I am having to break my Linda Evangelista rule to go to an AM meeting. Check back during the day, I have posts I want to complete but could not get to overnight.
Dolphin species attempt ‘common language’ BBC (hat tip reader John M). This is very cool. One philosopher who was studying the question of what “personhood” means has concluded that dolphins are “non human persons”. There is reason to think they are smarter than primates.
Genetically inserted insecticide contaminates U.S. waterways Scientific American (hat tip Lambert Strether)
Ancient giant penguin unearthed in Peru BBC (hat tip reader John M)
In a Computer Worm, a Possible Biblical Clue New York Times (hat tip reader Crocodile Chuck)
Scientists: 40 Times More Cancer-Causing Toxics in Gulf than Before Spill … Dispersants to Blame Washington’s Blog
First World War officially ends Telegraph (hat tip reader Martin W)
What’s Eating Todd Zywicki? Adam Levitin, Credit Slips
10% SAVINGS RATE + CONSUMER SPENDING AT 65% OF GDP = RETAIL DISASTER Jim Quinn. I would have cross posted this, but I am now a tad on the late side. Quinn has been very good on the retail spending beat.
Does a Weaker Currency Equal Default? Not in the Real World Marshall Auerback, New Deal 2.0
U.S. Treasury Gets $1 Billion Profit on Sale of Citigroup Stake Bloomberg. This might as well be Pravda. Talking about TARP profits in isolation from all the other subsidies banks like Citi have gotten is pure three card monte.
AIG exit plan set to deliver a profit Financial Times. More from the Ministry of Truth to your desktop. The Treasury would have had all the latitude it needed re accelerating or decelerating repayment if it had remained as a senior creditor and merely allowed interest payments to accrue rather than be paid out on a current basis (you’d need to work out mechanisms or review procedures as to when profits and cash flow hit a level where payout would be warranted). We are looking at tens of billion dollar losses on AIG according to all independent estimates. What is this misleading talk about “profit”? If you have a sick borrower, you don’t want to give up a senior creditor position. Yet the Treasury’s and Fed’s incompetence as a creditor is being given a free pass.
End the Credit Rating Addiction IMFDirect. The IMF politely hints that finreg dropped the ball big time.
The IMF’s foolish praise for austerity Martin Wolf, Financial Times
Top 10 Ideas for Goldman Sachs New Ad Campaign Barry Ritholtz (hat tip reader Hubert). In case you missed it…
Antidote du jour:
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AM meeting…eh. Times are tough…Yves, but…POLE DANCING really…
Skippy…some can dream lol…better than thinking non stop about the impending explosion/implosion lmao.
here’s the link to the Stuxnet NYT article:
http://www.nytimes.com/2010/09/30/world/middleeast/30worm.html?ref=middleeast
“the larger bottlenose dolphins harass the smaller Guyana dolphins”
They’re quite like investment banks then.
trying to understand your “Linda Evangelista rule”, i see you’re linked to on her website:
http://www.celebopedia.net/linda-evangelista/
Bt, the Genetically inserted insecticide, should be harmless to all higher lifeforms (its a bacteria) but possibly deadly to butterflies, a pollinator…
Hah higher life forms…in one life time..eh. Lets expand the time line now, but profit comes first.
if we lose the pollinators, we revert to a grass & pinecone diet…
Oh sorry.. I was not demising your later inference but, the immunity higher life forms have as a singularity in time (life span) too commencement of siblings and their exposure post genetic exposure or roll the dice so many times and then its craps…en fin stuff…but by all means roll the bones, its fun.
So is it GMOs that are leading to the demise of honey bees?
john: to the best of our knowledge, israeli acute paralysis virus is the causitive agent in colony collapse disorder, although it usually doesnt do a colony in unless theyre stressed by other factors, most commonly varroa mites…
Jim Quinn’s chart, showing a recent decline in same-store percent changes in Target’s sales, is out of date. These same-store sales changes have actually increased every month since December 2009, except for one month probably due to a change in the day of Easter. The same is true of most other large box stores. However this data is not very relevant, since it is a change from the depressed sales of 2009. Plotting seasonally-adjusted total sales is better, and it seems to show an increase earlier this year, followed by an worrisome leveling off in the past few months.
Also, the fact that total debt has not declined, other then from foreclosures, does not indicate that most consumers are spending at their maximum. For those people with low levels of credit debt, a smart strategy would be to increase savings in the bank and not pay down things like mortgage and car debt. Then, if they lose their jobs they have cash easily available. And I know some people who are doing just that.
In summary, Jim Quinn is not, in my opinion, a good source on retail spending.
‘Government cannot financially provision in advance of future benefit payments.’
Oh, jeez. *sigh*
Marshall Auerbach is quite right that the Social Security trust fund is meaningless, as a parent-subsidiary obligation which disappears in a consolidated account.
But to say that government cannot financially provision is silly, and obviously wrong. All that the government need do to provision is to purchase securities other than its own — corporate, state/municipal, or even foreign.
The Chartalist obsession with non-revenue constrained finance would, if put into effect, produce currency collapse and hyperinflation.
Governments borrow not merely for show, but because printing money to fund their obligations is terminally inflationary. It’s unspeakably bizarre that MMTers don’t see this. But as in any other Bubble logic, because inflation happens to be low today, MMTers extrapolate this into an assumption that it always will be, no matter how irresponsible monetary policy becomes.
Lord save us from these monster raving loonies!
You need to quit misrepresenting MMT. Its advocates clearly say inflation is a constraint.
And exactly what inflation do we see in the US and Japan right now? Japan has engaged in two decades of money expansion as well as large scale deficits and has gone in and out of inflation.
Simple monetarism (that money supply is strongly correlated with inflation) has been roundly disproven empirically (and this was pre-Japan’s meltdown, via monetarist experiments in the US and UK) but I see it still has true believers like you.
I am not a true believer in much of anything but I do believe that the creation/increase/printing of US dollars that has occurred over the past few years has to have downstream impacts as the world’s Reserve Currency on all related currencies. It is based on this premise that I think the US is a world wide currency manipulator….Shock Doctrine for all.
The currency war will end when the US no longer holds the status as Reserve Currency…..less than 10 years, IMO.
Auerback’s sweeping statement that ‘the government doesn’t have to sacrifice spending now to spend in the future’ implies that inflation is not a constraint.
In more detail, Auerback stipulates that ‘inflation would be from too much aggregate demand and a too small output gap, which would imply an overheating economy with maybe 4% unemployment and 90% plus capacity utilization. Isn’t that the goal of deficit spending?’
This scenario has several problems. One is that the process will be nice and linear, so that the economic central planners can just back off the throttle when there’s no slack capacity and inflation starts to rise. A second is simply ignoring the excessive debt-to-GDP ratio which may result from the process.
The third is the notion that ‘there is no operational connection between spending, taxing and debt management.’ Yet governments continue to act as if there is such an operational connection. MMTers say this is merely a choice on their part, but I think the burden of proof is on them to substantiate this odd-sounding assertion.
My equally unprovable assertion is that if Marshall Auerback or Bill Mitchell were to succeed Tim Geithner as Treasury Secretary, the US dollar would collapse precipitously. If Geithner merely implemented their policies — same result.
MMT is a macroeconomically sophisticated specification of a Ponzi scheme. Its actual implementation would be ruinous.
Meanwhile, to the extent that Ben Bernanke exhibits some disquieting if muted MMT tendencies, gold soldiers on to daily new highs.
Back to economic first principles: There is no free lunch.
You really need to educate yourself.
Imagine an economy where there is no trade deficit, no trade sector at all. In this economy, households want to save (this is pretty normal except in the US in the worst of the bubble years). But businesses are also saving too (this is NOT “normal” but in fact has been happening in the US since 2003, so even in an expansion, and has been happening around the world, not just in advanced economies but even in many developing economies).
The result is the government must deficit spend to accommodate the behavior of the household and private sector or else output and wages contract (aka big time nasty recession).
The need of the government to deficit spend to accommodate the actions of other sectors is made even more acute when there is a trade deficit. The only scenario under which you can have households saving and the business sector saving and government NOT deficit spending is when you have a trade surplus. Pray tell, do we have that is the US?
Look at US history, we’ve run government deficits pretty much all the time (and I’m including the 19th century). Gee, the US rose to world dominance. How exactly do you explain that?
> And exactly what inflation do we see in the US and Japan right now?
I beg you to look at commodity prices. There is also wage inflation in China which will trickle over earlier or later, with China being our manufacturing base. The fact that the fall of some asset prices that were in bubble territory + contracting credit + the BLS BS regarding CPI reporting point to stable prices does not hide the serious strains starting to show up in the global currency systems.
“Auerback’s sweeping statement that ‘the government doesn’t have to sacrifice spending now to spend in the future’ implies that inflation is not a constraint.”
Where is the implication? In any case, are you suggesting that government spending in the future isn’t inflation constrained if that spending is ‘funded’ by surpluses that were run beforehand? All else being equal, any spending at a point where the government is inflation constrained will be inflationary, no matter how that spending is ‘funded’ by actions in a previous period.
“This scenario has several problems. One is that the process will be nice and linear, so that the economic central planners can just back off the throttle when there’s no slack capacity and inflation starts to rise.”
I see no assumption that the process is linear. What I do see in MMT literature is strong support for a Job Guarantee, and that support is largely because such a Guarantee places the most important aspect of economic support – jobs for people – into the category of automatic stabilisers. Placing it in that category removes any need for planners to control its level.
“A second is simply ignoring the excessive debt-to-GDP ratio which may result from the process.”
Excessive in what sense, and by what measure? You are begging the question.
“The third is the notion that ‘there is no operational connection between spending, taxing and debt management.’ Yet governments continue to act as if there is such an operational connection. MMTers say this is merely a choice on their part, but I think the burden of proof is on them to substantiate this odd-sounding assertion.”
And yet when they do substantiate this and other aspects of MMT, including in articles on this very blog, critics simply ignore the explanations.
“Private Equity Thrives Again, but Dark Shadows Loom”
http://dealbook.blogs.nytimes.com/2010/09/29/private-equity-thrives-again-but-dark-shadows-loom/
More on giant penguins:
http://www.youtube.com/watch?v=tVc0EZl3AfU
(the Italian subtitles are a bonus!)
“…because printing money to fund their obligations is terminally inflationary.”
Yes, it is, if that ‘printing’ goes beyond the economy’s ability to respond to increased demand.
“It’s unspeakably bizarre that MMTers don’t see this.”
MMTers do see this, which is why every article here which touches on the subject features comments from MMTers pointing out the danger of the real limit.
Ick, a bug.
Fianlly, a cold-blooded antidote for the hot-blooded Homo Not-So-Sapiens Not-So-Sapiens.
I note Jim Quinn’s post with interest because I thought a lot about this summer driving from Virgina to Ohio and back this summer and noticing the many empty strip malls and half-vacant professional offices in various suburban settings.
WWII ended and most cities were surrounded by countryside and farms, with compact little towns around railroad stations and all the shopping on “Main Street.” But people had been buying cars, were tired of living double-up, and there was 16 years of deferred demand (the Depression and then WWII) and had very clean private balance sheets (lots of savings, little debt) set the stage for the great post-war suburban boom. Lots of Americans became rich building subdivisions and then shopping centers and malls for Americans from 1945-1975, and one could see a real need. But something started going wrong after 1975.
A whole set of policies, including zoning laws, had come into being to encourage building and developing on the sprawl model. And also now, a class of wealthy and influential people believe that this was now their permament meal ticket. And speculative financiing quickly turned to ponzi financing on shopping centers and office developments. The developers and builders and the the bank officers made money, but when the overbuilding resulted in a crash, it was the bank shareholders and the FDIC that took the bullet and closed up the bank and savings and loan. And dead malls started spreading across the country. The cycle repeated in the 1980s, 1990s, and the Oughts (with residential now joining in the fun), with the same suspects reaping the short term profits, but not having to suffer any clawback for the long-term losses (except for Tom Wolfe’s character in “A Man in Full.”)
Economically, it hard to see how it will be justifiable to build a shopping center for the next 20 years, especially as more and more shopping will be done on-line, as the savings rate goes up, as U.S. real wages decline (for us non CEO types), and as the real price of gasoline cycles upward, but one should not bet against the grifters and scoundrels who are now making the decisions about the U.S. economy.
U.S. Treasury Gets $1 Billion Profit on Sale of Citigroup Stake Bloomberg. – This might as well be Pravda. Talking about TARP profits in isolation from all the other subsidies banks like Citi have gotten is pure three card monte.
Not only that; baby talk persists; i.e., “The longer the sale takes, the more chances that Treasury is going to have to sell some shares at a loss.” –duh!
… and our cronies don’t profit on timing signals.
Back to the reference to ‘Pravda.’ We’ll be explaining American history in terms of before and after; from 1776 to the present, that began with the Bush 2000 political coupe, followed by the Paulson 2008 financial coupe, the corporate election funding Supreme Court 2010 decision in Citizens United. What next? They, after all, are not going to stop until the enterprise is completed or ‘they’ implode. The trend is clear.
The fix is in to end the Internet as we know it headed by corporations with Verizon and GOOGLE in the lead; the people you can trust to ‘do no evil’ who have no more claim on the ‘commons’ of which the Internet is a part than the cow that jumped over the moon. NONE whatsoever. As for Verizon claims of rights via their $Billions invested in wires; they are entitled to profit from the USE of their wires. PERIOD. The corporations can be defeated. Many of the opposition wouldn’t know an Internet search engine from a book seller.
Michael J. Copps -FCC Commissioner, has been actively fighting for the open Internet (net neutrality) against control by the corporatocracy. You can see Copps interviewed by Moyers here, and Al Franken here and here
I am glad someone in DC is acting in the interests of the citizens of this country. If you know of any way these citizens can help, let us know. To me, there will always be hope as long as the Internet remains open.
You can get current information on the political maneuvering by attempter who follows the net neutrality issue and writes on it in detail on his blog here
Re the link about genetically modified toxin in waterways. The reporting of the article doesn’t mention that the particular toxin (Bt) is widely used by organic farmers and doesn’t mention whether the investigators were able to distinguish the GM-inserted toxin from the “natural” one used. In fact, organic farmers use a crude bacterial preparation of Bt, whereas the transgenic plants only contain the DNA encoding the Bt protein and not all the other bacterial material (which may or may not be harmful).
At best, this Sci Am article is poor scientific reporting and meant to sensationalize and scare.
I agree Iorac. It seems a fairly major oversight to not mention the use of the Bt organism in organic farming, but unfortunately it is the sort of skewed reporting I’ve come to expect on this issue.
First World War officilly ends?
What about World War II? I don’t think it could end before the first one. So, it is time to end the second one?
Was it really like that that the first globalization occurred in the early part of the 20th century and the inbalance was not fully resolved until after two world wars?
What do we look forward to in this second globalization?
We’ve made progress since the Korean war. None of those wars can “officially” end because they have never “officially” started.
Dolphin species attempting a common language?
Can economists achieve the Holy Grail – the Unified Theory of Economics that can explain the Austrian school, the Chicago school, Neoliberal, Keynsian, Montarist, Supply-Siders, etc?
Upon actually reading the article, I think an alternate interpretation is possible that the dolphins were using words that they normally didn’t say, thus sounding different, like for example, you Guyana dolphins are ugly, we are richer than you’re, this is bottleneck territory – words and thus sounds you don’t normally hear.
But John, don’t let science get in the way of a good story. Once we enter dark ages 2, stories will mean power, not science. Remember make the facts (data) fit the story. Some scientists will proclaim “junk science”, but isn’t good marketing just “junk science”. I think I need a drink of POM juice.
re: Goldman Sachs spin campaign. Sorry I missed this one but here is my contribution:
Cam: Photo of Goldman Sachs HQ reflecting sunrise off most windows.
Voice over: Goldman Sachs (deep authoritative male voice)
Cam: Shot of packed GS executive dining room, lots of laughter and smiling faces.
Cam: Cuts to photos of Geithner, Paulson, both chambers of Congress.
Voice over: We bought the law.
Cam: Cuts to photos of multiple families being tearfully ejected from their homes, and a small town barber putting a for sale sign on his door.
Voice over: And the law won.
Cam: Fade to black.
In the second Campaign, Goldman and Sacchs
We will be privy to see breif rough and tumble scenes of ethnic clensing occuring on American soil. Basically, a repeat of Dafur. Meanwhile, America’s “Best and Brightest” will be shown living in the sky like the Jetsons. This scene will draw to a close with America’s “Best and Brightest” making a toast at yet another dinner.
The screen will ‘freeze’ while the following words will be said,
Voice over:
“Goldman Sachs; still ‘saching’ and looting.”(deep authoritative male voice)
and the irony will be, only those living in the sky will be able to see the ad because only they will have tvs left.
I just spent like 10 minutes commiserating with Google about the Linda Evangelista rule . . . I think it must be this:
“I don’t wake up for less than $10,000 a day.” – Linda Evangelista