Thursday, August 28, 2014

It's Official: Hello Kitty is a Girl and the Market Again Drops on Russia

     This is now a fact as it's been confirmed by the 'experts'-yes, she is a girl-not a cat. Joe Kiernan of CNBC seemed quite shaken by the news this morning and it seems that many reacted the same way but I've always thought she was a girl. I think the point is not that she's a cat herself but that she's a 'young, smart girl'-as we have now been informed-who really likes cats.

     In the past I've had people come up with all kinds of weird theories as to what Hello Kitty is-that she was a cat was a lot more plausible than someone who thought she was a he!! This person I have in mind was actually a female which made it even harder for me to figure out.

       So I have some happy closure there even as others are in angst. While this makes sense to me, here's what doesn't: the market sold off today with stories that Putin has opened up a 'third front'-in the Ukraine.

        While this may be very bad geopolitical news, what exactly is the market thinking this means today? If  Putin succeeds in his offensive in the Ukraine this is very lamentable but I don't know if anyone really knows what it means for equities. Maybe that's the answer-'uncertainty'-though we saw the market sell off sharply in late July over this very same 'uncertainty.'  So even though we had some good numbers in today like unemployment filings down under 300,000 again-298,000, and a GDP number revised up for the second quarter to 4.2% all that matters its the Ukraine


          In part no doubt the market just needs a reason to sell off as we are again at all time highs and the market has been up basically every day for the last two weeks. Right now, I remain bullish. I saw this as an excuse to buy the dip-buying 20 more BAC $16 calls for Sept 26 bringing me to 80 of those. I need just a mild snap back in BAC and JNJ to make some decent cash. I was up 102% until today-since I had bottomed out before the rally at 70% down. However, today, I dropped off 7%. So am I up or down altogether math majors? LOL. I know Greg knows the answer to this one.

        P.S. For the actual geopolitical analysis, it seems that Putin is acting not at all from strength but desperation. The sanctions may hurt the Europeans but surely will hurt Russia much more. The ban on many food imports is surely a classic case of biting off your nose to spite your face.



Wednesday, August 27, 2014

Why Conservatives Always Accuse Krugman of Lying and de Blasio's Natural Experiment on Housing

     He said that this piece he did on the so-called 'Texas Miracle' of Rick Perry brought out a lot of the haters. In it he argues that the main reason so many are leaving big cities and states like NY for small states with conservative governors like Rick Perry is not because of low taxes and regulations on rich people and rich companies but lower housing prices.

     "But why are housing prices in New York or California so high? Population density and geography are part of the answer. For example, Los Angeles, which pioneered the kind of sprawl now epitomized by Atlanta, has run out of room and become a surprisingly dense metropolis. However, as Harvard’s Edward Glaeser and others have emphasized, high housing prices in slow-growing states also owe a lot to policies that sharply limit construction. Limits on building height in the cities, zoning that blocks denser development in the suburbs and other policies constrict housing on both coasts; meanwhile, looser regulation in the South has kept the supply of housing elastic and the cost of living low."

      "So conservative complaints about excess regulation and intrusive government aren’t entirely wrong, but the secret of Sunbelt growth isn't being nice to corporations and the 1 percent; it’s not getting in the way of middle- and working-class housing supply."

      "And this, in turn, means that the growth of the Sunbelt isn't the kind of success story conservatives would have us believe. Yes, Americans are moving to places like Texas, but, in a fundamental sense, they’re moving the wrong way, leaving local economies where their productivity is high for destinations where it’s lower. And the way to make the country richer is to encourage them to move back, by making housing in dense, high-wage metropolitan areas more affordable."

      "So Rick Perry doesn't know the secrets of job creation, or even of regional growth. It would be great to see the real key — affordable housing — become a national issue. But I don’t think Democrats are willing to nominate Mayor Bill de Blasio for president just yet."

       What makes conservatives so crazy over Krugman in a piece like this? I think it's conservative economists in part like Sumner and his readers who hate such pieces and after reading it declare him a 'liar.' I recall Mark Sadowski-not to pick on Mark just he's an example I recall, there are many such complaints-saying that what bothers him about Krugman is that 'he knows better.'

       There is a feeling that he sells out his knowledge for his personal ideology. To me this always seems a little convenient-conservative economists evidently don't believe that conservative economists ever prostitute their knowledge for political reasons but if true this is hard to square with what we saw from Greg Mankiw and Glen Hubbard during the 2012 race when they were in the pay of the Romney campaign.

         To be sure, a lot of what is believed by mainstream economists is considerably more conservative than what laypeople believe-think about things like the minimum wage-the average person bought into the MW in the 30s-in any case they elected FDR who put in place, then they continued to elect him and others like him who also believed in it. Or take 'price gouging'-most people think it's wrong for say a gasoline company to raise prices sharply during a hurricane-as a few did during Hurricane Sandy on Long Island, though most to their credit didn't.

         Most economists don't have a problem with such 'gouging' they chalk it up to the workings of supply and demand. Indeed, they would go on to argue that such 'gouging' has a salutatory effect as it prevents shortages.

          In any case, what ended the problem of long lines in Long Island was when the government imposed 'odd-even' days where some could only get gas on even days, some could only get it on odd days, so in this case, government was  the answer.

          Similarly with rent control. I saw in the comments that Krugman was criticized for not mentioning rent control. To make matters worth he praised de Blasio's agenda for low housing prices-no doubt many economists would complain that this is unlikely to be Pareto optimal.


           The de Blasio plan is about all the things conservatives hate-if prices are too high it must be because of rent control; get rid of that and prices will be nice and low after supply is back at it's equilibrium level.

           It is true, that in Krugman's recent textbook with his wife and fellow economist, Robin Weil, he criticizes rent control. So this is probably the sort of thing these conservative economists have in mind.

            If nothing else, though, economists should welcome de Blasio's '10 year plan'-no doubt this will be compared to Lenin and Mao's plans-as it gives them what they always tell us they need so dearly but so rarely get-a natural experiment. 

Burger King, Inversion, the Corporate Tax Rate and the Lies of Robert Pittenger

     I'm sort of giving the meaning of the world 'lie' a wide berth where simply being wrong is declared a 'lie'-call it the Scott Sumner berth. Still, you have to shake your head a little after seeing North Carolina Republican Congressman Pittenger on how we have the highest tax rates in the world and 'this is just shameful, shame on us.'

    This all goes back to the fallout over Burger King's merger with the Canadian company Tim Horton-the irony, is that while the stocks were up on the news, and BK is presumably doing this at least in part for 'inversion' purposes, Jim Cramer actually argues that these are two less than spectacular companies hoping that the two of them can somehow be spectacular together and while BK may be doing this for Canadian tax rates, Timothy Horton is doing this to make themselves somehow more 'American.'

    Many criticize 'tax inversion'-where American companies try to get a lower foreign tax rate. The answer to GOPers like Pittenger is just lower the corporate tax rate to nothing as this is both 'fair' and will allow us to 'compete.'

     I love having some knuckle dragging Republican from the South with all their racist and sexist policies-at this point it's pretty much impossible to vote while black down there with the not so Supremes gutting the 1964 Civil Rights Act-and they are also just destroying a woman's right to choose-come up and lecture the civilized country on how they should run things. Yeah we should start picking up North Carolina policies-first we should get a Confederate flag and then we should make draconian cuts to unemployment insurance. That would please Sumner no doubt.

    I know that Sumner often represents himself as 'unsure' of what the effects of this are, but that's all just part of his sophistry: have no doubt he opposes UI benefits and would never criticize any rollback of them. Part of the illusion that Sumner tries to foster-and this is quite right as this is what he calls his blog-is that economics is this value free field where what matters is 'economic science' not ideology-it's the discipline's deceit going back to Friedman's 'postiive vs. normative' conundrum. I wouldn't deny that economists don't really try to learn and understand in a scientific manner. However, at the end of the day, what decides actual policy? At some point someone has to make a choice which will not be pristine but will come with this policymaker's ideological baggage.

     We all have beliefs-or 'ideology' to use a loaded term. My feeling is that a Sumner opposes things like UI or the minimum wage for the same reason I support them. Ethical beliefs that can be informed but never fully overthrown by facts alone no matter how scientific-and the jury is till out on how scientific econ is anyway.

      At most none of us get beyond the realm of correlation-to really being able to rigorously prove causation too often. This is why Sumner overdoes it when he accuses Obama for instance of 'lying' about tax rates after Obama-when you look at it, it comes down as usual to how you define certain terms, certain assumptions, etc.

       On the inversion issue, I feel like someone like Pittenger is just sputtering a soundbite that is very misleading. Of course, Sumner wouldn't criticize him for this. What Pittenger should say is that US nominal corporate tax rates are the highest in the world. Once you adjust it to real rates, we don't have the highest corporate rate in the world or anywhere close.

        As for 'corporate tax reform' many big corporations don't even want tax reform-the current effective rate for large corporations is 12%-why would GE for instance want a 'reform' of the tax? Pittenger, of course, will play his usual game of blame the Democrats for all the world's ills but he is certainly not advancing the cause of reform by being so misleading.


Friday, August 22, 2014

Bank of America Pays the DOJ $17 Billion Dollars and the Power of Number 17

     A simple math problem for you-smile maybe if you're a math major or an economist, I don't know... Since I came into a little money back in March-there's still the main part in the future-I put some money into the stock market-mostly options, which is my game more than stocks. 

     My only stock is Apple which has paid me very handsomely at 22 percent gains. However, how have I done overall? Let me see if you can guess. A few clues. 

     Just a week ago I was down 70 percent-options are very risky. However, after some big gains this week on JNJ, JCP, and BAC I am up again. After Bank of America's fine was agreed to yesterday, the stock rallied from $15.50 to closing at $16.16. Believe it or not this seemingly small rise of $.66 is huge in the world of options and I made just $1,700 off of that. By the end of the day I was now at 70% for the week after being down 70% since I first started back in April. 

      So you see the power of 17-it was $17 billion for the DOJ and $1700 on BAC option gains for me. The market liked this because even though the $17 billion was the 'embarassing number' BAC had wanted to avoid, still at the end of the day at least there is some sense of closure now. At least we have an idea of the ceiling on how bad this gets for BAC. The market hates uncertainty-that was what was driving down BAC. Now I imagine it can at least hit $17.

     Question-did that bring me back to even? Ok, pencils down: no, It only brought me back to close to 60 percent of my initial investment, so I was still down about 40 percent. However, I also jumped into Gilead Sciences (GILD). This soared this morning over $2 dollars which gave me another $1,800. So now I'm up close to 90 percent since hitting bottom at 70 percent down last week. 

     Another question: did this bring me back to even? No, even now I'm just about about 70 percent-actually a little less than what initially came into the market with. It's much tougher to make up losses than the initial losing. Still, not to pat myself on the back, coming down back from 70 percent down with a 90 percent surge is impressive. 

     Anyways, such is life in the market. I've spoken to enough people by now to see that most would not have the stomach for all this-I mean if you tell someone that you're down 70 percent they would surmise that it's way too risky and that they would never consider trying it. However, unlike back in 2008 I'm not betting the rent money on it, I put in just a little bit to have some fun. If I do pull back to even-which requires about another 50 percent gain from here-which is not that much less than what I lost totally percentage wise from peak to trough initially, but is considerably less than I've rallied from since I hit the trough I must say that-again not to toot my own horn but just to be honest-that would be pretty damn impressive in itself. 

     I have to admit that the bears haven't been right in a long time-of course, that's statistics: bears are going to be right a lot less often than they're wrong as roughly for every 8 years in the market, at least 5 of them will be bull years, while no more than 3 will be bear. Sumner mentions the next 10 years after the late 90s as being a period that was bad for investors. 

     "DeLong identifies three periods when stock investors did poorly over the following 10 years—right before WWI, the late 1960s and early 1970s, and the late 1990s.  Even today I’m not sure exactly how much of the poor stock market performance of 1968-81 was due to the Great Inflation. Inflation did punish savers given that the IRS taxes nominal capital income.  But does that explain the entire underperformance?  Was there money illusion (confusing real and nominal interest rates) when discounting future profits?  I’m not sure.  I am confident, however, that moving to a fiat money regime was a black swan for the US 30-year Treasury bond market, and pretty much every other bond market as well."

         True in that the indexes were lower at the bottom in March, 2009 than at the beginning. Yet, even here there were 5 bull years and 5 bear. Bull markets are-thankfully-more prevalent than bear markets just as boom years are more prevalent than bust years. 

         Interestingly, over the last 11 years-since the bottom of the 200-2002 bear market, we've had only 2 years of a bear market while 9 years of a bull market. This is kind of part of what this post is about-part of it was just to celebrate me getting some gains in the market but part of it was how numbers and statistics can mislead. While technically the last 11 years as a whole has had only two bear market years, it's hardly looked upon by anyone as a Golden Age of growth-this is true not just of the regular guy who doesn't have much in the stock market but even for most investors themselves. 

         Similarly, many would assume that if you're down 70 percent and then rally 70 percent that means your now even. This also suggests that Zarathustra's Spirit of Gravity is certainly present when one is trying to reach the top-it's much easier to fall than to rally. Even the law of numbers observes this Spirit. 

Obama's Critics Turn to Special Pleading

     That's how Ben White sounds here declaring that President Obama should start listening to his critics-after all, clearly they have his best interests at heart! White kind of admits himself that complaints about Obama playing gulf after speaking about the terrible murder of U.S. journalist James Foley by ISIS are kind of flabby, but, still Obama should worry about them because? Well the race between Scott Brown and Jean Shaheen is allegedly very close and it shouldn't be.

      "There are some who argue that criticism of President Barack Obama for happily golfing after speaking to the nation about the brutal terrorist murder of U.S. journalist James Foley is unfair and doesn't really matter anyway."
      "Those inclined to care about presidential golfing are never going to like Obama, this argument goes, so why should he trouble himself with theircritiques? Obama himself is reportedly of this view. The president, we are told, "long ago stopped worrying about what critics say."
        "He should start worrying again."
        "Because while it is true that Obama will never be able to win over his most ardent critics, he is starting to lose some of his base in a way that could cost Democrats the Senate this fall and turn his last two years in the White House into a nightmare."
          "Look no further than New Hampshire for evidence of Obama's dilemma. Democratic Sen. Jeanne Shaheen, viewed as a fairly safe bet to win re-election, is now in a dead heat with former Massachusetts GOP Sen. Scott Brown, according to the highly respected WMUR Granite State Pollreleased Thursday night."
      Well obviously Obama's critics are right about everything, after all they sure were right that he was in deep trouble in 2012. Oh wait...  The Republicans are certainly worth listening to when they criticize Obama-after all, they know everything, I mean they have won 5 of the last 6 electoral colleges. Oh wait...  They actually lost 5 of the last 6. 
       To get specific here, White admits, this is just one poll in NH and others don't have it so close. Plus, if anything, he overstates Brown's haplessness-I don't like him and I was glad that Massachusetts where I lived a number of years got rid of him, but his resume is a little more impressive than White says-he really wants to make his overall point that Obama should listen to those who hate him-so he exaggerates here.
        The kvetching about golf is right out of Sean Hannity. I mean listen to him and Rush Limbaugh-if you lose a bet-and you'll hear the President destroyed for breathing. I remember listening to Hannity one afternoon during the 2012 election and him complaining that the President was costing 'you your tax dollars' everytime he took a bowl movement.    
         I'm sure there are those who would criticize him even for taking a bowl movement after speaking about the truly terrible beheading of James Foley. That's why he has to often tune out his critics-they cry so much wolf he simply has to-after all he has a country to run. Someone has to actually do the job while the naysayers bray in the backseat.
         Obviously even the Commander in Chief is a human being who can't stop living. The trouble is that so many Obama critics speak in such bad faith. They pick up the thread of any criticism no mater how crude just to knock hm. 
         So I doubt listening to them now will be anymore helpful than in 2009 and 2010 or 2012 or at any point in their unrelenting braying over the last 7 years. I can't speak for other members of the President's base that are allegedly turning on him because he was playing golf or took a vacation but I can say the bloom is not off the rose for me, nor ever will it be. I am so proud that this man has been our President, I just hope we can one day have a Congress that is not worth of a banana republic. 
         Off the beaten path, a more meaningful point of debate-not so much a criticism of just the President but of long standing U.S. policy is the payment of ransoms. Basically, we don't pay them-neither does Britain, but some of our allies like France does. 
          While Mr. Foley was beheaded many other journalists that were imprisoned with him were set free. This has touched up a debate where there are compelling arguments on both sides-nothing to do with the President being some terrible guy so no doubt his critics will find this of no interest. After all, it's certainly plausible that had the US paid a ransom, Mr. Foley would have been a free man and avoided his terrible fate. Perversely, we can go even further and put an exact dollar amount: ISIS had claimed they would release him for $132 million dollars. 

          Of course a life is priceless but his family didn't have this kind of money. The US government does, but this is against longstanding government policy. Should this policy change? At the least it may need to be rethought. 

          If anyone is in a position to discuss the question it's David Rodhe-who is not only a journalist for both the Reuters News Agency and The Atlantic but was held as a hostage himself in Afghanistan in 2008 for 7 months. No ransom was paid though he eventually got out. 

          As he himself says there are compelling reasons on both sides. Obviously from teh point of view of a hostage or their families, it gives a better chance of saving tehir lives. The argument against paying the ransom is that it will embolden terrorists-after all, kidnapping someone high profile enough could be a very lucrative business besides the ideology of the kidnappers. 

          What Rodhe does argue is that you can argue that the US and the UK are right not to pay or that France and others in Europe are right to pay but with  some governments paying and some not it creates the worse of all worlds. 

         Note that the full title of the Atlantic link asks not if just the US but if the US and Europe failed him-by together creating a worse of all worlds scenario. 


Wednesday, August 20, 2014

Nick Rowe Gives Us the Difference Between Keynesianism and Monetarism

     This is how he seems to differentiate. Nick doesn't spell it out in so many words but it seems to come down to this: general gluts. How do you explain them? What Keynesianism and Monetarism have in common is that they both acknowledge that general gluts happen as opposed to Austrian Business Cycle Theory or Lucas and Cochrane-the New Classicals, RBCers, et. al. 

     Nick thinks that you can only explain a general glut if you understand that money is different. What the ABCT and RBC theories claim is that a general gut is impossible-you can have sectoral gluts-gluts within certain sectors but not in every industry. 

      Now, Nick doesn't say it in so many words but it seems that when he criticizes 'whack a mole' theories or approaches, this is directed also at the Keynesians-whether 'New' or 'Old' or 'Post.' 

       He describes this as a battle between Walras's Law and 'Monetary Disequilibrium Theory.' However, clearly by this definition, Keynesians stand accused of being proponents of WL that he says works only in a non-monetary economy. 

      "Walras' Law says that a general glut (excess supply) of newly-produced goods (and services) has to be matched by an excess demand for some other good. But it could be matched by an excess demand of anything that is not a newly-produced good. It could be an excess demand for money. Or it could be an excess demand for: bonds; land; old masters; used furniture; unobtainium; whatever."
      "Daniel Kuehn calls this the "Whack-a-mole" theory of general gluts. The excess demand that matches the excess supply of newly-produced goods could pop up anywhere."
       "Monetary Disequilibrium Theory says that a general glut of newly-produced goods can only be matched by an excess demand for money. There's only one mole to whack. Money is special. A general glut is always and everywhere a monetary phenomenon."
        "In a monetary exchange economy, Walras' Law is wrong; Monetary Disequilibrium Theory is right. We live in a monetary exchange economy. Walras' Law is the worst fallacy currently taught in economics as gospel truth."

       At least it's clear why Nick always denigrates fiscal policy as such a distant second to monetary policy in terms of dealing with demand stabilization policy-if you follow him here than fiscal stimulus is still directed at just certain sectors-ie, whack-a-mole-whereas only a monetary solution truly gets at the root of the policy. I'm not saying his argument here is brand new, just that I wasn't aware of it before and at least I get the basis of why Monetarists of any stripe like him and Sumner always denigrate fiscal stimulus. 

        On the subject of general gluts I find this essay very interesting:

       "In 1954, in the History of Economic Analysis, Schumpeter (1954: 617) wrote that ‘Say’s law is 
obviously true. Nevertheless, it is neither trivial nor unimportant’. 

         "From the point of view of studies in the history of economic thought, this was an important 
turning point. Paradoxically, in Schumpeter’s interpretation, Say becomes a precursor of Keynes and of
macroeconomic analysis."

        "According to Schumpeter (1954: 617) the law is the direct result of the interrelations between the 
producers who act in an economy distinguished by the vertical division of labour. The perception that 
production determines the generation of income flows would have permitted a triumph of logic against the 
simplistic and irrational underconsumption thesis diffuse among non-economists. Schumpeter’s argument 
was subsequently taken up by Blaug (1962: 149)"

       "Production increases not only the supply of goods, but, by virtue of the requisite cost payments to 
the factors of production, also creates the demand to purchase these goods (...) The demand for the 
output of any one industry must increase in real terms when the supplies of all industries increase, 
since these are precisely what generates demand for that industry’s products. Say’s law, therefore, 
warns us not to apply to macroeconomic variables propositions derived from microeconomic 

      "There could be no greater irony than the transformation of Say into the pioneer of criticism of the fallacies of composition (Schumpeter, 1954: 623-624). The privileged object of Keynesian demonology is converted
into the patron saint of macroeconomic theory!

Saturday, August 16, 2014

MIchael Brown, the Truth, and Zizkean Politics

       Yesterday I remarked after the Ferguson, Missouri police released the name of the officer who killed the young man Michael Brown-the community, far from being satisfied seemed to flair up again. This is now confirmed as things heated up again last night. It wasn't all peaceful protests either but some looting.

        What the community doesn't like is what was released with the name of the officer-Darren Wilson-a claim by the police department that Brown stole a cigar and was a wanted robbery suspect prior to his being shot. 

         "Later in the day, Ferguson police released surveillance footage from a convenience store where the incident took place. In the three-minute video, three men can be seen entering a store. Two of the men go to exit together when another man, supposedly an employee at the store, tries to stop them. The larger of the two men pushes the apparent employee before walking out."

         "Brown's family spoke out after information relating to the robbery was released, saying they were "beyond outraged."
Michael Brown’s family is beyond outraged at the devious way the police chief has chosen to disseminate piece mil information in a manner intended to assassinate the character of their son, following such a brutal assassination of his person in broad daylight.
There is nothing based on the facts that have been placed before us that can justify the execution style murder of their child by this police officer as he held his hands up, which is the universal sign of surrender.
The prolonged release of the officer’s name and then the subsequent alleged information regarding a robbery is the reason why the family and the local community have such distrust for the local law enforcement agencies.
It is no way transparent to release the still photographs alleged to be Michael Brown and refuse to release the photographs of the officer that executed him.
The police strategy of attempting to blame the victim will not divert our attention, from being focused on the autopsy, ballistics report and the trajectory of the bullets that caused Michael’s death and will demonstrate to the world this brutal execution of an unarmed teenager.
Benjamin L Crump, Esq.
Anthony D. Gray, Esq.
Daryl D. Parks, Esq.

        At this point, though, can anything satisfy the protesters of Ferguson but evidence that corroborates their version of events-that Brown is an innocent gunned down in cold blood for no reason but because he's a young black man? This is why  I see the politics of Ferguson right now as Zizekean-the tangible demand-release the name of the officer-didn't satisfy the political subjects at all. 

        Since this new claim we've had many responses from those who believe this was race inspired murder. One is that in any case, just because he stole cigars this doesn't mean he deserved to die. Yes, but it nevertheless more complicated than saying Brown is just an innocent victim-if he did steal a cigar and was involved in a robbery. 

          Last night, the protesters were out and chanting 'I am Michael Brown', but they were also-many of them-looting and preying on people's stores. Because you steal a cigar doesn't mean anyone has the right to shoot you down in cold blood but your own actions also put you and others in more risk and this may be what happens in the dangerous shuffle that you yourself has caused. 

           I don't think I'm in the position to say definitively whether the shooting was legal or criminal but this new evidence if accurate is important and it does complicate the case against Darren Wilson. 

         P.S. It's an unfortunate irony for the protesters to chant they're Michael Brown and then show their disrespect and contempt for the property and rights of others-this is after all what Michael Brown himself may have done. 

         If Brown was killed during an attempt to restrain him during a violent confrontation then it's not true that we are all Michael Brown-after all, not all of us engage in theft and robberies. 

          P.S.S I don't mean Wilson is innocent, just that this latest news does complicate the case of those who are certain he's guilty. 




Friday, August 15, 2014

Darren Wilson and MIchael Brown: a Zizekean Moment In Ferguson, Missouri

     This morning the talk was that the protests in this little town that has become such a hotbed were turning 'almost restive.'

      It seemed that maybe the worse was over in the differences between the Ferguson community and the embattled police department, with the FPD releasing the name of the police officer who shot and killed Michael Brown.

      Yet in true Zizekean form after the political subjects of Ferguson get what they said was the one Thing they must have no matter what, their one nonnegotiable demand, they still aren't happy-far from it. Judging by the comments of some Ferguson residents in the immediate aftermath, they are now less happy than they were previous to the officer's name being released. 

       A big problem is the-rather sketchy-claim by the FPD that Brown was involved with a robbery previous to the shooting. 

       "Nearly a week after a police officer shot and killed Michael Brown in Ferguson, Mo., police on Friday identified the officer as Darren Wilson."

      "Wilson is a six-year veteran of the Ferguson police with no disciplinary record, Ferguson police chief Thomas Jackson said at a news conference on Friday morning."
      "Jackson provided few other details about Wilson at the news conference and did not take any questions. He said that Wilson had been responding to a call shortly before noon on Saturday when there was a 911 call regarding a “strong-arm robbery” at a convenience store."
       "A description of a possible suspect was given over the radio, saying this person was walking toward the QuickTrip convenience store in Ferguson. An incident report handed out by police on Friday labeled Brown as a suspect in the convenience store robbery, which involved the theft of some Swisher Sweets cigars."
      One woman interviewed by CNN complained that if this was true this info would have been released long ago-that this is an attempt to justify and explain Brown's killing. 
     As Josh Marshall says, even if it's true that he was stealing cigars this in no way justifies what happened to him. 
     "Just to bring you up to date on the latest development in the Ferguson story, city police havereleased a police report that purports that show that Michael Brown was the suspect in a convenience store shoplifting/robbery incident in which the suspect stole a box of Swisher Sweets cigars. (It's a little hard to capture the apparent progression of alleged events in a few words - see the print out of the police report here.)"
     "A few things: Assuming the report and Brown's identity are accurate, it's a terrible thing that a kid losses his life over a convenience store argument over cheapo cigars."

      "But there's salient issues raised by this. How are we only hearing about this almost a week later? This by no means justifies what happened to Brown. Really, we don't know what happened to Brown, it's important to remember that: for that we're going to need a real investigation into just what led up to the fatal shooting. But it seems to bring home in an entirely new way just how unprepared and frankly clueless the Ferguson police department is that they're only managing to mention this part of the story after days of war-zoning the city streets."

        Of course, this claim opens up many cans of worms. If true, it doesn't mean Brown deserved it though it would suggest that he bore at least some responsibility. As some analysts put on CNN just now prior to the release of the officer's name the Ferguson community was frustrated by a sense of not being heard. Do they feel heard now? The early response is not encouraging. 

Thursday, August 14, 2014

Ok We Got Fired but at Least we Saw the Kardashians and Made the Paper

     I think it's a fair exchange. Yes, I haven't posted lately but as I've said before, me and my coworker-friend Kevin are big Kardashian fans as I've written about previously.

      This week we took it to a whole 'nother level. Basically we took an unauthorized vacation. Ok-that was an act of defiance but though I really enjoyed my job selling snake oil to maintenance guys I had been a little disillusioned lately. For my love of telemarketing see here.

       No, not for Mark Sadowski's reasons.

        However, lately I noticed a different tone at work. I really like my manager, a young Koren kid of only 25 who's very bright. I love his analytical approach to telemarketing. Contrary to what many sales offices believe the key is not to be 'spontenous' but rather to have a verbatim pitch that you memorize so completely that it sounds 100% natural-and so you sound 'spontaneous.'

       Lately, though the owner had been on everyone's ass. He went after Greg-the Korean manager, not his real name-for being so friendly with me. In early July I asked for one week off. Now this shouldn't even be difficult as it's not paid. At this glamorous company we don't even qualify for a paid week until one year-which would have been in September. However, the sticking point is that Kev and I wanted to take the time together. After all-he has the car and I have the money so it kind of makes sense. Plus we're a team.

      Now the owner-for spite I feel like giving his real name which he doesn't need out there with the aggressive tactics we use at that company-had a cow and said that Kev and I couldn't have the same week off as this would leave two desks empty and that if he went, then he would start looking for someone to fill up Kev's desk. This struck me as patently unfair and actually very objectionable. I mean, Kev and I-along with our Haitian coworker Ralph-all three of us started the same day last September-have been model employees since we started. We don't come late, we don't miss days, we get lots of sales and paids-Kev, in particular at that time was on quite a streak.

     Meanwhile, I know plenty of people there that are chronically late/absent and they haven't been fired. It's a long story but my supervisor-he's also 25 and best friends with Greg once got in a fistfight with another employee there and broke his nose-and neither of them were fired.

     So to me, it showed some real ingratitude. The owner's edict, confined Kev and I to only going Kardashian hunting on the weekend. However, I always felt that our only hope was if we came over during the week as well-after all, on the weekends the Kardashians tend to lay low, whereas they tend to go out and about more during the week. So it kind of deep sixed our plan as well.

     This last weekend we visited and again didn't meet them though we did get some pictures with their assistants and security guard over at Dash in Southampton. On Sunday it occurred to me that I now have money-why should I let some $300 dollar a week job-after taxes; even if you get the bonus it's just about $400 a week-clip my wings. So I texted Greg on Monday Morning and let him know that we're taking a week off but that we would be back next week if he wanted us.
     What happened is that the owner didn't like having his bluff called and we're gone evidently. I was quite pissed by this but funny enough that same night I checked my account-to see how secure I am till I get my main funds-I've gotten some smaller sums, but not the main cash yet. Would I have enough to be comfortable? What I discovered is that they just deposited another $36,000 in my account. That kind of put it in perspective. It would take 2 and a half years at the snake oil to make that much money.

      So maybe I shouldn't worry too much about those ingrates. After all, I have been planing to start my own mortgage business anyway.

      Anyways, today we finally hit paydirt-we bumped into them eating at Driver's Seat next to Dash. Though we couldn't get into their area-security guards closed it off we did see them-and best of all the paparazzi took a picture of Kev and I-we were two big guys with all those little girls around-we made quite an impression, but most important was I was wearing The Shirt: 'In Kourtney Kardashian I Trust.'

        Scroll down and you'll see Kev and I.

        UPDATE: Scott Disick likes my picture!

Tuesday, August 12, 2014

Cognitive Dissonance Ends as Hillary and Obama 'Hug it Out'

     For the record I'm a long time Hillary man and I was a Hillary man long before I was an Obama apologist-I say this for the benefit of the firebaggers. I was for her in 2008 and felt that at times the Obama campaign-but especially the Obama supporters-would go too far in some of their criticisms of her. I especially felt that they seemed to think that any questioning of a candidates abilities and worthiness for the job on racial grounds is beyond the pale-which I certainly agree wholeheartedly with-but that it's ok to do the same thing on gender-ed grounds-allusions to the idea that maybe she can't be trusted to make decisions on her own without her husband really calling the shots-interestingly in the 90s the roles were reversed when he was the one in politics and she was the civilian so to speak who would be making all his decisions. 

        However, I was rather disappointed in her recent criticism of his foreign policy with the apparent suggestion that it was his alleged lack of hawkishness that has left to the problems in Syria and Iraq. I mean I remember when she was castigated in the 90s of speaking of a 'vast Right wing conspriacy' many people found her claim to be crazy-even if it were true. Yet with her recent criticisms, at least as they've been spun in the Right wing media, you have to wonder that with Democrats like her who needs Republicans. My problem is not necessarily her specific opinions on Syria or Iraq but that she phrased things in a way that would predictably be repeated by Republicans ad nauseum to attack not just Obama but in reality all Democrats.

        I hate the weak way she positions Democrats-we have to prove we're not all weak on defense by attacking the President. Ok-this is how I received her initial statements-and let's be honest, this is how Right wing Republicans are receiving it everywhere right now.

        On foreign policy at its most basic, let's face it, there is Right wing criticism and Left Wing criticism. Most anything Obama does on foreign policy is vociferously criticized in both ways. Right wing criticism always feels that the President's actions aren't hawkish enough, and Left wing criticism always feels it's not dovish enough. The Right wants a military solution everywhere, the Left wants it nowhere. Again this is at its most basic-in principle the Right always wants more military confrontation and the Left less.

         Her criticism of Obama is from the Right as it was in 2008. He criticised her from the Left and this was felt to be the most tangible ideological difference between them and what enabled him to go ahead. Her apparent mockery of the alleged Obama Doctrine of 'First of all do nothing stupid' makes you wonder what she thinks is better-go back the the Bush Doctrine of military escalation at all costs?

        However, I hate to criticise Hillary as I hate to criticize Obama-because it only strengthens their opponents who are mostly reprehensible. However, as she's the one who seemed to be bashing the President for her own narrow political gain-who cares what it does the Administration of which she was no small part or the Democratic party as a whole/-I was in the rare position of being unhappy with her. Thankfully she now says that she was not bashing the President as Rush Limbaugh and Sean Hannity-or for that matter Ross Douthat and Joe Scarborough-breathlessly tell us.

        "Hillary Rodham Clinton called President Obama on Tuesday to assure him that comments she made in a recent interview with The Atlantic were not intended “to attack him, his policies or his leadership,” according to a statement released by Mrs. Clinton’s spokesman."

       “Secretary Clinton has at every step of the way touted the significant achievements of his presidency, which she is honored to have been part of as his secretary of state,” said the statement released by the spokesman, Nick Merrill. “Like any two friends who have to deal with the public eye, she looks forward to hugging it out when they see each other tomorrow night.”

      "That is when Mrs. Clinton and Mr. Obama are set to attend a party on Martha’s Vineyard held by Vernon E. Jordan Jr., a longtime friend to former President Bill Clinton."

      For his part, Paul Waldman argues that people just have short memories-she has always been considerably more hawkish-ie, on the Right as I define it above-than the President. 

       "There are few things the political press loves more than an intra-party squabble, so it wasn’t surprising that when Hillary Clinton gave an interview to The Atlantic about foreign policy that offered something less than fulsome support for everything Barack Obama has done, it got characterized as a stinging rebuke. The Post’s Chris Cillizza described her “slamming” Obama. The New York Times said the “veneer of unity…shattered.” “Hillary slams Obama for ‘stupid’ foreign policy,” said an absurdly misleading New York Post headline (she never called anything Obama did “stupid”)."

        "If you actually read the interview, you’ll see that Clinton actually didn’t “slam” Obama (even Jeffrey Goldberg, who conducted the interview, overstates the disagreement in his report on it). She was careful not to explicitly criticize the administration, even when she was articulating positions that differed from what Barack Obama might believe. But there were clear indications that Clinton will be staking out a more hawkish foreign policy than the president she served as Secretary of State, on issues like Iran and Syria."
     "That isn’t because of some cynical calculation, or because she wants to “distance” herself from a president whose popularity is currently mediocre at best. It’s because that’s what she sincerely believes. If people didn’t have such short memories, they wouldn’t be surprised by it. Hillary Clinton has always been a liberal on social and economic issues, but much more of a moderate (or even a conservative) when it comes to foreign policy."
      Well just so long as her more 'moderate or even conservative' doesn't mean George W. Bushlike. 
        On foreign policy the President is going to be blamed no matter what. Even on clear foreign policy victories like taking out Bin Laden ungrateful Republicans claim that the Navy Seals deserve credit for that but he deserves none.  
        On Iraq, even Dubyah came around to a timetable for getting out of Iraq. The same Obama haters who knock him for not arming the rebels in Syria criticized him from the same mouth for helping the rebels in Libya. I'm not saying that on none of the differences between Obama and Hillary is she correct, I'm just saying I don't like her explicitly criticizing the President in order to 'distance' herself from him. 
        She says she isn't and for now I'm going to take her at her word as this is what I want to believe anyway and she sounds convincing enough. However, I will be watching how she talks foreign policy in the future. As long as she is telling the truth here and is not a George W. Bush Democrat on foreign policy, I look forward to voting for her in November 2016-and with any luck, for her daughter for the same job in say November 2036. 

      P.S. Here, Axelrod gets the last word:

      "David Axelrod, Mr. Obama’s former chief strategist, was quick to defend the president this week, in a flashback to the 2008 campaign. “ ‘Don’t do stupid stuff’ means stuff like occupying Iraq in the first place, which was a tragically bad decision,” he said in a Twitter post."



Friday, August 8, 2014

Matt Yglesias: From the Lucas Critique to the Yglesias Critique

     After finishing my piece on the Lucas counter-revolution-considering Simon Wren-Lewis' claim that it was not about stagflation but rather methodology based on the supposed failure of the old style Keynesian SEMs, I saw that Noah Smith had some very good updates on his piece that pointed out that one damning fact about DSGE is that it's not used by the finance industry and that the Fed still uses SEMs:

      A update by Matt Yglesias I think is perfect-along with Krugman he's the King of Concision-he says so much with so few words. Here he nails this debate on methodology vs. ideology in a few paragraphs. 

      "I wrote in December about how "freshwater" macroeconomic models have failed the market test and are never used in private industry even though a model that actually did what these models purport to do would be extremely valuable. Noah Smith extends the point in two ways, one by rebutting academics' most common excuse for why the private sector shuns these models and the other by observing that it's actually all dynamic stochastic general equilibrium (DSGE) modeling that the private sector shuns, not just the freshwater variety."
      "It seems to me, though, that this is really just a problem for freshwater macro. Saltwater DSGE macro, as best as I can tell, is just a kind of highbrow trolling."
      "Freshwater macro is trying to derive a substantive conclusion (policy intervention to smooth the business cycle is counterproductive) from a methodological point. Saltwater DSGE is trying to show that you can get salty results from freshwater methods, so the freshwater program fails. But this is because it turns out that a competent practitioner can produce a DSGE model that proves anything at allabout the world. Brown University's Gauti Eggertsson is a specialist at this. Want a model in which people becoming harder-working is bad for the economy? He's got one. Or a model in which the way to end a depression is to deal crippling supply-shocks to the economy? He's got one. I'm not saying these models are wrong, it's just that a basic survey of the literature is going to teach you that smart modelers can model whatever they want. Your actual reasons for believing one model or the other would have to come from somewhere else. Sensible people see that as a matter of historical fact the New Deal gestalt succeeded in greatly increasing economic growth, so they're interested in investigating exactly what aspects of the New Deal had that result."
       "And that's, I think, what you see in the private sector's rejection of DSGE modeling. Even in the academic work, the models themselves aren't genuinely driving anyone's thinking so you might as well skip to whatever it is that's actually changing minds."
      I called this the "Yglesias Critique' in the tile because I think he nails a key problem with DSGE models. We can debate whether it was ideology or methodology but WL is right and it's about methodology then a DSGE model can prove anything if you are a clever modeler-so what's the need for them?
      Yglesias also touches on something that I've always suspected with Sumner as well-as much as he wants us to believe that it's not ideology that drives him. it's clearly that his reason for believing his Market Monetarist model comes for elsewhere than what he claims. 
      The Yglesias Critique can help us avoid a lot of empty claims and serve as a pretty good compass when navigating treacherous intellectual waters. In his UPDATE, Noah does identify one use the finanical industry has for DSGE models-signaling for job applicants. 
      "The anonymous denizens of EJMR discuss DSGE and the private sector. Interesting post:
Insider in a small, boutique private equity firm. We do not use DSGE models, but we do use DSGE models as a screening device, in the same spirit as graduate programs use real analysis. It turns out that we can get these guys cheaper than MBAs, and they have similar levels of firepower.
     "So DSGE does function as a kind of signaling - the ability to make DSGE models is valuable to companies even if the models themselves aren't, because they indicate general intelligence, computer skills, creativity, and/or work ethic. That makes sense."


Mainstream Macro: 'In Bob Lucas We Trust'

     Even when mainstream Macro disagrees on some level they all recite this oath every day. Even those like Krugman, Delong, or Simon Wren-Lewis who call themselves Keynesians.  Here is Wren-Lewis-from here on WL-on Lucas' New Classical manifesto:

     "Following this little interchange (me, Mark Thoma, Paul Krugman, Noah Smith, Robert Waldman, Arnold Kling), I reread what could be regarded as the New Classical manifesto: Lucas and Sargent’s ‘After Keynesian Economics’ (hereafter LS). It deserves to be cited as a classic, both for the quality of ideas and the persuasiveness of the writing. It does not seem like something written 35 ago, which is perhaps an indication of how influential its ideas still are."

      So are New Keynesians like WL really fake Keynesians? How do they explain their homage to Lucas' manifesto? WL doesn't conceive the most important thing about Lucas' manifesto to be any alleged defeat of Keynesian ideas. Yet it ought to be understood that this is what Lucas thought it was. In his manifesto, he spoke a good deal about how Keynesian economics-what is now called Paleo-Keynesianism-failed on a 'grand scale.'

     Lucas clearly thought the hits 'Keynesian' economics had taken was fatal:

     “Though not, of course, designed as such by anyone, macroeconometric models were subjected to a decisive test in the 1970s. A key element in all Keynesian models is a trade-off between inflation and real output: the higher is the inflation rate, the higher is output (or equivalently, the lower is the rate of unemployment). For example, the models of the late 1960s predicted a sustained U.S. unemployment rate of 4% as consistent with a 4% annual rate of inflation. Based on this prediction, many economists at that time urged a deliberate policy of inflation. Certainly the erratic ‘fits and starts’ character of actual U.S. policy in the 1970s cannot be attributed to recommendations based on Keynesian models, but the inflationary bias on average of monetary and fiscal policy in this period should, according to all of these models, have produced the lowest unemployment rates for any decade since the 1940s. In fact, as we know, they produced the highest unemployment rates since the 1930s. This was econometric failure on a grand scale.”

     WL can claim to be a Keynesian who pages homage to Lucas because he argues that what was important about Lucas' manifesto and the NC-and later New Keynesian-revolutions was not about ideology but method. He claims that what was important here was not stagflation-even though Lucas alleges that the existence of stagflation is an 'emprical failure on a grand scale of Keynesian models.'

     "What I want to explore is whether this manifesto for the New Classical counter revolution was mainly about stagflation, or whether it was mainly about methodology. LS kick off their article with references to stagflation and the failure of Keynesian theory. A fundamental rethink is required. What follows next is I think crucial. If the counter revolution is all about stagflation, we might expect an account of why conventional theory failed to predict stagflation - the equivalent, perhaps, to the discussion of classical theory in the General Theory. Instead we get something much more general - a discussion of why identification restrictions typically imposed in the structural econometric models (SEMs) of the time are incredible from a theoretical point of view, and an outline of the Lucas critique."

      "In other words, the essential criticism in LS is methodological: the way empirical macroeconomics has been done since Keynes is flawed. SEMs cannot be trusted as a guide for policy."

     Well we get the idea of what NKers tell themselves when they drink the DSGE coolaid. Is it what Lucas thinks of? I'm not so sure. Here is Noah Smith

     "The Keynesian SEMs predicted that when the Federal Reserve lowered interest rates, it should have given the economy a boost; instead, all it did was create useless, harmful inflation. This made a big impression on economists. About a year ago I asked a group of economists whether the Fed should temporarily adopt a higher inflation target. Robert Lucas, who probably has more claim than anyone to being the father of modern macroeconomics, thundered: “We tried (stupid) inflation! It didn’t (dang) work!”

     Was the important thing methodology-for Lucas and friends or was it ideological, the opportunity to dance on the 'Keynesian grave'? I think this at least debatable. Lucas clearly sees it as simple as 'Keynesians told us inflation was good and it turned to be bad'-though no 'Keynesian' of any repute ever made such simplistic claim. The vulgar idea of the Phillips' Curve was clearly wrong but did you really need to burn Keynes to know that? 

    I suspect that what WL thinks is important about Lucas' counter-revolution may be different from what Lucas thinks. As for the area that they agree on-SEMs, well, what's interesting is that neither the finance industry or even the Fed have given up on SEMs, 35 years later:

       So both Wall Street and the Fed still haven't heard of the grand failure of Keynesian SEMs yet-it's hard to square this fact with Rational Agents. Neither of them declare 'In Bob Lucas we trust.'