"There's nothin' surer . . ." *

As a not-quite-identical follow up to this, we have updated information on income inequality.  (Follow through the imbedded links to this.)

The top 1% have been the only big gainers since about 1980, and are now, having really raked it in since 2002, once again at 1928-29 levels.  Let's see -- what happened in 1980 . . . (?)

And what happened in 1929?

You don't have to be a pinko commie, or even much of a socialist to realize that this kind of unbalance is bad for society.  It leads to disruption, possibly to depressions, and, as a worst case, armed revolution.   Not much likelihood of that, though, since all the rabid talk is coming from the right, where all they want is another freaquin' tax cut.

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* AIN'T WE GOT FUN from 1920 (Richard Whiting / Gus Kahn / Raymond S. Egan)

Stock Market Crash - Not So Bad?!?

A Mark Hulbert article on Yahoo finance suggests that the real recovery time for the stock market from the 1932 bottom to equal the value of the 1929 high was not the 25 years you would believe from looking at the stock charts, but a mere 4 1/2 years from the 1932 bottom to 1936.

Skeptical? Me too.

The rational is that a) deflation had price levels reduced by 18% from '29 to '32, and b) high dividend payment levels, in the range of 14%, contributed to a recovery contribution that is not factored in. These things are true, and not irrelevant, but they still tell a very misleading story. Hulbert only hints at the math, but it can be reproduced this way.

The JDI top (eliminating decimals) in 1929 was 381. Less 18% for deflation, this would have only been 312 and change at the 1932 bottom.

At the bottom, the DJI was at 41, a number which does not enter into the calculations.

From the Yahoo finance historical data, the highest DJI value in 1936 was 185, a number Hulbert does not cite. Take 185, and multiply it by 1.14, 4 times to get 4 years of compounding, and the answer is (voila!) 312 and change.*

OK. With a little detective work and some relatively simple math we can get to the desired answer.* But does anything smell maybe a bit fishy?

First off, Hulbert corrects the top value for deflation, but does not correct the gains from the bottom for inflation between 1932 and 1936. Trust me, there was some. Not a lot perhaps, but enough to to require some adjustments in the math.

The 14% dividend yield number from 1932 would have fallen dramatically as stock prices rose from 41 to 185 during the years from '32 to '36. This is huge, but totally left out of the reckoning.

Even beyond the specious math, the underlying assumptions are questionable. An investor would have had to stand pat through the entire 1929 to 1932 collapse, and then be in a position to reinvest dividends during the recovery. Possible, I suppose, but highly unlikely.

I've always respected Hulbert, but this article uses cherry picked data, flawed logic, and even some invalid numbers, to reach a very questionable conclusion.

Update: Something else troubles me about the whole approach. I think there is an apple and an orange here, maybe even an onion.** Comparing the the level of the stock market index to itself over time is one thing. Comparing the level at one point in time to any measure of total return at a different time is something else again. The total return idea has its own validity, but in this context strikes me as being a totally erroneous comparator.***

Update 2: Suppose Hulbert is 100% right, and I'm 100% wrong. From 1929 to 1936 you still have a compounded annual return of ZERO!

Update 3 (5/17) The ex post facto math in multiplying 185 by 1.14^4 to get a derived theoretical number from the previous bottom, based on presumed dividend returns reinvested strikes me as being bogus.
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* I can't be sure that this is how it was done, but if not, it's a heck of a coincidence.

** Perhaps what I was smelling.

*** But I'm just the trombone player

Factoid

After being waterboarded for the 183rd time, Khalid Sheik Mohammed was heard to exclaim, "Praise Allah for the clarity of my sinus passages.  Never has the neti pot been so effective!"

Sunday Music Blogging

Another Jazzbumpa original.   From my antiquity period.

This is converted midi file, so - just computer generated sounds, not an actual performance. This arrangement has been performed though.

Red Wings Playoff Blogging - Round 1, Game 1

The first game of the first series is always scary for a Red Wings fan.  Especially when they come up against a young, hungry*, low-ranked team with an outstanding goaltender, as the Columbus Blue Jackets have in rookie Steve Mason.

This year's regular season ended on such a sour note, that the Wings looked seriously UNREADY for the playoffs - prompting me to dub them The Eathelred Wings.  The start of the game was in keeping with my worst expectations.  Columbus spent 6 of the first 10 minutes on the power play. But, the player who seemed to be the biggest question mark going in was the one who came ready to play from the opening whistle.  While the rest of the team found their way back from the penalty box, the locker room, the concession stand, or wherever they were lurking, goalie Chris Osgood kept the Blue Jays off the score board, and the Eathelreds in the game.  Of course the fact that Columbus has the worst power play in the league might have helped.

At about the ten minute mark, the tide turned, and the Wings took over.  After allowing 13 shots on goal in the first period the Red Wings (having earned back their regular name, for the nonce) held the Blue Moons to a mere 8 for the rest of the game, including only 2 in the final period.

Scoring in the Wings 4-1 victory came from the third line and the defense - with the help of a couple deflections off Columbus players.  Bad luck for Mason, who really played an outstanding game.

Short synopsis:  Ozzie was brilliant, and kept the Eathelreds in the game until the real Red Wings  made their appearance - about ten minutes late.  Then the Wings put on a great show of defense, while also showing, once again, why they are the number one scoring team in the league.

I have to say something about the officiating.  It was horrible, terrible, atrocious, and ghastly.  I don't have too much of a problem with all the first period Wings penalties that put them on the PK for minutes on end.  I have a big problem with the non-calls on Columbus.  There were no fewer than 6 blatant infractions that were non-calls.  Two goalie interference, two holding/interference in the Columbus defensive zone, and two slashes, one of which could have caused a serious injury, had it been a few inches higher on the arm, and the other setting up an early scoring chance for the Blue Bonnets.   Two of the four Columbus penalties were for goalie interference, and neither of those was as severe as the two non-calls.  Pitiful job of officiating.

This single incident illustrates how out of it the officials were. With under two seconds left in a 4-1 game, Columbus iced the puck.  It looked like the clock ran out, and the Wings bench swarmed Ozzie to congratulate him.  But the officials made them clear the ice, and have one last face-off in the Blue Sea's end. Freaking pitiful! 

Columbus is a team with big aggressive players.  Once the game was out of reach, I expected (with some prompting from Mickey Redmond) a lot of cheap shot action from the Blue Clay. But, to their credit, and that of manger Ken Hitchcock**, it never happened. 

On to game 2.

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* This is the first playoff appearance in the 8 year history of the Columbus franchise.

** Even without the moustache, he still reminds me of Captain Kangaroo

Easter Sunday Music Blogging

A Jazzbumpa Original

I cannot believe what I heard today

Senator Inhofe, of global warming denialist fame*, has on his own Senate website the YouTube video of his pathetic lies, offered from his trip to Afghanistan to an eager American public.

So soon after I go prattling on about the unwisdom of making politically charged statements that are so easy to refute, he serves this up: Obama is gutting the military and endangering the country. Evidently, the good Senator does not read my blog. Maybe it's just because he's busy with his foreign travel.

Well, if a 4% funding increase constitutes a cut, Inhofe does higher math than I can comprehend.

But, of course, his intellectual prowess is -- is . . . uh . . .

Urbino puts it in perspective.
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* Evidently not realizing the difference between climate and weather.

More on Pelosi - or Not

Following up on this post.

After giving this matter some further thought, I've concluded that it isn't even about Pelosi. It's about using misinformation to incite unjustified anger and outrage, in an attempt to gain a political advantage. It merely uses Pelosi as a foil. It could just as easily have been Ted Kennedy, Barney Frank, or any Democrat with high name recognition. According to Urban Legends and Myth Blaster, this pack of lies, in some variation, goes back to before the mid-term election of 2006. Clearly, the goal is to discredit Democrats, in general. As such, it is a desperate measure by a fanatic, and profoundly dishonest. When you think about why people lie, there is a simple and obvious answer that almost always fits: the truth does not serve their purpose. In this case, it becomes really unfortunate when good and intelligent people, like you on this distribution list*, fall into the trap of taking it seriously, and even passing it along to others.

When you see something like this, ask yourself a few questions. Are there any citations, or is it all naked assertions? What kind of language is used? If it is highly emotionally charged and pejorative, set your BS radar on high. Do the assertions pass a laugh test, or does it look like some kind of parody? If it is says, "You aren't going to believe this," maybe you shouldn't. At least not without doing a simple Google search.

Here is a related problem. In any debate between an honest person and a liar, the liar has the advantage. While the honest person is constrained by considerations of truth and relevance, the liar is free to make up anything, and use all sorts of misdirections and irrelevancies to muddy the water. The honest person has to clean all this up, and dispose of it before the discussion can progress. But the liar can always stay a step or two ahead.

If anyone is interested, here is an essay that goes even deeper into the liar's inherent advantages.
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* Of the original e-mail that caused all this ferfluffle.

Another Correlation

Updated: 10/07/15

This graph shows a measure of inequality of income along with a measure of partisan polarization in the U.S. House of Representatives. I would never have thought of this pairing, but Nolan McCarty, Keith T. Poole, and Howard Rosenthal did. (Scroll down after linking.)

Their data set stops at 1998.    Now updated through 2012.

Here is the original graph, through 1998, via the Krugman link below.

Since then, as I originally suspected, it has only gotten worse, on both counts.

Krugman thinks finance sector wages are a cause. Works for me.

More generally, I blame the Republicans.  Really.

Decline in the Volume of World Trade

Graph by Barry Eichengreen and Kevin H. O’Rourke, displayed as Figure 3 in their article at Vox. The entire article is worth reading.

I've been wondering, since my Smoot-Hawley posts (Smoot 1 and Smoot 2), if the tariff was really important in reducing international trade, and thus contributing to the depth and duration of the Depression of the 30's, or if the trade decline was a direct result of the unfolding depression, and the tariff was relatively unimportant.

Here is a comparison, on a month by month basis, of the decline in world trade from the peak months listed for The Great Depression and Now. I haven't heard much noise about increasing tariffs yet, this time around, and don't know if any have been implemented.

The graph offers Nothing definitive as an answer to my question, but is at least consistent with the idea that trade was falling on its own, and Smoot-Hawley might not have mattered much.

This article, co-authored by Eichengreen, goes into some related detail, and explicitly assumes that Smoot-Hawley was a bad thing. But, it does not demonstrate that trade declines were caused by tariffs.

Nancy Pelosi to Jazzbumpa: Drop Dead

Not really. Though Mitt Romney is another story.

I received this e-mail today from one of my former colleagues who retired along with me and several others last fall. (Note the apostrophe after "morons." Whoever wrote this is as ignorant as he is dishonest.)

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LET'S IMPEACH HER NOW BEFORE SHE DOES FURTHER DAMAGE!! WHAT AN IDIOT!!

IF YOU DON'T AGREE JUST DELETE--IF YOU DO--PASS IT ON!! WHERE DO WE GET THESE MORONS'


Windfall Tax on Retirement Income

Adding a tax to your retirement is simply another way of saying to the American people, you're so darn stupid that we're going to keep doing this until we drain every cent from you. That's what the Speaker of the House is saying. Read below...............

Nancy Pelosi wants a Windfall Tax on Retirement Income. In other words tax what you have made by investing toward your retirement. This woman is a nut case! You aren't going to believe this.

Madam speaker Nancy Pelosi wants to put a Windfall Tax on all stock market profits (including Retirement fund, 401K and Mutual Funds! Alas, it is true - all to help the 12 Million Illegal Immigrants and other unemployed Minorities!

This woman is frightening.

She quotes...' We need to work toward the goal of equalizing income, (didn't Marx say something like this?), in our country and at the same time limiting the amount the rich can invest.' (I am not rich, are you?)

When asked how these new tax dollars would be spent, she replied:
'We need to raise the standard of living of our poor, unemployed and minorities. For example, we have an estimated 12 million illegal immigrants in our country who need our help along with millions of unemployed minorities. Stock market windfall profits taxes could go a long way to guarantee these people the standard of living they would like to have as 'Americans'.'

(Read that quote again and again and let it sink in.) 'Lower your retirement, give it to others who have not worked as you have for it'.

Send it on to your friends. I just did!! This lady is out of her mind and she is the speaker of the house!

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It contained a lot of colored fonts, bolding, etc. that I am not going to bother to reproduce here.


I sent this response to my former colleague.

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Agreeing or disagreeing has nothing to do with it. And it's a bit late for an April Fool.

What you need to do is send a retraction to everyone you have sent this to, and insist that they do the same. In fact, just forward my note.

Feel free to hate Pelosi. I don't think much of her either, but probably for an entirely different set of reasons.

And I'm all for holding politicians hairy feet to the fire, irrespective of party affiliation..

But, God damn it, let's spend the ten seconds it takes (that's how long it took me) to do the necessary fact-checking to reveal this as total bull shit.

http://www.snopes.com/politics/pelosi/windfall.asp

And do a little critical thinking. Does the claim even make any sense?

Frex: Does this note give any indication of when or where these ridiculous statements were alleged to be made? Or who they were made to?

Of course not, because it's a combination of distortions, misquotes out of context, and shit that someone made up.

Oh - and don't you think the retired generation is big enough to have some political clout, probably shouldn't be screwed over, en mass, and that the Speaker of the House might almost be smart enough to realize that?

Jesus, people - we're educated. Use your brains.
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But, you see, this is what conservatism has been reduced to.

They have nothing to offer. Nothing. That's why we get: Obama is a Muslim, Obama made the stock market fall, he hangs out with terrorists, and Pelosi wants to confiscate my 401K.

I've said before that we need a a thoughtful, responsible conservatism in this country. If it exists at all, it is somewhere in the Democratic Party.

Upate (4/08, 11:30 a.m.): There was some blowback to my note. Here is my response.
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So Snopes is liberal and therefore a liar. I get it.

How about this from a true-red conservative.

He goes on to rip Pelosi to shreds. Draw your own conclusions about bias.

Here it is from urban legends.

Now I'm up to 30 seconds.

Bullshit is still bullshit.

I'm not in favor of Pelosi. I'm in favor of the truth, and using critical thinking skills.

What I'm against is the approach to partisanship that pretends that anyone on my side is right and virtuous and must be defended/protected, but anyone on the other side is scum and any manner of lie and distortion to make them look evil is OK by me..

All this does is get in the way of rational discourse.
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We Are So Screwed

This via Paul Krugman:

Just as stocks were peaking, and poised to tank, the Federal Pension Guarantee Board, under the BRILLIANT governance of the departed but not lamented Shrub administration, switched from bonds only to lots of stocks.

All hail the ownership society!