Symbiosis

A missive which is just a review of a book review might be seen as lame. But there you are. Today's NYT, dead trees division has a review of "Hattiesburg: An American City in Black and White", which tells, yet again, the tale of how wage slave states (and, in this case, an outright slave state) depend on access to wealthy states to dump their goods. Now it's China.

Hattiesburg became known as a hub for the railroads and the lumber industry; located in the thick of Mississippi's Piney Woods, about 70 miles north of the Gulf Coast, the town was a draw for new residents seeking their fortune. But William Hardy, the Confederate veteran who founded Hattiesburg and named it after his wife, couldn't realize his vision for an economic powerhouse without the help of Yankee money — an issue that would come up again and again in the so-called New South. "The former Confederacy," Sturkey writes, "was broke."
[my emphasis]

The same continues today: how many cars and planes do BMW (not many) and Boeing (none) sell in the wage slave South?

How Dumb Can You Be?

Dumb enough to start a NFL 'development' league without negotiating access to 'developing' NFL players. Can you believe this? And capitalists are the self-appointed Smartest Guys in the Room!!

One players' union official said it would violate the terms of the NFL's collective bargaining agreement if active players are lent to the AAF.

Take Me Out to The Ballgame

With the reporting the last few days about 1) the Godzilla contracts with Harper, Trout, et al and 2) the average (read: mean) contract falling, by a bit, each of the last two years I wondered whether anyone in the analytics branch of sports actually gets it. Turns out, yes. As in real life, so in baseball: earnings are severely skewed.

The reported average salary of an MLB player is $4.38 million. However, the median income of $1.5 million tells a different story about the earnings of all players. The average gets distorted because of the large number of players with multimillion-dollar salaries. At the most recent count, 38 players are making above $20 million a year, and 125 players are pulling in more than $10 million.

One might wonder whether any readers of that site understand what 'median' is, but at least one sports writer does (well, that's not his day job). There is hope.

Turtle Time

Any number of times (here's one) these endeavors have asserted that the 1%'s craving for guaranteed return at high rates will be spiked by their lemming-like chasing of Treasuries. With the collapse of the richer alternative, home mortgages, the 1% (which includes corporations) continue to avoid physical investment. In due time, this tsunami of cash would push down the return on Treasuries. Supply and demand, and all that.

Not only that, these endeavors have warned that the Fed's belief that it could affect long-term rates by fiddling with, i.e. raising, the over-night rate was beyond stupid. Fed's elite have been watching the flight from physical investment for years, yet they continued to assert that the problem was one they could solve.

The Fed can't convince stupid CxOs to invest in physical capital when they refuse to. The only way to get capitalists to grow (net) real investment is to grow aggregate demand for end-user goods. Guess how to do that?

Speak to Me

This recent op-ed reminded me of a war story of my father's. He managed to avoid getting shot at during WWII by simply scoring in the high cohort. Even in the frenzy to defeat the Axis Powers, the US military made the effort to find the Best and The Brightest. While I don't know whether it's still true, then the high cohort was the pick of the litter for the Signal Corps, not that such necessarily meant not getting shot at. Signal Corps ran combat radios and communication lines on the battlefield.

Pop spent his time building radio beacons, initially in the Caribbean, then North Africa for the balance of the War. Among the tokens he returned with was a French flat wallet, gold inlay. I guess that's why I use such. He was stationed in Algiers for most of the War. By stationed, he meant a commandeered mansion. I forget how many were quartered there, but they had a house boy to take care of them. The boy was less than a teenager, but what Pop found remarkable was that he spoke six or so languages.

Until recently, whenever I considered the situation, I recalled my struggles with various human languages learning in high school and college. How could a six or seven year do with simplicity, many times over, what I fought with?

Then the lightbulb finally went off. Juveniles aren't learning a language. They're learning sounds that have concrete meaning in the real world. Language, per se, has nothing to do with it. When talking with the Americans, it's "bread". When talking to the French, it's "pain". The notion of a language isn't part of the exercise. It's all one language, mashed together. By the time those living a monolingual existence get facile with it, they're, pretty much, locked in.

The interpersonal essence of language learning extends to learning as a whole. We know that small-group, in-person instruction is more effective than traditional lectures. We ask questions, are asked in return, and we learn more, learn faster and retain more when we care about the people we are interacting with. It's no accident that despite the initial enthusiasm generated by MOOCs, or massive online open courses, they have in fact been a major disappointment, with completion rates as low as 5 percent. By comparison, online courses with smaller groups of students and direct feedback from the professor show completion rates as high as 85 percent.

What You Quant Is What We Get

Once again, with vigor, we find a pundit making the case that >events drive data, not the other way round. And, once again, the title I see in my dead trees version while I sip coffee differs from the innterTubes. I prefer the dead trees.
Dead Trees: "Recession-Spotting, Beyond the Math"
innterTubes: "You Never Know When a Recession Will Sneak Up on You"

Why the preference? One reminds one of a famous movie (which I've not seen, only read about) about personal catastrophe.

The 2001 recession developed when the internet bubble popped, or at least that's how we tend to remember it. But go back and check the numbers. The internet accounted for, at most, about 2 percent of the economy then. If we use the logic we've been applying to trade wars and government shutdowns, it would seem that popping the internet bubble shouldn't have been enough to cause a recession. But it did.

The problem, of course, is that inflections in the data haven't been predicted (so far) from the up-to-date time series that econ/business/pol types use to inform themselves.

Looking back, for example, we know that a recession officially began in April 2001, yet scarcely anyone understood that then. In June 2001, only 7 percent of economists in the monthly Blue Chip survey believed a recession was underway. In the months before that 2001 recession began, only 16 percent of economists expected that a recession would start within the next year. Now, 25 percent of economists in a Wall Street Journal survey say they expect a recession within the next year, and anxiety seems to be growing.
[my empahsis]

Sounds like a case of once bitten twice shy. On the other hand, there's among the most famous adages of the econ community:

The stock market has forecast nine of the last five recessions.
-- Paul Samuelson/1966

What Are The Chances?

Among the regular entrants in the r-blogger universe, Arthur Charpentier is usually a math-heavy fanboy in his posts. Today is quite different. His main area of interest is actuarial matters. As mentioned here more than once, getting to be FSA is no mean feat. As I've also mentioned, I don't consider actuarial work product to be reliable. When there is stable historical data, which everybody uses just because the risk under analysis doesn't/hasn't changed from then to now, there's not much to it. The fact remains, as it always has been, that predicting off the end of time series data is at your own risk. Or your employer's.

The problem, of course, is that major losses are due to rare events, for which there is little to no historical data, in the financial sense. For each insurance sub-genre (life, P&C, auto, etc.), there is some data from which a trend (or, more to the point, an inflection) may be gleaned. Climate change has, and will continue to have, major influence over nearly every sub-genre of insurance, but P&C most heavily. IMHO. If one wishes to underwrite, it is far more important to be a subject matter expert than an actuary. That's just not debatable.

So, in all, here is the punchline, typos included (his native language, it seems, is French; not that this is a good excuse :) ):

So I want to show that the upper bound of the AUC is actually quite low ! So it's not a modeling issue, it is a fondamental issue in insurance !

For those in the insurance business, I suppose the attitude is; 'it's better to make the wrong decision with bad data than to make the right decision with qualitative analysis'. McNamara and Cheney and The Manchurian President are examples of decision making using neither.

Some Times You Act Like A Nut

Sometimes you don't. This time Jerome Powell is a nut, but David Leonhardt not so much. And, one might add, good old Robert Gordon.

So, Powell. I was working on some text while the '60 Minutes' interview was running, so I only heard it (not much to be seen in such interviews, by and large). What he said impressed me as stunningly stupid for a high-level economics pundit. The Fed has more responsibility than to make the 1% richer. A fact he doesn't admit. As to the lack of oomph in the economy, he offers up some contradictory factors.

First:

PELLEY: A record seven million Americans have fallen behind on their car payments. Never happened before. What do you make of that?

POWELL: But the number of people who are experiencing, you know, auto defaults has gone up because the number of borrowers has gone up. I think it also though shows that not everyone is experiencing this widespread prosperity that we have.

The same sort of thing was said about all those toxic mortgages in 2005. Just sayin'.

Second:

PELLEY: You mentioned growth last year being slightly over 3%. That was with the tax cut and with unemployment in this country at a rate that we haven't seen in decades. Is that the best the economy can do now, 3%, slightly over? Are the days of 4% growth over?

POWELL: The labor force, back when we used to have 4% and 5% growth years, the labor force was growing quickly, 2.5%, 3% in some cases back in the '60s and '70s. We have an older population now. And our labor force is growing more slowly. It's growing less than 1% a year.
...
And we have an unusually large number of people in their prime working years who are not in the labor force. The United States has a lower labor force participation rate than almost every other advanced country.
...
So as technology evolves, it requires rising skills on the part of the people. U.S. educational attainment has not moved up as rapidly as it has in other countries. Globalization's also a factor. For many advanced economies, manufacturing, to some extent, has moved into developing countries.

Third:

PELLEY: According to federal statistics, the upper half of the American people take home 90% of income, leaving about 10% for the lower half of Americans. Where are we headed in this country in terms of income disparity?

POWELL: Well, the Fed doesn't have direct responsibility for these issues. But nonetheless, they're important.
...
But the data show now that actually, the chances of making it from the bottom to the top in the United States are lower than they are in many other comparable countries.
...
There are plenty of prime-aged people who are not in the labor force and who would be better off in the labor force.

So, in sum, it's all labor's fault. One point he makes is factually wrong, using the Fed's own data. The aging cohort of the population has shown a rising participation rate, blaming old folks for stagnation is bogus. With automation, of various sorts, displacing labor, and said more heavily capitalized production puts more pressure on aggregate demand; amortization of the machinery can only be done with higher prices (ugh) or more sales. Where is increasing demand going to come from as income and wealth stagnate? Stupid.

Powell, in good company with his cabal, refuses to acknowledge the triple sources of inflation. Always and only blaming greedy workers does more harm than good, most of the time.

Contrast this nonsense with David Leonhardt today.

Here's the truth: There is no boom. The economy has been mired in an extended funk since the financial crisis ended in 2010. G.D.P. growth still has not reached 3 percent in any year, and 3 percent isn't a very high bar.

Why is this happening?

There are two main culprits. The first is a savings glut. Americans are saving more and spending less partly because the rich now take home so much of the economy's income — and the rich don't spend as large a share of their income as the poor and middle class.
...
The second big cause is an investment slump. Despite all the savings available to be invested, companies are holding back.

Or, as has been written more than once: it's the aggregate demand, Stupid! Growth is a demand side phenomenon, despite the braying of Laffer and such.

Pankration

For reasons unknown, last night I wondered what became of my karate instructor. Mind, I studied with him in '73 and '74, having to give up the study when I went to DC, so I wasn't sure that he'd still be teaching. Or even still alive.

Boy howdy! Seems I'd missed a NYT report from last year. One can learn a lot by letting your fingers do the walking through the yellow Googles. He's 90 and still teaching.

For those who've made the transition from graduate school to 9-to-5 Cubeland job, it will come as no surprise to know that one of the major adjustments to living is what to do with all that unconstricted time. For myself, I looked for activity as far removed from academia as I could stand. I'd joined the Boston Y, and signed up for a karate class there run by Dave Edwards. After a few lessons, Dave told me that I really should be studying with his teacher, George Gonis in East Boston. So I went.

Along with the NYT article are some comments, which mostly cavil the story. The two main criticisms are that the health claims aren't specific to this version of karate and that there really isn't any such thing as Greek karate.

As to the latter first. George had written a paper on the origins of ancient Greek style of karate, as he described it. The fact that George is Greek may well have something to do with that point of view. Yet, there is historical evidence, which he presents.

As to the former, some backstory. By the time I began with George, he had been promoted to the highest level by his first teacher, in New York City, some time earlier. So his study moved to that man's father, who happened to be the head of the school. This study entailed George going to the mountains of India every other year for training and testing for a couple of weeks. I was fortunate that he made such a trip early in my study. When he got back, even the white belts (self included) got to hear of the trip. This was significant in light of the fact that only black belts were allowed to be in the facility during black belt class. Only during the semi-annual tournament did the lower belts have a chance to see what the black belts did. Light years from what we white belts were doing. Intimidating.

The singluar revelation from his talk was the fact that his teacher was 104. Or, as George said, "from the neck up he looks old, but from the neck down it's like he's made of rubbah!" So, yeah, it works.

During my time in Boston, I also took up tai-chi (yes, yin and yang of a kind) with Julian Miller, who learned from William C.C. Chen (still living and about 85), also in New York City. He took us to a hall in Cambridge to see another master, T. T. Liang. This would have been '73. He performed a double sword form. Liang lived from 1900 to 2002. So, yeah, it works.

Cronkite Was Right

For those old enough to remember, or who read history, it was widely cited that when Walter Cronkite declared Vietnam a quagmire, Johnson admitted the war was lost. Not that this stopped him or Nixon from continuing, of course.

But it is increasingly clear to this reporter that the only rational way out then will be to negotiate, not as victors, but as an honorable people who lived up to their pledge to defend democracy, and did the best they could.

Some, still, dispute that Cronkite's editorial put the lie to the war. But it's hard to argue that it had no effect.

Today's news brings something of the kind. Colbert has won the kiddies. Not the Trump Fawning Fallon. May be forever after. We don't know yet, of course.

For the first time, Mr. Colbert's "Late Show" on CBS has drawn a bigger Nielsen rating point among young adult viewers than any other late-night talk show. Until now, Jimmy Fallon's "Tonight Show" on NBC has been the leader in that category, which is vital to advertisers.

Angry, old, white, victimized, rural men aren't enough to save The Manchurian President. Remember, he only squeaked in by 78,900 votes across PA, MI, WI. If the Dems can't turn that number around, they don't deserve to be called a political party.

Josh Billings Was Right

The trouble with people is not that they don't know but that they know so much that ain't so.
-- Josh Billings/1874

The two hour stream of consciousness diarrhea dump by The Manchurian President at CPAC was all the rage for the MSNBC pundits last night. I didn't watch any of the dump, of course, and each pundit took bit of it to task. Lawrence O'Donnell picked The Manchurian President's assertion that the US, stupidly, ended tariffs in 1913. O'Donnell went on to say that tariffs continued.

They're both half right, alas. It is true that prior to the sixteenth amendment, various attempts to have an income tax were struck down by the courts, so the amendment was necessary to have the tax. It is true that prior to the income tax, most of Federal revenue was from tariffs. It is true that the reason for the tax was to provide a more predictable revenue. It is true that substantially lowering tariffs was seen as a way to improve life for the 99% (not a concept then, of course). It is true that the income tax was imposed on the 1% (ditto).

But tariffs weren't totally eliminated in 1913. Just gutted in favor of the income tax. And tariffs returned with a vengeance during the Great Depression.

So, they're both half right.

Dee Feat is in Dee Flation - part the thirty fourth

From today's briefing.com:

08:31 ECONX December Personal Spending M/M -0.5% vs -0.2% Briefing.com consensus
08:31 ECONX December Personal Income M/M -0.1% vs +0.3% Briefing.com consensus
08:30 ECONX December Core PCE M/M +0.2% vs +0.1% Briefing.com consensus
08:30 ECONX January Personal Income M/M -0.1% vs +0.3% Briefing.com consensus

And, we're burning down the house. December is the cruelest month.

That is the lowest level since September 2016. Economists polled by MarketWatch had expected starts to total 1.23 million.

Have a nice day.