## Posts

Showing posts from September, 2011

### Homeboy Down

Ron Paul and some more sensible people are exercised over the assassination of terrorist and American Citizen Anwar al-Awlaki. “Al-Awlaki was born here, he’s an American citizen, he was never tried or charged for any crimes,” Paul said today after a speech in Manchester, New Hampshire, CNN reports. “To start assassinating American citizens without charges - we should think very seriously about this.” I'm not too sympathetic to this argument, even though al-Awalaki was a homeboy from my home town. The fact is, you don't charge and try a bank robber when you catch him in the act and he resists arrest. Yes, it would be nice if there was a more formal process for charging these guys, but its not like he was about to show up at the embassy to defend himself in court.

### Bullshit

Krugman identifies some : The good news: After spending a year and a half talking about deficits, deficits, deficits when we should have been talking about jobs, job, jobs we’re finally back to discussing the right issue. The bad news: Republicans, aided and abetted by many conservative policy intellectuals, are fixated on a view about what’s blocking job creation that fits their prejudices and serves the interests of their wealthy backers, but bears no relationship to reality. Listen to just about any speech by a Republican presidential hopeful, and you’ll hear assertions that the Obama administration is responsible for weak job growth. How so? The answer, repeated again and again, is that businesses are afraid to expand and create jobs because they fear costly regulations and higher taxes. Nor are politicians the only people saying this. Conservative economists repeat the claim in op-ed articles, and Federal Reserve officials repeat it to justify their opposition to even modest

### Calling Mr. Keynes

The Dow is down nearly 800 points in the last 48 hours and the US government can now borrow money for ten years at a profit - at current interest rates (1.77%), investors are paying the government to hold on to their money (inflation adjusted).

### Tyler Cowen Finds A Straw To Grasp

It seems the Irish economy actually had a couple of quarters of growth. The economy expanded at a faster rate than expected in the second quarter of the year, putting in its strongest quarterly growth performance since the recession began, according to new data published today. The seasonally adjusted figures estimated that gross domestic product – the widest measure of economic activity - rose by 1.6 per cent between the first and second quarters of 2011. Gross national product, which excludes the profits of multinational firms, increased by 1.1 per cent compared with the first quarter of the year. Even Cowen's usually rather sychophantic commenters can't swallow this one. Examples: Gepap.............So with this grand growth, Ireland will return to its pre-crisis GDP when? 2020? 2025? 2030? Yeah, hurrah for austerity! ..... Benny Lava............“Ireland’s seasonally adjusted unemployment rate rose to 14.2 percent in the second quarter from a slightly revised downwa

### Modest Proposal: Fakers

The so-called hurry up offenses are becoming popular in football, speeding the game up to a more or less glacial pace. This puts some pressure on the really big, really fat guys needed to play defense - many defenses get "gassed" and appear to crumble. In response, defenses have started faking injuries. The wise men of football appear helpless to deal with the practice. Faking still goes on. Even in cases when the intent seems obvious, officials are not in a position to decide whether an injury is real or staged. The league doesn't want them making that determination, especially with the renewed emphasis on player safety. The league cannot take a hard-line stance, other than to say on Page 19 of the rule book: "The Competition Committee deprecates feigning injuries, with subsequent withdrawal, to obtain a timeout without penalty. Coaches are urged to cooperate in discouraging this practice." My proposal: just force players injured enough to stop play to sit

### Rent! Rent! Rent! Rent!

If high-frequency and other related strategies work, traders ought to be extracting enormous rents from the recent hypervolatility of world markets. Are they?

### Size Matters (for Gravitational Waves, too)

Via Technology Review : Can very large scale gravitational waves explain (apparent) cosmic acceleration and other exotic and funky features of the Cosmos? Edmund R. Schluessel says yes: http://arxiv.org/abs/1109.4315 Strong long-scale gravitational waves can explain cosmic acceleration within the context of general relativity without resorting to the assumption of exotic forms of matter such as quintessence. The existence of these gravitational waves in sufficient strength to cause observed acceleration can be compatible with the cosmic microwave background under reasonable physical circumstances. An instance of the Bianchi IX cosmology is demonstrated which also explains the alignment of low-order multipoles observed in the CMB. The model requires a closed cosmology but is otherwise not strongly constrained. Recommendations are made for further observations to verify and better constrain the model.

### Dimensions of Diversity

I cribbed the title from the cover story of an upcoming educational conference. Diversity has been, and apparently remains, a major theme in education. Students, it seems, come in a variety of learning styles and from culturally diverse backgrounds. A teacher with a reasonably long and varied career is likely to teach the children of farmers and physicians, professors and crack whores, and each of those children will come with her own problems and idiosyncracies. So it's a good idea for a teacher to have some idea what they will be dealing with, but I still think that a little more time might be spent reminding teachers that it's not really their job to honor or celebrate that diversity. Their actual job is to teach those diverse little rascals to read, write, calculate, and work harmoniously with others.

### Lisa Randall On Her New Book

Lisa Randall is flacking her new book over in Lumo's Place . I like the idea of authors pushing their books on blogs. I haven't read it, but it's been well reviewed, and she supposedly had help from both Cormac MaCarthy and the Lumonator himself. Hard core Dylan fans may be disappointed in the subject matter, though.

### Indecent Exposure

Jared Bernstein has a nice graph of bank exposure to the variously Euro vulnerable sovereign debts, by country:

### Krugman on Judt

Paul Krugman on Tony Judt on one of my favorite themes: Doom! Not the least of the reasons I like this article is because he makes a grammatical mistake I keep making: one thing I was sure of was that the next great crisis would be different. It would be environmental, or about resource shortages, or about runaway technologies, or something; it wouldn’t be about a banking crisis and a collapse of aggregate demand, aggravated by bad monetary and fiscal policy. We’d learned to much to repeat that performance — right?

### Easy-Peasy

Watching a movie that turned out to be stupid, but the heroine, inteviewing for a finance job, was asked this not-quite Fermi-level question: "How many pennies would it take to fill this room." Her response: "With or without us in it?" Of course I would have dropped her like a hot potato right then - it's a neglible fraction unless they were in a broom closet - and they weren't - but she was Katie Holmes, so she got the job anyway. Take a look around the room you are in right now, and figure out your answer. I got a smaller number than I would have guessed. Homage will follow for good answers, even though they are easy.... I decided it was cheating to actually look at a one cent piece - you gotta guess the dimensions...

### Math

The US is a very low tax* industrial country (26.9% of GDP)that spends like a medium low tax industrial country (33%). President Obama wants to raise taxes on the richest Americans - so naturally, some of the richest Americans, beneficiaries of repeated tax cuts and an exploding share of the nations wealth, and their minions scream "class warfare." It is, of course, but it's class warfare they started and have been winning for thirty years. Obama: "During this past decade, profligate spending in Washington, tax cuts into multi-millionaires and billionaires, and two wars have turned a record surplus into a massive deficit," Obama said. "If we don't act, the debt will eventually crowd out everything else, eventually affecting us from investing in things like education and Medicaid. We need to cut what we can't afford to pay for things we need." So class warfare it is - but more importantly, it's just math. * US 26%, Austria 43%, Belg

### Another Gloomy Israel Assessment

Andrew Sullivan (again) has some quotes from Tony Judt's last interview: The characterization that comes to mind is "autistic." Israel behaved in a way that suggests it is no longer fully able to estimate, assess or understand the way other people think about it. Even if you supported the blockade (I don't) this would be an almost exemplary case of shooting oneself in a painful part of the anatomy. ... In short, this is the action of a country which is fast losing touch with reality. ... Another perspective, the long one, would be to say that Israel is behaving very much like the annoying little Judean state that the Romans finally dismantled in frustration. This classical analogy may be more relevant than we think. I suspect that in decades to come America (the new Rome) will abandon Israel as annoying, expensive, and a liability. The thing is, it's hard to be humble when you are sure that you are chosen by God. The Israel lobby is not fond of Jews who str

### Mo Money

Andrew Sullivan finds a gem in David Graeber's Debt . Graeber is talking about why the Smith-Menger myth of the origin of money matters: It seems to me because it goes back precisely to this notion of rationality that Adam Smith too embraced: that human beings are rational, calculating exchangers seeking material advantage, and that therefore it is possible to construct a scientific field that studies such behavior. The problem is that the real world seems to contradict this assumption at every turn. Thus we find that in actual villages, rather than thinking only about getting the best deal in swapping one material good for another with their neighbors, people are much more interested in who they love, who they hate, who they want to bail out of difficulties, who they want to embarrass and humiliate, etc.—not to mention the need to head off feuds. This sort of insight strikes at the heart of much classical liberal economics and rational expectations. It not only explains why tho

### Money, Money, Money: Murphy vs. Graeber

I have previously mentioned here that David Graeber has written a book on the history of debt: Debt, The First 5000 Years. Among many other subjects, he discusses the origins of money. In particular he disses the just so story on the subject concocted by Adam Smith, and the slightly more elaborate version of the same just so story by Carl Menger. It seems, however, that the Menger version (in English here ), is one of the sacred texts of the Austrian economic religion, and Robert P. Murphy (an adjunct priest at their high temple) was offended enough to come to Menger's defense. Not by the book, by the way, since he hadn't read it, but by what he extracted from an interview with the author. Unsurprisingly, he significantly misunderstands Graeber's point and consequently constructs a rather wrongheaded critique . First a summary. Menger's long winded guess at the nature of money reduces to this: participants in a barter economy found it really inconvenient so the mo

### Austerity and Unemployment

Paul Krugman has been waging a fairly lonely war against the notion that austerity is the cure for what ails us. He now has more empirical ammunition , thanks to a comprehnsive review of past episodes of austerity by economists at the IMF. In the first half of last year a strange delusion swept much of the policy elite on both sides of the Atlantic — the belief that cutting spending in the face of high unemployment would actually create jobs. I went after this stuff early and hard (I suspect that the confidence fairy will be one of my lasting contributions to economic discourse); still, it’s good to have a steadily mounting weight of evidence about just how wrong that view was. The latest entry is a comprehensive review of past episodes of austerity by economists at the IMF, from which the figure above is taken. Yes, contractionary policy is contractionary. And as the authors point out, it’s probably even more contractionary than usual under current conditions: The reduction in in

### Unified Field Theory of Pyramids and the Roman Empire

Can Real Business Cycle theory explain the pyramids? Well, probably not in the original sense, but try this. Agriculture was the biggest (or one of the biggest) technology shocks in human history. The result was an immense concentration of work and leisure. Now most labor could be concentrated in a few months, and subsistence on the proceeds was possible for the rest of the year. Because food had to be stored, this produced a social instability. Capital and food storage capability became concentrated in a few hands. The result: a few rich and starving masses. The starving masses, left to their own devices, would need to become bandits and pillagers, which turns out to be bad for almost everyone. Solution: put the masses to work. Pyramids and other building projects have been popular for much of human history. War is another favorite. The Roman empire was won by farmers fighting in the off season. The Aztecs and other meso-Americans pursued both strategies. A plausible arg

### Base Human Nature

The Republican base really is. Andrew Sullivan on one of the debate low points, when the audience cheered someone dying for lack of health insurance. 9.23 pm. I was surprised by the ineptness of Perry's attack on Romneycare. But I am more surprised at the cheering of someone dying because he couldn't afford intensive care. Yes, the GOP is now not only cheering executions; they are cheering people dying because thay cannot afford any health insurance. Cheering death by poverty. "Yeah!" came the cry at the thought of a twentysomething dying because he didn't have insurance. I didn't think I could be more shocked by the instincts of those in the Republican base, but I just was. They really are pond scum.

### Kevin Drum Saw The Debate So We Didn't Have To

I don't think he was impressed - favorably, anyway: Sorry for the radio silence about tonight's debate, but I'm still in a state of shock. This was a full-on freak show ... Jesus, what a depressing experience. Europe is about to implode, there's a pretty good chance that this could be enough to tip our economy back into recession too, and one of those clowns on the stage tonight might end up being president when it happens. Lord help us. I think by "might end up" he means "probably will be."

### Israel's Future

Benny Morris sees tough challenges ahead . Israel is under assault. On Sept. 20 the Palestinian Authority plans to unilaterally declare statehood and go to the United Nations for recognition. This is a rejection of all efforts for a peaceful compromise. In its wake will come waves of Palestinian violence. And yet this is just the latest manifestation of an embattled Israel that is being threatened from the outside—by Muslim Arab states and societies, Egyptians storming the Israeli Embassy, a nuclear-arming Iran (with its local sidekicks, Hamas in the Gaza Strip, Hizbullah in Lebanon), and a besieged President Bashar al-Assad in Syria—and from the inside by domestic upheaval that led to the largest mass protests in the country’s history. More than 50 years ago, Israel’s leaders, headed by David Ben-Gurion, believed and hoped that they were creating a social democracy, with all the requisite egalitarian accoutrements (socialized national health care, progressive income tax, child bene

### Biblical Stimulus

Deuteronomy 15 has a dynamic stimulus plan: Deu 15:1 ¶ At the end of [every] seven years thou shalt make a release. Deu 15:2 And this [is] the manner of the release: Every creditor that lendeth [ought] unto his neighbour shall release [it]; he shall not exact [it] of his neighbour, or of his brother; because it is called the LORD'S release... KJV Debt forgiveness can be a powerful stimulus. If, for example, you have some cash in the bank, you can think of that as a loan from you to the bank. Better go spend it. Should make everybody's CDS pretty expensive. God also has some advice (NIV this time): However, there need be no poor people among you, for in the land the LORD your God is giving you to possess as your inheritance, he will richly bless you, 5 if only you fully obey the LORD your God and are careful to follow all these commands I am giving you today. 6 For the LORD your God will bless you as he has promised, and you will lend to many nations but will borrow f

### End State

Via Tyler Cowen , by a somewhat labyrhinthine link chain, this quote from Keynes: We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come--namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour. We seem to be approaching a tipping point in technology where robots will be replacing human workers in an increasing range of occupations. The numbers of the potentially unemployed are staggering. The logical outcome of such an economy is a situation wherein virtually all the wealth flows to the owners of capital - the robots - and a tiny cadre of experts still needed to ensure their functionality. It's not implausible that a significant part of the current unemployment has exactly that character - that's a logical corollary of Cowen's ZMP idea. Th

### The Job Creators

Fox News and similar outfits like to remind us about once a millisecond that the rich are "the job creators" and as such, ought to be exempt from taxes of any kind.  The following is addressed to them: Dear Job Creators, Your job, as I understand it, is to create jobs.  In case you haven't noticed, you have been doing a piss poor job of it.  In order to inspire you to do better, I propose we tax the crap out of you until you figure out how to improve your performance. Yours, sincerely, CIP

### U.S.E.?

Louise Story and Mathew Saltmarsh, writing in the New York Times , see signs of inching toward a European fiscal union - in effect, a United States of Europe.  The motivation is obvious - the apparent instability of the Euro zone as currently constituted - but the obstacles are enormous.  I don't expect it to happen, at least not until the Euro sheds a few of the weaker members, but the implications would obviously be huge. One problem is that the situation is evolving rapidly, and politics moves with glacial speed.  The other problem is the question of who gets what.  So far the bankers having been driving this train, and I would be very surprised if European citizenry would be willing to give up so much to save a bunch of bankers who got into this problem mostly through their own stupidity. At some point, I think, the insolvent banks need to be annihilated or reorganized.  And how about requiring adequate reserves for credit default swaps and other insurance catastrophes in w

### Not the Only One

It seems that I'm not the only one to get all John Lennon  over the prospect that the Higgs might just not be there.  Peter Woit has also been similarly inspired , and he has some actual substance as to the implications. If the SM Higgs is found, there will be rejoicing at first at CERN and within the physics community, and an appropriately proud announcement to the public. Debate will begin on who gets the Nobel: experimentalists? which of the 6000+ people at LHC/CMS/ATLAS? or theorists? Anderson/Higgs/Englert/Brout/Guralnik/Hagen/Kibble, or ? I gather Brout is no longer with us, maybe this will have to wait until the list gets down to three by attrition. Probably the best case would be for Weinberg/Salam, but they already were rewarded for the SM. Maybe the Swedes could make Weinberg’s a double. The LHC experimentalists would have an active research program for many years trying to measure the Higgs properties. Theorists though would face the gloomy prospect that these would ju

### Do Governments Invent New Technologies?

From Tyler Cowen, of all people . Despite what conservatives routinely sell, the government is often the source of productive new technology.  In the age of internet and web, that seems obvious, but it happened before as well.  Few ideas are more crucial to the industrial revolution than that of interchangeable parts: The symbolic kingpin of interchangeable parts production fell in 1960 when Robert S. Woodbury published his essay “The Legend of Eli Whitney and Interchangeable Parts”…Woodbury convincingly argued that the parts of Whitney’s guns were not in fact constructed with interchangeable parts… With Eli Whitney reinterpreted as a promoter rather than as a pioneer of machine-made interchangeable parts manufacture, it remained for Merritt Roe Smith to identify conclusively the personnel and the circumstances of this fundamental step in the development of mass production. Smith demonstrated that the United States Ordnance Department was the prime mover in bringing about machin

### Galaxy of Lies

A favorite constellation in the right-wing galaxy of lies is the notion that government spending has exploded in the Obama years.  Paul Krugman takes a look at the facts . Do the dismal economic numbers really reflect the turn to fiscal austerity? I keep hearing people say no, because austerity hasn’t actually happened yet in America. But they’re wrong. The fact is that the fading out of the stimulus, and in particular of aid to state and local governments, is already and noticeably leading to substantial withdrawal of government demand. Look, in particular, at actual government purchases of goods and services — governments at all levels buying stuff — which is what standard macroeconomics says should have the highest multiplier, since unlike transfers and tax cuts it is by definition spent rather than saved. Here’s the picture, showing changes in real spending over the previous year: Krugman estimates that cuts in government expenditures have take a per cent or more out of the e

My recent comments section stopped working when Echo / JS-Kit / Haloscan changed something or other.  Anybody know how to fix or adequately replace it?

### Debt and Debt Peonage: Sumerian Style

More from David Graeber: Debt, The First 5000 Years. Debt was invented in ancient Mesopotania, and ditto consumer debt.  A persistent problem with consumer debt was that one bad harvest could ruin a huge fraction of the farmers, with bankers seizing their homes, farms, families, and persons.  Farm and village was abandoned as endangered farmers fled, often to become bandits. Kings countered this vast social disruption with occasional consumer debt cancellations.  Eventually, it became common for a new king to do this kind of debt forgiveness at his ascension to the throne.  I expect that loans got harder to get when the King got old. This is the kind of drastic medicine that neither Europe nor the US has the stomach for - but might be preferable to the kind of slow death by bankruptcy that we see before us.

### Notice Me! Reprise.

Steve Landburg is a frequent and frequently vituperative critic of Paul Krugman.  Rarely has Krugman deigned to answer is his less distinguished colleague, but on the subject of House Republican Majority Leader Eric Cantor's decision to hold Hurricane Irene disaster relief hostage, he does.  The result is surprisingly instructive, though (in my view) most of the instruction comes from Krugman and the commenters on Landsburg's blog. The argument, and yes, you do have to click thru to follow it:-) Krugman Landsburg Krugman And even Steve is happy about it . What I like about people in academics is that when we disagree, we actually care about figuring out who’s right — and therefore we have a tendency to reach consensus, though it can take a while. It can be more important that people acknowledge our points than agree with them.  Of course Steve has decided not to notice mine.  Which calls for this truly lame video (but I still like the song):