Click here for the story on how reporters are being arrested for covering anti-Trump inauguration events, AND

at least six media workers are facing up to 10 years in prison and a $25,000 fine if convicted.

News flash. The Donald is insecure and petty. This is how authoritarian's roll. This is why Trump is bringing staffers and acolytes to every single time he makes a speech or press conference. They clap and applaud and make The Donald happy.

OMFG is this really happening.

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 all developing.

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:

1. 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.

2. Write some mathematical equations reflecting this.

3. Solve the equations for the unknown outcomes.

4. 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.

5. 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?’, Journal 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 past understandings.

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 real positions.

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 Eckstein, O. (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 with reality.

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.

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.

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 a mile.

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.

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.

Thank you Jake Tapper.

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.

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 weather 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]

Yves Smith has a good article on the economic hardship of young adults.

...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).