Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

Copyright Notice

Everything that appears on this blog is the copyrighted property of somebody. Often, but not always, that somebody is me. For things that are not mine, I either have obtained permission, or claim fair use. Feel free to quote me, but attribute, please. My photos and poetry are dear to my heart, and may not be used without permission. Ditto, my other intellectual property, such as charts and graphs. I'm probably willing to share. Let's talk. Violators will be damned for all eternity to the circle of hell populated by Rosanne Barr, Mrs Miller [look her up], and trombonists who are unable play in tune. You cannot possibly imagine the agony. If you have a question, email me: jazzbumpa@gmail.com. I'll answer when I feel like it. Cheers!

Friday, December 31, 2010

Best Headline of the Year

From Krugman's Op Ed this morning.

My nomination for headline of the year comes from the newspaper Roll Call, on July 18: McConnell Blasts Deficit Spending, Urges Extension of Tax Cuts.”

This puts him at just about this level.  Except the guy who came in 3rd in the Myrtle Turtle  look-alike contest is operating on hostility due to simple greed, while the moron in the van has a rather different variety of reptile brain.

You can't make up shit that is as ridiculous, stupid, and just plain awful as the reality of what the Republican liars, brigands and thieves are doing to America.

PK concludes:  "Banana republic, here we come."

God, we're screwed.
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Quote of the Day - Ringing Out/In the Old/New

An optimist stays up until midnight to see the New Year in. A pessimist stays up to make sure the old year leaves.
~ Bill Vaughan

H/T to Hatool at The Corner.
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What The Hell?!? Friday - Blackberry and Apple Edition



I don't get the part about the orange.

H/T to Sharon.
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Thursday, December 30, 2010

The Best Economic Blogs

According to Alen Mattich at the Wall Street Journal.  (With a H/T to James Hamilton.)

Alen is evidently a very serious person, since he placed Marginal Revolution at the top of the list, and Megan McCardle, who "is excellent" (gag) near the bottom.  No, I will not link to her.  I really don't feel like hugging a squid tonight.

You can certainly see why MR made it to the coveted apex.  Who but Tyler Cowan could read this story, and see in it a lesson about monopsony?

There are actually a number of good choices on his list - as evidenced by the fact that I link to them in my right-hand panel.

It includes - almost as afterthoughts - Delong and even Krugman, "albeit with the caveat that his ad hominem attacks detract from his analysis."  WTH?!?  I guess that is a reminder, lest we forget, that we're dealing with Rupert's Wall Street Urinal, so the connection with reality is going to be erratic. 

There are blogs listed that I've never checked out, so there is some future fodder, mayhaps.  But I'm genuinely baffled that he missed Modeled Behavior.  That site is mostly interesting and thoughtful, often erudite, and always promotes a staunchly free-market, libertarian-leaning conservative viewpoint.   And Karl, at least, will sometimes engage me.

Then again, Mattich thinks Megan McCardle, who, with her "bachelor's degree in English literature from the University of Pennsylvania, and an MBA from the University of Chicago" is no more an economist than I am,  is an "excellent" economic blogger.

If I were to say that explains a lot, would I be making an ad hominem attack that detracts from my analysis?
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Moron the "Lump of Labor Fallacy" Fallacy

Over at AB, Tom the Sandwich Man has series of posts on the infamous "Lump of Labor Fallacy" fallacy, cross-posted at his own blog.  I'll post a complete series of links when it is complete.
 
In the first installment at AB, Andrew Biggs of the American Enterprise Institute made a long comment which contained this bit of brilliance:

. . . If the lump of labor view isn't a fallacy, that implies that it's simply impossible for the French to work as long as people in other countries do, . . .

My retort:

This is the kind of absolutist thinking that reduces economics to drivel.  If something is true, then it is IMPOSSIBLE, always and everywhere, for a contrary idea to be true.  That is why Austrian economists believed the Great Depression was the Great Vacation.  They couldn't recognize that real world economics differs across space and time, and the absolutes only work as special cases.  Thus, the condition in France proves that the LOLF is a correct concept.  Very pat.  Also a classic fallacy of composition.   
 
GDP growth has been dismal, but still positive over most of the past 10 years, yet employment has not kept pace, as Tom demonstrated with actual DATA, and unemployment is now sky high. Recent college graduates can't get jobs, and illegal immegrants are giving up and going back to their dismal homelands, because they are out of work here.   
 
http://articles.cnn.com/2009-02-10/us/immigrants.economy_1_day-laborers-immigrants-and-native-born-americans-immigration-experts?_s=PM:US  
 
Riddle me that LOLFer.  
 
Another reason the LOLF is a fallacy is that it attributes to nonbelievers a concept to which they do not actually subscribe:  that the number of jobs is fixed (more erroneous absolutist thinking.)   The reality is that there can be in certain times and places, an imbalance between workers and jobs available.  Clearly, that is the case now.  Nobody has to suppose that the number of jobs is X, to ten decimal places.  You only have to realize that the number of jobs is growing a) slower than the number of workers, b) not at all, or c) is in fact negative.  Any of these can easily happen in the real world.  
 
So, LOLF is itself a fallacy for two obvious reasons:  
1) It is based on a fallacy (of composition.)  
2) It dishonestly represents the position of the contrary point of view.  
 
Can I put a QED on this? 

Tom thought I could.

Note that Biggs, as Coberly pointed out at AB,  has made a career of contriving "well sounding rationalizations for destroying Social Security."  He is agenda-driven, not fact-driven.
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Wednesday, December 29, 2010

Haiku Wenesday - Frost

FROST I

A hoary coating
Makes blades of grass look ancient:
The dew of Winter

FROST II

Fresh from the freezer,
A tall glass mug that's coated
With translucent ice.


FROST III

An Old Wanderer
Admonishes us to take
The Road Less Traveled.


Join the fun!

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L.A. Times Crossword Puzzle Blogging

Wed, Dec 29, 2010 Gary Cee

Theme: After our discussion on themes yesterday, and despite other temptations, Eye-yi-yi, I'll just go with the unifier,  EYE OPENER.  For the asterisked clues, the first word of a common two-word answer can precede the word "EYE," yielding a totally different type of two-word phrase.   Lots of times these are RIB TICKLERS, but today they're pretty straight forward.

17 A. *Unquestioning devotion : BLIND FAITH.  Belief in something, in the absence of evidence, or even disregarding contrary evidence.  Don't get me started.  BLIND EYE:  What the devotee turns to the imperfections of the object of his devotion.

63 A. *Knee-slapper : RIB TICKLER.  An amusing joke or story that gets gets your ribs moving with a series of tee-hees.  RIB EYE:  A boneless, well-marbled steak, cut from the top of a standing rib roast.  Cf. 23 D!

10 D. *Pitchers and tumblers : GLASS WARE.  The clue defines them very well.  Vessels made of glass, suitable for transporting libations to and from the table, and thence to the lips.  GLASS EYE.  A non-functional ocular prosthesis: an artificial EYE made of GLASS, the best material for this application.  Sammy Davis Jr. had one.  Since I'm an EYE GLASS WEARER, I was tempted to go with the childhood taunt "FOUR EYES" for the theme, but, alas, "EYE" only shows up once - in the unifier.

34 D. *Like treatment for visiting dignitaries : RED CARPET.  It is literally rolled out for heads of state, and at gala celebrity events.  Less formally, it indicates giving someone an unusually high level of hospitality.  RED EYE: An overnight flight from point A to point B, implying discomfort and lack of sleep, hence the RED EYES.  Probably not the usual means of transportation for someone about to walk the RED CARPET.

And, of course, the unifier, 38 A.  A 5- or 40-Down ... or what the start of each answer to a starred clue can be : EYEOPENER.  This has a few different meanings.  The first is a startling revelation that gets one to see something in a new and unanticipated way. (Those with unquestioning devotion are immune.)  The second is an alcoholic drink consumed early in the day, presumable to get one up and at 'em.  Third, the stimulants in 5 and 49 D.   But, here, it also uses a common cross-word trope to cleverly indicate that the beginning of each theme answer can precede "EYE."

Hi gang, It's JazzBumpa, with a tumbler of ginger ale at my elbow.  Glenkinchie will come a little later.  I don't recognize Gary Cee's byline.  This puzzle was a lot of fun, and seemed pretty fresh to me, despite a few common entries.  I've been anticipating AGLET for a long time, but don't recall seeing it in a puzzle before.  The pinwheel theme answer  arrangement is uncommon, as is placing the unifier in the center of the grid.


Across


1. Sound return : ECHO.  I was thinking of investment returns.  Now I have my eye open for clechoes!

5. Suspension bridge support : CABLE.  Here is an example I get to drive across going to and from visiting my mother.

10. Obtain forcibly : GRAB

14. Miller, for one : BEER.  I thought it would be a teller of a Canterbury Tale.  But the miller was drunk, so it kind of fits.

15. Shoelace tip : AGLET.  For some odd reason, I love this word.  "Mom, they're tying the whole world together!"

16. Stubbs of the Four Tops : LEVI.  News to me.  But he might have just what you need.

19. Scored 100 on : ACED.  Perfect!

20. Bozo : GOOF.  Or a clown.

21. "When the smog clears in California, UCLA," e.g. :PUN.  Sheesh.  I read right through this and didn't get it.

22. Hitchcock title : SIR.  Good night! I didn't know that.  Nice misdirection for the director.

23. Dice-rolling game : YAHTZEE.  I haven't played this game in years, and don't recall liking it very much.

26. The King or Prince : POPSTAR.  A royally clever clue.  I think we had Jacko, the King of Pop not too long ago.  Prince is the artist formerly known as "The artist Formerly known As Prince," which makes him the once and future Prince, I suppose.  Never was a big fan of either.  Feel free to provide links in comments.

29. Repugnant reaction : UGH.  Not now.  I just took a sip of the Glenkinchie!

30. Pound sounds : YIPS.  Rhyme time for puppy noises.

32. Treatment plant input : SEWAGE.  Now -- UGH!

33. Tie up, in a way : MOOR.  I have no idea why this caused me a problem.  Maybe our boaters can explain the origin if this word.

35. Home of Duke U. : N CAR.  The Raleigh-Durham-Chapel Hill region of North Carolina, a beautiful part of the world with a lot of traffic.  Note Abrv. n Cl. & Ans.

37. Looks bad, comparatively : PALES.  Someone or something can PALE in comparison.  But - no politics - moving right along . . .

41. Parisian daily, with "Le" : MONDE.  Lucky guess.  No idea where in Le Monde it came from.

44. Singer Amos : TORI.  Never paid any attention to her.  Here is a song for the season.

45. Latin 101 verb : ESSE.   Stock fill.

49. Signs into law : ENACTS.  Rumor has it that making law is like making sausage.  If you won't ask, I won't tell.

51. Pool room supply : RACK.  It's that triangle-shaped thingie that you put all the balls into, then take away so you can hit them.

53. Amigo : PAL.  That's right friendly!

54. Reaches : ATTAINS.  I always like it in those old westerns when the bad guy pulls out his gun and says, "Attain the sky."

56. Chesapeake Bay city : NORFOLK.  Just across the James River is Hampton, where my step son Tom used to live.  Now, home is in FLA, and he should be back there by Friday.

58. Televise : AIR.  Hmmm.  Don't they also AIR radio broadcasts?
And
36. Aired again : RERAN.   Is it a clecho if the clue echoes an earlier answer, or just an inelegance?

59. Physicians' org. : AMA.  The American Medical Association.  Note Abrv.

61. Precisely : TO A "T."  Sometimes it's just a "T" and sometimes it's a "TEE."  Either way, the origin is disputed.

62. Fall : DROP.  I always think of the stock market drop in the FALL of '29.

67. Green climber : VINE.

68. Title owner of a sitcom bookstore : ELLEN.  Beats me.  I haven't watched sit-coms in 30 years.

69. Homeland of the folk-singing Clancy Brothers : EIRE.  Always need perp help to decide between EIRE and ERIN.

70. Two out of three, say : MOST.  Is the GLASSWARE MOST full or MOST empty?

71. Teacher's directive : SEE ME.  It means (s)he wants to talk.  Hope it's something you want to hear.

72. Pringles-like Lay's product : STAX.  I really cannot understand what justifies the existence of the Pringle, let alone a competitive product from a company that makes real chips.

Down

1. Flow back : EBB.  Like the tide.

2. Place to see Bugs? : CEL.  Gary got me here.  A CEL is a transparent sheet that animation figures are drawn on.  CEL is derived from celluloid, a plastic made from cellulose.  Today, the CEL is a relic, due to CGI.

3. Dwarfs' song : HEIGH-HO.  Spelling this was a guess.  Disney stopped using CELS in 1990, but this was long before.  

4. Self-contradictory afterthought : OR NOT.   I'm never sure if I should say this, OR NOT.

5. Joe's stimulant : CAFFEINE.   A bitter tasting crystalline xanthine alkaloid which occurs in the beans, leaves, and fruits of some plants, notably coffee, aka JOE.

6. Turkish authority : AGA.   If you can't do it, the AGA KAHN.

7. Plane, in a control tower : BLIP.  On a radar screen.

8. Relax : LET UP.  Or ease up, stop applying so much pressure.

9. Cultural group : ETHNOS.  Per the Free Dictionary, "people of the same race or nationality who share a distinctive culture."

11. Conservatory event : RECITAL.  Typically a solo musical performance by a singer or instrumentalist.

12. Like Joe? : AVERAGE.  He just an average Joe - but he's also a clecho!

13. Bridge action : BID.  The action is an auction, and the players get to bid for the contract.  Suits me!

18. Half asleep : DOZY.  Pretty much the same thing as DROWSY.

23. "De-lish!" : YUM.  RIB EYE, anyone?

24. Gone by:  AGO.  Long ago, in a galaxie far, far away . . .

25. Theme park acronym : EPCOT. Disney's "Experimental Prototype Community Of Tomorrow."  I can never remember that.

27. Toon Le Pew : PEPE.  An amorous pole cat with an accent.

28. Hi-__ graphics : RES.  For good pictures of THINGS!

31. Flavor : SAPOR.  I think we've been disconcerted in the past by SAPID.  This looks like the root of all SAPIDITY.  SAPOR is the quality of a substance to produce flavor.  A hungry insomniac might want a saporific soporific to get DOZY.

39. Bigfoot cousin : YETI.  A very distant cousin, since bigfoot is from North America, and the Yeti lives in the Himalayas.  Though sometimes he can be found in a CEL with Bugs.

40. Smoker's stimulant : NICOTINE.   Another plant alkaloid, found in the nightshade family, and another clecho!  It is what causes tobacco addiction.

41. "Give __ holler!" : ME A.  Give me an "H" . . .  That's not very good.  My bad.  I mean ME A CULPA.

42. Province bordering four Great Lakes : ONTARIO.  One of the lakes has the same name.  Which Great Lake does it not touch?

43. League of __ : NATIONS.  "Distinguished gentlemen" wouldn't fit.

46. What a "Me and My Shadow" singer might be :SPOTLIT.  In the lime light, so to speak.  Here we have the star of yesterday's theme and the man with a glass eye.

47. Mineo in movies : SAL.  He was a singer, too

48. Mountain lion prey : ELK.  Pretty ambitious snack, if you ask me, but probably a lot of YUM!

50. Catches : SNARES.  Or some drums.

52. Ray who said, "It requires a certain kind of mind to see beauty in a hamburger bun" : KROC.  Ray Kroc founded McDonald's.  To him I say, "That's a crock!"

55. The parenthesis in :-) : SMILE.  Your basic emoticon.

57. Counterfeits : FAKES.  We call them ERSATZ.

60. Competent : ABLE.  Having a useful skill.  One of Adam's sons was competent.  The other was ABEL.

62. Pet physician's deg. : DVM.  Doctor of Veterinary Medicine.  Note Abrvs.   They do not belong to the AMA.

64. Pro __: for now : TEM.  Like a committee, PRO TEM, usually set up for a single purpose and dissolved when the task is complete.

65. Pitcher's stat : ERA.  'Nother Abrv.  Earned Run Average.

66. Oscar winner Harrison : REX.  He was a fair lady's man.

That was fun and interesting.  Hope you liked it too.

Cheers!
JzB

Cross-posted at The Corner.
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Tuesday, December 28, 2010

The U.S. Economy is Dying - Pt 2.

Back in October I posted Part 1, based on a look at GDP since WW II.  Here are some other dismal facts to ponder.  Consider first, Capacity Utilization.  Data from the Federal Reserve.



It's easy to pick out the recessions on this graph.  The line droops like an icicle as business slows, then climbs up again as we come out of recession.  The disturbing thing is the trend line, shown in green on the chart - relentlesly down, down, down for over 40 years, as each recovery is more anemic than the last.

Just for kicks, the capacity utilization line is sketched out in Red and Blue segments, indicating the spans of Republican and Democratic administrations. I've also added a horizontal line for each admin, indicating the average of utilization over its time span.  Note that the moribund Carter admin. was at a higher level than ANY of the Republicans.  Actually, at 83.45%, Carter even inches out Clinton at 82.84%.   It's just an amazing coincidence that all of the icicle tips - except for the last one, that B. Hoover Obama inherited from his idiot predecessor - are Red.  One might also note in passing that the onset of a Republican administration is always - and I mean ALWAYS indicated by a steep drop in capacity utilization (e.g. RECESSION).  This must be one of the ways in which Republicans are good for business.

Right now, in the midst of an a scintillating recovery - we've been stalled at 75% for three months - we're still nowhere near the descending tend line that connects the tops.  Note also that 75% is in the mid-range for previous bottoms.

Here's industrial production since 1967, from Calculated Risk.


There was a time when this was a growth curve - then G. W. Bush happened.  Now it looks like we're stalling out at a level that was once a peak - a mere 10 years ago.

Remember that small business are the real growth engine of our economy.  Here are their near term hiring plans, also from CR.



The ZERO level used to occur at bottoms.  Now, we've had to improve to get to that level.  (Take that, Lump of Labor Fallaciators.)  Plus it looks like we might be stalling there as well.

On the other hand, though, big business are doing their part by hiring lots of people.   That would perhaps be more helpful if it were happening on this continent.  (Take that, Lump of Labor Fallaciators.) (H/T to the L/W.)

And if you're wondering why all this is happening, let's ask all the small business owners what their biggest problem is.


Poor sales?!? Could that be an aggregate demand shortfall?

Those small business owners sound like a bunch of Keynesian idiots!

No wonder we're in so much trouble.
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Quote of the Day - Same as it Ever Was

John Maynard Keynes, in THE ECONOMIC CONSEQUENCES OF THE PEACE.


Thus this remarkable system depended for its growth on a double bluff or deception.  On the one hand the laboring classes accepted from ignorance or powerlessness, or were compelled, perusade or cajoled by custom, convention, authority, and the well-established order of Society into accepting a situation in which they could call their own very little of the cake that they and Nature and the capitalists were co-operating to produce.  And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice.

He was speaking of Europe in the 50 years prior to WW I - a very different place and time.  Of course, Keynes (like anyone who believes him today) was both stupid and an idiot.  What possible relevance can his pronouncements have to us, here and now?

Update:  Probably not his intention, but it looks as if Ed might have an answer to the relevance question.

H/T to Thoma.

Monday, December 27, 2010

Inflation Alert!!!

OMG - LOOK AT ALL THIS INFLATION!!!

(It's the green line.  Follow the link.)

THE SKY IS FALLING.

(The green line at the bottom of the graph.)

WHAT ARE WE GOING TO DO??!?? - CALL GLENN BECK.  BUY GOLD!)

(It's crawling along the Index = 100 line.  Open your eyes.)

H/T to PK
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Mellow Yellow Monday



A Winter Tableau
Arranged in stark white, some red,
A touch of yellow.

MellowYellowMondayBadge

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A Comedian Succeeds When Government Fails

I have two three thoughts on THIS.

What an amazing story about Jon Stewart shaming congress into passing health care for the surviving heroes of 9/11.

What a shame that a comedian has to speak out to get the government to do what is so obviously right and proper.

God damn the Republicans to hell forever!

H/T to the LW
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Sunday, December 26, 2010

Quote of the Day - Jesus H. Christ

In comments over at BT's place, bobby, who is "still looking for 'whirled peas'.. ;-)" asks:

I've always wondered.. what does the middle initial 'H' stand for??

Mimus Pauly has the answer.

The "H" stands for Hallmark -- because God cared enough to send the very best.

;-)

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Saturday, December 25, 2010

Kellemes Karácsonyi Ünnepeket és Boldog Új Évet

Merry Christmas and Happy New Year!

(H/T to Kristen)
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More on Noel



Plus . . . 




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Six Word Saturday 12/25

Step son Tom is leaving Afghanistan!

Best Christmas present ever - for sure.

Trip home takes about a week.

Merry Christmas* to my electronic friends.

*Or Happy Holidays - you can chose. 



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Christmas Music Blogging

Continuing the review of music I've played recently, here is a good performance of Leroy Anderson's CHRISTMAS FESTIVAL.   Recording is a bit fuzzy, but the playing is wonderful.



And now for something completely different . . . . (WoW! - this is really good.)



MERRY CHRISTMAS, EVERYONE!
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Friday, December 24, 2010

What The Hell?!? Friday - "Jesus was a NeoCon" Edition

I wasn't planning to put up a WHAT the HELL?!? post on Christmas eve, but, quite by accident the other night, I ran across these two seemingly contradictory posts, within about an hour of each other.

Jesus was a Jewish Communist.  This post is rich in biblical citations.  Here is an example.

Luke 6:24 : "But woe to you who are rich, for you have already received your comfort."

Jesus was the Perfect Conservative.  This post, alas, is bereft of biblical citations, so we must take the allegations on -- uh . . . faith.

These two ideas seem irreconcilable.  But I found both on the inter-tubes, so - Hey! - They have to be true.  But - now what?

Maybe there is just a bit of temporal dislocation here.  Consider that the original Neocons, like Irving Krystol, were Jewish Communists (specifically Trotskyites) who, with the passage of time, and through some sleight-of-mind that is beyond my comprehension, became Goldwater and then Reagan conservatives.  I guess this validates Russell Kirk's point that conservatism is a mindset, and not an ideology.  But more importantly, what is the passage of time to God - a mere trifle, I'm sure!

Now, I realize it's hard to imagine Jesus wanting to, frex, "bomb Viet Nam back into the stone age."  Or Pakistan either, for that matter.  On the other hand, though, those people are MUSLIMS . . .

I'm still having a hard time wrapping my head around this - but the world is a complex, messy place, and Einstein - who probably understood Jewish things better than I do - convinced me that there are things in it that I'm just not going to get.

But the only people I can think of who were both Jewish Comminists AND conservatives were the original Neocons.  Ergo:  Jesus was a NeoCon.  Q.E.D.  (Sort of)

I imagine there are those among you who are viewing all this with doubt and skepticism.  If you are so reality-bound that you aren't willing to set all that aside, then you are not ready to be a NeoCon.  Nor an Austrian economist.

Amen, amen, I say unto you - oh ye of little faith.
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Christmas eve Music Blogging

Another delightful piece that we played earlier this month.  The Polonaise from "Christmas Eve" by Nikolai Rimsky-Korsakov.





MERRY CHRISTMAS, EVERYONE!
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Wednesday, December 22, 2010

Thinking Like an Economist Means That . . .

Zombie ideas eat your brain!

I love Calculated Risk, and have great respect for whoever it is that puts it together.  But that doesn't mean that they are always right.  A post today titled Older Workers and the Lump of Labor Fallacy resurrects the "Lump of Labor Fallacy" fallacy, and illustrates one of my really big problems with economics and economists.

The idea in the CR post is that older workers staying in the work force - a phenomenon happening with continuously greater frequency over the last 20 or so years - does not take jobs away from younger workers.  LoLF believers will tell you that additional workers - whether they are ought-to-be-retired codgers, immigrants, fresh graduates, or zombies risen from the grave - expand the economy by going to work, buying lunch, new clothes, new cars, and renting apartments.

OK - maybe not the zombies, who have rather a different concept of utility.

Now, the LoLF is a truly great idea, and like most great ideas, it's true some of the time.  But other parts of the time, for example when U6 unemployment has been stuck at over 16% for over a year, businesses are sitting on piles of cash like brooding hens instead of investing in either capital improvements or labor, and even the illegal immigrants can't find jobs, it's high time to start thinking outside of the tidy little economic coffin.

This, come to think of it, is actually the same disagreement I had with Karl Smith recently, though we didn't use the LoLF vocabulary.

What Karl, the good folks at CR, and economists in general refuse to factor into their thinking is the current unpleasant reality, which gives me an opportunity to quote myself.

And what makes this case different is the liquidity trap at the 0-interest bound, and the aggregate demand shortfall due in part to private deleveraging that causes the unwillingness of corporations to invest in either equipment or employees, compounded by the unwillingness of banks to lend at any level of risk when then can get an absolutely risk-free 0.25% on excess reserves from the Fed. Whether the collapse of the M1 multiplier is cause or effect remains a mystery to me.

We are hovering at the edge of a deflationary spiral, similar to the situation in 1929; but austerity rules the day, almost world wide. I am deeply pessimistic about this turning around any time soon – or even over the next several years. The incoming Repug majority in the House will only make it worse.

Since then, I've learned a couple of things that illustrate that the situation is already worse than I thought.  Here's an example.

Pedro Pablo slowly folds up his American flag blanket and stuffs it in his duffel bag. With it goes his American dream.

"I left my family and lost four years with them. I will ask them to forgive me," he said.  Pablo is an illegal immigrant from Guatemala who came to the United States to support his wife and five sons back home. When he arrived, construction jobs were plentiful. Over the last year, he says, he's worked three days.

He recently boarded a bus with a one-way ticket home, paid for by the Guatemalan consulate in Los Angeles. "I thought I could get ahead here. I regret coming."

Across the United States, tens of thousands of immigrants -- those here legally and illegally -- are facing a similar dilemma: Do they continue to search for jobs in a struggling U.S. economy or return home to an even bleaker economic situation?

"Things are very dire, and I think it's impacting those at the very bottom even more so," said Abel Valenzuela, a professor at the University of California-Los Angeles who has spent years studying day laborers.  "Day laborers are being really, really impacted."

On the TV news last night I saw a young couple with $250,000 in student loan debt who are unable to find relevant employment, have no idea how to service this debt, and will likely lose their modest home.  They aren't alone.  Thousands of recent college graduates clutching their freshly-minted degrees proudly set out to enter the job market only to find that there isn't any.   If nothing else, this has opened up a whole new set of opportunities for vultures.

New public, private and college-based programs are targeting a grim and growing market: unemployed college graduates who can't afford to repay their student loans. 
This week, BridgeSpan Financial, a start-up based in Washington, D.C., introduced SafeStart, a product designed to protect borrowers from the risk of defaulting on their loans. For an upfront payment of $40 to $60 per $1,000 of student debt, SafeStart will provide an interest-free line of credit that borrowers can use to repay federal student loans for up to five years after graduation.

Lovely.  For a mere $12,500, give or take 20%, that young couple might be able to buy a five year reprieve from interest on their student loan debt.  I wonder where they'll borrow the $12,500?

Young, educated people can't pay off their student loans.  Immigrants are returning to their impoverished native lands in despair.   All because there aren't any jobs to be had.  But economists simply can't get beyond that old "Lump of Labor Fallacy" fallacy.

As Krugman said in his Monday op-ed piece, on a different aspect of stubbornly wrong headed thinking (emphasis added):

  Yes, politics is the art of the possible. We all understand the need to deal with one’s political enemies. But it’s one thing to make deals to advance your goals; it’s another to open the door to zombie ideas. When you do that, the zombies end up eating your brain — and quite possibly your economy too.
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Haiku Wednesday - Noel

Noel

Noel is the French
Word for Christmas. It simply
Means nativity.

Noel II 

A time for giving,
And to be forgiving, and
to be forgiven.
 
Noel III (No "L") 

For believers a
New start.  For others a hole
In the alphabet



Join the fun!

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The NEW Story of Christmas - Fully Digitized




Link

H/T to Judy D!
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Monday, December 20, 2010

Of Deficits and Inflation - Part 2

In Part 1, I took a hard look at deficits and inflation, from 1951 through 2009, and wound up with some questions.  One them was - "What does the very different look of the first chart before and after 1980 mean?"  Here, for your convenience, is the first chart.

I constructed cloud charts, as in part 1, for the data up to 1980, and after 1980.  The differences between the two time frames are striking.  The differences with different time delays are not.  I'm only presenting 3-year delay here.  Basically, all the charts up to 1980 make a pretty similar set, irrespective of time delay; and all the charts after 1980 make another similar set that is very different from the first.


As in part 1, The year over year change in CPI is plotted as a function of the deficit (as a percentage of GDP) three years earlier.  The slope is 1.73 - an increase of inflation of 1.73% CPI for each % of deficit, with a three year lag.  The correlation coefficient is an impressive .672.

Here is a similar plot for the years after 1980.


For this plot, the slope is only 0.168 - less than a tenth of the slope for the previous period.  The correlation coefficient is only .31.

Here is a plot of slopes and correlation coefficients for the two time frames, with CPI lags from 0 to 5 years.



In the earlier period, the inflation measure peaked three years later than the subject year, as did the correlation coefficient.  For this period, correlations in the two to four year range are all greater than .5 - the strong correlation region.

In the later period, the effect is slight, the response from 2 to five years flat, and the correlation coefficient low, indicating weak correlation.

The first time frame is based on 29 data points, so there is a pretty high level of statistical significance to the data.  The second time frame has a varying number of points, depending on the time lag chosen, but never fewer than 24.

The conclusion I draw from this is that from 1951 to  about 1980, and from about 1981 on represent two quite different economic environments.  The earlier period was characterized by secular inflation, and deficits led to higher inflation.  The later period was characterized by secular disinflation, and inflation has been quite insensitive to deficits.  Based on this data, I think we can make those statements with a high degree of confidence.

OTOH, I have no confidence at all about the future.  I'm afraid we've slipped into actual deflation, or something very close to it.  My guess is running deficits will do nothing to spur inflation, but that is speculative.  We shall have to see what we will see.

What this exercise suggests very strongly is the map of the economy has different regions, each having different characteristics that require different approaches (a la Keynes, frex.) I'm convinced that before and after about 1980, the post WW II era is divided into two distinctly different realms: an expansion phase followed by the great stagnation. The M1 multiplier had been sagging since the mid 80's, before it fell down in '08 and couldn't get up.

If I may editorialize a bit, the problem with Libertarians and Austerians is not that they are absolutely wrong, but they are right within a certain realm; and they let that make them think they are right in all realms - because, in their absolutism, they refuse to recognize that different realms exist.

Because of this one-concept-fits-all-circumstances mind set, they end up exploring the jungle in parkas and snow shoes. They forget (or deny) that Keynes didn't overturn classical economics (his big mistake, IMHO) he expanded it, the way Einstein expanded Newtonian mechanics.

What do you think?
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Of Deficits and Inflation

It's part of common wisdom that Federal budget deficits are inflationary. 

Update: Here is an example.  And a direct refutation.

Well, common wisdom is a lot more common than it is wise.  Let's see how this bit of it stacks up.


Here's  a look at deficits, as a percentage of GDP, along with inflation, as measured by year-over-year change in the Consumer Price Index, since 1951.  For the graphs in the post, deficits are positive numbers, and surpluses are negative.  This trick is to allow a possibility for deficits and inflation increases to be positively correlated.  I'm not thrilled with CPI as an inflation measure, but I have the data at hand, so we'll just go with it.




It looks as if there might be two realms, from 1950 through 1980, with generally increasing deficits and inflation, and since 1980 with small or non-existent deficits and low to moderate inflation.  In 2009, we may have entered a totally different economic realm, but that remains to be demonstrated, at least with regard to these variables.

From 1950 to 1980, peaks in deficits and valleys in CPI line up almost perfectly.  Though in the big picture they are rising together, at the detail level the year to year correlation is actually inverse. Change your perspective a little, and deficit peaks seem to lead inflation peaks pretty consistently.  Since 1980, I can't see any relationship, no matter how hard I squint.

Here are some scatter plots of YoY CPI percentage change against deficit as a percentage of GDP.   First, both variables are measured for the same year.




Lots of scatter, a trend line that basically traces the 4% CPI line with a very slight positive slope, and a correlation coefficient of 0.0476 - essentially nothing.  But we are expecting the deficit increase to lead the CPI increase, so here's a look at a 1 year delay: Deficit vs CPI increase a year later.





The scatter doesn't go away, of course, but now we can see a bit of a trend; about 0.28% inflation for each percent of deficit/GDP in the previous year.  But, with all the scatter, the correlation coefficient is only .19 - very weak correlation, indeed.  So far we have a small slope, weakly correlated.  Let's look at longer lags.  Because of the lags, deficit values for recent years will fall out of the data set.  As can be see in the graph immediately above, 2009's 9.91% deficit was the first to go.






Though the scatter drifts a bit, the two and three year delays give pictures that are otherwise very similar. Here  we have a somewhat greater slope, about .4% inflation for each percent of deficit three years earlier.  The correlation, at .27, is a bit less weak, as well - but still pretty anemic.







Farther out, the trend line flattens back down, again close to a constant 4% at 5 years, and the correlation collapses to a measly .12.

What are we to make of all this?  My first thought is, with such low correlations - not too much.  But to see both the slope and the correlation rise and then fall again over a 5 year period does suggest that there might be a real cause and effect, operating with a lag of 2 to 4 years.  Here is a graph of the slopes and correlation coefficients from 0 to 5 years out.




I can think of two reason why correlations might be weak, even if the cause and effect is real:
-  Inflation is a function of more than one factor, so other things, possibly operating independently, can be equally or more important. 
-  If the time lags are meaningful, the lags from up to 5 years in the past are all operating together.  None of that is sorted out here.

Questions in my mind now are -

1) Is this correlation meaningful, or just a data artifact?

2) What does the very different look of the first chart before and after 1980 mean?

3) Do the current large deficits suggest that there may be some inflation around 2012 to 2013?

4) Or are we now in a different realm where deficits either don't correlate with inflation, or perhaps correlate in a dramatically different way?

This exercise has been rich in generating questions, but not too effective in generating answers.

What are your thoughts?
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Sunday, December 19, 2010

Shadow Shot Sunday - 12/19



Play for me, Lauren,
In this cold, bleak midwinter,
A new song of joy






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Sunday Music Blogging 12/19

I can't find a really good performance of this orchestral setting of "In the Bleak Midwinter" on YouTube.  This one seems to be the best of the lot, but the recording is fuzzy, that audience noisy, and the brass players a bit imprecise.  Oh, well.  There are several nice choral renditions that you might want to check.

We played this setting by Robert W. Smith  last week at our December concert.  The melody is a simple pentatonic phrase, and certainly fitting for the bleak imagery, but hauntingly beautiful.  I didn't realize that Gustav Holst - of PLANETS fame, had written it.  As it turns out, this was at the specific request of Ralph Vaughan Williams.


Saturday, December 18, 2010

John the Boner Has a Hyperactive Sense of Irony . . .

Or, alternatively, a total and absolute tone-deafness to irony.

There are times when, looking at a situation in a vacuum, you just can't tell.

But, conservatism being what it is, and the Boner being what HE is, I vote for the later.

Holy flaming brass icon of Moloch!

Rep. Michele Bachmann, one of the most outspoken conservatives in the House, has won an appointment to the secretive House Intelligence Committee. 

The move by incoming Speaker John Boehner to put Bachmann on the panel surprised Republican insiders . . .

Yeah.  It surprised me, too - dumber than a god-damned stump Michelle Bachmann on the for-God's-sake INTELLIGENCE Committe. 

OK - one can easily find loony characters in congress (in-coming senator bat-shit crazy Dr. Paul the lesser, and his belfry-soiling patriarch, long time Texas representative Dr. Paul the greater spring readily to mind.)  But for an outre blend of insanity and stupidity - and I'm talking mega-dumb, at the Sarah Palin level - I don't think Michelle Bachmann has a peer.

Upon further reflection, though, it shouldn't surprise me at all.  On the one hand, the big lesson of the Cheney-Rumsfeld administration was that it is literally not possible, when thinking about the Repugnicants, to be cynical enough.  On the other, look at the Rethugs history of showing utter contempt for this country, it's citizens, government and institutions by putting simpletons, ciphers, fools, and cardboard cutouts into positions of grave or potentially grave responsibility:  Ronald Reagan, J. Danforth Quayle, George W. Bush, Bobby Jindal, Sarah Palin. 

Members of the Intelligence panel receive classified briefings in a secure conference room in the Capitol, and are sworn to secrecy about most of the committee's activities.

"If you're looking for media and controversy, that's not the committee to be on," said a Republican familiar with the discussions about Bachmann's appointment.

There is not enough schadenfeude in the entire expanding universe for me to extract even a single microscopic grain of amusement from this horribly sad event.

I have uttered this despairing phrase so much that I was going to drop it from my lexicon, due to overuse.

But - one more time:  WASF!

Now, I must go hug TWO squids.

H/T to the LW, whom I will love forever, no matter how much bad news she brings.
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They're Banning Kids in Florida for Wearing Red and Green!*

If you hear it on Fox, there's a good bet it's faux!

The Colbert ReportMon - Thurs 11:30pm / 10:30c
Blitzkrieg on Grinchitude - Gretchen Carlson & Christian Nation CHRIST-mas Tree<a>
www.colbertnation.com
Colbert Report Full EpisodesPolitical Humor & Satire Blog</a>March to Keep Fear Alive


* To understand the real horror and repression of the godless liberal fascist war on Christmas, you must sing the title of this post to this song:





H/T to Beale, who is in a really bad mood.
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Six Word Saturday

Today - Our oldest grandson's birthday party.

We've a cluster of December birthdays.

Happy birthdays to us, to us, too.



Immigration Follow-up

A few days ago I talked about immigration in the context of a down economy and issued a challenge of a sort to Karl Smith.  He challenged me back, asking if what I described were the general case or a special case, and if a special case, what makes it different?

Easy as pie.

The basic generalities of economics were developed in the time of Say and Smith. To whatever extent that they were valid then, they were in the context where a large company might have a dozen employees, barriers to entry were not huge, and there was no great opportunity for monopoly.


Contrast today, when the economic landscape is controlled by gigantic trans-national corporations, and energy is controlled by cartels. Which is the special case?


What about booms and busts? What about wars and the aftermath of wars? What span of American history would represent the general case?


To answer your question, population and the economy generally (if I may now use that word) grow together. The fact that GDP/capita has had an approximately constant growth rate over spans of decades is real world evidence that population growth does not lead to rising unemployment. So, one can reasonably surmise that immigration need not directly cause unemployment. If there were a labor shortage, then pretty clearly immigration could help the economy expand.


So, on balance, and despite my protestations, I was talking about something other than what looks like the usual general case over the last hundred years. Whether this constitutes a special case, or one of many possible more-or-less usual cases remains unanswered for lack of a sufficiently broad and detailed historical data base.


My main point was – and remains – that generalities are dangerous, the real world is messy, and dogmatic statements the reflect an absolutist view of economics that is highly questionable if you simply look out your window on any particular Thursday morning, ought not to be held up as examples of clear thinking and an appropriate way of viewing the world.


‘Cuz it seems a bit ad hoc.


And what makes this case different is the liquidity trap at the 0-interest bound, and the aggregate demand shortfall due in part to private deleveraging that causes the unwillingness of corporations to invest in either equipment or employees, compounded by the unwillingness of banks to lend at any level of risk when then can get an absolutely risk-free 0.25% on excess reserves from the Fed. Whether the collapse of the M1 multiplier is cause or effect remains a mystery to me.


We are hovering at the edge of a deflationary spiral, similar to the situation in 1929; but austerity rules the day, almost world wide. I am deeply pessimistic about this turning around any time soon – or even over the next several years. The incoming Repug majority in the House will only make it worse.


Sadly,
JzB

Friday, December 17, 2010

Of Health Care and Insurance

Earlier this week, Thom Hartman had somebody named Joseph from World Nut Daily on his radio program. I think it might have been Joseph Farah, who seems to run the whole show there.

One of Joseph's points was that what he calls "ObamaCare," if it included a public option, would put health insurance companies out of business.  To this, I say, "Hooray!"

He also attempted to make a point about competition, suggesting that a "free market" approach to health care coverage would yield optimum results for everyone.  While I do no doubt Joseph's sincerity,* his argument is pure bull shit.

Consider the business model of health insurance; it's really pretty simple.  Income is from insurance premiums.   Expenses are payment for the health care services used by customers of the insurance company.  In this scenario, there are two ways to effect profitability.  On the income side, you raise rates.  On the expense side, you refuse to pay for services, and/or eliminate high-cost clients from your cost structure by terminating their coverage.

That's it.  There are no other possibilities. Opportunities for competitive advantage by improving efficiencies are severely limited, and would not be proprietary.  Opportunities for competitive advantage by taking better care of your customers would result in increased outlays and thus reduce the bottom line.  The clear, simple, and obvious message is that for-profit health insurance does not fit a rational business model.  The profit opportunities and the customer-care needs are in an absolute and irreconcilable conflict.

So, what's the answer?   It seems obvious.  A single-payer system run on a not-for-profit model suits the needs of customers.  Since there is no profit, there is no need to try to maximize it by cutting off high-cost users - those in greatest need of coverage - nor to raise premiums above whatever the total cost of the population risk pool drives.

Update 12/18:  I forgot to mention that with the Federal Government as the single-payer, premiums would then be in the form of taxes.  Thus, Joseph's objection that people would be (unconstitutionally) forced by law to buy a service from a commercial entity simply evaporates.  Congress has the power to levy taxes on all citizens.   In addition, for health insurance to make any kind of economic sense, even as not-for-profit endeavor, and for premiums to be affordable for all, you have to have the healthy members in the population as subscribers and in the risk pool.  Hence, UNIVERSAL single-payer coverage.

As an additional advantage, the lack of a profit element eliminates the need for premium mark-ups to guarantee profitability.   The only losers in this scenario are the multi-millionaire CEO's, who add no value to the system while skimming lots of value in the form of huge salaries and bonuses.  What we currently have is a system run by leeches, for leeches, to the detriment of society.  But, since they control a bought and paid-for congress, there is no hope that it will improve, unless there is a revolution.

Once again, we're doomed.
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*A later caller accused him of being a shill for the insurance industry.  Hartman didn't think so, and I don't either.  He's just a smart, but naive guy who's drunk on free market kool-aid.

What The Hell?!? Friday - Lunch Time Sing Along Edition

Almost too much to Handel.




H/T to Howeird.
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Thursday, December 16, 2010

Feeling Diminished

The common major and minor scales - recognizable by their sequences of whole and half steps - are not the only ways to parse the octave.  One of the others is the synthetic diminished scale.  This is a symmetric construction of strictly alternating whole and half steps, resulting in a scale of 9, rather than 8 notes.   Also, due to the symmetry, it doesn't matter which of the tones arrive at by a half tone scale step is considered the tonal center of the scale.  These four tones also define a diminished chord.  For example, one such chord contains the notes G, Bb, Db and E, any one of which can be taken as the root.  This tonal ambiguity has been exploited by composers for centuries as a way to negotiate a key change, or just sound eerie and disturbing.

The resulting scale ( G - A - Bb - C - Db - D#/Eb - E - F# - G) is also highly versatile, and sophisticated jazz improvisors use it to good effect.   I don't put myself in that category, but I have had some fun noodling on the G diminished scale.  Recently, I've tried improvising against a static C7 chord, using this scale.  In that context, the notes are, starting with G, the perfect 5th, major 6th, minor 7th, root, flat 9th, sharp 9th, major 3rd, and flat 5th (or sharp 11th.)  The dominant seventh chord is very accepting, and will accommodate any of these notes, either as basic chord tones or extensions.  This G to G approach also places the tonal center (C) in the middle of the melodic range, rather than the extremity, so the resulting melody has a rather plagal feel.

Just for kicks, I recorded this snippet using the video capture on our iMac.  There's no background to provide context, but if you have perfect pitch you can imagine the C7 chord in the background.

The sound quality of the computer's built in mike is pretty poor.   I don't really sound this harsh.

I hope.

First, two octaves of the G dimished scale, up and down, then 16 bars of improve, in a moderately quick 2/4 time.



video

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Thoughts on Immigration

Everybody at Modeled Behavior is in love with immigration, and sees in it the key to economic growth and the salvation of our country.  I disagree.  Like almost all Americans, I descended from immigrants, some of whom came here as recently as two generations ago - if you can call well over 100 years recent.  I am not, in principle, opposed to immigration.  As a practical matter, though, I think it makes sense to realize that not all places and times are the same, and changing policies to fit changing circumstances is both rational and appropriate.

Karl Smith wrote a post today which I think neatly sums up the difference between rote free-market ideological dogmatism and a reality-based approach to the real world problem of immigration. He praisingly quotes a paper by one of his students which contains this assesment.

On a very basic level, this explains why immigration would only serve to expand the economy.

It is this kind of abstract absolutism that makes thinking like an economist a very treacherous way to look at life in the real world.  My rejoiner:

I guess ad-hocery is where you find it. Your student’s one-side analysis reads like something from a Chamber of Commerce training manual, and the last sentence smacks of brain-washing. 

I would have written that paragraph as follows. Would you give me a failing grade? Why or why not?

Immigrants not only join the circular flow of the economy as consumers, but also as labor. The supply and demand result is that firms have lower labor expenses, which translates directly into higher profits, while the already unemployed have to compete for fewer job openings at lower wages. Immigrants also spend money on goods and services which results in higher profits for corporations. As an aside, they might have purchased some of these items while still in their home counties, which would have improved our balance of payments situation.

The net result is a gain for employers, and a loss for the general population, aka labor, and potentially for the general economy. This contributes to even further wealth disparity between the rent-seeking and labor classes of society. The most successful corporations are then able to spend their earnings buying out their competitors – a trend that has already been distorting the U.S. economy by removing competition for several decades. This ultimately gives a small number of corporations relative monopoly power on the supply side, and monopsony power regarding labor demand. While immigration is not a main driver in corporate consolidation, it does contribute to it in this subtle way. Even more troubling is the growth of international corporations which have these powers across nations and continents, and owe loyalty to nobody.

Relating this to the current situation, in a depressed economy, higher corporate revenues do not tend to increase firm production, since the demand of consumers is low, because they do not have the ability to pay due to unemployment, low wages, and/or excessive debt. Henry Ford understood the importance of a living wage 100 years ago in the age of anti-trust fervor, but that bit of knowledge has become the bunkum of history to modern CEOs.

It’s interesting to note that, despite the current depressed economy, corporations have recently seen the greatest gains in profitability ever attained over any 18 month period in history. This has not led to more jobs. By a bitterly ironic coincidence, U6 has hovered near 17% for that very same 18 months, as firms sit like misers on piles of retained earnings. On a very basic level, this suggests why immigration in a time of high unemployment has mixed and difficult to predict effects on the economy which might well net out to a negative.

Cheers!
JzB