about being liberal or conservative anymore y'all. That is a hype offered by the fascist whores who want to confuse the people with lies while they turn this country into an aristocratic police state. Some people will say anything to attain power and money. There is no such thing as the Liberal Media, but the Corporate media is very real.
From the Bill
Miller blog, an article about Modern Monetary Theory in defense of the mainstream corporate
media's need to defend the status quo of Rational Economic Humans.
The mainstream promote the idea that an economic proposition that is not backed up by some
mathematical expressions is clearly inferior and likely to be wrong.
Suffice to say that the great works of Marx and Keynes, among others would be disregarded if the
inclusion of mathematical squiggles was the demarcation criteria between deficient and sound analysis.
But it is also not correct that MMT economists have avoided formal expressions when they consider
them to be useful in advancing comprehension.
For example, in my 2008 book with Joan Muysken – Full Employment abandoned – there is a lot of
mathematical exposition, where appropriate and effective.
Further, the expression Garbage-In, Garbage-Out applies in this case.
A formal mathematical model is just a logical construct following the rules of mathematics. Whether
it has traction with the real world is another matter all together and that depends, in part, on the
assumptions we start with to ‘set up’ the formal model.
So if we start by assume there is a ‘representative agent’ (representing us all to overcome
intractable aggregation problems) that is always rational and maximising and who follows the formal
dictates of rational expectations (which assume on average the guesses about the future are always
correct) and can ‘solve’ complex intertemporal (across time) maximising problems that require
understanding of the techniques, such as random process, measure theory, Lebesque integrals, Ito
Calculus and the rest, then it is pretty certain, the output from such an exercise will be nonsense.
Hence, the failure to predict the Global Financial Crisis or even see that there was any problem at
The evidence is clearly that people within social systems do not behave remotely like the ‘single
person’ (agent) in the mainstream macroeconomics models.
The introduction of rational expectations into the literature (in the late 1960s but the idea really
gathered pace in the late 1970s) led to mainstream economists talking endlessly about
‘forward-looking maximising behaviour’.
John Muth (1961), who introduced the idea to economists, claimed (p.316) that:
I should like to suggest that expectations, since they are informed predictions of future
events, are essentially the same as the predictions of the relevant economic theory …
[Reference: Muth, J.F. (1961) ‘Rational Expectations and the Theory of Price Movements’,
Econometrica, 29(3), 315-35.]
In other words, when we make guesses about the future, we are assumed to be acting as if we know the
actual data generating process that will deliver that future. We are sometimes wrong but on average
our errors net to zero – which means we have more or less perfect foresight.
William Poole summarised the literature in this way (p.468):
The rational-expectations hypothesis is that the market’s psychological anticipation …
[future price] … equals the true model’s expectation …
[Reference: Poole, W. (1976) ‘Rational Expectations in the Macro Model’, Brookings Papers on
Economic Activity, 2, 463-514.]
The economic modelling task then came down to the following steps:
Assume – that is, assert without foundation – that all persons are rational and deploy rational
expectations. They interact within efficient, competitive markets (that is, where prices shift to
balance demand and supply to ensure the configuration of outcomes (resource usage) is optimal for all.
Write some mathematical equations reflecting this.
Solve the equations for the unknown outcomes.
Shock the ‘solution’ with some policy change and ‘prove’ it is ineffective because as a result
of (1) all agents predict in advance the shock and act to negate it.
Write ridiculous articles that claim that fiscal policy is ineffective.
... Arthur Okun (hardly a radical economist) once mused that if the mathematical depiction of
decision making represented by the rational expectations literature was correct then all the
economists on payrolls around the world were redundant because even the person delivering the post
‘knew’ the underlying economic model that generated the empirical observations we call economic data.
While reflecting on the usefulness of rational expectations, James Tobin noted in 1980 that (p.796):
Herbert Simon and others have accumulated considerable evidence to support the hypothesis
that decision makers, from students and consumers to executives and statesmen, use “rules of thumb”
in the face of uncertainties and complexities that defy detailed anaylsis and explicit optimization.
Decision making itself is costly. The rules that simplify decisions are not unalterable, of course,
but they tend to persist unless the environment is perceived to have changed drastically or they
yield disastrous results.
[Reference: Tobin, J. (1980) ‘Are New Classical Models Plausible Enough to Guide Policy?’,
of Money, Credit and Banking, 12(4), 788-799.]
There has been a long-standing tradition of institutional researchers who have understood that
individuals do not behave in the way depicted by these streamlined mathematical frameworks deployed
by economists. The more recent behavioural economics research has ratified the conclusions of those
Tobin had earlier written (1972, p.13):
Lucas’ paper provides a rigorous defense of the natural rate hypothesis, and the study’s
rigor and sophistication have the virtue of making clear exactly what the hypothesis requires. The
structure of the economy, including the rules guiding fiscal and monetary policy, must be stable and
must be understood by all participants. The participants not only must receive the correct
information about the structure but also must use all of the data correctly in estimating prices and
in making quantity decisions. These participants must be better econometricians than any of us at
the Conference. If they are, they will always be – except unavoidable mistakes due to purely random
elements in the time sequence of aggregate money demand – at their utility- and profit-maximizing
The was a touch of humour here but the point he was making was obvious. The sort of requirements
that these mathematical models that mainstream economists deploy place such unrealistic demands on
human reasoning that they are of little use in understanding what actually goes on in the real world.
[Reference: Tobin, J. (1972) ‘The Wage-Price Mechanism: Overview of the Conference’, in
(ed.) The Econometrics of Price Determination, Board of Governors of the Federal Reserve System and
Social Science Research Council, Washington, 5-15.]
But research communities that become crippled by the onset of Groupthink avoid these intersections
Exactly. I call it paralysis by analysis. Falling in love with data at the expense of the
individuals behind the data. Numbers are only as good as their interpretation, and numbers are
easily misinterpreted if you have misconceptions or biases about the underlying phenomenom because
humans innately see what they want to see.
Sunday, 22 January 2017 at 14h 16m 37s
Trump spokeman Sean Spicer -- first press conference
This is Sean Spicer, President Trump's press secretary. He did not take questions from the media
journalists at this, the first of President Trump's press conferences. Mind you this comes off the
last press conference, which was from President Trump himself, when he called CNN a fake news outlet.
Saturday, 21 January 2017 at 13h 30m 33s
At times like this it’s common to speak of shared purpose and national unity. If that’s what you’re
looking for, there are plenty of other voices you can listen to.
It would be wonderful if national unity were possible, but it isn’t. Perhaps Donald Trump will
surprise us all and turn out to be a temperate, careful, and wise president. If that should happen,
I’ll join with conservatives to give him the praise he deserves. But he hasn’t earned it yet, not by
Please, don’t tell us liberals that when we criticize Trump we’re doing terrible damage to the
convivial spirit that would otherwise prevail were we not so rude. We’ve heard that baloney before,
and it’s pretty rich coming from people who spent the last eight years saying that Barack Obama was
a foreign socialist tyrant carrying out a secret plan to destroy America.
So spare us your hypocritical talk of unity, because your champion sure doesn’t believe it. We’ve
seen it clearly since the election: once he goes off his teleprompter, we get not even the pretense
of unity from Donald Trump. Quite the contrary; he communicates again and again that he has nothing
but contempt for those who don’t pay him proper tribute. After a campaign that was built on hatred
and resentment from its very first moment, he couldn’t bring himself to reach out to the majority of
Americans who didn’t vote for him, mounting a “thank you tour” only of states he won (think what you
would have said if Hillary Clinton had been the victor and done that) and lashing out on Twitter
like a cranky toddler at anyone who criticized him.
Being elected to the presidency wasn’t enough to grant him an iota of generosity or magnanimity. He
may be the most powerful person on earth, but he’s still a tiny, petty, insecure, vengeful man whose
only measure of any human being’s worth is whether they’ve praised him recently.
It will be a long time before the contrast in the character of these two presidents ceases to bring
us pain. We won’t forget how Trump treated Barack Obama, a man who despite every rancid personal
attack you threw at him conducted himself in office with an uncommon level of grace and class. And
now he has handed the keys to the White House to a man who launched his political career with a
despicable campaign to question to question Obama’s birthplace, and who in every way is his
opposite: impulsive where Obama is thoughtful, ignorant where Obama is informed, disrespectful where
Obama is polite, vindictive where Obama is generous, a walking collection of character flaws where
Obama is a role model.
[SOURCE:Paul Waldman | Washington
Post | 20 January 2017]
Friday, 20 January 2017 at 21h 55m 27s
Another Kowalski song
Friday, 20 January 2017 at 22h 38m 49s
I created this myself by the way. No copy and paste bullshit for me. More like crop the picture,
read and listen to the speech, then manifest my own gestalt (look up that awesome word) in my own words.
Paul Krugman is awesome. Here is
his brief and cogent explanation of why the insurance market for health care is problematic.
...providing health care to those previously denied it is, necessarily, a matter of redistributing
from the lucky to the unlucky. And, of course, reversing a policy that expanded health care is
redistribution in reverse. You can’t make this reality go away.
Left to its own devices, a market economy won’t care for the sick unless they can pay for it;
insurance can help up to a point, but insurance companies have no interest in covering people they
suspect will get sick. So unfettered markets mean that health care goes only to those who are
wealthy and/or healthy enough that they won’t need it often, and hence can get insurance.
If that’s a state of affairs you’re comfortable with, so be it. But the public doesn’t share your
sentiments. Health care is an issue on which most people are natural Rawlsians: they can easily
imagine themselves in the position of those who, through no fault of their own, experience expensive
medical problems, and feel that society should protect people like themselves from such straits.
The thing is, however, that guaranteeing health care comes with a cost. You can tell insurance
companies that they can’t discriminate based on medical history, but that means higher premiums for
the healthy — and you also create an incentive to stay uninsured until or unless you get sick, which
pushes premiums even higher. So you have to regulate individuals as well as insurers, requiring that
everyone sign up — the mandate, And since some people won’t be able to obey such a mandate, you need
subsidies, which must be paid for out of taxes.
[SOURCE:Paul Krugman | New York
Times | 18 January 2017]
So you fools who think repealing the Affordable Care Act is going to automatically launch free-market
nirvana need to throw up the cool-aid immediately. When people think of free markets, they act like
all interactions between professionals, citizens, customers, and people are the exact same. They
treat every business and economic sector like a flea market or restaurant industry: everyone is
freely interacting with the same access to customers and citizens based upon the same criteria, so
those that use their resources more efficiently or perform the best services will inherently
succeed. In this model, hard work will accrue profit and customers will benefit.
Which is fine, but health care is not a flea market or a restaurant. You can choose if you want to
shop and dine, where you want to shop and dine, AND even whether you want to shop and dine. When
you get sick or have health issues, ignoring the problem is not an option. It's also not beneficial
to society at large because people with contagious diseases or chronic disorders that forego
treatment affect everyone as
a result and turn a bad situation worse, thereby increasing the necessary health costs. When costs
increase on those who cannot afford such costs, when costs increase because of delayed or decreased
treatment options, these costs spread out over those who can pay, namely
those who do buy insurance. This is why health insurance costs increased every year in the decades
preceding president Obama.
Costs will be increasing very shortly. Bank on it. Health care rationing will also increase, which
means micro-management of individual cost decisions will affect decisions about customer health that
probably will not be in the best interest of the health of that individual -- but in the best
interest of the
insurance company. It is precisely these perverse incentives that make health care an economic
sector than CANNOT achieve efficiency if it is treated like a free market.
Repealing the ACA was stupid, but you never know, this might precipitate the ground-work for
something that will be much better, because the pain of this stupid action will arrive very shortly.
Middle class voters everywhere will not be happy when their precious health insurace costs increase
by 20% per year or more over the next few years.
Wednesday, 18 January 2017 at 18h 42m 1s
The recent west coast weather
Notice the counter-clockwise spinning system over the Pacific ocean between Hawaii and Washington
State. The South part of the tail carries all the water. This is partly due to the spinning of the
Earth towards the East which induces orthogonal rotational weather systems
(orthogonal here means "perpendicular to the surface of the Earth"). The thing is that there are
competing spins that meteorologists understand as "High" pressure versus "Low" pressure systems. Low
Pressure is due to occupancy of air by water molecules which drops the air due to the weight,
inducing the spin cycle. A high pressure has less water occupancy, and might be very dry, which
induces moisture to "rush" into the high pressure pocket.
As the Earth spins, Low pressure systems
get created in reaction to the spinning of the Earth, which thereby induces reactions from High
pressure areas. The interactions between these two regions of air mass largely dictates the seasonal
patterns over the globe, but there are other factors, such as upper atmosphere pattern (sometimes
called the "Jet Stream"), geographical topography (such as Mountain ranges), and even sunspots.
During the past few years of drought here on the West coast, a High pressure system over Northern
California and the Pacific ocean a thousand miles off the Oregon Coast blocked the spinning Low
weather systems and sent them into Washington State, Oregon, and Canada. In January 2015 California
had summer weather conditions in January, and San Francisco had no rain at all during January for the first time in recorded
history. This was wierd (see below) because January is the middle of the central distribution
of recorded data and is typically the month when rain occurs more often.
Here is the Monthly Precipitation for various Bay Area locales:
[SOURCE:Chelsea Harvey | Business
Insider | 30 January 2015]
...young adults had a good run in Reagan years before the nasty hangover of the 1990-1991 recession
kicked in. From Fortune, summarizing a report by a group called the Young Invincibles, using Fed data:
The report found that millennials—15 to 34-year-olds in 2013—were worth roughly half as much
as the boomer generation and are earning about 20% less in comparison to young adults in 1989. While
millennials earned $40,581 on average in 2013, members of the boomer generation earned $50,910
annually in 1989.
Meanwhile, young adults with debt and a degree in 2013 earned roughly the same as those who had
no degree at all in 1989: $50,000.
The lower number on the paycheck has also materialized in the form of a lower net worth. While
Millennials are worth about $10,900, the Boomers were worth $25,035 at the same age.The lower number
on the paycheck has also materialized in the form of a lower net worth. While Millennials are worth
about $10,900, the Boomers were worth $25,035 at the same age.
...needless to say, one of the factors driving the lackluster post 2007 results is the lousy quality
of jobs. 94% of the new jobs created in the Obama era were part-time or temporary.
The lack of a steady job makes it hard to save for a down payment and hard to have enough in the way
of steady earnings to qualify for a mortgage. And in our society, where the property rights of
tenants are generally poor (unlike some other societies) and landlords can and do raise rents
aggressively, owning real estate historically was the way that the middle class accumulated wealth
for retirement. The 30 year mortgage matched the typical productive earning years of the (male) head
of the household. When he retired, he would own his house rent free and face much lower costs, or
could move into a smaller home and free up equity. Housing was a tax-advantaged forced savings
vehicle; the traditional model provided a wealth buffer for retirees even when real estate
appreciated only at its long-term historical level of a mere 0.5% real price growth per year.
The resolution of the crisis again turned the old model on its ear. Housing before the crisis was at
strained valuations in relationship to average incomes and rentals. Yet the priority after the
crisis was to restore home prices to their former levels. Now in fact, outcomes have varied
considerably, with the top 10% communities that have done well in the “recovery” seeing turbo
charged home price gains (which in New York, San Francisco, and increasingly other major cities have
been amplified by Russian and Chinese flight capital).
Sunday, 15 January 2017 at 10h 7m 54s
This is a good idea
Digby recently put out a post about how it's important to keep a weekly list of
events during authoritarian crises so as to not forget how far things evolve, and not become
defeated by moving goal posts.
She came up with 36 for week 9, and has lists for the other 8 weeks to boot. Kick ass.
The Office of Government Ethics director publicly lamented, "we seem to have lost contact with
the Trump-Pence transition since the election."
Three vendors have placed liens on the Trump hotel in DC for unpaid bills of over $5 million, in
The OGE similarly said they had not completed ethics reviews of Trump's cabinet nominees.
Leader McConnell said the Democrats need to "grow up" on Trump's desire for speedy confirmations.
Sean Hannity endorsed a tweet which said "Make Russia Great Again" with the word, "Amen."
Hannity later deleted his tweet.
Meryl Streep used her Golden Globes lifetime of notable work speech to eloquently attack Trump,
without mentioning his name.
Trump responded via a tweet that Streep is an "over-rated" actress, and denied he had mocked a
Trump took credit for a Fiat Chrysler plant and jobs in MI and OH. Fiat Chrysler responded that
Trump had nothing to do with it.
Trump appointed Jared Kushner, his son-in-law, to a top WH post, possibly violating the 1967
federal anti-nepotism statute.
Trump told the NYT that all the dress shops in DC are sold out for his inauguration. This was a lie.
Trump team dismissed the National Nuclear Security Administration and his deputy, responsible
for maintaining our nuclear arsenal, as of January 20. Trump also dismissed the commanding general
of the DC national guard.
Cory Booker became the first US Senator to speak out against a fellow sitting senator at a
confirmation hearing (Sessions for AG).
CNN reported a bombshell - Intelligence chiefs had briefed Trump that Russia had gathered
information to blackmail him (the dossier).
Same day, BuzzFeed published contents of the dossier, which apparently had been in the hands of
the FBI and some in the media since the summer. Contents included the infamous golden shower.
Trump denied having been briefed, and said the contents of the dossier were confirmed by
intelligence to be fake. DNI Clapper issued a public statement indicating the dossier's contents are
still being verified (not fake), and media reported that Comey met with Trump one-on-one to review
the dossier the prior Friday.
Trump held his first press conference since July. Trump packed the room with paid employees, who
applauded him, and jeered at reporters.
At presser, Trump said he had no plans to release his tax returns, or resolve conflicts of
interest, saying, "I have no-conflict situation because I'm president."
Trump bullied reporters at two news outlets, calling them "fake news," and used other news
outlets as evidence.
The director of the OGE publicly blasted Trump's non-plan for dealing with conflicts of
interest. Next day, Rep Jason Chaffetz threatened to investigate the OGE.
Next day, while meeting with CEO of AT&T at Trump Tower (AT&T needs approval for their merger
with Time Warner, parent company of CNN) Trump tweeted CNN is "FAKE NEWS" and tanking.
Rep Barbara Lee said she would not attend Trump's inauguration. During the week, the list grew
to 6 members of Congress.
Trump encouraged his followers in a tweet to "buy L.L. Bean," in violation of a WH policy
prohibiting the endorsement of products.
The Justice Department inspector general opened an investigation into allegations of misconduct
by the FBI and Comey, leading up to the election.
C-Span's online broadcast was interrupted by Kremlin-backed broadcaster RT, while Rep Maxine
Waters was speaking. Waters has said she will not meet with Trump. The broadcast was also
interrupted that morning when a Senator discussed Russian hacking.
WAPO reported that Michael Flynn, Trump's NSA, spoke to Russia's envoy on Dec 29th, the day
Obama announced sanctions on Russia. Trump team initially denied this, then later, said they spoke
only once that day. Reuters reports they spoke 5 times that day.
Trump continued to deny Russian hacking, and to use quotes around Intelligence in his tweets.
Trump appointed Rudy Giuliani to a cybersecurity role - albeit though a private company.
Trump appointed a sixth Goldman Sachs (past or present) employees to a major role in his
After Congress was briefed by Intelligence chiefs, Rep John Lewis said, "I don't see Trump as a
Next morning, Trump tweeted a disparaging attack on Lewis, on MLK weekend, saying he was all talk.
Democrats in Congress were furious with FBI director Comey's unwillingness to answer their
questions and fully brief them.
UK media broke that the former agent who gathered the info in the dossier, had shared his
findings with the FBI, starting in the summer, and had become concerned that a cabal within the FBI
was compromised and attempting to cover-up information.
The Senate announced hearings on possible Russia-Trump ties, and said subpoenas would be used if
The FEC sent Trump a letter listing 247 pages of illegal contributions to his campaign.
In the wake of the Trump dossier becoming public, Russia's cybersecurity head is out of a job.
Human Rights Watch issued it's annual report of threats to human rights around the world. For
the first time in 27 years, the US is listed as a top threat because of the rise of Trump.
A Quinnipiac poll showed Trump's favorability ratings continuing to slide to historic lows for
modern day presidents: only 37% of Americans view Trump favorably.