Why So Serious?

The Walking Dead just set a basic-cable record with being the number one show among the 18-49 demographic. NBC's popular show Revolution sort of has the same theme of society being a step away from systemic collapse, the rule of militias, YOYO morality (You're-On-Your-Own), and the rise of Fascism.

On a ligher note, I also like Castle which is being rerun on basic cable pretty regularly. It stars Nathan Fillion from Firefly (I came late to that show also) and Stana (sounds like Madonna) Katic one of the most beautiful women in the history of the planet.*(!) Katic's parents are Serbian Croatian and she grew up in Canada and Aurora, Illinois. In one re-runned episode her somewhat dour/serious character detective Kate Beckett, lightens up and blurts out "Shut the Front Door!" with a smile. I could feel the emotions of a hopeless schoolboy crush overcoming my defenseless brain. It's one of those things that's simultaneously a rush and depressingly embarrassing. The show has some good writing (like one episode was about zombies) and cameos by cool actors, but what gives it that extra something is the implausibility of there being such a gorgeously beautiful and distractingly attractive police detective in existence. (No wonder mystery thriller writer Richard Castle wanted to work with her.) You have to suspend your disbelief just as you have to do with shows about the existence of zombies. Good to see Fillion land another good show and we wish Katic the best.

----------------------------------------
*That's centuries of beautiful women all over the globe.

Monetary Policy in Challenging Times by Charles Evans (speech in Toronto)

(via Thoma)

First, assume a can-opener by Ryan Avent

The Fed has been pursuing a process of opportunistic disinflation and keeping the labor market weak longer than necessary. It has permitted a large output gap to grind away at the nation's productive capacity and actively destroy human capital. Why? Have to keep the rabble in line.

Doug Henwood on Ezra Klein and Walmart

On the latest episode of the TV show Leverage, "The crew sabotages a mega-store in order to keep it from destroying a small town."

What's Holding the Economy Back? The Collapsed Housing Bubble, End of Story by Dean Baker

BRAD DELONG: THREE DIMENSIONS OF INEQUALITY: GLOBAL, EDUCATIONAL/TECHNOLOGICAL, AND PLUTOCRATIC

We used to have a framework for understanding the time dimension of inequality in the United States: we called it the "Kuznets Curve". The United States starts out as a country that is relatively equal--at least among white guys who speak English. Free land, lack of serfdom, the possibility of moving the west if you don’t like the wages you’re being offered in the east--all of these produce a middle-class society. Then comes 1870 or so, and things shift. The frontier closes. Industrial technologies emerge and they are highly productive and also capital intensive. So we move into a world of plutocrats and merchant princes: people in the cities, either off the farms or from overseas, competing against each other for jobs. And we get the extraordinarily stark widening of American income inequality up until the mid-1920’s or so.

This then calls forth a political reaction. Call it progressivism, call it social democracy, call it--in Europe--socialism. The idea is that the government needs to put its thumbs on the scale, heavily, to create an equal income distribution and a middle class society. Progressivism and its candidates are elected to power in democratic countries in the North Atlantic in the twentieth century--in spite of everything you say about Gramsci and hegemony and the ability of money to speak loudly in politics. Thus from 1925 to 1980 we see substantial reductions in inequality in the United States--the creation of a middle-class society, at first only for white guys and then, gradually, for others.

In 1980 things shift again. Since 1980 we have had an extraordinary explosion of inequality in the United States. This explosion has taken place along two dimensions.

First, we have seen extraordinarily rapid growth between the top twenty percent and the lower eighty percent. The benefits to achieving a college education skyrocket--for reasons that I don’t really have time to go into, and for reasons that are still somewhat uncertain.

Second, we have an even larger explosion of inequality between the top .01 percent, the top 15,000 households, and the rest of the top twenty percent. This second explosion is the most puzzling and remarkable feature of the past generation. 

AV Club reviews The Walking Dead, "When The Dead Come Knocking"

The Fake Skills Shortage by Krugman

That Shortage of Skilled Manufacturing Workers is Really a Shortage of Employers Willing to Pay the Market Wage by Dean Baker

HOW TO GOVERN AMERICA IN 2013 II: MORTGAGES, HOUSING, AND THE RECOVERY by DeLong

The claim that cuts in state and local (and federal!) spending are dragging down the economy are well-founded. The claim that mortgage debt overhang and depressed consumption are not dragging down the economy is not well-founded.

Baker says that right now: 

The claim is the dropoff in consumption due to the debt burden of these homeowners explains the weakness of the recovery.

Some simple arithmetic shows the absurdity of this view. The amount of underwater equity is estimated at between $700 billion (Core Logic) and $1.1 trillion (Zilliow). Suppose that we can disappear this debt through some decree, how much additional consumption would we see? If we assume that these households spend an incredibly large share of this increase in their net wealth, say 15 cents on the dollar, this would imply additional consumption of between $105 billion (Core Logic estimate) and $165 billion a year (Zillow estimate).

However we would have also destroyed the wealth of the mortgage holders. Let's assume that they just spend 2 cents on the dollar of their wealth. This would imply a net boost to demand of $91 billion to $143 billion. While this would be a helpful boost to the economy, equivalent to a government stimulus program of this size, this would hardly be sufficent to make up a shortfall in annual output that the Congressional Budget Office puts at close to $1 trillion.

I'm confused.

Underwater Homeowners Cannot Explain the Weak Recovery by Dean Baker

The claim is the dropoff in consumption due to the debt burden of these homeowners explains the weakness of the recovery.

Some simple arithmetic shows the absurdity of this view. The amount of underwater equity is estimated at between $700 billion (Core Logic) and $1.1 trillion (Zilliow). Suppose that we can disappear this debt through some decree, how much additional consumption would we see? If we assume that these households spend an incredibly large share of this increase in their net wealth, say 15 cents on the dollar, this would imply additional consumption of between $105 billion (Core Logic estimate) and $165 billion a year (Zillow estimate).

However we would have also destroyed the wealth of the mortgage holders. Let's assume that they just spend 2 cents on the dollar of their wealth. This would imply a net boost to demand of $91 billion to $143 billion. While this would be a helpful boost to the economy, equivalent to a government stimulus program of this size, this would hardly be sufficent to make up a shortfall in annual output that the Congressional Budget Office puts at close to $1 trillion.

Calculated Risk:

Next Thursday, the BEA will release the second estimate of Q3 GDP. The consensus is GDP will be revised up to 2.8% annualized growth, from the advance estimate of 2.0%. This would be a pretty sharp upward revision.

Five economic trends to be thankful for by Neil Irwin

To look on the bright side, I'm also grateful that Nate Silver was right.

Interview with Bill McBride of Calculated Risk by Joe Weisenthal

But the state and local gov’t drag is pretty much over, and getting rid of that is really going to help and then of course, housing is a big plus.

...

A lot of it is simple. I read a lot of different economists to try to understand theory, because I’m not an economist – I have an MBA – I kind of understand business, I’ve always been good with numbers, but I read economic theory and I’m glad to read…when we were going into this crisis, I was reading Krugman all the time because it was clear to me that he had a handle on what was going on, from what was going to happen to interest rates….I’d read what he would write and read what other people would write and go, this makes a lot more sense to me. And all that has worked out.

(via DeLong and Krugman)

AV Club reviews the Walking Dead, "Hounded"

The Crystal Ball

Hari Seldon and the Psychohistorians.

As Yglesias and others argue, what's needed is better economic forecasting. Part of this I would argue is Risk Topography, something Alan Greenspan failed to do very well. Not only Greenspan though. The entire financial services industry nearly destroyed itself because of its rampant gluttony And of course the regulators and ratings agencies were bought-off enablers.

After election night, Nate Silver's The Signal and the Noise shot up 850% to 2nd place on Amazon.

3.31.13

Game of Thrones Season 3

New Cast Members

DeMarco should be fired STAT

Can the Federal Reserve Help Prevent a Second Recession? by William Greider

What’s missing from Fed politics is the left: the countervailing voices of progressives, liberals and labor, who could make the case for more drastic action by the Fed. In effect, they could put an arm around Bernanke and encourage him to try more aggressive measures. Liberal-labor advocates could also defend the Fed against its right-wing enemies and act as principled critics who can pressure the central bank’s governors and push them further in a sensible direction than they might want to go.
* * *
Joseph Gagnon, a twenty-five-year veteran of monetary policy at the Fed and now an economist at the Peterson Institute, lamented the one-sided nature of elite debate. “What bothers me,” he said, “is one side is nothing but critical of what the Federal Reserve is doing, and the other side is just silent. I just don’t understand. Why aren’t a lot of voices complaining that the Fed isn’t doing enough? The progressive side has been absolutely silent, and yet the conservatives have been jumping up and down. And this totally distorts the Fed’s environment.”

...

Joseph Stiglitz, a Nobel Memorial Prize–winning economist at Columbia University, and Mark Zandi, chief economist at Moody’s Analytics, propose an excellent use for Fed-created money: funding a massive refinancing of home mortgages, which would cut monthly payments dramatically and free personal income for consumption. “Housing remains the biggest impediment to economic recovery, yet Washington seems paralyzed,” the two wrote in an August 13 New York Times op-ed.

A plan proposed by Oregon Senator Jeff Merkley, they explained, could boost disposable income for some 20 million families with underwater mortgages, including those not backed by the government-sponsored housing enterprises Fannie Mae and Freddie Mac. A “government-financed trust” would buy up the refinanced mortgages, thus giving private lenders the capital to make more loans. Several federal agencies could handle this, but Zandi told me that using the Federal Reserve would be the most efficient way. “The biggest impediment is the banking system,” Zandi said. “The pipeline for origination of lending has shrunk—a lot of midsize banks and mortgage companies got out—so the big banks now account for even more of the volume. They manage the flow by raising their eligibility standards. That’s why they are making so much money.” 

The Federal Reserve could change that, Zandi said, but he added, “I think the Fed would never go down this path unless the national economy is sliding back into recession.”

Lizzy Caplan and Alison Brie on their new movie, Save The Date, and their TV shows by Nathan Rabin

Janet Yellen’s Game-Changing Speech for Monetary Policy by: David Dayen (at Firedoglake?)

I kind of view Firedoglake, Duncan Black, Digby and Crooked Timber as the pain-in-the-ass-but-in-the-right Tommy Lee Jones as Thaddeus Stevens. They're right but wrong.

Yglesias on the the payroll tax cut extension and the Austerity Bomb.

John Cassidy on the Austerity Bomb:

But has Obama given the Republicans sufficient reason to believe he won’t eventually roll over? 

At least to me, that’s not yet clear. During his press conference, a reporter asked the President, “(W)hy should the American people and the Republicans believe that you won’t cave again this time?” This was Obama’s reply:

Well, two years ago the economy was in a different situation. We were still very much in the early parts of recovering from the worst economic crisis since the Great Depression. And ultimately, we came together, not only to extend the Bush tax cuts, but also a wide range of policies that were going to be good for the economy at the point—unemployment-insurance extensions, payroll-tax extension—all of which made a difference, and is a part of the reason why what we’ve seen now is thirty-two consecutive months of job growth, and over five and a half million jobs created, and the unemployment rate coming down. But what I said at the time is what I meant, which is this was a one-time proposition. And you know, what I have told leaders privately as well as publicly is that we cannot afford to extend the Bush tax cuts for the wealthy.

I find your lack of faith disturbing

Grand Moff Tarkin's team of rivals:

Nov. 19th is Uranus Day:

However, Hitler was so focused on the city itself that requests from the flanks for support were refused. The Chief of the Army General Staff, Franz Halder, expressed concerns about Hitler's preoccupation with the city, pointing out that if the situation on the weak German flanks was not rectified, "there would be a disaster." Hitler told Halder that Stalingrad would be captured and the weakened flanks would be held with "...national socialist ardour, clearly I cannot expect this of you (Halder)," and replaced him with General Kurt Zeitzler in mid-October.

And there's a new movie about about another "hinge moment" in history.  The reviewers are saying Spielberg's Lincoln is pretty good. Tony Kushner's script has a scene where Union soldiers are quoting the Gettysburg Address back to the celebrity Lincoln:

Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in liberty, and dedicated to the proposition that all men are created equal. 

Now we are engaged in a great civil war, testing whether that nation, or any nation, so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this. 

But, in a larger sense, we can not dedicate, we can not consecrate, we can not hallow this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government of the people, by the people, for the people, shall not perish from the earth.

"When my information changes, I change my opinion. What do you do, sir?" 

- Keynes

PUBLIC DEFENDER: Diane Ravitch takes on a movement. by David Denby

Sounding like Charles Evans, Minneapolis Fed President Narayna Kocherlakota at a town hall in Duluth on October 30th:

In light of the unusually large macroeconomic shock, I believe that it is misleading to assess the FOMC’s actions by comparing its current choices to policy steps taken over the past 30 years. Instead, we have to assess monetary policy by comparing the economy’s performance relative to the FOMC’s goals of price stability and maximum employment. In particular,if the FOMC’s policy is too accommodative, that should manifest itself in inflation above the Fed’s target of 2 percent. This has not been true over the past year: Personal consumption expenditure inflation—including food and energy—is running closer to 1.5 percent than the Fed’s target of 2 percent.¹

But this comparison using inflation over the past year is at best incomplete. Current monetary policy is typically thought to affect inflation with a one- to two-year lag. This means that we should always judge the appropriateness of current monetary policy using our best possible forecast of inflation, not current inflation. Along those lines, most FOMC participants expect that inflation will remain at or below 2 percent over the next one to two years. Given how high unemployment is expected to remain over the next few years, these inflation forecasts suggest that monetary policy is, if anything, too tight, not too easy.

He used to talk about structural unemployment. What changed his mind? Perhaps it was the visit to the North Dakota "mancamps."

Risk Topography

Found it. My blogpost on Robert Shiller's "risk topography" piece "Needed:  a Clearer Crystal Ball."

Is this the actuarial science, something the ratings agencies (Moody's, _____, _____ ) failed at by giving toxic sludge AAA ratings?

Yglesias's review of Nate Silver's new book urges the "curious fox (not hedgehog)" to look into economic forecasting. It's hard because as Yglesias says future economic conditions depend upon political outcomes.

Ygelsias also wrote about this research paper put out by the Reserve Bank of Australia, which says that central banks are poor forecasters. From the paper:

Our estimates suggest that uncertainty about forecasts is high. We find that the RBA's forecasts have substantial explanatory power for the inflation rate but not for GDP growth.

Probably because central banks target inflation rates and not GDP growth/full employment.

Zombie-killer Krugman says Brian Beutler was the one to coin "austerity bomb."

Michonne is my new favorite on The Walking Dead. The show has motivated me to pick up the graphic novel series.

In the latest episode, she left The Village - Woodbury - and Andrea stayed.

Austerity Bomb (see the European Feedback Cycle of Doom)

Robert Reich:

This is why any “grand bargain” to avert the fiscal cliff should contain a starting trigger that begins spending cuts and any middle-class tax increases only when the economy is strong enough. I’d make that trigger two consecutive quarters of 6 percent unemployment and 3 percent economic growth.

To make sure this doesn’t become a means of avoiding deficit reduction altogether, that trigger should be built right into any “grand bargain” legislation – irrevocable unless two-thirds of the House and Senate agree, and the President signs on.

(via Thoma)

The Progressive Echo Chamber

Which popular blogs are predicting a sell-out by Obama over the Grand Bargain?

Crooked Timber? Firedoglake? Digby?

Unrelated:

Janet Yellin Says She's "Strongly Supportive" of Evans-Style Approach To Monetary Stimulus by Yglesias

The Signal and the Noise

Good name for a band.

Central Banks Aren't Very Good at Macroeconomic Forecasting by Yglesias

Yglesias's review of Nate Silver's book.

What we need is a Nate Silver of forecasting. Robert Shiller had a NYTimes article on forecasting a while back. Need to look it up.

Nov. 19 is Uranus Day

Nov. 19 is Uranus Day

DeLong:

And so, 70 years ago this November – on November 19 to be precise – the million-soldier reserve of the Red Army was transferred to General Nikolai Vatutin’s Southwestern Front, Marshal Konstantin Rokossovsky’s Don Front, and Marshal Andrei Yeremenko’s Stalingrad Front. 

The Battle of Stalingrad 

The German offensive to take Stalingrad had been halted by a combination of stubborn Red Army resistance inside the city and local weather conditions. The Soviet counter-offensive planning used deceptive measures that eventually trapped and destroyed the 6th Army and other Axis forces around the city, becoming the second large scale defeat of the German Army during World War II.^[30] 

During the siege, the German and allied Italian, Hungarian, and Romanian armies protecting Army Group B's flanks had pressed theirheadquarters for support. The Hungarian 2nd Army, consisting of mainly ill-equipped and ill-trained units, was given the task of defending a 200 km (120 mi) section of the front north of Stalingrad between the Italian Army and Voronezh. This resulted in a very thin line, with some sectors where 1–2 km (0.62–1.2 mi) stretches were being defended by a single platoon. Soviet forces held several bridgeheads on the western bank of the river and presented a potentially serious threat to Army Group B.^[13]:p.915 

Similarly, on the southern flank of the Stalingrad sector the front southwest of Kotelnikovo was held only by the Romanian 7th Army Corps, and beyond it, a single German division, the 16th Motorized Infantry.

However, Hitler was so focused on the city itself that requests from the flanks for support were refused. The Chief of the Army General Staff, Franz Halder, expressed concerns about Hitler's preoccupation with the city, pointing out that if the situation on the weak German flanks was not rectified, "there would be a disaster." Hitler told Halder that Stalingrad would be captured and the weakened flanks would be held with "...national socialist ardour, clearly I cannot expect this of you (Halder)," and replaced him with General Kurt Zeitzler in mid-October.

David Brooks Is Worried About Non-Existent Economic Crises by Dean Baker

Krugman had this nailed. All of the sudden deficit scolds are worried about the austerity bomb.

@RORTYBOMB RELAYS @MAXBERGER 'S SUGGESTION: WE SHOULD CALL THE "FISCAL CLIFF" THE "AUSTERITY BOMB." I CONCUR by DeLong

HOW TO GOVERN AMERICA IN 2013 I: LIMING THE PLAYING FIELD WEBLOGGING by DeLong

Now tell me why Ed DeMarco is still head of the Federal Housing Finance Administration?

Class

Bottom half gained a year, top half gained 5 years, while the deficit scolds argue life expectancy overall has been extended by 2-3 years, writing out the class issue.

Life Expectancy of the Living Dead by Krugman

Michonne

AV Club reviews The Walking Dead, "Say the Word"

Which Polls Fared Best (and Worst) in the 2012 Presidential Race by Nate Silver

Among the more prolific polling firms, the most accurate by this measure was TIPP, which conducted a national tracking poll for Investors’ Business Daily. Relative to other national polls, their results seemed to be Democratic-leaning at the time they were published. However, it turned out that most polling firms underestimated Mr. Obama’s performance, so those that had what had seemed to be Democratic-leaning results were often closest to the final outcome.

Rasmussen was Republican-biases as I have always thought.

Republicans, You're Doing It Wrong

As Nation and Parties Change, Republicans Are at an Electoral College Disadvantage by Nate Silver

The media reported that Ohio won the election. When Ohio was called it was over as I blogged earlier in the week. Silver says actually it was Colorado that put Obama over the top. Ohio was about the auto bailout but  Colorado is about demographics.

Don’t Credit Us, Obama’s Tacticians Say

They say it was Obama and his message that inspired the ground game. Or in Barone-speak, the fundamentals helped boost the "mechanics." The demographics were part and parcel of the fundamentals.

Biden will be on Parks and Rec in one week.

Moneyball & Modern Family

Big year for the "Moneyball" and "Modern Family" types in the culture wars.

Nate Silver gains prominence and Tammy Baldwin becomes the first openly lesbian U.S. Senator.

Is there a flaming gay data nerd who combines the two?*

As Victories Pile Up, Gay Rights Advocates Cheer ‘Milestone Year’

States’ Votes for Gay Marriage Are Timely, With Justices Ready to Weigh Cases

Election Result Proves a Victory for Pollsters and Other Data Devotees

A Record Latino Turnout, Solidly Backing Obama

Senate Races Expose Extent of Republicans’ Gender Gap

I'm reading Chris Hayes book on the failure of U.S. elites and "Meritocracy" and it's pretty good except for his Arab Spring blind-spot and insistence that Saddam Hussein and foreign dictators "aren't that bad." Its a common thing for anti-war liberals. But he's totally right about the lack of trust and respect in authority and the failure of institutions.

I was struck about how on election night Chris Matthews was disappointed in Obama's victory speech in that he didn't thank Clinton or really mention the Democrats, both of who were essential to his victory. As Hayes reports people don't respect institutions and the Democratic Party is an institution that often fails to deliver. Congress has had abysmal approval ratings.

In a way Matthews is right, but maybe Obama won in part by not being so closely identified with the Democratic Party. I don't know.

-------------------------
*He isn't flaming, but the New Yorker reports Silver is openly gay.

2012

Ron Swanson, Jack Donaghy, pundit Stephen Colbert, and Charles Montgomery "Monty" Burns are bummed.

Potheads everywhere are happy as Colorado and Washington legalize marijuana.

Wall Street’s Bad Investment Decision by Krugman

Get What You Pay For? Not Always by Eduardo Porter

The Five Stages of Fox News Grief

Begun, These Marijuana Wars Have by Yglesias

Bloodbuzz Ohio

Ohio decides election. Obama supporters turned out to vote as they did in 2008 but didn't in 2010.




On a personal trivial note, the papers said Obama played a superstitious basketball game yesterday while waiting for the results. His team included Alexi Ginnoulias and Scottie Pippen. I volunteered for Ginnoulias's Senate camgaign and met him a couple times. At one of his fund raisers I met David Plouffe, Obama's campaign manager in 2008 and 2012. Well done, Plouffe.

Waiting on the results of the election which could be hours or weeks away, I checked out my linked Tweeters. It's enjoyable when the famous and politics mix especially when I agree with them.

via Silverman:


Sarah Silverman on WhoSay

Wilde and Franke-Ruta RT Rashida Jones:

"The following states allow election day registration: ID, IA, ME, MN, MT, NH, ND, RI, DC, WI, WY."

This message was retweeted 1,248 times!  Wilde RTs Elizabeth Banks:

"Me and @oliviawilde are voting for@BarackObama TOMORROW"

Banks RTs Josh Hutcherson.

"Participate in our democracy. America is a great country. Vote to keep it that way."

They were in The Hunger Game together. Probably made or are making the sequels together. Hutcherson is in the new Red Dawn movie. He seems to get a lot of work. He was also in the saddest movie ever in the history of film.

AV Club reviews The Walking Dead "Killer Within"

I finished Sheila Bair's "Bull by the Horns" and recommend it. She mentions the Naked Capitalism blog and correctly argues that Obama, Geithner and Summers should have done more about mortgages and the housing market. DeMarco gets some decent mentions interestingly given his destructive behavior and she fails to mention how the Fed focused on housing too.

She does lay the blame squarely with Alan Greenspan and the culture of deregulation he created at the Fed, which is not a Republican viewpoint even if she is a Republican. She does blame Republicans for choosing party over country.

She is a deficit nag like everyone else, something that is compulsory in Washington I guess.

The big blind spot is the housing bubble though. No mention of bubbles or bubblenomics. Lots of discussion of the inepitude of bank management and the greed of trader types. She has an excellent description of a scene where she gave a speech to financial types and they all blamed the borrowers and absolved the lenders which in her mind is ludicrous.

Interestingly she mentions Simon Johnson but disagrees with him about Too Big To Fail banks. Read what Johnson has to say about her here. He notes:

(Disclosure: I’m a member of the nongovernmental Systemic Risk Council that Ms. Bair created and leads; I was also appointed to the F.D.I.C.’s Systemic Resolution Advisory Committee while Ms. Bair was still chairwoman.) 

Ms. Bair, a Republican from Kansas, worked with Bob Dole and was appointed to the F.D.I.C. by President George W. Bush. Her defining positions were against the interests of the very largest financial institutions.

Wonkblog Doesn't Like Financial Speculation Taxes by Dean Baker

Housing Vacancy Rates Fall and No One Notices by Dean Baker

Via DeLong

AN ARTICLE FROM THE SHOGGOTH SPECIES PROFESSOR OF PHYSICS AT MISKATONIC UNIVERSITY

Benjamin Tippett: Possible Bubbles of Spacetime Curvature in the South Pacific

(Submitted on 29 Oct 2012) 

In 1928, the late Francis Wayland Thurston published a scandalous manuscript in purport of warning the world of a global conspiracy of occultists. Among the documents he gathered to support his thesis was the personal account of a sailor by the name of Gustaf Johansen, describing an encounter with an extraordinary island. Johansen`s descriptions of his adventures upon the island are fantastic, and are often considered the most enigmatic (and therefore the highlight) of Thurston's collection of documents.

We contend that all of the credible phenomena which Johansen described may be explained as being the observable consequences of a localized bubble of spacetime curvature. Many of his most incomprehensible statements (involving the geometry of the architecture, and variability of the location of the horizon) can therefore be said to have a unified underlying cause.

We propose a simplified example of such a geometry, and show using numerical computation that Johansen`s descriptions were, for the most part, not simply the ravings of a lunatic. Rather, they are the nontechnical observations of an intelligent man who did not understand how to describe what he was seeing. Conversely, it seems to us improbable that Johansen should have unwittingly given such a precise description of the consequences of spacetime curvature, if the details of this story were merely the dregs of some half remembered fever dream.

We calculate the type of matter which would be required to generate such exotic spacetime curvature. Unfortunately, we determine that the required matter is quite unphysical, and possess a nature which is entirely alien to all of the experiences of human science. Indeed, any civilization with mastery over such matter would be able to construct warp drives, cloaking devices, and other exotic geometries required to conveniently travel through the cosmos.

Not dead yet: Currency Management and the Need for a More Competitive Dollar by Josh Bivens
(via DeLong)


What's Really Dragging Down the U.S. Economy by Dean Baker

Wow, that isn't what the Commerce Department is telling my spreadsheet. I get that the average share of consumption (all categories together) in GDP was 67.3 percent in the years from 1985 to 2005. I get that it was 70.8 percent in the most recent quarter. This means that consumption was 3.5 percent higher than its longer period average as a share of GDP. This means that consumers are not hanging onto their wallets at all. In fact, they are spending at very ambitious rate. (Boys and girls, you can check this one for yourself by going to the National Income and Product Accounts and clicking up Table 1.1.5.) 

This is consistent with the data showing that consumption is higher than normal relative to disposable income. (The adjusted consumption line has to do with the treatment of the statistical discrepancy in the national income accounts.) This means that consumption is not holding back the economy, it is actually unusually high.

...
The other error along these lines is that imports should be expected to rise relative to GDP as the economy moves back toward its potential. If GDP were to rise by 6 percent to bring it back in line with its potential then imports would rise by roughly 20 percent as much or 1.2 percentage points of GDP. This would make it more clear that the biggest factor that is out of line with our historical experience is the trade deficit. That would be even more clear if we took a longer period as the basis of comparison that was not so distorted by asset bubbles.
Of course given the Washington Post's unabashed celebration of recent trade agreements its reporters are probably not allowed to call attention to such facts.
 

AV Club review of Cloud Atlas by Keith Phipps

It was an enjoyable movie. Better than V for Vendetta or Matrixes 2 & 3. I loved The Matrix and this is a lot like that movie. Plus I'm a fan of Keith David who has a big part in it. Some of the films he's been in: The Thing, Platoon, They Live, Road House, Marked for Death, Reality Bites, Dead Presidents, There's Something About Mary, and Pitch Black.

AV Club reviews The Walking Dead, "Walk with Me."

AV Club review of Alphas second season finale

Germany Has Outperformed the U.S. Because of Work Sharing by Dean Baker

Nov. 19 is Uranus Day

Our Debt to Stalingrad by DeLong

And so, 70 years ago this November – on November 19 to be precise – the million-soldier reserve of the Red Army was transferred to General Nikolai Vatutin’s Southwestern Front, Marshal Konstantin Rokossovsky’s Don Front, and Marshal Andrei Yeremenko’s Stalingrad Front. They went on to spring the trap of Operation Uranus, the code name for the planned encirclement and annihilation of the German Sixth Army and Fourth Panzer Army. They would fight, die, win, and thus destroy the Nazi hope of dominating Eurasia for even one more year – let alone of establishing Hitler’s 1,000-year Reich.

CommentsTogether, these 1.2 million Red Army soldiers, the workers who armed them, and the peasants who fed them turned the Battle of Stalingrad into the fight that, of any battle in human history, has made the greatest positive difference for humanity.

Wikipedia entry for Battle of Stalingrad

"The battle took place between 23 August 1942 to 2 February 1943"

Operation Uranus

Uranus

Uranus is the seventh planet from the Sun. It has the third-largest planetary radius and fourth-largest planetary mass in the Solar System. It is named after the ancient Greek deity of the sky Uranus (Ancient Greek: Οὐρανός), the father of Cronus (Saturn) and grandfather of Zeus (Jupiter). Though it is visible to the naked eye like the five classical planets, it was never recognized as a planet by ancient observers because of its dimness and slow orbit.^[16] Sir William Herschel announced its discovery on March 13, 1781, expanding the known boundaries of the Solar System for the first time in modern history. Uranus was also the first planet discovered with a telescope.

Uranus ( /ˈjʊərənəs/ or /jʊˈreɪnəs/; Ancient Greek Οὐρανός, Ouranos meaning "sky" or "heaven") was the primal Greek god personifying the sky. His equivalent in Roman mythology was Caelus. In Ancient Greek literature, Uranus or Father Sky was the son and husband of Gaia, Mother Earth. According to Hesiod's Theogony, Uranus was conceived by Gaia alone, but other sources cite Aether as his father.^[3] Uranus and Gaia were the parents of the first generation of Titans, and the ancestors of most of the Greek gods, but no cult addressed directly to Uranus survived into Classical times,^[4] and Uranus does not appear among the usual themes of Greek painted pottery. Elemental Earth, Sky and Styx might be joined, however, in a solemn invocation in Homeric epic. 

The Corrections*

Or Minsky Moments when the music in musical chairs stops.

Liquidity, bubbles/ponzis/chain letters, and money by Nick Rowe

I might as well join in the fun. Along with Steve Williamson, Noah Smith, Karl Smith, Paul Krugman, David Glasner, and Steve again. [Update: and Brad DeLong and JP Koning. And David Andolfatto.] 

Some assets are more liquid than others (they have lower transactions costs of buying and selling). More liquid assets will have a lower desired rate of return than less liquid assets (that means people will be willing to own them even if they expect to earn a lower rate of return than less liquid assets).

Money (the good that is used as a medium of exchange) will be more liquid than other assets. (If some other asset were more liquid than money, people would switch to using that other asset as a medium of exchange instead of the existing money, and that other asset would become the new money).

I wonder if anyone wrote that the environment and climate change is a bubble in that it is unsustainable.

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*If anyone doesn't know, this was the title of a Jonathan Franzen novel.

Standard of Living Is in the Shadows as an Election Issue by Leonhardt

Better Ways to Deal With China by Eduardo Porter

China and Protectionism: It Ain't Quite as Simple as They Tell Us by Dean Baker

Housing Was a Huge Headwind; Now It’s a Small Tailwind by Jared Bernstein

Busted: 75% of the Biggest Home Lenders in 2006 No Longer Exist by Matt O'Brien

Bernanke not coming back

The End of China Bashing: Toward a Serious Discussion of the Trade Deficit by Dean Baker

Paul Krugman and Ezra Klein both say, following Joe Gagnon, that the time for criticizing China for "currency manipulation" has passed. This is partly true in the sense that China's currency has risen substantially in real terms against the dollar over the last few years. However this does not mean either that the relative value of the dollar and the yuan is now at a sustainable level or that China is not continuing as a matter of policy to prop up the dollar against its currency. 

Thoma and DeLong seem to agree with Krugman and Klein. Is this a reaction to Romney's China bashing during the debates as the Presidential race tightens?

You can't blame them in that this election is very important.

Who will be the next Fed Chair (Applebaum piece) or Treasury Secretary (Sorkin piece) According to Sorkin: "If Mitt Romney wins the presidency, he has already pledged he will replace Mr. Bernanke, whose term as chairman ends in January 2014, in just over 15 months. However, Mr. Bernanke has told close friends that even if Mr. Obama wins, he probably will not stand for re-election."

Or Supreme Court judge?

minutes later, however, it became clear that while the court had rejected an expansive view of the Constitution’s commerce clause (which the administration had argued gave Congress the power to make people buy health insurance), it had in fact upheld the health care law on grounds that the individual mandate fell under Congress’s broad power to levy taxes.

Good insight from Krugman.

Things That Aren't Bubbles

Is fiat money a bubble in this sense? Not at all. It’s true that green pieces of paper have no intrinsic value (except that they can be used to pay taxes, which is actually important), so that my willingness to accept green paper from you is based only on my belief that I can in turn hand that green paper over to someone else. But there’s nothing to prevent that process of monetary circulation from going on forever. 

So what is fiat money? It is, as Paul Samuelson put it in his original overlapping-generations model (pdf), a “social contrivance”. It’s a convention, which works as long as the future is like the past. Obviously, such conventions can break down — but then so can things like property rights. In fact, you could argue that almost every asset in a modern economy owes its value to social convention; green pieces of paper could become worthless, but then so could any paper claim, which is, after all, worth something only because laws say it is — and laws can be repealed. 

And once you realize that a social convention is not at all the same thing as a bubble, several related fallacies fall into place. 

Take the common claim on the right that Social Security is a Ponzi scheme because the system has few real assets. It’s true that Social Security is mainly a system in which each generation pays for the previous generation’s retirement, in the expectation that it will receive the same treatment from the next generation. But like monetary circulation, this process can go on forever; there’s nothing unsustainable about it (yes, demography, but that’s about the levels of taxes and benefits, not the fundamental nature of the scheme). So there’s nothing Ponziesque at all. 

A final thought: the notion that there must be a “fundamental” source for money’s value, although it’s a right-wing trope, bears a strong family resemblance to the Marxist labor theory of value. In each case what people are missing is that value is an emergent property, not an essence: money, and actually everything, has a market value based on the role it plays in our economy — full stop.

Conservatives assert that social contrivances are "bubbles," things like fiat money, property rights, and Social Security. Is this a category mistake?

Bubbles are "unsustainable."