Dr. Keynes Was Right

Lies, Damn Lies, and the BLS

2012-02-03T15:20:00.001-05:00

That's Bureau of Labor Statistics. The headline over the column in my dead trees version of the NY Times reads: "Stagnant Job Growth is Expected in Report". Yet, the number this morning was glorious. How does that happen? Why did the numbers come in so much better than expected? Were the numbers figured? Let's see whether we can find out.

First: these numbers are estimates from sample surveys. The only population number related to employment is the weekly UI filing number. Everything else is an estimate from some kind of survey.

Second: as every fourth grader knows, a percent is just a decimal fraction with the point shoved over two places to the right. And every fourth grader knows that a percent goes up whenever the numerator goes up or the denominator goes down. Or both.

This is real time, in the sense that I haven't looked at the numbers. I'm going to go out on a limb and say that, at least, the denominator went down. That number is the estimate of the total labor force. That number has been declining through 2011 - 2012 (here is the table and this is the almost raw data), the difference being seasonal adjustment. Seasonal adjustment of economic data is still controversial.

Now, have a look at the next table. What we see is that the number not in the labor force is up, as is the number working multiple jobs.

Table A-15 is where the doubters gather. U-6 is the number cited by both Left Wing and Right Wing sympathizers as justification for either blaming all those lazy poor people who can't seem to stay put in Mitt's safety net, or blaming Mitt and Friends for slicing away at the safety net. The not seasonally adjusted is the number which matters. And it's up a tad from December to January.

I rest my case.

The Center of Attention

2012-01-31T12:49:00.000-05:00

The Case-Shiller house price index is out again, and it's down. Reports are that it is expected to decline for yet a while. Well, D'oh!!!! House prices can only move up with median income moving up. How difficult is that to figure out?

Snakes!! I Hate Snakes!

2012-01-19T23:22:00.003-05:00

Many, many years ago I saw a piece on the TV, which showed the effects of population. It was a closed cage, a few feet on a side, such that it fit in a laboratory room. In it were rats. The point of the experiment was to document the changes, if any, in the physical and behavioral aspects of the rats as their numbers increased. Suffice it to say, nothing good came of it to the rats. I think this guy was the experimenter; certainly he did such experiments. Wikipedia was down when I wrote this up; now it's back so here's the write up. There they are.

What got me thinking about the rats was an earlier story about American's appetite for out of season and out of country foods; blueberries in February and the like. (I didn't save the link; this one looks similar; it's AP so would end up nearly everywhere.)

Now, put this (imported food dependence) together with the primary, secondary, tertiary breakdown used by economists to describe what an economy makes, and what is a buck worth? Or put another way, as physical resources become scarce, what will the US have to trade for real stuff? Who wants CDOs for food? Have a nice day.

Dee Feat is in Dee Flation, Part 17

2012-01-19T09:40:00.002-05:00

Well, the Flation Numbers came out this week. And, as usual, the Prosperity Through Austerity And Inflation's The Issue folks can't be happy. Here they are:
Core PPI 0.3%
Core CPI 0.1%
PPI -0.1%
CPI 0.0%

I'll leave it to the reader to see the forest and the trees. All that free money from the Fed sure ain't getting into the hands of people who spend. That's why there's no inflation. As the planet runs out of arable soil and hydrocarbons, with an exponential population growth, prices will rise due to shortage. The Idiots of the Central Banks will be too stupid to see this, and immediately raise interest rates, hoping beyond hope to play the role of Volker the Saviour. But they will only make matters so much worse. A Confederacy of Dunces, I'll say.

Here Comes the Mitten Man

2012-01-18T13:45:00.001-05:00

By now everyone with a functioning brain has heard of the Mitten Man's taxing problem. Today's NY Times has more stories (some Walter Mitty specific, others on the general topic) than I want to link; just go read it. Even if you're not subscribed, you're allowed a few (don't recall the exact number) visits per month. Kind of like NFL ref call challenges. Burn one, it's worth it.

Here's what pissed me off, the sub-sub-headline (dead trees version) in the Times' front page story:
"Unwanted Look at How Rules Favor Investors Over Earners"

The Washington Post, also sub-sub-headline (on-line version):
"Most of his income is from past investments"

The LA Times doesn't have Mr. Magic Underpants on the front page; wimps. They do have a stories over the last few days dealing with Mr. 15%, but no headlines of note (on-line version).

The Guardian doesn't have any meaningful headlines on its story about the 15%-er.

So, why am I pissed at both the Times and the Post? Simple: what the Mitten Man makes isn't by way of investment. If by, and I sure do, one means actually putting money into new physical production. He just moved money from some pockets, mostly other peoples', into his. Trading stocks, and companies, is gambling pure and simple. If you buy, you're betting the guy you bought from was a fool to sell so cheap. Selling, that other guy's a fool for paying so much. If you have insider information, and Mr. Mitty sure would with his hedge fund activities, the bet is sort of one sided. Do regular gamblers get away with 15%? Nope. Here's a Las Vegas explanation.

Why should Wall Street gamblers get off cheap?

What Language Do You Spook?

2012-01-16T11:22:00.002-05:00

Drew Conway is my kind of guy: a spook. Now, before any of the uber-PC folk get their backs up, an alternate definition of the word: colloquial for intelligence operative, origination unknown. I don't always put it on my resume, but I spent some time in the 1980's in Jack Anderson's shop. Officially, an intern; I did get paid some money. That's likely because I brought in a two column story (a story getting more than one was highly unusual) on the CIA running guns from Argentina (if memory serves) to Ghana. Corky Johnson worked on it with me. This was the time of Iran-Contra and the like. The story falls into the "like" category. We could never figure out why the Post didn't follow-up. I still have the galleys.

So, I was surfing through R-bloggers looking for background using R with Powerpoint; I know, yucky mucky. But I'm supposed to chat up some folks about that today, if they bother to call. In the search results is a long piece by Mr. Conway on proper data visualization. Comes out against pie charts. Good for him. I highly recommend it; he manages a bit of humor, when offering that a graph should have a 140 character footnote. Such a twit!!

Money, Money Everywhere

2012-01-15T17:30:00.001-05:00

I wrote the following as a broadside reply to a post on one of the blogs, but a) it's really too long for that, and b) it deserves to stand on its own. I'll leave the last word to the last commenter over there.

The continuing fascination among freshwater economists, and non-economist commentators, with currency as determinative of an economy's function is macabre. Hayek, and his gang, are totally batshit. When I was in graduate school, his stuff was au courant. It's still batshit. No one, as yet, has cited an historical occurrence of prosperity through austerity, the Austrians' panacea. I infer that the thrust of some arguments is to pump up the Austrians. My intent is to emasculate them.

The fundamental problem with financial analyses, of late, is lack of understanding that the US dollar is New Gold. One sees what happens when Europe or Asia gets a sniffle: Treasuries fly out the door. Bretton-Woods gave the US an absolute upper hand, but also explicit benefits in international trade; until the oil embargoes, and the abrogation of B-W, the world was our oyster. We're now the currency of record, but have none of the benefits. If we were to manipulate the dollar as profligately as other countries do their currencies, the world would be as a rusted out Yugo in a Big MAC.

Both Japan from ~1990 and the USofA today suffer from the twin evils of shifting to high income inequality and the resulting collapse of demand; it's the shift that causes the problem. It's just that simple. Recessions and depressions through history have the same cause, and the refusal to deal with it is why Japan remains mired in muck. And so will we if the Austrians get their way. I think they actually enjoy destruction of societies.

Currency, as Hume pointed out, is merely the grease that lubricates barter; it is not the raison d'etre of any economy. Goldfinger was a fictional character. The Bass brothers were real, and look how that turned out. I suppose that a shift to a "service economy" meant that currency would come to be viewed as real goods, but that doesn't mean it's an intelligent course of action.

Interest rates, in the real world, are determined by physics and engineering: more efficient real capital drives more efficient production by some delta. This delta is the real rate of return on physical investment. That is the maximum time value of money, the interest rate. While clever people may attempt to flummox reality, it never works out. The underlying reason for The Great Recession is that there is no real rate of return on home mortgages (or any purely fiduciary instrument, a fact happily ignored by many in the financial industry). There is no productive justification for interest earning on residential (or commercial, but that's another episode) housing. The value of residential housing can only increase (or decrease) with median income, since housing is merely serial consumption. Since I started this piece, I posted on eating crow, in which I marveled that a Fed board member voiced the view that housing "investment" really wasn't. I was/am genuinely surprised, since until those notes came out I read nothing from mainstream policy makers to show such an understanding.

When median income couldn't keep up with interest rate re-sets, the cry went up far and wide, "I'm melting!!!". And the financial community was flabbergasted. "We couldn't see it coming." And so forth. They had all been busy looking at yield curves and ignored the controlling ratio: median income / median house price. You can find graphs of that ratio around the interTubes now. Including my Viagra graph, by the way.

Over the course of the USofA, long term interest have been lower than short term for considerable lengths of time. There is no a priori justification for long term and short term interest rates having some magnitude differential. The risk of long term real investment is not necessarily greater than short term; it all depends on the risk inherent in the use of the funds, not the duration. One can argue the opposite, in fact: an effective use of physical capital will be both long term in its value stream (a better mouse trap) and lower in risk (a better mouse trap). 19th century was characterized by: specie money, deflation, recession, and lower long term interest rates. With today's technological march, one can argue that "long term" productivity streams don't last as long as they used to. There may not be any long term.

Another characteristic of 19th century America: capital flight to states, and when they weren't sufficiently groveling, countries, which were autocratic towards labor. The only reason that worked, for a while, was the expansion of population and the country's control of vast amounts of territory and resources.

If a picture is worth a thousand words, here's a couple:

Apple Chinese factory.

Lewis Hine/1909

They Eat Crow, Cold [update]

2012-01-13T16:23:00.003-05:00

I was right, right, right.

Not that this makes me feel so much better. Quants began to invade economics departments in the early 1970's. I was there and saw the jettisoning of economic understanding for algebra, preferably in support of partial differential equations and Bayesian statistics. Insight is far more important than symbol manipulation, unless your field is math or physics. Even so, in the latter case the symbol jiggling follows the insight; that's just what Einstein did. He as lousy at algebra and needed help.

To paraphrase Shakespeare: "The first thing we do, let's kill all the quants".

Some juicy quotes.

"Some officials, including Susan Bies, a Fed governor, suggested that a housing downturn actually could bolster the economy by redirecting money to other kinds of investments."

Actually, kind of right, in that, as I've been saying, housing isn't investment in expanded production. But not so easy to pull off when the housing investment is crooked to begin with.

"The transcripts of the 2006 meetings, released after a standard five-year delay, clearly show some of the nation's pre-eminent economic minds did not fully understand the basic mechanics of the economy that they were charged with shepherding. The problem was not a lack of information; it was a lack of comprehension, born in part of their deep confidence in economic forecasting models that turned out to be broken."

The crux of the matter, of course.

"'It's also embarrassing for economics,' [Justin Wolfers, an economics professor at the University of Pennsylvania] continued. 'My strong guess is that if we had a transcript of any other economist, there would be at least as much fodder.'"

Again, spot on.

[update]
I haven't had time to read all of the transcripts, but for those who are interested, here a couple of links.

This one is the transcript page.

This one is a longer set of quotes.

Energizer Bunny

2012-01-12T20:23:00.004-05:00

One of those theses I'd been considering writing about just became redundant. And that's a good thing. For various reasons, none of which I can pinpoint, I'd been building on the idea that our problem is just energy. I don't know that this is novel, but it's not been the basis of any analysis I've seen in memory. Analysis is political or religious or whatever.

But the fact remains: the distinguishing characteristic of human "progress" is just large per capita energy expenditure. Whether that energy expenditure necessarily makes us more "civilized" is a significant question. But the change in societies can be simply measured in BTUs.

So, I was sipping rum and cable surfing, and came across "The History of the World in Two Hours" on History International (or H2). I caught the last half hour or so, but was struck by thesis: "progress" was the result of energy consumption. I guess I don't have to write the piece. Check your local listings. It's worth a look.

The question not answered: is there really any difference between a hairy Neanderthal using a club to kill his neighbor in order to take his neighbor's stuff, and not so hairy homo sapien using a laptop to reach the same end?

Turning Japanese, Part 2

2012-01-08T14:42:00.000-05:00

I, along with a considerable chunk of saltwater economists, have been harping on the history of Japan from 1990, as an object lesson for the USofA and The Great Recession. So, imagine my surprise when today's NY Times runs a piece on the front page of the Review section claiming that the USofA should now *emulate* Japan! What's up with that? Another case of Judy, Judy, Judy?

In part, I have to disagree with some of his conclusions based on inappropriate data. He says: "Luckily there is a yardstick that finesses many of these problems: electricity output, which is mainly a measure of consumer affluence and industrial activity. In the 1990s, while Japan was being widely portrayed as an outright 'basket case,' its rate of increase in per-capita electricity output was twice that of America, and it continued to outperform into the new century." Now, in my dead trees version which I read this morning over dark roast Panera coffee, that sentence is right next to a 1/4 page photo of an open air pedestrian shopping street at night. Could well be Tokyo. Wherever it is, it shows the profligate use of electrons devoted to signage. Moreover, Japan uses much more electricity for public transport, which is a Good Thing, but really isn't an indicator of progress vis-a-vis the USofA (here). A few minutes with interTubes search didn't yield a source of household electricity use, which didn't surprise me. On the other hand, WikiPedia has this piece, citing IEA data, which shows Japanese per capita electricity use declined in the mid 2000's.

The number he should have used, if it were available, is median household electricity usage for both countries. Since Japanese homes, at the median, are significantly smaller than US (not the best number, but the best I could find), the delta percentage is a truer measure of usage, with the caveat that 10% more of 1 is a lot easier to do than 10% more of 100. And whether using more electricity is a sign of progress is a whole 'nuther question.

Where I have to agree, at least superficially, is this:
"Japanese manufacturers have graduated to making so-called producers' goods. These typically consist of advanced components or materials, or precision production equipment. They may be invisible to the consumer, yet without them the modern world literally would not exist. This sort of manufacturing, which is both highly capital-intensive and highly know-how-intensive, was virtually monopolized by the United States in the 1950s and 1960s and constituted the essence of American economic leadership."

While I have to agree that not killing off manufacturing is a Good Thing, the manic chasing of export sales is foolish. If one wants to have a robust domestic economy, then domestic consumption of capital goods is also necessary.

Where I really have to praise his insight is the tale of victimhood perpetrated by the Japanese hierarchy internationally. Poor downtrodden Japan!! As my Pappy used to say, "a hand full of gimme, and a mouthful of 'Much obliged'".

One point about the article needs amplification. He talks about differences in inflation over the relevant period, and remarks that US statistics makers had changed their methodology to something called "hedonic inflation adjustment". I missed that somewhere along the line, likely when I was trying to make a living with a camera. The concept was taught when I was even an undergraduate, but I don't recall the term. It amounts to calculating 'flation weighted by the change in "quality" of the various goods in the market basket (the technical term for the list of goods and services used to measure 'flation).

The BLS says this about it.
An opposite view is here.

On balance, hedonic (a truly woeful term) adjustment is appropriate. The concept is commonly used by Right Wingnuts, by the way. They use it to say that Americans aren't really more prone to poverty now than years past just because the goods (services, not so much, of course) of today are so much more capable than five or ten or twenty years ago. That doesn't stop them from complaining when the argument defeats them.

Color Me Happy

2012-01-07T17:52:00.002-05:00

I posted the following comment on Offensive Politics' post on its graphic presentation of Iowa results:

This post got referenced on Revolutions Analytics, and garnered a comment that the (default) HCL scale used by ggplot is faulty. I commented that the closeness of the vote is perfectly reflected in the color scale; the confusion is correct.

So, off I went to Wickham's ggplot2 book, chapter 6 on scales. scale_full_gradient2() and library(vcd) provide ways to impose non-linear color scales. At first, a good thing. But I wonder. There's been a good deal of discussion, here and there, with regard to spinning data. It would seem that using a non-linear color scale is just as bad as fiddling with axis scales.

What do you think?

I mentioned this post earlier, which was then followed by its linking from Revolution Analytics. One of the prime directives of professional statistics, as distinct from polemic number spewing, is that form shouldn't affect perception. In other words, don't fiddle the picture to plant an idea not supported by the data. In this case, the original commenter complained that the color scale made it difficult to distinguish among the counties' vote winners. My view, so far at least, is that the defaults used by R/ggplot for this implementation rightly reflect the similarity between Romney and Santorum.

The default color scale is, essentially, linear. The alternatives mentioned are decidedly non-linear. Now, the notion of linearity with respect to color scales may be problematic, but the ggplot defaults do implement a notion of linearity, in that two opposite colors are blended along a linear mixing.

Here's examples from Wickham's ggplot2 text. I suppose it was uploaded legally. I hope.

This is the various color scalings:

As can be seen, the color gradient in the right two alternatives is far more extreme. I'm still not convinced that one should do such fiddling.

Barbary Piracy

2012-01-07T16:55:00.000-05:00

I'm by no means a Cato Institute type, but a piece by one of their staff was linked from Groklaw. It talks about the SOPA, and debunks the whole idea. Nothing I hadn't long ago figured out, but it may be revelatory to those who don't do economics.

I don't recall, and am way too lazy to run it down, whether I've written up here my thoughts on the general topic of macro and sub-macro economics. In a nutshell: many (most? all?) numbers based arguments, distinct from outright policy ones, that promote some law or regulation to "save" or expand some industry or corporation are guilty of bad arithmetic.

Here in sunny Connecticut, there was a gaggle of data when the casinos were being considered. Numbers were produced to assert that casinos would produce a bounty of revenue and jobs. Didn't happen. And the reason it didn't was that there was no net gain to Connecticut's economy; Connecticut folk spent at the casinos rather than movie houses or restaurants or whatever. As the article points out, what's forever been obvious to me, the vast majority of "pirates" wouldn't/couldn't afford to buy the item without the pirate option. Many of my Dear Readers are way too young to remember copy protection of common PC applications. MicroSoft and Lotus were the vanguard, locking Word and 1-2-3. There would be estimates of millions of illicit copies of the programs running in homes, and visions of $$$ danced in Bill's and Mitch's head. Baloney. Eventually, both gave up, although MicroSoft has been creeping back into the mire with Windows authentication.

What they ignored, because it was necessary to do so, was that such "pirated" copies were in search of employment where those programs were required. The "pirates" would never have the cash to buy either, and certainly wouldn't. They had no intrinsic demand for either. It turned out that most of the pirating was happening in corporations, in any case. Surprised?

The same applies to CDs and DVDs, but slightly differently. Music and movies have intrinsic demand for their consumers. Would a consumer buy that CD at full price if there were no other option? Who knows? But... for those who can't/won't pony up full price, the consumer's discretionary expenditures don't change. Rather than spend $5 on an illicit CD, s/he spends $5 on a graphic novel or a Big Mac meal. The overall economy is no different. Those who do pony up the full price then have to forego both the graphic novel and the Big Mac meal. It's just a government sanctioned and imposed transfer of wealth from one industry/corporation to another.

Not something a libertarian would countenance.

There Card Monte

2012-01-06T09:47:00.000-05:00

Not being a rapid Republican, I viewed the Iowa dance with detached amusement. The farther out on the starboard wing they go, the better off the nation is. At some point, even the averagely informed and intelligent will realize they're being taken for a ride. Granted, we haven't yet found that distance.

Early Wednesday afternoon, I was checking R-Bloggers, and saw this graphing post of the results. No discussion evolved. As a virtually instant analysis, it was to the point.

Then, Thursday the conspiracy theorists had a field day. Not that the post came out and said so, of course. However, the flood of discussion sure did.

There are a number of aspects to the Iowa results. Most of them in the realm of political economics, oddly enough. As some of the comments noted, caucuses are *not voting* exercises. As a bit of video (I think I saw on "The Daily Show") showed, it's scraps of paper in left over Christmas boxes; and who knows what else. These are purely party run and controlled pageants. Whether there are monitors to the counting, and a chain of control to the counts, and all the other electoral niceties, I sure don't know. Doesn't appear that way, at least.

Then, today this bit of news. But, if the GOP Brain Trust (could fit in a Match Box Yugo box, of course) wanted the anti-Romney, why Santorum? He couldn't get re-elected in Pennsylvania, for crying out loud. PA ain't MA, but it sure ain't MS, either. May be they should just rename it the White Folks Only Tea Party and be done with it. OK, I know; honesty has never been their best policy.

Pieces of Eight

2012-01-03T10:07:00.001-05:00

Yo ho ho, and a bottle rum!! Six pieces of eight'll buy you a jug!

No, I didn't just get back from a Jack Sparrow movie (never seen one, actually). What I did just finish is an AP feed, a copy is here, which didn't quite go all the way (thanks, Berman). It did state: "Republicans also controlled Congress for six of the eight years Bush was in the White House, clearing the way for many of his policies to be enacted."

As you may have guessed, if you've not followed the link, the Right Wingnuts aren't embracing their last President. You know, the fascist kind, the only kind which can be Legitimate Presidents. The Chimp as red haired stepchild. As bastard spawn of a one night stand.

It may be time to create a new website, 22of28.org, to put a stop to the lies from the Right Wingnuts.

Da Meme, Boss, Da Meme

2011-12-30T13:28:00.002-05:00

Krugman's hijacked my meme!!

I had intended to wrap up the year with a song, but before I do that, I have to claim vindication, since (for those who don't follow links) the title of the good doctor's column is "Keynes Was Right". I'll drop him an email asking for props. I'll even let you know if I hear back. I'm not going to hold my breath.

Now, for that song. The 1950's saw two folk music revivals. The first was in the spirit of Woody Guthrie, who is still not all that welcome where he was born. This was music by and about the left behind. With the Red baiting and such, some of these singers were blacklisted, and the revival petered out. Toward the end of the decade, a folk music safe enough for suburban white folk emerged, and chief among the performers were The Kingston Trio. A bit later, one of their arrangers got together with a couple of not quite so safe (and all three a tad older than the college kids around whom this second revival revolved) white guys to be The Limeliters. A bit more sophistication and a bit more edge. Not the Weavers, though.

But, The Kingston Trio did record and perform this song.

Poverty Hill
Fred Hellerman/Fran Minkoff

They come in their summery dresses and jackets so fine, the rich folks who measure success with a big dollar sign.
They gaze with delight with the rocks and the scraggly pines. The come in the Spring and they stay 'til the Fall
On Paradise Mountain away from it all.

Chorus:
Stubble and stone make a hard row to how. What little will grow, the drought will kill.
The summer folks call it Paradise Mountain but we call it Poverty Hill.

They say we have beautiful faces as grainy as wood. Yeah, they'd like to live here of all places if only they could.
Well, we don't get those wood, grainy faces from livin' too good. It's the rocks and the sun and dust and the heat.
It's too much of work and too little to eat.

(Chorus)

They pack and say what a pity that they have to go. They say that Old Smokey's so pretty all covered with snow,
But how we get through the winter they never will know. No lard for the pantry. No grist for the meal
And winter's are cold over Poverty Hill.

(Chorus)

Yes, we call it Poverty Hill.

Fred Hellerman was a Weaver.
Fran Minkoff was a Robert Hunter to the Weavers; she wrote for others, too.

The Point of No Return

2011-12-29T11:04:00.001-05:00

A comment on Can I Peak Your Interest, said, "there's also a basic supply and demand element to interest rates." (this guy). For better or for worse, this is a common misconception, due to treating cash as a commodity. It isn't. As Adam Smith, the real one, asserted, it exists only to simplify barter. Yes, currency arbitrage has been around at least since Jesus tossed out the money changers. That still doesn't mean that, in a functional economy, cash is anything more than WD-40. That's really all it is.

Where it gets a little more complicated, is in capital. Currency is fiduciary capital, whose only reason to exist is to buy physical capital, which economists have long referred to as plant and equipment/machinery. Until recently, anyway, when the quants on Wall Street invented new and bizarre ways to separate "investors" from their currency.

What determines supply and demand? In consumer goods and services, economists have long hung their argument on "utility": an iPhone or Hostess SnoBall or a visit to a massage parlor each bequeath to me some level of this "utility". It is the utility that justifies the payment. And this utility is in my head. The utility of the three legs of the survival stool; food, clothing and shelter, is easier to calculate. But most of what we consume these days is outside the realm of basic survival. For a bit longer, at least. In any case, the supply and demand idea applies here: the perceived utility sets the level of demand.

With physical capital, it's pure arithmetic. If a new plant or machine yields a 10% improvement in production, that's what I'll pay to have that plant or machine. A lower interest rate won't entice my to buy more of that plant or that machine, if there isn't a market for the widgets I'm making. A higher interest rate will compel me to say no. The interest rate is set by the physics and engineering of the plants and machines available to capitalists. In an ideal world, of course, and the one devised by the Wall Street Banksters is pretty far from that. But all they can do is distort the process, mostly to their advantage. The fact remains: the real rate of return on new plant and machines determines the interest rate. Since we've moved on to a Post Industrial Society (haven't we?), matters get a bit more complicated. If money is lent for purposes other than conversion to physical capital, what's the proper interest rate?

Ah, there's where the Banksters messed up. By convoluting the connection between cash and real investment (which broadens the definition to assets beyond simple plants and machines to include any amortizable purchase; I said it was a bit more complicated), they've been able to obscure the process.

By now most understand that Greenspan is Patient Zero of The Great Recession, when he caved interest rates under BushII. If ours were still an industrial economy, very low interest rates *would* have led to a surge of physical investment, since useful, but lower return, plants and machines become profitable. Rather than buying productive plants and machines, all that Greenspan cash ended up in housing CDOs. Why? Because it was viewed as being easier. Easier for two reasons: 1) there wasn't all that pesky stuff to keep track of and 2) the Banksters didn't have to go find capital intensive businesses to soak up the cash. Recall, much of the free cash was coming out of Asia, and profitable physical investments had already been transferred to Asia. Even the Chinese were looking elsewhere to stash (at a profit) all that cash.

Thus was born the subprime loan. And a short respite for the middle class from the debilitating effects of declining median income. The respite also happened to capitalists: while the Right Wingnuts among them rail against consumer debt, without it, all those cushy executive jobs would go the way of the dodo, along with the companies. As Eccles says, an industrial economy requires a way to absorb increasing productivity. If it doesn't get distributed as wage increases, other methods will be found. They were.

The problem from a capital allocation, macro-economic, point of view is that housing isn't capital investment. Housing is just serial consumption of that "utility" thingee. The home owner doesn't generate an economic return on his use of the house; he just lives there with Wifey and 2.2 mini-thugs. For what it's worth, China is finding itself in a housing frenzy, too. Again, not enough clever engineers figuring out better plants and machines. And if they did, there'd be still lower wages for workers to buy the widgets. Can't get away from the distributional collateral damage. Mortgages are supported by (median) income, and nothing else. They're not real investment.

So, back to the initial comment. A supply and demand answer to interest rates in capital is less true than for consumer goods just because the value of the use of capital (not the cash itself) is, with sufficient effort, exactly calculable. This is not true for most consumer goods, which are valued by intrinsic "utility". Thus, the interest rate is determined by the inventiveness of engineers to devise more efficient machines.

Absent, of course, Dr. Evil.

Can I Peak Your Interest?

2011-12-26T14:02:00.002-05:00

Well, may be I've got the spelling off. But may be not. The point of this essay is to debunk the conventional theory of interest, which asserts that interest is paid because savers want to be paid for the use of "their" money, and that they determine what the "real interest" rate is. Bunk.

What really determines the "real" (and I use those quote marks because no one in the economics field knows what's "real", so far as determining an absolute measure of interest; not the rate, but the definition used to derive the rate, that gets into weighing de/in-flation and other factors) is physics, not savers' time preference. Moreover, the world's banking systems subvert the process with many levels of intermediation (see, for example, this about the opposite).

The current Great Recession (and it ain't over, not by a long shot) dates back to Reagan and the PATCO strike; thus began the Long March to removing the middle class; at least, the non-financial sector employed middle class, what some refer to as the blue-collar middle class. For the True Right Wingnuts, a blue-collar middle class is an abomination, a pariah on society. Reagan began the policies in earnest. Alan Greenspan (remember him?) carried them out. It was under BushII that Greenspan caved interest rates, and thus set up the scenario of Your Home (Equity) is Your ATM^©. This was necessary, as the decline in median income and the shift in taxes from the few to the many, was well underway. Without the Home ATM, consumption could not continue. Without consumption, the USofA enters its Japan Period. Now we have, and Obambi the patsy can take the blame. Returning to the policies which caused The Great Recession isn't going to end The Great Recession. It's not a coincidence that the only prosperous period since Reagan was Clinton, who throttled back. Couldn't last, not with a Right Wingnut Supreme Court.

So, what, then, does determine the rate of interest, and why is it important?

The latter first: economic growth, which is to say society wide growth as opposed to Corporation XYZ growth, is solely determined by physics. If the totality of the economic engine produces more from period to period, then growth has occurred. Otherwise, not. Without growth in production, growth in population can't be sustained. And, just to be clear: growth in production means more widgets, not just more cash from selling widgets. As Adam Smith, the real one, said money is not goods and services rather, "Labour was the first price, the original purchase - money that was paid for all things. It was not by gold or by silver, but by labour, that all wealth of the world was originally purchased." I wonder how many Right Wingnuts would still call Adam Smith their Mentor if they knew? Further, the production which matters is that which sustains the society; credit default swaps, not so much.

There's another problem. The monetary growth of an economy isn't, by definition, sufficient to sustain population growth. If all that an economy produces is banking services, for example, those services don't supply food, clothing, and shelter to the population. Some monetary equivalencing takes place to value the services against physical goods. Not to mention the fact that the physical goods aren't produced in the economy, but must be imported. The calculus has quickly gotten out of hand.

The IMF, the World Bank, the Great Gaggle of Bondholders (as exemplified by Skull & Bones) decide how much an American Dollar is worth relative to a Euro or Renminbi. Whoever controls international exchange rates (if that's a sovereign country) gets to tilt the playing field to its advantage. The USofA had that advantage for two decades after WWII, in the form of the Bretton Woods convention: "The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar...". In 1973, OPEC (really, the Arabs in retaliation for the USofA's support for Zionism, which one may deny exists, but is quite real to Arabs), demonstrated that this system was no longer in control. Oil was in control.

And so it has been ever since. The fall and rise of Russia is built on oil. The rise of Brazil, and to a lesser extent Venezuela, so too. The American response, beginning with Carter, was to monetize the economy. Most don't remember, or weren't born yet, but Carter began the assault on Government. It wasn't in full stride until Reagan, but Carter started the ball rolling: "The Carter Administration submitted 11 reorganization plans to Congress to streamline the federal government. All but one, a plan to create a Department of Natural Resources, went into effect. The largest of the plans was revamping the civil service system." Carter ended up politicizing public service, the kind that regular folks choose to do, not the figurehead nonsense of Special Ambassadors and such. Reagan just took the anti-government, and by implication anti-intellectual, cudgel and beat the rest of the middle class with it. It was, and is, no secret that the Federal government employs a lot of highly educated people; the enemies of the Right Wingnuts, whether they knew it or not.

We have two positive feedback efforts at work: the attack by the few upon the many, and the financialization of the economy. The former results in policies which move income and wealth to the .1%-ers and the latter moves capital from physical production to monetary gambits. Taken together, the society regresses.

Where we are now. The American economy has devolved from making things to making deals. When an economy makes things, flation in either direction is merely an inconvenience; trading one thing for another is just barter with currency being the oil for the machinery. When an economy stops making things, and just deals, then currency becomes not just the oil, but the machinery. And therein lies the problem. When the world ran on specie money (chiefly, gold), flation was determined by new gold finds; how stupid is that? Studies of 19th American economy note that it was almost wholly de-flationary, and for the simplest of reasons: real production expanded as the population did and territory did (it was taken from the native inhabitants), but without new currency, prices for all goods and services fell. There was, not coincidentally, recurring recession over the century. Not a bit of history the Right Wingnuts and Goldbugs want you to know about. From a macro-economic point of view, the 19th century was anarchy.

The root cause of the Continuing Recession is two fold: the monetization of economic activity and a massive shift of that money from the many to the few. Fixing it will likely not happen, because to do so requires punishing those who engineered the collapse, and those folks remain in control of monetary policy. When I was a kid, one of my tasks as soon as I could walk and count, was to trek to the corner store and get The Parents cigarettes, $.25/pack. Mother stuck with Viceroy, Father switched among a few brands. One of those was Old Gold, and it's still in production, although now a discount brand. Well, the American Dollar is New Gold. You saw the flight to the dollar on those days when the Euro looked to crash. That will continue. And it's not because the USofA makes all the shiny bits that make other countries need dollars to get them. No, it's because the Right Wingnuts are determined to keep the dollar's value stable no matter how badly doing so disrupts growth and equality. Unlike the period of Bretton Woods, Americans don't get any benefit. Well, the .1%-ers do, of course, but not the rest of us. For the .1%-ers, all that matters in currency; each a Little Goldfinger.

[UPDATE]
This just in.

The biggest nutbag is, of course, Ron Paul. He is both a .1%-er and a goldbug. Here's from today's news:
Economists note that Paul's long-standing proposal to return the dollar to a gold standard would force the United States to relinquish control of its currency.

"We would still have monetary policy - it would be set by gold miners in South Africa and Uzbekistan, rather than bureaucrats in Washington," said Michael Feroli, chief U.S. economist with JPMorgan Chase.

"If you like what OPEC means for oil prices, you'd love what the gold standard would do to financial markets."

Birds of a Feather

2011-12-21T14:03:00.002-05:00

That I find more solace in quants than relational databases has always been true and that my view of RDBMS building remains at odds with many of the Kiddie Koders who run their various asylums, are not excuses for pandering to the knuckleheads who very nearly destroyed western civilization. There's just no forgiving that. And is the main reason I've little interest in doing finance quant work.

It remains rare for the business press to print anything remotely discourteous to the quants, as if anyone else would pay them so much to do so much damage should they stamp their little feet and leave. Well, leave it to the Times to unleash its peashooter. The pea was this little bit of text:

"Banks considered the leverage ratio a blunt tool, an insult to all the investments they had made in the last decade to create sophisticated risk management systems, as well as a threat to potential profits and payouts to top bankers."

Read the whole article for some additional context, although the arrogance isn't highlighted. I'll do that. These are the very knuckleheads who shot the rest of us in the gut, and they want the right to continue to do so. Remember, borrowers can only spend what savers supply; national borders really don't matter. While leverage can be used to inflate the profits of individual banks, or even the whole financial sector, leverage doesn't create real resources.

And, if you've not done so recently, check out the quotes at the top of the blog. Birds of a feather, and all that.

Icarus

2011-12-21T13:07:00.001-05:00

The sky is falling. Oracle reported down, a bit, but, in particular, didn't report above expectations. Larry has been sly for a long time, in setting guidance low enough that bettering it is a piece of cake. Not this time. As I type, it's down 15%, and news is that much of the tech sector is getting the flu.

The knee jerk reaction: mortgage the farm and buy Oracle stock. IIIIIIIIIIII'm not so sure this time. Here's why.

Oracle didn't get quite the *new* software sales and *new* hardware sales. The latter is, by all accounts, due to customers waiting on the new machines during the quarter. The former is more speculative. The reports are vague. My take: given the aggressive pricing of Oracle RDMBS, ditto for MySql (yes, it's GPL, but Oracle blasted its support prices into the sky in the past year), and putting the screws to java adopters; folks are looking for a safer port.

On the RDBMS side, Postgres gets ever closer to Oracle, if you're not a Fortune X00 company (and even if you are, and building apps off the mission critical axis). Mainstream pundits are crying that "Da Cloud, boss, Da Cloud" is putting Oracle in an untenable position. It is said that cloud providers use dirt cheap components, soft and hard, and Oracle's RDBMS and Sun-ish machines are just too expensive Up There. As if being cheap were the best way to make money!? "Cheap goods sold dear" is an aphorism that's been around forever. The Cloud is shaping up that way, and if so, I'd avoid Fortune X00 companies that chose to put *my data* Up There. In this nascent era of Cloud, too many stories of wandering data to suit me.

What's really stupid about Larry's ploy: the Oracle RDBMS is built on an engine (the piece that actually does all the inserting and updating) which uses Multiversion Concurrency Control (MVCC, as it is known) which is better suited to the asynchronous nature of the Web/Cloud than the locker paradigm that most other (notably, not Postgres) RDBMS have been using for decades. They've been backing in, so to speak, MVCC support recently, but none is a true MVCC database. In other words, Larry has the proper mousetrap for the setting, but has managed to offend his customers. But, that's Larry's way.

Reports say that Oracle claims the shortfall is due to last minute non-signings. If so, then this is an aberrant glitch. Given that Fortune X00 companies are sitting on, by some accounts, more than $3 trillion, there's no macro reason to not buy new IT. Unless you're a Fat Man yearning for Famine.

A Warren-ted Search

2011-12-20T14:48:00.000-05:00

One of the points "for further research" as I used to say when I was an academic, in the Triage exercise was using social media to measure outcomes. R has a library, twitteR, (yes, R folks tend to capitalize the letter at every opportunity), which retrieves some data. I was at first disinterested, since I don't have a twitter account. Thankfully, twits can be gotten without being a twitterer. Since Elizabeth Warren's campaign is just over the border, and sort of important in the grand scheme of things, I've been exploring.

Here's the entirety of the R code (as seen in an Rstudio session) needed to return the twits (1,500 is the max, which will prove troublesome when the battle is fully engaged):

> library(twitteR)
> warrenTweets <- searchTwitter('@elizabethwarren', n = 1500)
> length(warrenTweets)
[1] 9
> warren.Text <- laply(warrenTweets, function(t) t$getText())
> head(warren.Text, 10)
[1] "@elizabethwarren i hope you win agianst sen scott brown. the 99% r with u"
[2] "@elizabethwarren More $$$ coming your way!"
[3] "#HR3505 PAGING: @ElizabethWarren Help us!!!!"
[4] "@elizabethwarren - not to worry, the only job Karl Rove ever got somebody was George W. Bush. and look how that turned out."
[5] "RT @SenatorBuono: What an amazing turnout 4 a superstar. @elizabethwarren"
[6] "HELLO @ElizabethWarren ! PLEASE RUN as a 3rd party or Ind. FOR POTUS2012. Dems just threwSENIORS underthebus for the working tax cut! EXdem"
[7] "@chucktodd We hope 2011 will be remembered for something a LOT closer to home. #ows #OccupyWallStreet @ElizabethWarren #WARREN/PELOSI-2016"
[8] "RT @SenatorBuono: What an amazing turnout 4 a superstar. @elizabethwarren"
[9] "What an amazing turnout 4 a superstar. @elizabethwarren"

The lines starting with > is the R code. The lines starting with [x] are the output. Here we have 9 twits.

Now, what do we do with the text? For that, I'll send you off to this presentation which came up in my R/twitter search (and is the source of what you've seen here), conducted in Boston. Missed it, dang. With slide 11, is the explanation of how one might parse the twits looking for positive/negative response. By the way, even if you're not the least bit interested in such nonsense, visit slide 29.

As I mentioned in Triage and follow-ups, getting the outcomes data is the largest piece of the work. Simply being able to "guarantee" the accuracy of twitter (or any other uncontrolled source) data, given the restriction on returned twits and such, will require some level of data sophistication; which your average Apparatchik likely doesn't care about. The goal, I'll mention again, isn't to emulate Chris Farley's Matt Foley and pump up a candidate no matter what the data say, but to find the candidate out of many most likely to win given some help. Whether Triage would be useful to a single candidate; well, that depends on the inner strength of the candidate.

Tenant FarmVille-ers

2011-12-16T13:39:00.000-05:00

"Something is rotten in the state of Denmark"
-- Hamlet Act 1, Scene 4 (here for a synopsis)

Why quote Hamlet? Today marked the start of public trading in Zynga, a (or *the*) Facebook gaming company. To the consternation of some, it's falling as I write from the IPO price. You can read the links on the page for further explanation.

But, being something of a Luddite techy (an oxymoron in the manner of "happily married") and Keynesian thinker, I've been dismayed over the last decade or so watching the laissez faire driven destruction of the American economy at the hands of money centered capitalism. Krugman, in today's column, deals once again with the topic, echoing what I said earlier in Part 16 of Dee Feat: inflation ain't happenin'. Now, why it's not happenin' doesn't get explained, for some reason. It's that the money is going into corporate coffers, not middle class consumers. The cash will stay there, and so long as it does, there'll be no growth or inflation. Fat Man likes it that way.

Back to Zynga. The company is another in a long line of unproductive siphons of capital, following LinkedIn and Groupon and the rest. As an aside, it was reported that FedEx is doing a booming business due to internet shopping. So let's see: Main Street gets shut down, and we burn hydrocarbons an order of magnitude more just so little Kimmey can have her Barbie? In no rational economy would this make sense. Zynga is just another private sector redistribution scheme; "money for nothing and the chicks are free".

Dee Feat is in Dee Flation, Part 16

2011-12-16T09:23:00.003-05:00

The new CPI/PPI numbers are out here, for example (lines for Dec 15 and Dec 16). As usual, we remain on the edge of outright deflation. I posted another Fat Man short piece this week; that one was happenstance, I wasn't expecting confirmation to fall from the heavens like Manna. Jesus loves me! He really loves me. What follows is from a previous Dee Feat piece, regurgitated for your enjoyment. I picked one at random because it saves typing in a whole new file name; doing it this way, I only have to replace the iteration number. Luckily, it deals with both Dee Flation and Fat Man. Yeah, I'm just a lazy good for nothing.

The assertion that there has to be inflation just because the Fed has eased interest rates and cost of reserves to the Banksters doesn't mean that inflation is on the horizon. It's been on the horizon, of the Tea Baggers and Banksters, for a couple of years now. Nuthin'. And for good reason. None of the money makes its way into the economy. Banksters and Capitalists are sitting on an unprecedented cache of cash. Misers all. "It's mine, all mine, and I'm keeping it. Just in case my greed causes an even worse Recession." Which is what the slier among them want, deflation increases the value of their cash cache, and they've got to do nothing to get the "return on investment". Consummate evil. Bernanke may have study the shit out of the Great Depression, but back then corporations were hurt by it. These, except for the occasional bank, have been swaddled in cash. Which they hoard, hoping for deflation. Mark my words; I've said it before.

Once again, three sources of inflation: cost push, wage push, demand pull. Wages are falling (median income was recently reported to have gone down some more, thanks Dubya) none from there, incomes are stagnant (which is why companies, when anyone bothers to ask, don't complain about wages but "lack of demand") so none from there, leaving only scarcity of goods to drive costs up (and that can only be sustained if consumers have the $$$ to pay the higher cost) and that's not been happening, either. In any case, with a 70 to 80 percent service economy, cost push is an outlier in the best (so to speak) times.

Fat Man in Famine, part 2

2011-12-14T16:04:00.003-05:00

I was doing some searching, looking for prior art on using Twitter, etc. to measure campaign event outcomes, when this 538 piece, from today!, popped up. Remember what I've been saying about Fatman in Famine? Think I was just making it up? Here's proof.

Tiny Antlers

2011-12-12T08:40:00.002-05:00

Yes, the title of this piece is intended to tickle the bottom of long term memory; sounds kind of familiar, I guess I should read it. Alas, Elton John (so far as anyone knows) has nothing to do with Obambi. Elton cared about a tiny dancer.

Obambi, last night, displayed a smidgeon a spunk. Not enough to get me convinced he'll do what's needed. He *still* allowed himself to be portrayed as the sole re-distributor, ignoring the record of the Right Wingnuts since Reagan, who saw to it that the 1%-ers (and the far more evil .1%-ers) got rich while the rest got poor.

The numbers that matter: for 22 of the 28 years from Reagan to BushII, the Right Wingnuts controlled at 3 of the 4 branches of the US government. That's a fact. In that time, through law making and activist judges (not the least, the Supremes), they put a severe tilt in the economic policy landscape.

Unless, and until, Obambi tells that story, he'll be toast. He can't continue to allow himself to be played for Stepin Fetchit.

Both Sides Now

2011-12-08T13:52:00.002-05:00

Judy Collins (not Miller!) had a hit with "Both Sides Now", although Joni Mitchell wrote it and later recorded it. I still hear Judy's version in my subvocalized ear. A while back I wrote, again, about the situation with the Euro and ECB, making the assertion that a regime that only had Dr. Friedman without Dr. Keynes couldn't work. I doubt that I was the first to see this, although I did come to the conclusion unaided by mainstream pundits.

So, imagine my surprise when a front page story in the Times contains this tasty morsel:
"...Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France, who are trying to find a way to save the euro while imposing legally binding fiscal discipline on the Continent's floundering southern economies."

Now, fiscal policy in the immediate context is punitive, but in the long run, it has to be supportive. Just, as I have pointed out more than once, here net Federal dollars flow in large quantity to the poor Red states from the hardworking Blue states. That's just a fact, one that the fat headed Red staters (I'm talking to you, Sarah) can't abide discussing. Europe, if it is to have a single currency, will have to have a centralized fiscal policy. That will mean the well-to-do few end up supporting, so some degree, the poor red headed stepchildren. All those folks, here and in Europe, who used debt to buy stuff saved capitalism. Without their demand for goods, capitalists would have died. They will soon enough, if their incomes are shattered. Without real demand (what economists call the desire for goods coupled with cash to buy; I demand a Ferrari, but don't have enough cash, so that's not real demand), production ceases. Production ceases, and only the Fat Men survive the ensuing Famine. The Right Wingnuts, Cameron being the species on display today, always refuse to accept such a simple and unavoidable accounting. It ain't rocket science.

As Eccles, quoted on the front page, makes clear, economics really is a zero sum game in the immediate and medium term. Again, often written, economic growth only sustains if it's measured on physical output, not financial manipulation. An argument is easily made that the "service economy" is just a skewed implementation of income re-distribution. After all, the highly paid services are only minutely consumer facing jobs. The vast majority are overhead, from a macro-economic point of view. And even outside of closely defined financial services companies, as well. GE got into a mess by shifting from production to money laundering, along with the Banksters. They are mending their ways.

How many hours of office "work" is an iPhone worth? In whose currency? These are the uncomfortable questions. To the extent that economies become disconnected from physical production the more difficult it becomes to value labour. In olden days when butchers bartered with farmers two facts controlled: 1) useful goods moved and 2) both parties were consumers. Barter, when one party is not a consumer and one half of the barter is a corporate service, is more difficult. There's another story about the plight of bond traders in today's edition, as well. Trading financial instruments is the ultimate expression of make-work; what in FDR's time would have been dam building and undergrowth clearing. FDR's implementation accomplished a good deal more Good.

Consumers buy Things, corporations buy services. The notion of a post-industrial economy is a myth, or a lie, depending on how annoyed one is. The Great Recession, not nearly done with, is proof.

"I'm a Fronkensteen"

2011-12-02T17:56:00.001-05:00

There is a movie, "Bad Day at Black Rock", and any objective economist (there aren't any, and that includes Your Humble Servent) must think that today is such a day. The Monthly Unemployment report has blown the lid off of the data. How could a lackluster increase in employment yield a 4 tenths of a percentage point *decrease* in the unemployment rate? Yeah, Dude, what's up.

I'm here to reveal the awful truth.

First, contrary to widespread belief, you're not counted as out of the workforce when your UI runs out. And you're not counted as newly hired when you get a job. All the numbers you're hearing today, and likely for some time, are generated by *surveys*; two in the case of the monthly report. This is one. This is the other. And here is a description of sausage making. The last is a rather long, and detailed, report. I'd wager that few economists, data scientists, and certainly not reporters, have ever read one front to back; I did, but that's when I was in grad school, so it shouldn't count.

These, to be technical, are stratified random samples. Just as Gallup and Harris tell you what the most watched TV show is with a handful (relative to the nation's population) of viewers, the BLS and Census tell you what's going on in the economy with a handful. Don't get fidgety, though. The private sector prognosticators do the same thing. The country is too big, both in bodies and square miles, to do a census each month on citizens and businesses.

But, I will admit, that some news spewers have made a point of the 315,000 drop in the labour force to explain how it is that so-so new jobs leads to .4 point drop in the unemployment rate. Same thing happened during Reagan, but no one's made that point.

It's a Mad House

2011-12-02T12:20:00.002-05:00

The NY Times is, if nothing else, schizophrenic. It's surely not the last holdout for Liberalism; that myth was spiked by Judy/Judy/Judy. Today's issue is pluperfect. First, Floyd Norris calls for reinflating housing. But, then, we read this story about Germany.

For those who read regularly, you may recall (if you got here at the beginning) I have written about the folly of housing as investment. Housing is capital wasted, if one is a Smith/Rand leaning economist, anyway.

Read both pieces. Note, particularly, the German Man-in-the-Street. And the passing reference to inflation of house prices; yes, the speaker uses the word "inflation" and not "appreciation". Because, housing is just serial consumption, not investment.

What's The Difference?

2011-11-29T19:03:00.000-05:00

To continue with the Triage project, I've spent a day or two with more graphics texts (about which I'll be musing anon), and getting more familiar with the mapping scenarios.

Separate from the scatterplot matrix data shown in Triage, which would be used to measure the micro components of a campaign, is the question of displaying national trend, twixt Us-uns and Them-uns. For that one turns to map graphics, which is a whole other world. Still in R, mind, but not statistical in nature.

What I have recently found is this site, which replicates a US map with 2004 election results. Now, our Apparatchiks won't be downloading zip files from outside sources, of course. On the other hand, the files make for a perfect dive board for the PoC. Load them into PG, swapping Republican for Bush and Democrat for Kerry and Other for Nader (that's not much of a stretch!). Just for completeness, I'd found much earlier (but can't find that I'd cited), this map exercise, but as of now, the author has been too embarrassed to post the R that does it. While only some form of income data (not specified), it is a follow-on (linked to) to an election stream map set, also not supplied with the R that made it. Nevertheless, one can conclude that with enough time, this is a task suited to R. As mentioned in an earlier post, the animation bits are likely via googleVis.

I'll be using his data, since it provides a basis and I don't have to concoct some, though not the R he used (still using the stock R from Wickham). It's not clear how the numbers were derived.

What is really useful about the 2004 map posting is the data source: a county level count. Get these into a PG table, and we have a surrogate for data which our Apparatchiks would have, and which we can further expand with relatively simple SQL; just to see how a map would change. The notion for this part of the Triage effort is to measure the effect of national campaign spending, post some event/ad/debate/foo, at the POTUS/party level; a RNC/DNC (or 501/527/foo group) view of the country.

Here's the new PG table where we load:

CREATE TABLE public.election (
state varchar(25) NULL,
county varchar(25) NULL,
tot_precincts int4 NULL,
precincts_reporting int4 NULL,
republican int4 NULL,
democrat int4 NULL,
other int4 NULL,
constraint pk_election unique(state, county)
)
WITHOUT OIDS
TABLESPACE pg_default

And we get it loaded thus (concated from the state/county files in the zip):

copy public.election from '/databases/rawdata/2004election/output.txt' using delimiters ';' csv header

Note that column names are underscored, rather than camelCase, since PG forces quoting to use anything in the database if there are Caps in names. Yuck.

And here's the PG + PL/R (I've left it as is; comment/uncomment to generate each of the maps, this is the difference map, shown last. The first set are for the two event maps, while the other is for the diff map):

CREATE OR REPLACE FUNCTION "public"."us_graph" () RETURNS text AS
$BODY$
X11(display=':5');
pdf('US_graph_diff.pdf');
library(maps)
library(plyr)
library(proto)
library(reshape)
library(grid)
library(ggplot2)
library(mapproj)
states <- map_data("state")
#elections <- pg.spi.exec ('select state, sum(republican) as "Republican", sum(democrat) as "Democrat" from election where event_number = 2 group by state order by state');
elections <- pg.spi.exec ('SELECT a.state, sum(a.republican - (SELECT b.republican FROM election b WHERE b.event_number = a.event_number - 1 and a.state = b.state and a.county = b.county)) as Republican FROM election a where a.event_number = 2 group by a.state ORDER BY a.state ')
elections$state <- tolower(elections$state)
elections$republican <- elections$republican/10000
choro <- merge(states, elections, sort = FALSE, by.x = "region", by.y = "state")
choro <- choro[order(choro$order), ]
#p <- qplot(long, lat, data = choro, group = group, fill = Republican / Democrat, geom="polygon", asp=.6)
p <- qplot(long, lat, data = choro, group = group, fill = republican, geom="polygon", asp=.6, main = "Poll Shift", xlab = "", ylab = "")
p + labs(y = "", x = "")
p + opts(panel.grid.major=theme_blank(), panel.grid.minor=theme_blank(), panel.background=theme_blank(), axis.ticks=theme_blank())
p + scale_x_continuous("")
p + scale_y_continuous("") + coord_map()
p + opts(axis.text.x = theme_blank(),axis.text.y = theme_blank(), axis.title.x = theme_blank(), axis.title.y = theme_blank(), axis.tick.length = unit(0, "cm"), axis.ticks.margin = unit(0, "cm"))
p + scale_fill_gradient(limits = c(0, 90))
print(p)
dev.off();
print('done');
$BODY$
LANGUAGE 'plr'

All that spinach for the library calls got eliminated by making an .Rprofile in postgres user's home with the following line:

.libPaths("/home/postgres/R/x86_64-unknown-linux-gnu-library/2.14/")

You could also call out the libraries explicitly; both ways work. The additional spinach is various directions to eliminate the lat/long grid on the maps. None work!

Here's the Event 1 map:

Now, let's update the table to include an event_number (easier than using a date, anyway) and an event_type. That way, we can generate maps in sequence, but also note what sort of event just/last happened. We could also generate maps sequences for only certain sorts of events (they'd be in a check constraint).

So, let's make some new data:

insert into election (select state, county, tot_precincts, precincts_reporting, republican * .8, democrat * 1.2, other, 2, 'foo' from election where event_number = 1);

We wouldn't get such dramatic shifts (modulo Swift Boats) in the real world, but this is PoC territory.

This yields a new Event 2 map:

I'm still grappling with my main wish list item: showing the changes in the colors. As it stands, each map takes the full gamut, leaving the legend to display the shifts; doesn't do that all that well. Viewed another way, why not show the delta of polling strength (vote displays are a bit late, after all)? We can do that with a single map. How to get the data out of the election table? For that a correlated subquery is sufficient. It's that big SQL statement.

Here's what the delta map looks like:

What we see is the shift, in absolute, not relative, numbers. So Texas looks to be more Democrat from Event 1 to Event 2 just because it started with more votes; same with California.

Getting rid of the lat/long grid is still a problem, but then, this is a free PoC. Cheap at half the price.

Tipoeing to the Truth

2011-11-25T12:55:00.000-05:00

The NY Times makes another tiptoe step toward truth today. The published an op-ed piece by Herbert Gans, who is semi-famous. What remains unanswered is the question: what has caused the imbalance? In order to fix the problem, the problem must be correctly surmised. Gans, and others, continue to ignore the elephant sitting on the coffee table. He floats a few band-aid tactics, but ignores the cause.

The problem is two fold (as I have written in the past, so this is just today's musing). The first is that recovery from recession presupposes that the workforce can be re-employed doing what it did before the Crash, if only the economy's demand could be restored. That doesn't work this time, since the stability of the Bush years was based on two non-productive uses of capital: housing and finance. As unpleasant as it may be to hear, but putting capital into housing requires diverting capital from productive uses. The only way for the banksters to make money on housing is for the mortgage holders (that vanishing Middle Class) to see increasing income. Houses, per se, don't generate output the way a Brown and Sharpe milling machine does (or any physical capital). Therein lies the root cause of the Crash. Without growing incomes, housing becomes unsupportable as investment.

Finance is a zero sum game: all of the cash involved is fixed by the scope of the savers. Profit to the finance wizards is extracted from the flow of cash between the savers and the borrowers; the finance wizards don't create wealth, they purloin it. More than a few, formerly just from the left fringe and latterly from more staid venues, have suggested that our economies were better off (and would be again) when finance was reduced to the boring trade it was before the failed math fiddlers got involved. They don't appear to have brought anything positive to the situation. Off with their heads.

The elephant is distribution, as it always has been. Those who are lucky enough (and Krugman's piece today says so again) to score big did so out of luck, but continue to assert that it was personal brilliance. They still insist that none of the mess was their fault. It was mortgage companies, then banks, that created sub-prime and liars' loans in order to sell overpriced houses and pocket excess cash in the process. The liars didn't walk in pointing a gun demanding a sub-prime mortgage; there's been sufficient reporting of cases where folks (often of darker hue) were given only sub-prime mortgages when they qualified for conventional. The mess was created by the Gatekeepers to housing, for their benefit, not for the home buyer or society writ large. Off with their heads, too.

That Stay Puft Man

2011-11-22T14:55:00.000-05:00

One of the funniest bits in all of film comedy is the Stay Puft Man vignette in "Ghostbusters". It would be nice to see that look on the faces of Fat Men in Famine (way back in May, 2010 they were my subject). As second prize, is today's NY Times; a mother lode of confirmation. I just got back from my reading of the dead trees version, and here are the stories which relate to Obese Oligarches (comforting to see that the Mainstream Media finally gets it):

Corporations cash out and layoff
LinkedIn's execs cash out, big time
Europe's continuing angst
the party never started

I'll give you just one quote (from the first cite):
"But spending on capital investments like new plants and infrastructure has stagnated more broadly in corporate America, confounding efforts by the Obama administration to spur economic growth. Capital expenditures by companies on the Standard & Poor's 500-stock index are expected to total $546 billion in 2011, down from $560 billion in 2008, according to data compiled by Thomson Reuters Eikon."

As the Fat Man pieces explain, when you've got lots o cash, deflation is the guaranteed, risk free, way to acquire income. Now, that's what's wrong with this country. What the Right Wingnuts won't admit, for if they did their arguments collapse, is that the "debt" of our middle class (here and in Europe) is the necessary cost/price of capitalists' wealth. Without the cash, no one buys the stuff, and if no one buys the stuff, there's no return on capital. Note, carefully, the implication of the quote; to the extent that corporations make "profit" from financial manipulations rather than goods production, is the measure (inverse, alas) of an economy's stature. Jesus threw out the money changers. Oddly, our self-righteous Right Wingnuts don't seem to mind them. As I've written a number of times, economic growth isn't measured by cash increasing, but by increasing production of consumable goods. The only way for a business to re-pay debt is to generate *new* income (or cut costs, but that's explicitly limited to shutting down the business) levels from increased production. Real economic growth comes from better production, not money manipulation. Wall Street Banksters managed to change the rules to favour money manipulation. We, and not they, are the ones harmed by such "free market" decisions.

That last cite might seem out of place. But it fits in this way: I watch Bill Maher's show on Friday/HBO when he doesn't load up on Right Wingnuts; however, during his last show he ranted that college students were not majoring in science and engineering enough to suit him. He quoted some numbers, I forget the particulars, but he contrasted performance art (or somesuch) to engineering (ditto), with the former number of graduates greater than the latter.

Here's a paper looking at the issue, and a quote:
"Paul J. Kostek, who previously managed career activities as vice president of IEEE-USA, the electrical and electronic engineering institute, says there is no shortage. 'You saw what happened to the price of gasoline when there was a shortage last summer. If there's a shortage of engineers, why aren't people paying $200,000 to hire an engineer.'"

There's been plenty of anecdotal evidence that undergraduates flocked to Finance just because it was less rigorous and more lucrative. It's no secret that a degree from a business school was worth many Bongo Bucks. Not so much anymore. It's also documented that undergraduates are leaving computer science; there's no way to earn back the cost competing against a $2/hour Indian.

Honesty in Government

2011-11-09T10:27:00.002-05:00

[UPDATE] -- copied Sales the first time, same issue.

As I transition into data scientist, which means re-adding my stats mojo to my RDBMS mojo (not replacing the latter with the former, by the way), I've come across more than a few postings and writings in the statosphere about truth in data. The writing is always by data professionals (not lobbyists and the like, near as I can tell), and the point is always that the data is truth. By truth one means the most accurate picture of the real world, unadorned by propaganda.

Today's Federal data dump includes September wholesale inventories. They were down .1%. Here's the quote: "..were $462.0 billion at the end of September, down 0.1 percent (+/-0.2%)* from the revised August level." What's the starry thingee, one might ask? Well, it's the link to a footnote.

Here's the footnote:
"* The 90 percent confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero."

Two points to note about the footnote: 1) the CI is 90% level, which is very generous and 2) it spans 0, which means what the note says. I wonder how many of the reports about the report will bother to tell us about that.

Here's the link to the original; click the link for Excel or PDF.

Walk Like an Egyptian

2011-11-06T21:31:00.000-05:00

I walk funny. Such has been observed, sometimes as complement and sometimes as insult, for years. The earliest complement I recall happened when I was working with guys from Touche-Ross (Boston), right out of grad school (1973, or thereabouts). One asked me how long I'd been studying karate. I hadn't said that I was, but I had been for about 6 months. I asked what led him to the conclusion. It turned out that it was my gait.

In high school, the response was somewhat different, along the lines of fruityness. Now, I'll admit to having a preference for hot dogs over tacos when it comes to food, but just the opposite when it comes to activities Sybaritic. Interpret that as you will.

The whole thing traces back to being a Boy Scout, around 1960. The Boy Scouts back then weaved in a good deal of "Indian" lore. One of the Indian practices involved how they moved through the forests. Specifically, how the feet should be held during walking and running. Most folks, especially girls who've spent time in ballet lessons, walk with toes splayed out. Donald (or Daisy) Duck in motion. Not so for the Indian; foot is exactly straight, either walking or running. The explanation in the Handbook was that walking with straight feet saved some number of steps per mile. I trained my feet to point straight ahead. I guess that led to some anomaly in how my gait looked.

That time in Boston wasn't only in karate academy (so he called it), but also running on the indoor track at the Boston YMCA. I ran barefoot, although I guess that wasn't within the written rules. I got spoken to occasionally. I still ran barefoot. Running barefoot required a different form from usual running. The fat running shoe had come into existence, so the common way for runners, especially distance runners, to stride was heel first. I never liked that; too much shock up the leg, shoes or not. Barefoot runners could never do that, anyway. The barefoot runner strides onto the ball of the foot, and releases some weight to the heel as the opposite foot moves forward. It takes more energy to run to the ball of the foot, since the heel stride allows the runner to "fall" onto the foreleg. Since I wasn't interested in marathon running, generating the extra oomph wasn't a problem.

Ball strike running encourages that straight foot form, as well (you want to land first on the knuckle of the big toe, that's what it's there for, then roll through to the arch). Fit very nicely with my zeitgeist.

What in the world compelled me to type all this out? Today's Times magazine has a story about Tarahumara Indians and barefoot running. Seems that what I'd learned from the Boy Scouts 50 years ago, and how I'd run 40 years ago is now Cool. While having nothing to do with Keynesian economics, yet another demonstration of my humble ability to foresee the future. Now, that's cool.

(I read this in today's Times Magazine, dead trees division. Looking for the link for this piece revealed that the author of the article has been writing about this topic for some years; even has a book. First I'd heard of it.)

Bubble, Bubble Toil and Trouble

2011-10-27T12:04:00.001-04:00

I put up this comment, in reply to an R-blogger blogger musing on bubbles. Liked it well enough to share with you all.

So far as the real estate bubble: some of us saw it happening in 2003, although the (self interested) mainstream pundits didn’t or wouldn’t. The measure is simple: the historic ratio of

median house / median income

is a (near) constant over short to medium term in any one place. Aggregated over the USofA, it’s a bit flaky, given regional differences in price/wage levels.

Here’s a plot: http://drcoddwasright.blogspot.com/2011/08/viagra-at-home.html

The point of bubbles is quite simple, they occur when mo money chases less stuff. Credit isn’t really needed, although that certainly happened with the Subprime Mess. A bubble can happen with just a shift of funds out of proportion to some sector. The first dot com bubble was just that; a massive shift of existing funds to a narrow sector.

The Subprime Mess was motivated, in the patient zero sense, by Greenspan’s decree that interest rates would be held down. The bread crumbs can be traced. The point is that it was not the result of independent homo economicus decisions, but deliberate political decisions by a few political appointees. Pre-20th century, not so much.

The financial services coup de etat of our economy is a bubble, from the point of view of historic proportion of national income. This was a co-ordinated shift from the many to the few orchestrated by Right Wingnuts in Congress. Nothing to do with excess credit. One could go on for days.

Specific (or narrow sector) stock bubbles are generally driven by ignorant retail fools. We saw that with vaccine stocks two years ago. Nothing to do with excess credit. Netflix is quite the same.

In other words: Minsky’s only half (b)right. Inflation requires mo money, but narrow (in time or space) inflation need not require global increases in cash/credit. If you look at median income from 1980 to 2008, you’ll see that it moved virtually not at all. The Subprime Mess was motivated as much by existing funds shifting to “higher yield, lower risk” housing instruments due to Greenspan’s enforced low interest rates. Up to then, yes, housing instruments were low risk, *just because* they were restricted to conservative price/income ratio. Blow out that ratio, and you blow out the risk. Some noticed, but the mainstream pundits turned a blind eye. It was in their self interest to do so.

Analytics don’t help much when the propellent is vicious politicians in league with Banksters.

Dee Feat is in Dee Flation, Part 15

2011-10-27T09:22:00.001-04:00

Today's news story/analysis adds more data to what is obvious, we're headed into the ditch. Thanks to the Right Wingnuts who've decided that we all should have to feel the pain, just not the Banksters.

The assertion that there has to be inflation just because the Fed has eased interest rates and cost of reserves to the Banksters doesn't mean that inflation is on the horizon. It's been on the horizon, of the Tea Baggers and Banksters, for a couple of years now. Nuthin'. And for good reason. None of the money makes its way into the economy. Banksters and Capitalists are sitting on an unprecedented cache of cash. Misers all. "It's mine, all mine, and I'm keeping it. Just in case my greed causes an even worse Recession." Which is what the slier among them want, deflation increases the value of their cash cache, and they've got to do nothing to get the "return on investment". Consummate evil. Bernanke may have study the shit out of the Great Depression, but back then corporations were hurt by it. These, except for the occasional bank, have been swaddled in cash. Which they hoard, hoping for deflation. Mark my words; I've said it before.

Once again, three sources of inflation: cost push, wage push, demand pull. Wages are falling (median income was recently reported to have gone down some more, thanks Dubya) none from there, incomes are stagnant (which is why companies, when anyone bothers to ask, don't complain about wages but "lack of demand") so none from there, leaving only scarcity of goods to drive costs up (and that can only be sustained if consumers have the $$$ to pay the higher cost) and that's not been happening, either. In any case, with a 70 to 80 percent service economy, cost push is an outlier in the best (so to speak) times.

Concentration

2011-10-26T09:27:00.000-04:00

Before there was "Jeopardy!", there was "Concentration". 1964 and 1958 (or 1963, depending on how you measure) respectively. Both were of the brainiac game show genre, with "Concentration" aimed at short term memory and visual translation. For those who weren't there: there was a game board, which was a grid of squares (just like "Jeopardy!"). Each square contained stacked cards. The outer card was just the serial number of the grid slot. Contestants called for two cards, which revealed the names of prizes; if the names matched, the contestant had the prize added to his/her cache. Then the cards were removed from the stack, revealing parts of the underlying rebus puzzle. The first to solve the puzzle won his/her list of prizes. Concentration to remember which prizes went with which squares, and translating the rebus pictures into a coherent statement.

What jogged my memory (and never a very good one) was a comment by Tom Cordle to the posting of From Sea to Shining Sea on Open Salon, where these posting are duplicated (and those readers make the effort to comment). "It's also a geography lesson, too, because in the latter images, one can identify many major metro areas of the US as blue patches in a sea of red." Concentration. The graphics worked.

I've mentioned in the past that the Tea Baggers' days are short, supposing that the Federal Courts don't curtail free and fair elections (which is in no way a given), in that urbanization leads to liberalism. Demographers and poli-sci types have known this for decades, and is one of those factoids which sits at the back of my brain stem and occasionally barks at me. I usually then pen something, making the point.

You can see what Tom refers to in this back link from the original citation. The first display is a time series of Red/Blue state morphing. So long as militia folks don't get to be the only legal voters, Tea Bagging is a flash in the pan. One can note that the resistance to Nasty Capitalism in Europe is stronger, in part because Europe is more urbanized.

The distinction exists in the current posting by Sparks, which sparked my interest, but it doesn't jump out quite so strongly in the static images.

From Sea to Shining Sea

2011-10-25T12:03:00.000-04:00

As follow up, or update, to the Triage piece, I offer up this post from an R-blogger. As it stands, there's no code (the author claims ugliness), but does applaud ggplot2. The latter I expected, in that Wickham's book has a section (5.7) on using maps, but not much detail.

Of more interest, is the data source, shown as CCES on the plots. Turns out that this is CCES. While not real time data, as Sparks demonstrates, R and ggplot2 can show both categorical and discrete variable impact over a map. For the Triage project, one would need internal real-time (or close) for the effort to be worthwhile, but I'd wager that it is.

Guilty, Guilty, Guilty

2011-10-21T11:29:00.002-04:00

I finished the first draft yesterday, so it was with some pride that I note this news today. As the subtitle of this endeavour says, "It's the Distribution, Stupid". Yes, one can have an economy and society which runs on many poor and a few rich, but that wasn't the notion of the founding fathers, or Adam Smith (who published "Wealth of Nations" in 1776, too). No, the notion of the founding fathers was that autocracy shouldn't happen here. Their ideas depended on an America which ceased to exist in mid 20th century: if you didn't like the society outside your door, you light out for Indian territory, where there's free land and abundant resources. We're going European. Well, gone European. Our survival depends on recognizing that an economy which wastes resources at light speed can't sustain.

I was surfing through the Yahoo! financial pages, when I saw a headline to an article: "Modern Economics has Failed". Neat headline, but not much meaning. "Economics" is the study of how economies actually work. The various theories, attributed to the field, include the ever famous Keynesian, supply side, Austrian, classical, neo-classical, and a host from the 19th century back to before Adam Smith (the real one). For most of these centuries, the field was called Political Economics, in recognition of the fact that States make the rules; while autocracies bent toward social Darwinism long before he was even born, structures of rewards and punishments were always around. And there were always rules, generally tilted toward the Monarch. But rules there were. Economics, when prescriptive, is divergent in thought, and this divergence isn't based on some fundamental economics, but politics. Despite the rise of Behaviour Economics, what economics has to offer is cause and effect policy. Thus, the Right Wingnuts continue to cling to Trickle Down, in the face of total failure over decades. Failure, of course, from the point of view of the commonweal, but not from the point of view of the 1%-ers, who support the Right Wingnuts' marketing.

Which brings me to the thrust of this musing, -isms.
tribalism
monarchism
socialism
capitalism
communism
fascism

That's the historical lineage. Tribes looked out for their own, and to a lesser or greater extent, tried to usurp from neighboring tribes. Once tribes got big enough, and society built cities, monarchism became the rule. And was the (nearly) universal structure in "civilized" societies for millennia. There are those who argue (and I agree) that feudalism marked the beginning of socialism, in that the sovereign recognized a duty to provide for lower classes. In today's arguing, feudalism is often portrayed as slavery, and it certainly wasn't. Not much upward mobility, though. While some describe today's rightward drift as toward a new feudalism; if only we were headed to something that good.

So life remained pretty boring until industrialization made capital more significant than before. Capital in agrarian societies is mostly an oxymoron.

Capitalism brought a drastic set of changes. Urbanization. Concentration of power. And lots of machines. The China situation, where much of American goods are produced (is that, too, an oxymoron?), is a lot like 19th century New England mill towns. The state of people living and working in those mill towns is ably documented by photographs. Yes, the hell of child labor and the rest existed into the modern age. The Foxconn facility is larger, but the principle of production is the same: many cheap hands. For the Chinese government, it makes sense. It's the same sense that happened here in the 19th century, and even early 20th; coerce, cajole, entice the rural population to migrate to cities for "a better life". India has done the same. It's a simple proposition, you get to earn enough for some food and a place to sleep, the only question is whether you prefer to work amongst piles of animal shit outside in the rain and snow or inside without the shit. The quality of your skills is not relevant (if this sounds familiar, yes Mao did that too), since none are needed.

Marx saw where this was all going, and concluded that it wouldn't last for long. He devised a different set of principles, studied a country (which was not Russia, but England), and invented communism. The basic idea is that intelligence is what matters, not accumulated wealth. Accumulated wealth leads to sloth. Living in a seat of hereditary monarchy, he well saw that smarts weren't a qualification for having power. He posited that smart decision making would be made by those best equipped, not those who'd managed to just get rich.

Russia, tossed out the Czar and adopted a version of Marx. Not really very close, but enough to scare the crap out of capitalists in Europe and the USofA. Which gets us to Mussolini. He's the guy who invented fascism, both in word and fact. Here's the Wiki article. What our dear Tea Baggers are promoting, although they claim to be against The Elites, is fascism.

Which brings us to the Pubs. While Obambi hasn't lived up to his (own) billing, none of the set of flunkies can lay a glove on him. Well, if he treats the election as war, which is what the Koch Party surely does, and he's conspicuously lacked so far.

Back to the beginning: in what way has modern economics failed? I said it hadn't, only because economics is largely descriptive in nature. Yes, Keynes and Laffer and Friedman and so on offer up "theories", but The Great Recession wasn't caused by failure of economics. (For those in the know: Samuelson was the one who started the trip into mathematical economic theory, thus obscuring the principles of economics ever further. Somewhat off topic, but here's a post on the effect of interloper quants; follow the back links for more detail. That happened in economics in the mid 1970's. The profession has devolved ever since.) There has been, at least since Harding and the roaring 20's, a split within professional economics between those who earn a living at it by providing justification to constituents (just like a lawyer) and those who look for ways to advance the commonweal. And for those in the second set, much internecine conflict over how to do it. As always, the loggerhead is whether to support the wealthy or the poor with government action. Those that wish the State to support the wealthy generally phrase their argument in terms of social Darwinism: the rich have to be coddled or they'll up and leave for someplace else, and we can't have that; my beloved Bermuda is deep in such throes. I know, that doesn't make sense, but I didn't say that Right Wingnuts made sense.

The failure which drove us to The Great Recession was purely political. We are where we are because for 22 of the 28 years from Reagan to the end of BushII, the Wingnuts controlled at least 3 of the 4 branches of the Federal government. Re-read that sentence. The Wingnuts, largely because Democrats are feckless, have gotten away with blaming anyone to the left of Attila the Hun with anything bad in the economy. Even given the stark evidence that only under Clinton did median income in the nation make any upward progress. One of my favourite quotes, of all time, comes from a recent Times article (spoken by a Bankster): "Financial services are one of the last things we do in this country and do it well. Let's embrace it. ..." Said the spider to the fly. And some wonder why there's an Occupy Wall Street?

Which brings us back to a failed economy (I was tempted to say Failed State, but that would only insult some really famous ones). First, what do we mean by modern economics having failed? Thus encouraged, I went past the headline to the story. And he's right: it's all about politics. Failed in the jingoist notion of American superiority. Failed in the sense that our tribe has been torn asunder. But the author gets it wrong in ascribing the cause to the profession of economics. The cause is purely political.

Now, how to fix the situation. If by fix we mean restoring GDP, then only Keynesian knobs and switches will work. None others have worked in identical times before, they won't work this time either. The Wingnuts always lay the blame for economic decline on workers getting too big a piece of the pie, in face of the pure fact that demand for the Wingnuts' widgets fell off the cliff because workers had no money to buy widgets. The punish labor approach of Reagan and both Bushes didn't work; they gave us The Great Recession.

The simple answer is that an economy can't grow out of depression by making most folks poorer tomorrow than they are today. Making the rich richer is the Right Wingnut agenda. It always works for the 1%-ers, but not the rest of us. It is obvious that restoring a growth inducing distribution of income is the only solution. How that's done really doesn't matter. Only until, and if, the middle class does have most of the income, and thus broad based consumption, will we progress. Japan never did.

Once Again, With Feeling

2011-10-19T13:44:00.001-04:00

I get tired of redoing the litany of why we got where we are, so I've written up a few sentences that get to the kernel. Today, I've put a bit more flesh on the bone. I hereby release all copyright to the public domain, and encourage all to use this words in email forums, mailing lists, or anywhere Right Wingnuts spout lies. Peace.

It was the Right Wingnuts from Reagan to BushII that gave us a Great Recession. And they ran at least 3/4 of the government for 22 of those 28 years. The reason "gummint don't work" is that for those 22 years, the Right Wingnuts actively sabotaged Government. It was they who repealed Glass-Steagall, and let the finance corporations rape the Middle Class. Before Reagan, the 1% took 9% of national income, during BushII it was 24%. Except during Clinton, median income fell over the 28 years. Unless you're a 1%-er, there's nothing that the Right Wingnuts do for you. Get your facts straight. And they were the ones who made it easy to ship our jobs overseas. Get that fact straight, too. Have a nice day.

By The Numbers

2011-10-10T11:02:00.002-04:00

There's that famous quote from The Bard, "The fault, dear Brutus, lies not in our stars, but in ourselves if we are underlings." As my fork in the Yellow Brick Road tracks more towards (what's now called) Data Science, various notions bubble to the surface. One lies in an age old (within my age, anyway) dispute between traditional (often called frequentist) math stats and those who follow the Bayesian path. From my point of view, not necessarily agreed to exist by those on the other side, Bayesian methods are merely a way to inject bias into the results. Bayesians refer to this "data" as prior knowledge, but, of course, the arithmetic can't distinguish between objective prior knowledge and fudging the numbers.

So, I set out this morning, being Columbus Day (a day honoring Discovery for some, invasion for others), to see whether there're any papers floating about the intertubes discussing the proposition that our Wall Street Quants (those who fudged the numbers) bent Bayesian methods in their work. As I began my spelunking, I had no prior knowledge about the degree to which Bayesian had taken over the quants, or not. Quants could still be frequentists. On the other hand, it is quite clear that Bayesian is far more mainstream than when I was in grad school. Could Bayes have taken significant mindshare? Could the quants (and their overseer suits) abused the Bayesian method to, at least, exacerbated, at most, driven The Great Recession. It seemed to me likely, any crook uses any available tool, but I had no proof.

Right off the bat, search gave me this paper which references one (at a pay site) from the Sloan Management Review. The paper puts the blame on risk management that wasn't Bayesian. You should read this; while the post does discuss the SMR paper on its merits (which I couldn't read, of course), it also discusses the flaw in Bayes (bias by the name of judgment) as it applies to risk management.

Continuing. While I was a grad student, the field of academic economics was in the throes of change. The verbal/evidence/ideas approach to scholarship was being replaced by a math-y sort of study. I say math-y because many of the young Ph.D.s were those who flunked out of doctoral programs in math-y subjects. Forward thinking departments recruited them to take Samuelson many steps further. These guys (almost all, then) knew little if anything about economic principles, but department heads didn't care. These guys could sling derivatives (initially the math kind, but eventually the Wall Street kind) on the whiteboard like Einstein. I noted the problem then, the 1970's. This paper touches on this issue (linked from here). "These lapsed physicists and mathematical virtuosos were the ones who both invented these oblique securities and created software models that supposedly measured the risk a firm would incur by holding them in its portfolio." Nice to know it only took 40 years for the mainstream pundits to catch up.

And, while not specifically about Bayesian culpability, this paper makes my thesis, which I realized about 2003 and have written about earlier: "Among the most damning examples of the blind spot this created, Winter says, was the failure by many economists and business people to acknowledge the common-sense fact that home prices could not continue rising faster than household incomes." One of those, D'oh! moments. McElhone, the Texas math stat, introduced me to the term 'blit', which is 5 pounds of shit in a 4 pound sack. By 2003, and certainly following, the US housing market had become rather blit-y. The article is well worth the reading. There are links to many other papers, and it does raise the question of the models used by the rating agencies. Were these models Bayesian? Were the rating agencies injecting optimism?

Which leads to this paper, which I'll end with, as it holds (so far as I am concerned) the smoking gun (which I found to be blindingly obvious back in 2003): "Even in the existing data fields that the agency has used since 2002 as 'primary' inputs into their models they do not include important loan information such as a borrower's debt-to-income (DTI)..."

This few minutes trek through the intertubes hasn't found a direct link between Bayes and the Great Recession. I know it's out there. I need only posit such as initial condition to my MCMC (look it up).

Robbing Peters to Pay Paul

2011-10-05T10:17:00.002-04:00

Much hand wringing going on. The TARP banksters are raising fees on the Little People!!! What the fuck did you expect??? The banksters got the Little People by the nuts; they're the only place left to squeeze, now that subprimes have imploded. And the banksters need some way to pay those extortionate salaries and bonuses, which they earn for the very hard work of moving other people's money from one bankster pocket to another.

What did anyone expect? There's no penalty for screwing the Little People. The banksters, and their enablers in the Right Wingnut Fraternity, have free rein. Tea Baggers all, and stupid. I predicted it, of course.

The Polar Bare Club

2011-09-29T21:45:00.000-04:00

In today's news, is this piece on melting Canada ice. While not all that surprising in and of itself (Arctic ice has been diminishing during summer for decades), it reminds me of reports from a few years back. That reporting, here for example, concludes that with sufficient cold fresh water injected into the North Atlantic (remember, sea ice is nearly salt free), the Gulf Stream (also known as the heat conveyor) movement of equatorial heat to the north, particularly Europe, would slow or cease. Hello Siberia.

"... this is the way the world ends: not with bang but a whimper."

Pretty as a Picture

2011-09-29T10:38:00.001-04:00

Along with an interest in stats and graphs comes a level of responsibility. Kind of, guns don't kill people, people kill people. The canonical text is "How to Lie With Statistics", which was first published in 1954. Legend has it, it's never been out of print. Likely so.

It so happens that I've found a couple of blogs/sites which both deal with graphing stat data in non-disinterested ways. I'll note once again that a stat/quant/analyst/foobar is supposed to be disinterested. S/he's just an impartial judge of the data, trying to scope out the real relationships in the data; if there are any, there may not be. Data associated with politics is particularly susceptible to bias. But others face the same pressure. Worker stat bees (having been there) are often encouraged to slant the presentation in a way to make the nappie marketing Suits look like geniuses. It's a problem everywhere; all worker bees are expected to behave as attorneys; staunch defenders of whatever the Suits have done.

Watching the response to drug clinical trials is particularly amusing. Rather often, the sponsor will be shocked (shocked, I say) that its new FooBar Resolver didn't blast the .05 requirement out of the water. There'll be "unexpected placebo levels" or "unbalanced randomization" or "the FooBar Resolver patients were sicker than placebo". And so on.

Be that as it may, here are a couple of sites worth grazing:
The R Graph Gallery, from Romain François
The Gallery of Data Visualization, from Michael Friendly

Figures Don't Lie, But Liars Figure

2011-09-27T15:42:00.002-04:00

I just found this link, which says it all (well, most all) about lying, stats, and graphs. It's only a bit beyond 5 minutes. Time well spent.

Who's Hiding Under that Rock?

2011-09-27T13:59:00.002-04:00

Lots of folks, humble self included, have been despondent with Fetchit since he caved on the stimulus. Yes, since nearly the beginning of his term; he then demonstrated that endearing quality of giving up before the first punch is thrown, nay before the bell rings. It's been quite irritating.

Today brings news that Axelrod gets it. Which begs the question: which one of the two, Fetchit or Axelrod, has been living under a rock? Reagan spent his time on the throne blaming Carter and Democrats, while taking credit for ending the Soviet Union (he had nothing to do with it by the way, it was successive crop failures that did in the Kremlin). Fetchit really is beyond naive'. Has Fetchit been ignoring Axelrod all this time, or has Axelrod done a Punxsutawney Phil and declaimed six more years of winter? Either way, D'Oh!!!!!!!

Yellow Journalism

2011-09-22T10:56:00.000-04:00

So, here's the latest on the Market from Yahoo! Finance:

God futures shed an additional ~10 points to fresh lows

Where's Richard Dawkins when you need him? It's quite clear that the Tea Baggers are pulling out the stops to crash the economy again, and try to pin it on Fetchit. They likely will succeed in both respects. Hilaryyyyyyyyyyyyyyyyyyyyyyyyyyyy!

Not My Ox, You Don't

2011-09-20T08:43:00.002-04:00

I had been meaning to write a short piece on the whole deficit reduction and austerity magic elixir. The story being, of course, that lots of rich folks got, and stay, rich by sucking at the Federal teat. The money milk they get is, of course, not only fully justified but necessary to the commmonweal and all that. Reality is, they just don't want to have to get their money from that mythical competitive economy they propose for everybody else, particularly those who work for wages.

Well, here it is. Read it and get angry.

Fire up the Barby

2011-09-18T15:26:00.001-04:00

Put some shrimp on the barby, mate; Charlie's here. Darwin, capital of North Australia, really was named for that passenger on "The Beagle". As I have mused in the past (most recently) and earliest, the Tea Baggers are misanthropic, myiopic Social Darwinists. Today's NY Times, in the Business Section no less, carries an article by Robert Frank (derived from his book) which denies the notion that either Darwin or Adam Smith was a Social Darwinist. Give it a read, and buy his book. I'd ask for percentage, but I'm hardly the only one who's made the case.

A quote from Frank:
Close reading of Smith's work shows that his position was very similar to the modern liberal's.

A quote of Smith by Frank:
In "The Wealth of Nations," he wrote, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

But, since the Tea Baggers take Cheney's point of view, that only the left engages in reality based policy, I suppose they'll not be fazed. Frank's solution is not so far fetched, but fails, I think, to provide a mechanism in either fiscal or monetary policy when things go bad (or, less often, good). On the other hand, he's saying what I've quoted My Mother (and yours, if she were smart) as saying: "what would be world be like if everybody acted like you?" He touches on the sore spot of Right Wingnut capitalism, which is that it is inherently wasteful. Or put another way, that there is an infinite supply of natural resources. Why an infinite supply? Because of the notion of creative destruction of capital and multiple capitalists consuming capital to produce a Certain Widget. In time, capitalists conspire to choose a monopolist, but not necessarily the one who's most efficient in the production of the Certain Widget. And even if it is, there's no reason that there'll be enough resources left.

Never forget: there are *twice* as many Americans today as 1950. While there were enough resources to support a middle class which really was most of the middle when there were 150 million of us, that's not true today. The shrinking of the Western middle class (and the dramatic slowing of its birth in the East) as a proportion of the population can't be avoided. Sorry.

The A Team

2011-09-14T12:25:00.002-04:00

As Hannibal used to say, "I love it when a plan comes together". Just got back from reading my dead trees NYT, and there on the front page (with circles and arrows on the back) are the numbers I've been reminding folks about since I started this endeavor. The Right Wingnuts *do* want most folks most poor. And most of them are just too stupid, and religulous, to admit they've been gulled.

Dee Feat is in Dee Flation, Part 14

2011-09-14T10:05:00.003-04:00

[Nothing much has changed since the last Flation piece, so here it is again! Only slightly updated.]

Along with a lackluster initial claims, which rose some, we also got the PPI (Producer Price Index), which was up a tad, although nothing major. Moreover, the "core" number was downright laggard.

Here's the briefing.com description:
Separately, the Producre Price Index for was flat in August, as had been generally expected. Core producer prices increased by a mere 0.1%, though. A 0.2% increase had been expected.

This time, briefing.com's note didn't mention that PPI (whole) was 0, 0, 0.

Despite what the Right Wingnuts have been braying for what is now *years*, the stimulus and TARP and all that other money has been funnelled to the 1%-ers, who don't spend much, if any, of this largess slathered over largess. Regular folks, who the Tea Baggers should be supporting (but don't, since Tea Baggers are the pawns of the .1%-ers), aren't getting the $$$, so the $$$ doesn't make it to the spending stream.

What the Usual Class of Pundits is ignoring: the inflation inherent in food and fuel is *Cost Push* (i.e., shortage) and their knee jerk "raise interest rates before the sky falls" will only hasten the fall, and make it that much worse. Figure out how to increase supply of shortages, morons. There was a story in a recent NY Times about farmers switching from useful crops (well, useful as food, anyway) to fuel crops. D'oh!!!

Obambi is such a waste of time. If I were Biden, and had to sit through his speech, I'd have fallen asleep, too.

Batshit, Ponzi, and Little Ricky

2011-09-13T09:20:00.001-04:00

Rick "Batshit Boy" Perry has had fun labeling Social Security as a Ponzi scheme. The dim bulb Red Staters applaud. They are dumb. As I wrote back in July, Social Security is not, never has been, nor should ever be, an investment scheme. That's just a waste of money. It's a current account program, just like most of what the Federal government does. To do otherwise wastes money in administrative overhead (moving, and accounting for, money from one pocket to another), and leaves government in an untenable position; can it prosecute malfeasance in the market if doing so diminishes its "return"? And the survey says: government's proper role is to protect the citizens from malfeasance. End of story.

Nouriel, Karl, and Me

2011-09-12T15:46:00.001-04:00

Not so surprisingly, I don't read the Wall Street Journal; I suppose I should, if only for the opposition research value of doing so. But the batshit Tea Baggers lie so fulsomely, that I can no longer abide it. I do, however, dabble with Mr. Market, and today was a link on one of those sort of pages to a write up of Roubini's recent WSJ interview. Here's the version that was linked to.

Near as I can tell, Roubini was and is a capitalist fanatic. Yet, here he is making the same argument I (and others, I'll acknowledge) have been making from the start of this endeavor: "It's the Distribution, Stupid". I shudder to think what it means to have Dr. Doom on my side of the coin.

Rave Reviews

2011-09-04T12:20:00.000-04:00

I admit it: I always gloat a bit when the mainstream pundit class finally catches up. Today's NYT Sunday Review section has the Reich piece, which digs into the data to demonstrate the thesis that you don't grow an economy by making the middle class (and those below) yet poorer. My only quibble is that he didn't j'accuse to Reagan and the Bush Boys. Stop being so prissy.

The second piece, which shares the full double page center spread with Reich, is a similar take to the urbanization thesis. Not so surprisingly, the author is at "The Economist". Europeans, having lived on that piece of ground for millennia, get it. The Tea Baggers insist on the impossible, that the USofA can conduct itself as it did in the 18th and 19th centuries, when there was this whole fresh continent full of natural resources to squander. Those times are long gone, and we're all European now. If my thesis is correct, either the Tea Baggers stage a coup, a la 2000, and we descend into urban/civil warfare (as Uruguay did in the 60s and 70s, propelled by the same de-industrialization fervor), or the electoral process remains intact, and the Tea Baggers are relegated to the dunce corner.

Michele, My Devil

2011-08-29T15:06:00.002-04:00

Just when I thought she couldn't get any more vile, here she puts her foot up her crotch. What she ignores: God has been quite cruel to those living in the Bible Belts. Texas is turning to desert. Most of Irene's damage happened south of Mason-Dixon. Please, please be the candidate!!! This country needs to decide once and for all whether it has any intelligent life.

Pushing a String

2011-08-24T09:17:00.000-04:00

You can't push a string. I've heard that phrase many times, even when I was active as an economist. I don't remember who first said it, but memory says it was some general, perhaps Patton. One source, be still my heart, attributes it to Keynes! Who knew? I still think it first came from a general; the phrase originally referred to leading troops into battle.

In any case, while looking for the source, I also came across this story. Note the date, and that it cites a Fed researcher. I hadn't read the piece when I composed the first entry in this blog. (Which, it turns out, meant that I was concentrating on the wrong thing. If I'd put gobs of money into the market on 22 March 2009, I'd be very much richer. As it was, I remained concerned with explaining the situation while looking for the next database assignment. Let that be a lesson.) The point of this missive is to wonder what Fetchit and Bernanke must be thinking. Big Bold Ben must know that he's been trying to push a string neigh onto three years, and the only "success" is inflation in the stock market.

While unemployment, as described by the BLS number of record, is a bit lower, much of that is due to expiring benefits. Not on the dole, you're not counted as unemployed. Yesterday the market went up by more than 300 points, and today, a bit before the open, it looks to be giving much of that back.

Monetary policy can only try to push the string, on the way up. On the way down, easy as pie, as Volker demonstrated. As I've written in the Flation Series, monetary policy only works when there is demand pull inflation; which means lots mo money in the hands of consumers. That isn't happening. Given population surging and the BRIC countries demanding our profligate lifestyle, inflation is, and will be, driven by physical shortage of materials. Strangling an economy with monetary policy under that condition will only make matters worse for the vast majority. It'll be fine for those Fatmen in Famine, however.

And you know who the Fed really represents.

Viagra At Home

2011-08-19T19:48:00.001-04:00

A bit of R. I've mentioned a few times that I "knew" we were headed into the ditch around 2003. I don't recall that I'd read Shiller at that point (or even that I was aware of him), it was just obvious that house prices were outstripping median income. The raw data is available (no idea how long it has been), so here's a picture worth a few words. The data run from 1890 to 2009.

Where's my little blue pill???

Only The Stupid Die Young

2011-08-12T15:35:00.002-04:00

Today's NY Times has two pieces worthy of notice, so far as this endeavor goes. I'll leave you to hunt out Floyd Norris's column, if you like. You should, of course, since he echoes much of what I've been writing. The article I'll explore is a subject close to my heart: only the stupid die young. (It seems that the map was first published a few days ago, although I only saw it this morning in my dead-trees-with-croissant moment.)

More than once, I've taken the Tea Baggers to task (not many read this blog, I'd wager) for their insistence that Gummint is Evil, and so on. In the course of those musings, I've pointed out that, were it not for FDR, the South would still be living a 19th century existence. No piped water. No piped waste. No electricity. In other words: shitting in the backyard, next to the hand pump, and may be a kerosene lamp or two at night. That's no joke.

Still and all, the Southern embrace of Fascism has its price. This map makes it quite clear.

You can go here for median income data. Sort it South, so to speak.

And here for smarts. The bottom quartile is almost all South; California and Hawaii likely due to non-English native language issue.

Cerebral Density [UPDATE]

2011-08-12T09:01:00.001-04:00

There's been some continuing confusion, so in the immortal words of Roseanne Roseannadanna: "Claaaaaaaaaaaaaaaaaaaas!"

Time for some review.

1) "Wall Street", the metaphor means stock brokering.
2) "Wall Street", the physical location, is a collection of streets/avenues in lower NYC constituting a financial district; more than just stock brokering goes on there, but so what?
3) stock trading, whether by two humans, two computers, or one of each, is a zero-sum, non-productive endeavor. With the exception of buying of Public Offering shares, which are in the noise over any given time period, and are exactly 0 most days of a month. The fact that "studies" have determined that 70% to 80% of trades are between HAL-9000 computers engaged in price arbitrage in time/space, only strengthens the argument.
4) the supply siders continue to argue only from their perspective: I want X% interest earned on my money (that's my rate of time preference). My in this case is the explicit lender, who generally is distinct from the saver(s) whose money is lent. From the demand perspective, justifiable interest eventually is determined by the increase in physical production (real economic growth) by the most productive use. This is the upper limit, as not all borrowers will/can engage in this Activity A, since to do so would flood the market with Widget Q, thus lowering its price and removing some, possibly catastrophic, amount of the return. Ruinous competition, as the Robber Barons used to say. Interest on home mortgages is not a productive use of capital, since the financial capital is not used to produce some Widget V over the life of the "house". Housing is just consumption over time. The interest paid is justified only by the demand by lenders for "some" return; otherwise they could put the money into companies engaged in Activity A. Lenders can attempt to increase X%, but will be stopped by the maximum productivity growth endeavor. And that's an asymptotic limit; it will never be reached, since if all borrowers undertake the endeavor, they flood the market with the Widget Q, driving down both its price and the return on the physical investment made to produce them. The point being: the interest rate is ultimately determined by physical engineering/science, not by quants on Wall Street, despite what they may think.

Point 4) leads to a problem manifest in the Great Recession: since so much of the USofA's financial capital was put, not into physical investment, but fiduciary instruments, the return on that capital was tied explicitly to the rise in cash incomes of the borrowers. There is no other source of cash to pay the interest. When the interest payment exceeded cash income's carrying power, as was inevitable since median income was falling during BushII, the Ponzi melted. There is no new plant or machinery bought with the fiduciary capital to make more/better Widget Q. Those that still refuse to understand this, can spend some quality time with their favorite search engine. This is well known among academic economists, and published. Likely also well known among Wall Street affiliated economists, but they're not about to rat out the hand that feeds them.

[UPDATE]
To further point 3): yes, there are Public Offering shares in some day's trade. No, those shares are not sold, at the initial asking price, in regular trades. They are distributed by the underwriters to the subscribers. At that point they can, subject to any restrictions in the PO, be traded *between the initial owner and any computer or human* just like the rest of the shares on its exchange, because they are now just trading shares.

A Good Havana

2011-08-11T15:46:00.000-04:00

I guess it was Freud who said (or so the folklore says): "Sometimes a cigar is just a cigar". Freud smoked them by the boxful and they killed him.

Mark Cuban, on the other hand, hasn't killed anybody (that I know about). He has, however, been quoted, thus: "Wall Street has nothing to do with creating capital for businesses, its original goal."

He doesn't quite get to the main point: stock buying and selling is utterly non-productive. But that's really what he means. Further, since the activity is no more productive than betting on horses at the OTB, tax the income the same way as other gambling winnings. Sauce for the goose, sauce for the gander. It is gratifying to read that someone else gets it.

Mother's Little Helper

2011-08-09T20:34:00.000-04:00

Yes, I know I owe you folks the details of the YDI, which don't yet exist. Due to my increasing fascination with statistics (my first love, truth be told), and the R stat language, I keep finding interesting bits of R out there.

Today's installment is why the YDI came into my head. (It's linked from an R blog posting, but he's said to use R in his method.) This is just one example, and recent. But it shares the common characteristic of such efforts: it ignores the driver of depression, collapsing demand. The money guys, whether banks or brokers or funds, view the economy through their narrow currency (as opposed to production) peephole. No, not pee hole.

They also ignore what's been the problem since Reagan: concentration. Both of wealth, and corporate control. Adam Smith (the real one) made clear that an economy, if it be successful, has to be such that power is diluted equally among all participants. That wasn't true in 1776 (a common Trivial Pursuit question) either, but the Tea Baggers do love to romanticize.

Payback's a Bitch [UPDATE]

2011-08-07T17:53:00.001-04:00

Hope springs eternal, in that I've left the following on the White House comment site. Praise God!!

You now have the opportunity to demonstrate that you really, really do have a pair of gonads. You do that by making (with additional rhetoric, perhaps) the following statement:

"My administration will not be extorted or blackmailed by the Banksters and their lackies, the credit raters. Together, they conspired to send this country into a Great Recession after extracting billions of dollars from ordinary Americans. They, with the connivance of the Lunatic Right in Congress, have blocked all efforts at financial service reform, since reform will eliminate many illegitimate revenue streams.

American fiscal policy will not be determined, or even swayed, by corrupt corporate interests."

Demonstrate that voting for you was not a complete waste.

[UPDATE]
Nice to know I got there first (so far as I know). Today's Times has this op-ed piece.

And The Survey Says...

2011-08-04T13:42:00.000-04:00

As my dive into stats, and possible departure from RDBMS as the site at the end of the Yellow Brick Road, continues, I came across a ruby library called fechell. My inital thought: "shouldn't that be fechall, as in Fetch All, Fetch Ell. What does that mean? Well, D'oh! The normal name for the code is FECHell. Ah, much more to the point.

I found two posts, by way of R-bloggers by the person who developed the library. Here's the post where he develops the use of the data and the library. He references a Part 1 post with the background.

This intrigues me not a little bit. Suppose, just for grins, that you're the campaign manager for a state wide (or larger) candidate. That is, one where monies are allocated to distinct locations. Further, suppose that you have this data in close to real-time, and you also have data measuring "outcome" for the use of these monies, say polling data. And let's say that the two maps, monies and outcomes, are congruent.

Could one make predictive decisions about monies allocations? Well, it depends. The naive' answer is: abso-freakin-lutely!!!! The real answer: not so much. The naive' notion is that money well spent is indicated by winning the election (which is kind of too late for allocation decisions) or some upward movement in polling data. Ah. Let's spend where the spending works. Superficially, makes a lot of sense.

The only problem: stat studies invariably show little correlation between money and winning. I know, Liberals in particular are worried about the Citizens United effect, where corporations have gobs more loot than anybody else. They'll just buy the elections. And they well might. This would not make me smile. But, the studies of the data show that the effectiveness of campaign ads is less grounded in their expense, rather their content. Sometimes, may be often, attack ads work.

Here's an academic attempt to find out.

And yet another.

A quote from the second story (not, that I know yet, cited from the study):
"While we see an influence of the campaign ad in the short-run, in the long run the ad loses its effectiveness. This finding begs the question: how cost effective is it for politicians to spend millions of dollars on campaign ads which have little long-term effect on voter opinion?"

StatMan to the rescue!!! The problem is that it's now August, 2011, and any application being written as I write (assuming that folks have started) need to be up and running by January. In order to be worth the time and money expended, the application has to have *predictive* value. FECHell data passed through some software is only retrospective. Political ops should know enough about their candidates and opponents to design ads that work. Making a simplistic leap from $$$ to polling/winning is a waste of that time and money. The retrospective data needs to be run through some multi-variate hoops (either multiple regression or ANOVA, most likely; PCA and MDS are less applicable here) to identify the attributes, besides money, which move the bar toward higher polling or winning.

The problem with the simplistic model is that the knee jerk reaction to positive feedback in some campaign is to toss yet more money to that campaign. But that's likely a waste of money. The goal is to use the data to identify those trailing candidates today who'll win tomorrow if they get more $$$ and *spend it on what works*. Pouring money into a winner is a loser. Pouring money down a rat hole is, too. The latter case is more obvious, but the former is just as wasteful.

Economists refer to "opportunity costs"; I can spend $1 on toothpaste or candy. I can't have both. In the short run, candy is dandy. In the long run, toothpaste wins. Campaigns don't, generally, last as long as the toothpaste's long run, but you get the point. Money is finite, and should be spent on those activities/goods/services which gain advantage to the goal. In the case of FECHell data, the goal is winning elections. Looking retrospectively only at $$$ and winners is just the wrong goal.

Putin His Finger on The Problem

2011-08-02T20:24:00.000-04:00

Vlad, the Impaler, is a half wit. That is to say, he's witty, and half right. "They are living like parasites off the global economy and their monopoly of the dollar", is what he said.

The problem, as this endeavor has made its main theme, is that It's the Distribution, Stupid. Without the USofA sucking up all that widget production from the Third World (and Russia is very Third World), all those oligarches and autocrats would have no place to dump all those widgets. Fact is, the relationship is symbiotic.

I'll repeat the quote, extended:
As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth ... to provide men with buying power. ... Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. ... The other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.
-- Marriner Eccles

Services, of course, as I've penned a bit about recently, are difficult to value. They also tend to be bought by corporations, and less by consumers. Is one systems analyst worth one iPad 2 or three? I wonder whether anyone would really trade any service for physical product. Ask yourself.

For those who don't recall, Eccles was FDR's Fed chairman, and later founded a think tank. A digression: follow the Bretton Woods link in his article, and you will find this juicy bit, "The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar ...". In other words, we gave Europe the Marshall Plan, and we took control of the planet's money. This fact has irritated many for more than half a century. And this Gerrymandered system is largely what made America Exceptional, until 1973 when the Arabs figured out that the au courant currency was black gold, Texas Tea.

I suspect what gets in Putin's craw is that much of the production in the Third World (and China is very much Third World) is owned by American (titularly, anyway) corporations.

He Stepped in It

2011-08-01T08:59:00.000-04:00

Well, Obambi has left the White House. He's sent in his successor, Stepin Fetchit. You knew this was coming.

No, It Ain't no 401(K)

2011-07-31T20:16:00.000-04:00

Both the Lunatic Right and Joe Sixpack say about the same thing: You/I paid into Social Security, so you/I have earned $X of Social Security. Only one problem with that; it's a lie.

Let's go back to the beginning. When FDR got Social Security enacted, there was a small problem. Which problem was paying for those who were immediately eligible (they were 65 or older), and those who would become eligible in short order. Even if it made sense (it doesn't, see below) to treat SS as an annuity program, for lots of folks there wouldn't be enough "income" earned between now and 65. In the end, SS was explicitly enacted as a current account program. Current account is CPA speak for "paid for out of this period's receipts". The period in question is the fiscal year.

We have one reason why SS can't be an annuity: too many folks for too long a period of time (45 years, give or take) from inception of SS couldn't earn a nest egg if SS were some sort of annuity system.

But there are more profound reasons. Hence this epistle.

In recent posts, I have talked about the investment process and the source of return on investment. From a MBA or CPA point of view, all that matters is cash flow. If the cash flow exceeds some agreed upon amount, then the application of fiduciary capital is said to be a "good investment"; the cash flow exceeds the "time value of money", imputed. Buying that stupidity is the base cause of the Great Recession (and the Great Depression, too as it happens). Real return on invested capital comes not from pure cash flows (Ponzi schemes provide those, don't you know), but from greater production.

Economists and policy wonks and anyone who's tried to prove otherwise, have all had a good deal of difficulty in demonstrating that purely financial investing has a beneficial (and measurable) effect on production. The post-industrial economy is a myth (well, as an object of desire, at least). Folks buy stuff; corporations buy services. Hair dressing and septic tank draining are consumer services. So are lawyering and doctoring. Here's your homework: enumerate all the service jobs which sell *solely to consumers* that provide an upper-middle class income. How many of those jobs are of recent creation? As I said, lawyering and doctoring are well paid service jobs (although lawyering doesn't qualify for the homework, since its highest paid work for corporations), but they've been around for more than a thousand years.

The structure of an economy, whether it skews toward making things or skews toward service, matters. Real return on investment is essentially non-existent for services. To the extent that the USofA has drunk the post-industrial KoolAid, financing any retirement program becomes more difficult.

The truth is that "service" jobs with a consumer clientele are overwhelmingly shit jobs which could never support a middle-class family; most of those jobs have been around since the industrial revolution, and have been lower-class grunt work from the get go. The contemporary archetype is hamburger flipping under the arches. Build a middle-class life on that? No.

Let's ask the simple question, then: if SS *were* to be an annuity (i.e., a program which invests SS deductions by the Government), how would that work, and what might be the problems?

First, let's assume away the timing problem described above; all those less than 45 years from retirement just get paid out of the annual Federal budget (as it's done from the beginning).

Second, we get to the crux of the problem: what sort of investments can be made? Joe Sixpack and Lunatic Right, meet the can of worms. SS currently "invests" in Federal Government "debt" (Treasuries, so called). Does this make any sense? I'll just say, NO. Here's why: in order for an investment to earn a rate of return, that investment has to increase production of some good (possibly service, but I don't buy that such really can happen) above what's currently possible. The canonical example is a brand new machine. And not just new, but new and better than current machines doing the same task. Needless to say, "investing" in Treasuries is a classic example of robbing Peter to pay Paul. The Gummint moves a bit of money from one pocket to another, and then moves a bit more back to that first pocket. Treasury "pays" interest to SS (and anyone buying its bills, of course), but for doing nothing. Private pension funds generally "invest" in "high quality" Federal debt. I haven't vetted this posting, but it looks close. Such "investing" ends up costing money, in the overhead needed to do the money transfers back and forth.

Time for a thought experiment. What if SS could invest in anything, in particular private companies like Microsoft and Enron and Exxon/Mobil? The immediate problem is one of conflict of interest. Had SS been heavily invested in Enron, or Madoff, how could it possibly carry out its duties to protect the public through DoJ/FBI/SEC/etc.? The SS investment manager would do all he could to block discovery and prosection, same as private investors and insiders have done. Would the resulting investments mean that the Federal government was either Socialist or Fascist (pick whichever feels derogatory)? Of course. The Lunatic Right cried Socialism with TARP, but, of course, TARP was the furthest thing from Socialism; Socialism means taking care of Joe Sixpack even if that means pissing off the Fortune 100. TARP was classic Fascism; government aiding corporations at the expense of Joe Sixpack. The fact that Joe Sixpack watches Fixed News and is easily bamboozled into believing the exact opposite of reality doesn't change reality.

There's been a good deal of ink, most negative, over sovereign wealth funds. If SS invested in, say, Brazilian oil fields, would you care? Would Brazil? It's not a simple problem. From a real economics perspective, investing in real capital is more intelligent than investing in fiduciary instruments. The rate of return on fiduciary instruments is arbitrary and not connected to real economic growth. All those CDOs which caused the Great Recession depended on payments from folks who had no reasonable expectation of economic growth. Real capital investment can, but isn't guaranteed to, be productive.

If SS had been invested in American car companies, would there have been any mewling from the Lunatic Right? Likely not, since then it would just be a case of a motivated investor protecting his investment.

How could this privately invested SS deal with the Great Recession? Those eligible to retire in the past 3 years would have gotten hammered, as did those who depended on 401(k)s. Would the Feds make up the deficit? Or would they just say, "tough luck"? What do you think? Remember, Bill Gates's investment income on his billions took some hit, but it had no material impact on his base income need. His level of capital is not on the edge. The same is certainly not true of those want to live off a 401(K). Read this.

Third, is the dirty secret of SS. Many in the Lunatic Right excoriate Baby Boomers as being, in their kinder remarks, self-absorbed and greedy and stupid. What the Lunatic Right don't admit is the simple truth: it was the Boomers who made possible the level of SS (and Medicare) enjoyed by their parents and grandparents. Since SS is paid for on current account, the Boomers prime earning (and consuming) years dovetailed nicely with the retirement of their parents. The problem is that Boomers didn't breed its own Baby Boom, although there has been recorded a bit of a Boomlet. However, without a thriving middle-class, eviscerated by the Lunatic Right aided by white trash morons nation wide, the per capita cash flow to continue SS at the level of the Boomers' parents is scratchy.

Which brings us to the final question: does it make sense to have annuity systems based on private investment for the purpose of country wide retirement? The answer, it seems to me, is no. Again, the basis for this conclusion is that return on investment, real return, is found in productivity improvement. This also requires a demand side increase in consumption to absorb this burgeoning productivity. Face it: if you're the CEO of XYZ, Inc. the only reason to make real capital investment is the certainty that you can shift your increased production. While you, as an individual CEO, may consider reducing production as a way to gain that increased productivity benefit, from a macroeconomic view the process fails. Increasing productivity demands increasing consumption, which itself means dispersion of income away from capital to labor.

Ok, you readers of the Lunatic Right can run off to the ER with palpitations. Don't come back.

Retirement income, no matter how generated, is a generational transfer. Labeling *only* SS (or any country's government program) a transfer mechanism is specious. All retirement programs do this. Since this is true (trust me on this), the lowest overhead cost lies with a SS type, current account, system. The issue isn't some arbitrary interest rate compounded annually, determined either by government or market, rather it is increased productivity widely distributed.

R You Experienced?

2011-07-29T19:46:00.000-04:00

Herewith some musings on politics and data. Don't be afraid, the data doesn't bite. Those interested in the relationship between the two could find this amusing.

I've always been conflicted: data for analysis (stats) or data for use (RDBMS)???? I started adult life as an econometrician, and ended up doing the Relational Model. Until recently, that was OK. The problem is that the Lunatic Right gets ever more aggressive in its lying. So, doing good with data is more important than the technology used, although smart database is better than dumb files.

Which brings me to R (a stat language). I've been working with it for a couple of years, in an informal way. Unlike SPSS, SAS, PSTAT, and the like, the syntax looks more like C or java than SQL. Chapter 10 of "R in a Nutshell" is titled "Object-Oriented Programming". So, a programmable stat language. It also does graphics very cool. It has bindings to most languages you'd find in the PC/server world (none for COBOL that I could find), an RODBC driver, an RJDBC driver (they do what you think), and some database specific drivers (Oracle and PostgreSQL, at least).

I had a chat with some folks, which chat was supposed to be about my data geekiness, but turned out to be about their code geekiness. Which led to a conversation best described as an oxymoron; McElhone (a math stat I worked for some years ago) would have just said, "happily married". It's kind of too bad; there's lots of data wonking to be done if 2012 isn't going to be worse than 2010.

Not having heard anything, despite emails saying I'd be kept in the loop, I've spent part of today looking for R topics on point, just to see what might have been. Turns out, there's bunches.

First, there's R-bloggers, a blog aggregator. The right hand column goes most of the way down the Yellow Brick Road. Talk about bunches. There's also PlanetR, but it's not so user friendly.

Second, there's this blog post I got to from R-bloggers. This is the second post; the first (linked in the post) discussed the ruby mod which prepares the data. The problem being solved is rather different (other than being about money, but that's the basis of any politics issue) from the one I attempted to chat about. What is disturbing: my interrogators evinced no knowledge of this. It's more than 2 years ago, tied to ruby (their language of preference), and animated graphics (the sort of eye-candy they alluded to).

To quote: "The entire process, from extraction to visualization was created in about half a day, so there is obviously more work that could be done." That includes installing MySql and R; my interrogators didn't do MySql, but some other R compatible database, and didn't seem to know anything about R, although I had mentioned this when we chatted by phone days previously. A half day. Repeat, retch, wish one had voted for McCain.

Third, there continues to be, what I'll call, The Brazile Problem: Democrats not knowing, or worse not speaking, the truth when the Lunatic Right spews self-serving shit. Only the truth will make us free.

When Darwinism Fails

2011-07-28T12:39:00.000-04:00

The Tea Baggers are just social Darwinists on LSD. But rather then viewing the world as it was in the 1960s, they view it as it was in 1790, or thereabouts. Needless to say, the USofA today bears little resemblance to what it was 300 years ago. Tea Baggers assert that all would be well if only government and society were returned to those halcyon times.

They're lunatics, of course. The overwhelming driver of American exceptionalism in the 19th century was access (only the natives needed be killed off) to a natural resource endowment never before available. There isn't now, either, especially in the USofA. We've squandered them. It is a saying among midwest farmers: the soil's only purpose is to hold up the plants, (petro)chemical fertilizers provide what the soil once did. We're about out of petroleum. Natural gas, it appears, can be extracted if we don't mind squandering huge amounts of water and fouling what's left. The same is true of shale oil (mostly in Canada).

The number which matters is resources per capita. I don't have a hard number as I write. There likely isn't one, since each resource need be weighted in an index. Suffice to say: population in 1790 - 4 million, population in 2010 - 308 million. There's a well known term in demography: hockey stick. This refers to what happens to a population once predation fades and before it returns. Population grows hyper-linearly until food and water run out. Scientists have done controlled studies of (non-human) animals to prove this, as you may not know. The desertification of the South, most severely in the Southwest, continues apace. An electrified fence on the Mason-Dixon line is in order. Those wastrels should all expire, not with a bang but a whimper.

I recently saw a program on Easter Island (one of the History Channels, I suspect), or you can read the Wikipedia article. Isolated, pre-industrial (i.e., migrationally difficult) islands are as close as we'll get (well, without Nazis anyway) to controlled experiments with humans. And, of course, the society chewed through the resources without regard for sustainability until collapse. I've seen no evidence that the Tea Baggers are any smarter. Similar conclusions have been made about South American Pre-Columbian societies.

Here's the problem: Darwinism only works if the stupid expire before they reproduce. If the manifestation of stupidity (which includes debilitating health problems) doesn't happen until after reproducing, then Darwinism fails. Think about that for a minute. Darwinism requires that the "survival of the fittest" happen while it still matters. Modern societies have removed, by and large, that stricture. We've vaccinated and drugged and surgeried away all those childhood and young adult maladies. The Pharma folks continue to develop more of same for ever more arcane fatal and debilitating conditions.

Now, in order to return to what they consider balance, the Tea Baggers seek to make permanent the gains (well, thievery) of the 1%-ers in the times since Reagan. Only the rich get health care, for instance. Just like the inbred, and vitally stupid, hereditary nobles of Europe in the Dark Ages. We'll spend gobs of money keeping 1%-ers alive for a few months longer, all the while protecting their spawn so that they can get similar. Such a world to look forward to.

The Myth of Compound Interest

2011-07-27T15:20:00.002-04:00

Open up any introductory economics text, Samuelson, for instance, and there'll be at least a whole chapter on interest rates and compounding of same as the salvation of mankind. The charging of interest isn't, and wasn't, universally accepted. Islam, famously, sort of prohibits it. What isn't as well known, due I suspect to outright bigotry is, Judiasm held the same belief.

Thanks to Shylock, the dark ages, and discrimination, Jews became synonomous with usury. But that's another episode. This one discusses where the notion comes from, and whether it makes sense in the real world.

Economists, famously, define interest as "the time value of money", which just means that *it's obvious* that a dollar next year is worth less than a dollar today. You can spend the dollar today, today; but not the dollar next year. So, how much value is "the time value of money"? Nobody knows. Is it 1%, 10%, or 30%???? Nobody can say. The reason is: it's a different number for each person. Intuitively, the more money you have, the less need you have for money today, or next year, so, based on need, the wealthier you are, the lower your "time value of money". Of course, rich folk are mostly the most demanding of interest income. They're lazy bastards, of course, wishing to have an income without providing any useful output to the society. That is the basic idea behind Islamic and Judaic bans.

But, there is a concrete application. This is, as economists call it, *real investment*. Economists (Tea Bagger fools excepted) recognize that economies are based on physical production, not financial manipulation. The issue has been discussed somewhat more since the start of The Great Recession: the number I recall is that leading up to The Great Recession, 30% of corporate profit was the result of money manipulation (finance, as it's adherents prefer to call it).

The problem with finance as a source of profit is that finance is a zero-sum game. Put another way, profit to finance comes from the flow of money from savers to borrowers. There is no other source. It is the skim off the top. Profit to finance means fewer dollars to borrowers, and fewer returned to savers.

So, how do economists justify compound interest? If one starts with a premise of physical production, then a return on physical investment can be calculated without recourse to "the time value of money". The return is purely the result of greater production due to the new physical plant/machinery/etc. Might you see where this is going? Here, take my hand.

During the subprime housing frenzy, large money flows went into American houses. They got larger, on larger plots of land. They cost more to build. The builders made out like bandits. Those money flows didn't go into the production of any salable good or service. Did you know that the USofA is one of the very few countries which subsidizes housing mortgages through the tax code? Or that most home mortgage holders (households) *don't* get that gratuity because they don't itemize? "The Tax Policy Center crunched the numbers and found that a complete elimination of the mortgage interest deduction would raise taxes on only 21.5% of middle-income workers, with an average increase of just $215 a year. The bulk of the increase would fall on the top 10% of wage earners. It's about as progressive as it gets." Cited here.

Krugman quotes himself: the American economy devolved into selling houses with Chinese money. There isn't any real return on housing. The only way to pay the interest on one's mortgage: buy less other stuff or hope that one's real wages rise over time. The key here is "real wages". Real wages only rise when the economy gains productivity and those gains trickle down to wage earners. Since Reagan, we have had lots of the former but none of the latter. Thus the subprime juggling.

On the other hand, if Joe's Machine Shop spends $10,000 on a new milling machine, Joe can, if he wants, figure out exactly how much better off his production is. Now, that calculation gets muddied by various tax code factors. If the increase in productivity nets Joe more than the vig by the bank, then he might buy the milling machine. But the decision has nothing to do with Joe's notion of "the time value of money", only whether he sees a net cash flow from the machine. The amount of vig he owes the bank makes a difference, but this isn't his determination of "the time value of money", only his banker's.

Why should compound interest exist in the real world? From an accounting point of view, anything can be done. The rules of accounting are wholly made up by humans. Humans decided what the rules are (frequently flouted, at that). The real return on physical investment is a function purely of the production process improvement. Compounding? The assumption is that there are an infinite number of real physical investments available for all time. If that sounds a bit like a Ponzi scheme, you're right.

So, what is "the time value of money"? My recollection from school, was about 2%; the historical long term average of the long term interest rate. And, contrary to popular belief, long term rates aren't necessarily higher than short term. This paper discusses. It's a read-only, so I couldn't get a juicy quote.

Which brings us full circle: why is there compound interest? In large part, it is a fiction of the banks. The only real interest rate is the return on physical investment, which is devilishly difficult to calculate. There certainly isn't a universal value, and that's the whole point. The artificial rates created by banks and governments are, by definition, divorced from reality. The larger problem created by the Right Wingnuts is the conflation of monetary interest rates with real return on investment. Moreover, interest paid for non-production expenditures (housing, highways, and hand grenades) is money wasted, from an economic point of view. Dissertations have been written on calculating "imputed interest" for such things as public works. How much productivity gain is there from a bullet train between Beijing and Shanghai? Or an interstate highway system in the US? One might argue that the former does good, while the latter does bad; the argument resting largely on externalities. The return on financial instruments is equally ambiguous, unless they are explicitly tied to physical investments which increase production; the subprime nonsense makes that quite clear. Microsoft Word on every company PC isn't necessarily a productive expenditure either; lots of studies have been done, many concluding that fancy word processing actually reduces useful time spent. The user gets fascinated with eye-candy, ignoring the quality of the content.

With the Fed (and the EU) keeping nominal interest rates near 0, one expects that real investment should soar, shouldn't it? Put all that cheap money to good use? Hasn't happened. Corporates hoard cash, complain about being taxed (lowest in at least 50 years), and do nothing. Well, wait for massive deflation, of course. Read about the Phat Man in Famine.

Lie to Me

2011-07-23T08:53:00.002-04:00

No, not the TV show, although the reviews I've seen are positive. No, the subject is The Big Lie. For those who don't remember, The Big Lie is a metaphor or description of repeating a statement, known to be not even remotely true, loudly and often. The point being to convince those who would oppose the course of action explicit or implicit in The Big Lie, to nevertheless act as proponents of that course. While the epithet is commonly attributed, originally, to Goebbels, it originated with Hitler ( here... ). The technique depends on group think, for which "The Emperor's New Clothes" is my favourite cite. Read the wiki article; the origin is not likely what you remember from school.

The Big Lie du jour is that Social Security, Medicare and Medicaid (you do know that most of Medicaid is for middle class old white folks, not brown poor children? I thought not) are being decimated because "people are living longer". Very early on in this endeavor, I mentioned this Big Lie in the piece "Modern Lovers". That was April, 2009. The liars are still at it.

I don't watch Maher's show as much as I once did; he doesn't have the balls to deal with the right wing lunatics he insists on having on. I definitely don't watch when he has two or more lunatics. But I did watch last night. And the Big Lie went off undemolished. If it were just Maher (and I've posted the issue on his website) who played dumb, well, it's his show. But Donna Brazile was on the panel, and she did, too. That's a Big Problem, since she is head of the DNC, and it's her job to call Bullshit on the Big Lies (yes, there are, boy howdy, more than one).

I mentioned in an earlier post that I had been solicited to apply for a Data Analyst position at the DNC. One of the required responses was Motivation (300 words or less). I let it be known that data analysis doesn't seem to be going all that well, in that Democrats generally (and by implication the DNC who are the "thought leaders" for the Party) have been letting these Big Lies skate by all the time. When the Emperor has no clothes, you have to say so, every time. They aren't doing that, and I stated that my motivation was to get the data out there. All the data support the Democratic position; unless you're a lazy ass 1%-er, of course.

Here's how I put it in another post:
Well, demographers know better. The increase in life expectancy *at birth* rose about two decades over the 20th century. It rose by about *2 years* at age 65 over the same period. Read that again. What it means is that more folks were around to fund social security (designed from the start as a current account program), far in excess of their extra few months at the back end.

I will give credit to Obambi, when Boehner bounced, he was explicit that the deficit problem shouldn't be fixed on the backs of those who least caused the mess and are the least able to pay. Well, he did say the latter, but I don't remember him making the former. I only heard excerpts, so it's possible he made the whole case.

That last quote says that Social Security (and the rest) are current account funded programs. There is another Big Lie, which I'll deal with at some point as it's very long and somewhat technical, that retirees "paid into" Social Security for all those years, and so shouldn't be denied. Well, it was never designed as a collective 401(K), which would be stupid and not something you would want, as anyone who wanted to retire on one found out the last few years.

I Told You So

2011-07-07T10:29:00.002-04:00

One of the pleasures of writing this stuff, is to find the "mainstream" press confirm (much later, of course) my thesis. Well, campers, it's happened again. Here's the piece. The original source is "US News and World Report", historically a Right Wingnut organ. I guess they've gotten hold of a token sane person.

And here a few quotes:

It's still possible that the Fed's critics might be right, with all that extra money--which is mostly sitting on banks' balance sheets--working its way into the real economy and producing problematic levels of inflation. But for that to happen, wages need to start going up as well, since a spike in wages is usually what triggers prolonged inflation at the consumer level. Anybody gotten a big raise lately? Hardly.

The Fed used quantitative easing to boost demand for stocks and other risky assets, by buying up many safer investments, such as treasury securities and other types of bonds. That left investors with little choice but to put their money into the stock market, and the Fed's program did in fact coincide with a huge bull market in stocks.

In sum: all that TARP and stimulus and QE money went straight to banks and corporations, who've decided to keep it, rather than expand; supply side once again revealed to be a Right Wingnut scam, no jobs of course. These are times when I wish I were wrong. Alas, no.

I Wave the Flag [UPDATE]

2011-07-04T10:49:00.003-04:00

What's the appropriate theme for Independence Day, 2011??? How about, equity?

Equity has never been much promoted as a reason to be American. In fact, through convenient fiction (e.g. Horatio Alger, et al) the Right Wingnuts have been able to convince the stupid class that America is the fount of generational progress; that anyone can become completely better (in terms of the size of your purse) than everyone else. Not that this is true, of course. See this study. There are lots more.

I watched some TV yesterday, and saw an interview with Eli Pariser (C-SPAN2), who's written "The Filter Bubble", and bits of episodes of "The Revolution" (one of the History channels). Both were about, although I suspect neither of the creators knew it, equity.

Pariser's book, and the substance of his interview, was that the controllers of the InterTubes seek to sell ads. Period. (I wasn't sure that he quite got the point of his thesis. He may be more clear in his book.) Now, that's been my assertion for quite some time. Google isn't in the search business, or the cloud apps business, or anything else. They are a mammoth ad agency, pure and simple. Their profits come from providing a "superior" ad to those willing to buy ads. They used ads as a way to monetize search services, and thus support providing search results. I'll concede that Google might have been motivated as a search company very, very early on before they figured out that they had to find a way to fund Google without direct user payment. But quite soon, the true business of the business became apparent.

Today's Google, and Facebook, and Yahoo!, etc. are ad agencies. They use various MacGuffins to entice entry, but the point is to get users to buy somebody else's stuff. (I'll add, out of necessity, that AdBlock Plus is effective in removing ads, and has the side benefit of speeding InterTube use by not downloading all that ad crap. You should get it.) Google, the powers that be at least, have been aware for sometime that the cash nipple is fragile. To my knowledge, they've never said so explicitly. But their behaviour has been crystal clear. Google gets taken down, not by a better search engine, but by a better ad delivery system. Now, that could be search, but it would be a waste of effort to make such a direct assault. Google stumbled (I'm convinced it was not on purpose) on its money engine.

Any activity which depends on ads is fragile. The activity isn't selling its wares for fee. It's selling ads to producers. *Any* vehicle which sells more of the producers' stuff destroys the titular business. Google should know this by now. The enemy is everywhere, and nowhere. By the time Google finds out who the enemy is, it will be too late. Just as it was for newspapers.

If search and cloud apps and such were the product being purveyed, they'd do so in a way which maximizes coverage; much like a newspaper. The shotgun approach, so to speak. In an email I sent to Mr. Pariser, upbraiding him for being a naive' twinky (I didn't use those words, but that's what I meant), I allowed as how Google is implementing "narrowcasting", and that I'd run across the term decades ago. I wrote that extemporaneously, but, after typing, took a moment with WikiPedia to see if I were right. I was.

Google, et al, are in the business of divide and conquer. So far, at least, this has been for commercial purposes. But fascism isn't necessarily the result of expressed political motivation, as did Mussolini (he invented the word). It can creep in on little cat's paws (look it up). There have been reports of the Feds using private snooping when it was not convenient to get authorization. For Google, they seek to divide the users into ever more homogeneous clusters, down to the individual, in order to offer advertisers a more potent target. If you want to sell assault rifles, people who search for Greenpeace aren't likely buyers. People who search for Tea Party, but not Tea Bagger, likely are.

Having divided, Google conquers through more "effective" ads. We lose privacy and autonomy in the result. The younger generation doesn't care. Both corporate and political fascists have found the ultimate wet dream. But it's real, not a dream. BushII brayed about No Child Left Behind, but his agenda *depends* upon people having no higher order thinking. The dumber they are, the better. And Americans are getting dumber.

Which brings me to the History channels. Years ago, the shows were mostly about history. Today, they're mostly about stupid Americans doing 18th century tasks ("Swamp People" is my favorite title), mostly in the South. It's quite reactionary. Roger Ailes defeats Durant (not Kevin). There is a series about history, entitled "The Revolution". There being nothing else more interesting, I caught a bit of two episodes. I learned something (or re-learned, I don't remember). Turns out that the ignition point of the revolt, The Stamp Acts, weren't exactly what common wisdom says. While the colonists brayed about taxation and representation, the Brits had a different view. It turns out that the Brits had spent 60 million pounds defending us from the French and their Indian allies (I learned it as The French and Indian War, but it's also called The Seven Years War) in the preceding years. The Brits thought, rightly so, that the colonists should pay up. We remained free of the French thanks to the Brits after all.

If that sounds kind of familiar, think Iraq and Al Qaeda. Or Afghanistan and Taliban. Or Cuba and Russia. And so forth. The Brits merely wanted equity. Their men and munitions had protected us, so we should do our part. Equity. Those self absorbed colonists didn't see it that way. This was all ours, for the taking. Remember that until the end of the 19th century, the USofA was still stealing land from Indians and Mexicans, so the notion of going somewhere else if you didn't like the way things were, was still possible. What made the USofA great wasn't some better notion of politics or American spirit or any other jinogistic pablum. What made America great was access to the richest bounty of natural resources the world had ever seen. Most of it is gone now, of course, squandered. Like it or not, we're becoming more like Europe, resource constrained. We either live like they do, or perish. But I digress.

Google seeks to remove equity. Google seeks to take for itself all data which permits it to sell more ads for more money. Google's problem, of course, is that search is only the last big thing to attract masses of humans. Newspapers and magazines preceded, and were defeated by Google and Craig's List. The point is, Google/newspapers/magazines aren't about selling a product to the titular buyers (the users), but about selling a service to advertisers. That there is a "Chinese Wall" between editorial and ads in print media is an artifact of old fashioned morals. There is no law, and all of MurdochWorld makes this clear, mandating that corporate ad interests may not pollute the editorial product.

Will Google and the rest explicitly get into bed with Murdoch and the Tea Baggers? That is, will Google and the rest admit that what they're about is making as much money, but not about making society a better place? That's the $64 question. Here's the conundrum: in order for Google to make lots o money, it needs to sell lots o ads. Will smart people use AdBlock, and similar, to avoid ads? Likely. Will Dumbshit Rednecks? Not so likely.

So, then, who's the target of Google's ads? Dumbshit Rednecks, of course. If it were only a case of Google putting 10 times as many assault rifle ads as those for pinot noir, I couldn't care less; it wouldn't make a dime's worth of difference to the country. But the problem is: Google *shapes the world view* presented to its users, to conform to the prejudices of those users. To some extent, I get lefty news (from where anymore?). The Dumbshit Rednecks get Dumbshit News. This is not surprising. The mechanism of advertising is *to reinforce prejudice*; it isn't to convince people to do a 180, or even consider that their worldview might be a tad askew. It's a very old book, but folks should (re)read Vance Packard's "The Hidden Persuaders", an outing of the ad industry.

Google has shown no interest, and has none, in getting into bed with MoveOn or other left leaning organization; not enough bodies. The problem is, there are more right wing numbnuts out there than left wing elitists. To the extent that numbnuts can earn more than the highly educated, is the extent to which the USofA is up Shit's Creek without a paddle. Inverting reward leads to an inversion of society. The mob, sort of, wins. The fascists who end up really running the place will suck in evermore of national income; the 1%-ers absorb evermore of national income. When the numbnuts finally begin to notice that their lives haven't improved under The Great Leader, they'll demand that the bad people who did this to them be punished. At that point, we'll see a Mao-ist destruction of the intelligentia. How will Murdoch and his friends explain why it is that they're following in the footsteps of Mao, that awful Communist? They won't have to. Thanks to No Child Left Behind, the numbnuts won't even know who Mao was or what he did.

Obambi Gets Shot

2011-06-29T15:32:00.002-04:00

I've been too busy recently wrestling with Mr. Market to be able to put together long form pieces. They would, in any case, be variations on a theme. Today brings an analysis which comports with mine, and is a somewhat long winded exegesis, in line with what I wrote to the DNC when they "invited" me to apply for a Data Analyst position. ONL allowed as how they wouldn't take kindly, and I allowed as that was OK, in that the issues would have arisen *after* I'd settled in to Capital Hill. Better to avoid all the expense. I've not been invited to audition.

The issues raised are serious, and were ignored in 2010, which is why we have so many more states being run by Right Wingnuts. Obambi and his enablers ought to be ashamed, but they're not. Even in today's encounter, more pablum about "coming together". Damn it, it's a war. Wise up.

Jumping Off a Cliff

2011-06-21T09:04:00.000-04:00

Another dump-in essay. Over at Seeking Alpha (a site which, 99.44% of the time, only says Good Things about shares) is an article on Pharma's patent cliff. Naturally, I was moved to comment, and it's somewhat longer than what I've been purposely writing these days, so here it is.

Well, if the science has been exhausted (in its current form), then the cost of health care (in its current state of life saving) should decline. Statins do work; although I recall reading recently that LDL/HDL levels may not be such a great marker for OS (that's from memory; I could have mis-read). If the for-profit model collapses, we could well see a return to a semblance of what we had decades ago: Federal funding of research and the release of compounds into the public domain.

If one looks at life expectancy for the US vs. any country that isn't third world, Big Pharma hasn't done such a bang up job. Further, all the bullshit from the Right Wingnuts that Social Security was set up to kick in at the age of life expectancy (not true, but I'll let that pass), and "we're living so much longer now, social security is doomed".

Big Pharma, with Federal complicity I'll admit, took advantage of the "War on Cancer", which was initiated to find a "cure". In fact, what we've gotten is a few extra months of life at end-of-life for staggering amounts of cash; most of which *does not* go to R&D, but rather to management and shareholders. All of these ad hoc potions haven't gotten us any closer to a "cure". Made a few folks nice and rich, but not so much for the rest of us.

The same could be said for diabetes; [Mannkind] is getting hammered, yet on the data has what could be viewed as a cure. One might wonder whose ox is being saved from a goring.

Well, demographers know better. The increase in life expectancy *at birth* rose about two decades over the 20th century. It rose by about *2 years* at age 65 over the same period. Read that again. What it means is that more folks were around to fund social security (designed from the start as a current account program), far in excess of their extra few months at the back end.

A Smoking Gun

2011-06-20T16:13:00.002-04:00

I'll start with the mantra of this endeavor: you don't make an economy/society better by making the rich richer. The Tea Baggers/supply siders/Hooverites/let them eat cakers continue to spew the "business and the rich shouldn't have to pay taxes and if they didn't Eden will spring up in every home and hamlet in the realm". A number of organizations which track data have taken a look at what happened the last time Corporate America got another dollop of dessert.

The studies are from National Bureau of Economic Research, National Tax Journal, and Allen Sinai (who authored a lobby group's study, but has since recanted). Sinai, by the way, is a respected economist, not a corporate mouthpiece.

As usual, and as I have been saying in this endeavor, giving money to those who have more than they know what to do with doesn't lead to growth. More to the point, Merck should have been driven to bankruptcy as the result of its management's stupidity and cupidity. In fact, the American taxpayers made both management and shareholders far richer. Is this anyway to run a country?

Poverty Hill

2011-06-15T10:39:00.000-04:00

There is an old comic, whose name I can't recall, who used the line: "we grew up poor but unhappy". What have I been telling you?

Now, sort of mainstream press have figured it out. The link credits a Right Wingnut with presenting the data. I expect that academic economists have done so long ago. I certainly did.

Read it and vote. And follow the many links.

You May Need Xanax

2011-06-12T14:36:00.000-04:00

If it's Sunday this must be "Week in Review"; well, at least at the NY Times. Whilst munching, I accomplished my weekly obligatory perusal, and found a Robert Shiller article, which discussed his Case/Shiller (why does he get all the media attention, when he was the junior partner?) index. He's also written up for a speech he recently gave. In the article, he's quoted: "It's impossible for statisticians to forecast," he said. "I honestly don't know."

Coming from him, I am stunned. The value of housing is historically tied to median income with a tether. That is why, as I have said countless times here, that by 2003 I was saying (although long before I took a public forum) the US economy was headed into the muck. Housing prices had already outstripped its historical relationship to median income. Housing prices will continue to fall until we get *at least* to that level.

It's also worth remembering that median income is commonly reported at the household point, while what really matters is median individual income. That number is somewhat harder to come by.

In the event, I'm going to bite the bullet and create Young's Depression Indicator, which will be a leading indicator driven by median income data. There may be a similar index/indicator out there. Should I find such, I'll cede the YDI to the rubbish bin. For now, expect it.

Ten for the Landlord, One for Me

2011-06-10T13:13:00.000-04:00

Every now and again I'll find a Famous Pundit making my argument on some topic of importance. I've been writing rather a lot recently on the theme that the 1%-ers really do want a Depression. My reasoning is simple: Depression is deflation, and for those with hoards of cash (yes, GE, I'm talking about you), "return on capital" can happen either by actively investing or passively watching as global prices fall. To the cash fat, it's all the same.

Well, today Krugman takes up the theme. He goes on rather longer than I have, and adds some spice. Give it a read, if you want to know where we're headed, and you didn't believe me long ago.

Note: I've coined (so far as I know) the epithet, "Dictatorship of the CEO"; Krugman is a bit less biting. He'll come around, eventually.

Analyze This

2011-06-08T08:52:00.000-04:00

I was quietly minding my own business on Monday, when what should pop into my inbox, but an invitation to apply for a position of Data Analyst with the DNC. I sure did. What was odd about the process, from both sides, was that one had to offer a 300 word "Motivation" statement. Boy howdy. Alas, I was so in thrall, I didn't copy it out for inclusion in one of these missives.

Events change, however. In a nutshell, I told the DNC that they were shamefully responsible for the 2010 debacle; the data needed to destroy the Right Wingnuts was low hanging fruit, which they ignored. And that they needed me. Kind of direct. We'll see.

What motivated this missive, however, was the news today that "mainstream" Republicans are toying with letting the country default.

It's high time Obambi used those balls he's used to produce kids for something more important. The Right Wingnuts game plan all along was to institutionalize the wealth transfer that started with Reagan, by blaming the deficit on Obambi. He, and the DNC, have been criminally silent through all of this.

FDR said, paraphrasing, that the banks hated him and he hated the banks; and he was down with that. The banks caused the Great Depression/Recession, so taking back what they stole was just minimum punishment. In fact, it isn't even punishment; it's called restitution. The poor folks whom the Right Wingnuts wish to destroy, didn't cause either event. Obambi, if he's worth a shit, has to take the fight to the bad guys. This holding hands around the campfire is merely convincing the Rove's out there that he's easy pickings. So far, he has been. He compromises firsts, doesn't even bother to ask questions later.

The DNC needs me. We'll see. Would be nice to get back to Capitol Hill. Look up an old girlfriend or two or three.

Oye Vey

2011-05-31T14:53:00.000-04:00

There is the occasional writer I envy, not because I covet his/her "voice" or style or subject and such, but rather his/her access. Joe Nocera has been "promoted" from the business page to the main op-ed page, and today talks with a Real Banker. What's revealing, and you should always read Joe just because, is that the Banker asserts what many of us in the anti-Banker wing have been saying: banking is only a Yenta for money. When bankers decide that they should get rich on the process, the process itself is distorted.

Boy howdy.

A Rich Man and the Camel

2011-05-30T14:17:00.000-04:00

There was a particularly vicious op-ed in yesterday's NY Times. The author is an economics professor at Duke. Of course he is. I needed a day to cool off.

Here's his thesis:

"Strikingly, Shariah lacks the concept of the corporation, a perpetual and self-governing organization that can be used either for profit-making purposes or to provide social services."

Now, the notion that corporations are the source of all good is not even embedded in the US Constitution. It wasn't until a right wingnut Supreme Court annointed the corporation as a "person" (see: here.) that corporations gained the right to trample over real people. Moreover, the Citizens United case made it worse. Then there is the decision this last week which allows corporations to really buy elections.

And, of course, North Carolina is where the legislature and governor allowed big internet companies to stifle social competition. So, yes Virginia, there really is fascism in the USofA. Where's Robo Cop when you need him?

He conveniently ignores some salient facts about the Arab/Islamic world (I infer that he is ethnically Turkish, but can't confirm that from any published biography): they gave us the number system, and a fulsome society while Europeans were clubbing each other in caves. Moreover, what makes capitalism work (to any extent) is resource squandering. One may note that the middle east, where he seems to solely focus, is resource poor; except for oil, naturally. Further, the autocratic nature of its governments has been in furtherance of Western desires (keep all those poor people from demanding a slice of the petroleum pie) rather than some innate failing of Arabs or Islam. It's not a coincidence that other single extractive resource, post colonial, countries are autocratic. It's not a coincidence that US corporations continue to move facilities from the US (titularly a democracy) to autocratic regimes, such as China. One of the more troubling is Pfizer's R&D move.

Democracy is driven by having a middle class that is most of the society. How much of production is "social" and how much "private" is not important. Capitalism requires excess resources to function, and the reason is because real world efficiency is subsumed to financial manipulation. We have the Great Recession (and the Great Depression, and a multitude of Panics in the 19th century) just because corporations value currency over physical production. This last is also why Right Wingnuts are always Gold Bugs and Inflation Zealots; they're in thrall to currency rather than real production. If they can "make money" by doing nothing rather than "making something" they have, they do, and they will.

Tired

2011-05-25T23:34:00.000-04:00

Some times I just feel so tired I want to fall down. Yesterday, whilst going to the grocery store to get more sugar, fat, and salt I caught a few minutes of "Marketplace" on NPR. Even though it is NPR, it's not a lefty friendly show, generally. The piece (only some) I caught was an interview with Jack Hough of "Smart Money", a Wall Street Journal feed. Not a lefty friendly organ, generally.

Long time readers, all three of you, are aware that the point of this endeavor is to continue to nag that the only way to have a stable society and economy is to get back to historically stable income/wealth distributions. It is widely understood that the market, and Joe Sixpacks, do better under Democrats than Republicans; the numbers are unambiguous. Even though Right Wingnuts go to great lengths to shoot themselves in the gonads.

So, anyway, in the course of the interview, Hough mentioned some facts which comport with my thesis:
1) the percentage of national income to profit which is the historic norm is 6.4%
2) the current value is 9.4%
3) the last time profits took that much was just before the Great Depression
4) workers are the buyers of what corporations sell, thus if workers get a smaller part of the pie, they can't afford pie

That last is a stunning admission from a WSJ writer. True, but stunning. The story is here.

Castles in the Air

2011-05-17T22:48:00.002-04:00

Once again, Dear Reader, I begin with the observation that: I've mentioned this a few times before in this endeavor. What I've mentioned is that giving taxpayer money to welfare queen corporations is a fool's errand. Today's installment is a story in the NY Times. Once again, corporate welfare queens. It makes me so angry, I could spit.

Mom Always Liked You Best

2011-05-10T11:21:00.002-04:00

Strictly speaking, UMass/Amherst isn't my alma mater, since that term is generally applied to one's undergraduate college. But it was almost my undergraduate school, and it was where I did my graduate work. In fact, at that time, it was the only University of Massachusetts, before "they" decided to re-brand the state teachers' colleges.

As regular readers know, the theme of this endeavor is to drive home the point that only with widely distributed income can there be sustained social and economic stability. Growth, too, since the population, best efforts notwithstanding, grows apace. Today's news brings this piece, co-authored out of Amherst. Neither the reporter nor the paper come out and say it, but get closer than most to the nub: the whole mess comes apart when only the 1%-ers get the gravy.

One can argue, and I certainly do, that nail pounders in FL and swamp people in LA, shouldn't be taking in more than a teacher in some urban school. But neither should basketball players, either. Priorities matter, and if we continue to reward 19th century skills (I'm talking to you in MT and WY) through the Tea Bagger reactionary zealotry, we'll end up on the wrong end of mercantilism (look it up).

This isn't the first paper to point out the undue influence of FIRE, especially Finance, on the input-output matrix (the paper doesn't use that term, but it's what matters) of the economy since WWII. The policy pundits need to stop listening to the garbage coming out the mouth of Orangeman. People buy Things, not the Services that continue to suck up national income. We make nothing that sustains family values, take that Newt.

Another Look Into the Dust bin

2011-05-04T10:50:00.002-04:00

OK, I said I wouldn't have any more to say about bin Laden. But then, I read this Time piece, and it can't go unremarked. It states that Obambi made a mistake in not giving credit to Bush. Say what?

This is what Bush said (quoted here):
'I truly am not that concerned about him', said President George W Bush on 13 March 2002, after being asked the million-dollar question 'where is bin Laden?' once too often.

So, Bush and his cronies insisted at least after Tora Bora that bin Laden was in the hills, dug in. That's what "intelligence" was on the table when Obambi was sworn in. Turned out that he'd been living the life of Riley with Abbott and Costello since at least all of Bush's second term.

Between saying he didn't care, and not even knowing generally where bin Laden was, Bush deserves CREDIT for offing bin Laden???? Get a brain.

So Long, It's bin Good to Kill You [UPDATE]

2011-05-03T10:42:00.005-04:00

I've only had one thing to say, and that's likely to be it, by posting a comment on a local blog early Monday morning.

What I said was, that by today (Tuesday, 3 May) the Right Wingnuts will further attempt to de-legitimize Obambi by spinning the offing of bin Laden as a Bush enterprise. They have to, you know, since their game plan since his election was to do so. Nothing done for the good of the country (or the Other 99%) will be supported. Only a continuation of the Right Wingnuts' elevation of the 1% to total control of the country will be accepted as bi-partisanship or compromise.

[UPDATE]
Right on schedule.

Casual Dress Acceptable

2011-04-27T22:30:00.003-04:00

This story just appeared in the news. It contains this wonderful quote:

Leprosy can't be spread through casual contact such as handshaking, or sexual intercourse.

So, just let your date know that casual means, well... casual. You'll both be happy. Ecstatic, even. Look it up in a good dictionary.

Seriously, you should read the story, if only to dispel myths you might still have. Except for that faux pas, it's informative.

Place Your Bets

2011-04-24T13:54:00.002-04:00

Another re-cycled spleen venting. This time, a letter to the editor at Bermuda's Royal Gazette. The writer praised an essay by some (unidentified) high schooler, who praised the idea of Bermuda casting its future with casinos. What follows is my reply.

It's very, very easy to overestimate the boon from casinos. Nevada, Las Vegas in particular, is a wasteland. As you may know, it depends on casinos.

Here in CT, we have two of the largest casinos on the planet. Few understand how they make their money. Here's the answer: they bus in old people from New York and Boston (Asians are particularly susceptible) who spend their giveaway rolls of quarters, then empty their pockets. The notion that it's a bunch of high rollers making poor folks rich is a myth (or perhaps just a lie). It's far closer to the truth that it's poor folks making rich folks richer.

So: what would be the draw? Anyone who's spent time at casinos knows the main fact: the casinos go to great lengths to keep folks inside. The wonder of Bermuda makes no difference to casino operators. Access to lots of dupes is what makes the difference. Atlantic City hasn't done so well just because it isn't right off the interstate between major cities; the CT casinos are, and that's how they manage to keep a steady supply of bus people. Who will be the bus people for Bermuda casinos? That's right, the poor folk of Bermuda. Casinos end up being a form of regressive taxation; something the 1%-ers dearly covet.

To determine whether casinos on Bermuda could make sense, there is a simple test available. Permit the cruise boats to run casinos while in port (with a split on gross to Government, of course).

Doing so will demonstrate a number of useful points.
- is the income from casinos greater than the loss from other business revenue
- is there any net increase in revenue at all

Remember, Bermuda isn't like the Caribbean islands, which are not only individually larger, but comprise a connected "country" of much larger size. Bermuda is just a tiny rock in the middle of nowhere.

The New KKK

2011-04-19T08:48:00.000-04:00

The Ku Kux Klan exists for a simple purpose: to extract economic value from a majority for the benefit of a minority. It happens that the majority is black folks and the minority is white folks in the South. That the precursor to the KKK was slavery is, of course, not a coincidence. Nor is it a coincidence that the KKK wraps itself in the Bible.

Well, those good white folks at Standard & Poors have done the KKK one better. It's still a minority seeking to subjugate a majority, and the minority is still a handful of white folks. But S&P are after really big bear, this time. They want to tell sovereign governments what to do. Recall that the rating agencies exist to provide transparency into the workings of private capital, a function at which they have traditionally been captive to the capitalists they're supposed shine light on.

So now, in order to punish the government for having the temerity to point out their failure to perform their primary mission, S&P decides it has the right and obligation to run our government. This is tyranny, pure and simple. The .1%-ers are using a proxy to run our government. Obambi will just roll over, again. You'll know these guys on the street when you see them. The white dunce cap, brown shirt, and nicely polished boots.

Krugman, and others, have been spent a good deal of ink debunking the bond vigilante justification for sending the country into a true Depression, as the .1%-ers clearly desire. I don't recall him, or the others, connecting the dots to the rating agencies as the implementers. Well, here we are. Get ready for a rapid descent, and keep your hands inside the vehicle.

Dee Feat is in Dee Flation, Part 13 [UPDATED]

2011-04-14T10:01:00.002-04:00

Along with a lackluster initial claims, which rose some, we also got the PPI (Producer Price Index), which was up a tad, although nothing major. Moreover, the "core" number was downright laggard.

Here's the briefing.com description:
Excluding food and energy, producer prices increased a much more tepid 0.3% in March. The consensus among economists polled by Briefing.com had called for a 0.2% increase.

Despite what the Right Wingnuts have been braying for what is now *years*, the stimulus and TARP and all that other money has been funnelled to the 1%-ers, who don't spend much, if any, of this largess slathered over largess. Regular folks, who the Tea Baggers should be supporting (but don't, since Tea Baggers are the pawns of the .1%-ers), aren't getting the $$$, so the $$$ doesn't make it to the spending stream.

What the Usual Class of Pundits is ignoring: the inflation inherent in food and fuel is *Cost Push* (i.e., shortage) and their knee jerk "raise interest rates before the sky falls" will only hasten the fall, and make it that much worse. Figure out how to increase supply of shortages, morons. There was a story in a recent NY Times about farmers switching from useful crops (well, useful as food, anyway) to fuel crops. D'oh!!!

[UPDATE]
The Core CPI was just released, at .1%, below the expected .2%. The money ain't getting to normal peoples' pockets.

Obambi is such a waste of time. If I were Biden, and had to sit through his speech, I'd have fallen asleep, too.

Blind Faith

2011-04-07T14:49:00.002-04:00

For those who haven't been singing along with the Tea Baggers and the religious Right Wingnuts, I'll take a moment to remind y'all of one of their primo arguments against Science: only God could create an organ as complex as the eye, so therefore the Bible is literally true, all of it.

Well, Boy Howdy this development (pun intended) must be especially bitter. I love it. Stupid is as stupid does.

Lies, Damn Lies, and Whining Tea Baggers

2011-04-06T15:45:00.000-04:00

The tea baggers, in the person of John Boehner mostly, are whining that the rich pay too much tax, and the poor get too much services. As they always do. The counter example is always Alaska, home of the Tea Baggers, and blessed with the highest per capita Federal largess.

So I thought I'd lay out a small thought experiment. The Tea Baggers continue to argue that taxes are too high, ignoring (not out of ignorance) that during their much loved 1950's (when men were men, women stayed at home, and darkies did all the real work for pennies) the highest tax rate was 91% and a Republican ran the White House. I suppose they've already ousted him from the party.

Let's start with a country of 1,000 people, $1,000,000 of GDP, divided as it was in 1980 (approx. of course) with 1% taking 8% and the remaining 99% getting 92%. Let's set the 1% rate at 60% and the 99% rate at 30% at the start.

Here's the arithmetic:

.6 x .08 x 1,000,000 = $48,000
.3 x .92 x 1,000,000 = $276,000
               total = $324,000

Now, fast forward to today, with the same rates, just a shift in distribution with the 1% getting 24% and the 99% getting 76%.

.6 x .24 x 1,000,000 = $144,000
.3 x .76 x 1,000,000 = $228,000
               total = $372,000

The problem, of course, is that Reagan/BushI/BushII cut the 1% rates about in half, so

.3 x .24 x 1,000,000 = $72,000
.3 x .76 x 1,000,000 = $228,000
               total = $300,000

For some actual numbers, have a look here. The conclusion, so far as I'm concerned, still holds. Warren Buffett said that there really is a class war, and that the rich are winning. Boy Howdy, I'd say.

Dee Feat is in Dee Flation, Part 12

2011-04-01T08:53:00.000-04:00

The monthly data is out, and the non-farm payrolls are a bit better than expected. Two flies, that have so far gone unremarked: government jobs continue to be scorched, mostly state and local, of course, so the poor states will get poorer by way of the negative multiplier; and earnings are flat, which means Our Capitalists are creating "want fries with that" jobs rather than "I'll have the filet" kind of jobs. With earnings flat, the only inflation momentum in the economy will come from shortages, some real, such as food, and manufactured, such as petroleum. The 1%-ers, who clearly now run this benighted country, will demand monetary solutions (of which there are none), and Obambi will cave in as he always does, thus cementing his 1937 moment. And I voted for this patsy!

Did You Hear the One About the Two Economists...

2011-03-21T11:29:00.000-04:00

I sit here doing my various things, all the while listening to that hated Liberal NPR, usually the station at Sacred Heart University, which as its name implies, is associated to the RC church; after watching that fat guy on "60 Minutes" last night, the right wing agenda of the RC church is clear. May be NPR isn't quite the Liberal Bastion. So, anyway.

The news minute just ran, and one topic was the existing home sales number, released this morning. It was down, and the home price the lowest in nine years. The reporter questioned an economist with the realtor lobby, who asserted that home prices have to rise because the population is growing. There's a reason economists are held in such disrepute, and such crap "analysis" is a big reason. For that statement to be true, then there never would have been a Great Recession in the first place. House prices rose in the face of stagnant and falling real median income just because the mortgage companies, then the banks in their lemming fashion, fudged the numbers to *force* prices up. Builders were the ones who made out on the deal; build them expensive, sell them expensive, leave.

Without a rise in real median income, folks won't be buying houses at any price higher since the mortgage payment is 1/4 of gross median income, and without the fudge factor, prices must return to historic norms. That's been the serviceable level for a very long time. It won't change, and Steve Jobs will see to it. For every added dollar that goes to a mortgage company is a dollar that Steve can't put in his pocket. One needs to ask the obvious question: where does the cash come from to buy iPads and iPhones and all the other iCrap present and future when median income is not rising? The answer, in the short term, is trading a nice living room for Steve's toys.

Steve's toys is a metaphor, to curb flummoxed responses, for any and all discretionary spending.

Putsch in America's Heartland

2011-03-10T08:00:00.001-05:00

Scott Walker has done a Hitler. For those who've forgotten, Germans elected Hitler on the theme that a minority was the source of all its economic problems. Walker did the same. Now, he's put Wisconsin's economy in the tank, and handed the 1%-ers even more wealth.

The unions negotiated lower wages in exchange for better health care and retirement. Pure and simple. The state of Wisconsin mismanaged, and short funded, those benefits. Failure was guaranteed.

Hitler did much the same.

Walker's union busting will only make Wisconsin worse, well on the way to being Alabama in the snow. Don't be surprised to when Walker and fellow Right Wingnuts outlaw all unions in Wisconsin. Mark my words.

Will Wisconsin's economy perk up in response? Hardly. State workers (well, those not needed to enforce a Police State, of course) now have 8% less income, transferred to the well to do. Private sector employers now have a weapon to reduce salaries and wages. In due time, and it won't be much, no one with a functional frontal cortex will work for the state. Just as in Germany (now and then) and Britain, which wage war on the middle class as we speak, economic activity (GDP for countries) in Wisconsin will go down the tubes. Like the propagandists they are, they will conjure up some new Enemy of the People. I'll guess unwed mothers. Yeah, kill them off, and all will be well.

Fit to Be Tied

2011-03-09T14:21:00.002-05:00

Tie me up, Buttercup! Well, lock me out Rex Stout!!! The stomach churning that is the NFL and its players needs addressing, if only a little bit. Long, long ago, when I was paid to be an economist, I had a look at public financing of private facilities. Primary among these are stadiums for football, baseball, and to a lesser extent basketball/hockey which usually share a facility. I could only find data which showed that the taxpayer didn't get much out of it. Owners, who, absent slavery, own little or nothing, generally made out very well.

So, in a fit of search hysteria, I found this piece at the HuffPost. I don't much like the HP, since it is mostly about indentured servitude, but this piece appears to be authored in-house. I guess. Hard to say. Whether this is a paid author, don't know.

Here's the bit that matters:
"Twenty-eight of the league's 31 stadiums (the Jets and the Giants share the New Meadowlands Stadium) have been built with some amount of public financing... Eleven have been 100 percent publicly financed. Taxpayers have put up more than $5 billion since 1990." Welfare for the rich?? Could be. Those teachers sure don't deserve retirement or health care, though.

Onward Christian Soldiers

2011-03-08T20:50:00.003-05:00

Say it with me brothers, "Onward Christian soldiers!"

On more than one occasion, I've ranted about the subversive christian element in the US military. It's been a while since the last bit of news, but here's a bute.

They're bound and determined to blow up the world in the name of Jeeeeeeeeesus!! For this they claim Constitutional authority. Inbred rednecked morons.

A Knife at a Gunfight

2011-03-08T14:13:00.000-05:00

Herewith the shortest posting yet.

The militias, white supremacists, and Tea Baggers take note: what's going on in Libya is what you will face should you act out your fantasies of rebellion. The government has F-15's. You don't.

And, if you think that all those Christian pilots will shoot down their buddies just because you expect them too. Not going to happen.

A Comedian

2011-03-07T21:13:00.003-05:00

I think I've mentioned a few times that I've not traveled much out of the country. In fact, I believe I once said that my only trip was to Haiti, in 1984 (or thereabouts). Not true; I was in Bermuda a few years ago, by very rocking boat. The only time I've flown is Haiti. Tony Bourdain's been there.

Now, Tony Bourdain is an acquired taste, so I'm told. I wouldn't know, as I've been impressed with his style of reportage from the beginning. This show is far more sober, still snarky, but not so with the people of Haiti. He doesn't travel far; only up the mountain to Petionville. The show is really about Port Au Prince, not Haiti. That's as it should be.

He did a piece on the Israeli attack on Beirut back in 2006, but that wasn't on purpose. He just happened to be there when the attack happened. The first few days of the shoot went normally. Then all hell broke loose. He turned to reportage.

In the aftermath of the earthquake, he goes. I've no idea why he thought of it, but he begins the episode reading "The Comedians", Graham Greene's novel set in a fictionalized version of the Hotel Oloffson in downtown Port Au Prince. We stayed up the mountain, in Petionville, at the Montana. A bit of irony: the Montana was (yes, past tense) up the mountain some few miles and farther from the quake's center, made of concrete, and pancaked by the quake; while the Oloffson is in the middle of the city, which is to say, almost on top of the epicenter, made of sticks, and still standing. We ate there, and sat on the balconies.

You have to watch this show. Check the Travel Channel for the schedule. If this doesn't get an Emmy, there's not a shred of justice. "60 Minutes" rarely makes such reportage. The Beirut episode was nominated, but didn't win. That episode was serendipitous, this one was very much on purpose. See it.

An Ouroboros Tale

2011-03-02T09:12:00.002-05:00

My favorite weatherman got canned a month or so ago; as a result of tracking him down, I found that he has a long running site/blog, to which I am getting addicted. His latest post (as I write) is one in which I became enmeshed, and has some of my cutest prose in a while. Teehe.

This is it. Much in the general theme of this endeavor. I'll also note that the folks who canned him, LIN Media, is threatening to pull its local channels (that's all it owns, I believe) which include Geoff's former weather screen, from Dish, which is how we get our TV needle, if it doesn't get some fat increase. More and more, folks are turning to HD antennas in urban and suburban settings. May be it's time to go that route. No more "Bathtastic", alas.

The Land of Stupid People

2011-02-24T10:59:00.000-05:00

I think I've mentioned Phil, I fellow I worked with many years ago, during one of my tours of duty through Boston. We worked in Lexington, a very nice suburb of Boston. Phil's house was in Brockton, the only town he could afford at the time he bought. It was quite some commute. On really bad days in the office, Phil would say "time to go back to the Land of Stupid People". Brockton was, and is, a whole city that's mostly inner city.

The problem is: the entire USofA (the Red and Purple parts, at least) has become Stupid People. "Mother Jones" has an article detailing the depth of the stupidity. The article's been excerpted here. You owe it to yourself to read both the excerpt and the entire article.

As an ongoing theme of this endeavor, that Americans really are too stupid to make rational decisions, is blind stupidity. Alas, the Right Wingnuts have found numerous memes to flummox the stupid. Democrats need to work on finding a few. I've offered, but they aren't interested. Oh well.

Bait and Switch

2011-02-18T07:47:00.000-05:00

As most of those who would read this endeavor, I've been following the Right Wingnut nonsense in Wisconsin and elsewhere. And, as usual, the Right Wingnuts are out to blame and punish the victims.

For those that might not know, public sector workers (other than the Feds, and that's another episode; I was directly involved in that one for about a decade) have themselves to blame for this situation.

Here's, in general, how it went.

1) the state/municipality cries poor mouth during negotiations, saying that the government/taxpayer can't afford to pay the teachers/cops/firefighters/etc. equivalent wages based on education/experience/skills. They offer to offset this with slightly better benefits; health and retirement in particular.

2) the workers, through their unions, take the bait. No one particularly wanted the jobs; cops and firefighters decades ago didn't always even have to be high school graduates. There have been reports of college degreed individuals being denied police officer entry because they would be bored (I have a specific memory of such news stories, but no link at the moment; I expect one can find such). Teachers were especially poorly treated. My sixth grade teacher showed up at our door one summer day, selling Compton's Encyclopedia.

3) states and municipalities routinely underfund both the health insurance and retirement accounts; it's not in the interest of a politician to pay for something which doesn't put fannies in the voting booth next election. There have been news reports about this for decades. The bill mounts. No one cares.

4) the unions, like Obambi today, refuse to hold the Right Wingnuts feet to the fire over time (Democrats, too; don't get cocky). The problem gets worse.

So, now the Right Wingnuts lie about the issue (Christie in New Jersey being particularly blatant), and seem to be getting away with it. Once again, misery (the disappearing middle class) demand company. They're actually buying the Reagan-esque meme that the poor folks have caused the Great Recession. Stupid people.