess the UK doesn't want a damp cloth leading the Labour party after all.

BBC - Jeremy Corbyn surprises his party. Quote:
Former Labour cabinet minister Peter Mandelson described the election result was a political "earthquake".

He acknowledged Mr Corbyn, whose leadership he had previously criticised, had been "very sure footed" in the campaign.

But he said if Labour was to come first and not "a good second" next time, the leader had to be much more "ecumenical" in his approach.
He didn't get where he is now by being "ecumenical". The UK working class, however, got to where they are now by being "ecumenical":
The leader of the Unite Union, Len McCluskey, said the election result was "an incredible advance" and it wouldn't be long before there was a Labour government.

He said that Labour's performance reflected that "there is a desperate wish out there for an alternative".

"We've had austerity rammed down our throats, it's brought about inequality, it's brought about the type of society that nobody wants - a low pay, race to the bottom society. Jeremy Corbyn came along and offered an alternative."
I guess this'll give Corbyn the legitimacy to finally drive out all the Blairites from his party.

Friday video: A Flock of Seagulls, now with alien anal probes

Pretty good cover of "Space Age Love Song":

Thursday, June 8, 2017

Thursday news

Seems GDX and GDXJ are reinflating now that there's some idea of what they'll look like after the rebalance. Let's see if they can show some resilience today with gold down $10.

Meanwhile, here's news:

New Deal Demoncrat - never rely on just one indicator. On how it's dangerous to rely too much on the yield curve.

FT Alphaville - Marvin Goodfriend is okay. On how Trump's pick for the Fed might not be a dangerous lunatic.

Brad DeLong - Marvin Goodfriend is not okay. On how Trump's pick for the Fed might yes be a dangerous lunatic. Basically, he was a fuckup in 2012.

BBC - Mozambique police warn bald men after ritual attack. Well, at least we're not Mozambique. And to think we've been drilling all those holes in desert mountains looking for gold, when it's been hiding in bald men's heads all this time!

Monday, June 5, 2017

Monday morning reading

Stuff worth looking at:

CEPR - job growth slows sharply as unemployment hits new low. Except the 90s taught us that 4.3% is not the natural rate of unemployment in the US. So maybe you shouldn't read too much into a one-month blip, buddy. Despite what the Fed's mandate says, they actually don't give a shit about unemployment: it's all about inflation, and wage inflation is never going to happen with the plutocrats in charge.

FT Alphaville - one of Trump's Fed picks is the right kind of crazy. Yes, Marvin Goodfriend is a fan of the idiotic Taylor Rule, which means he's at least 80% moron. But he's also very much into the idea of a really thermonuclear negative rate policy. This is him in 2016:
The zero interest bound is an encumbrance on monetary policy to be removed, much as the gold standard and the fixed foreign exchange rate encumbrances were removed, to free the price level from the destabilizing influence of a relative price over which monetary policy has little control—in this case, so movements in the intertemporal terms of trade can be reflected fully in interest rate policy to stabilize employment and inflation over the business cycle.


The zero bound encumbrance on interest rate policy could be eliminated completely and expeditiously by discontinuing the central bank defense of the par deposit price of paper currency. The central bank would still stand ready to exchange bank reserves and commercial bank deposits at par; and it could stand ready to convert different denominations of paper currency at par. However, the central bank would no longer let the outstanding stock of paper currency vary elastically to accommodate the deposit demand for paper currency at par.
I don't know enough about monetary operations to evaluate this, but this seems to work. And work frighteningly. And comparing the zero interest bound to the inflexibility of the gold standard makes sense. And he worked at the Fed so he actually knows how money supply works in the real world.

Noah Smith - the shouting class. This is a money shot right here:
Seeing this, a thought suddenly occurred to me: the ratio of people who expressed support for the thread to those who expressed annoyance with it was over 20 to 1. But if you scrolled down the thread, the ratio of words devoted to support vs. words devoted to annoyance would be more like 1 to 100. Or pixels, or square centimeters of screen space, or whatever. In other words, the "annoyed" group, though far far smaller than the "supportive" group, grabbed a vastly larger amount of attention.
In other words, the internet has broken the human species' millenia-old heuristic for evaluating normativity. You can't use the internet to determine whether a belief is popular, because the most unpopular opinions take up the most space.

For a hardcore social constructionist, that spells doom for humanity.