Saturday, August 1, 2015

Poor Hedge Fund Performance

Chart below illustrating the results of "investing" based on the monetarist people's quantity theory of "money" and their manifestly incorrect view of "money printing" and how they think that causes their so-called "inflation":

The #commodities hedge fund industry in crisis: multiple closures, AUM collapsing and average Jan-Jun returns down

— Javier Blas (@JavierBlas2) August 1, 2015

Gordon M. Hahn — Putin’s Asia-Eurasia Pivot: ‘Isolation’ from the West Spurs Eurasian Integration and Russian Globalization

Good summary of developments.
In all of the the above ways and others Moscow’s efforts to counter isolation from the West with closer ties to Beijing and the rest of the non-West are bearing a perhaps bitter fruit. Eurasian integration is now invigorated on a potentially much grander scale than the scare-mongering cliche’ regarding ‘Putin’s goal to restore the Soviet Empire.’ China and Russia are overseeing a consolidation of Eurasia that could assist Moscow’s (and Beijing’s) goal of delimiting the West’s influence.
Moreover, the Sino-Russian strategic partnership is going global, leveraging both powers’ ability to network internationally for purposes of trade, development and national security vis-avis both the potential NATO threat and the kinetic global jihadi threat. In combination with the other major Sino-Russian international project – BRICS – the SCO Eurasian project can be seen as a key building block in the efforts of Eurasia’s two great powers – China and Russia – to tap markets easier to access than Western ones, where political criteria often trump cooperation, and insure themselves from American hegemony, humanitarian interventionism, and adventurist revolutionism or ‘regime change.’
Thus, the West’s Kiev gambit has crystallized a consolidation and expansion of the Sino-Russian global partnership that at the least will circumvent U.S. hegemony and at most could challenge and overthrow it.
Russian and Eurasian Politics
Putin’s Asia-Eurasia Pivot: ‘Isolation’ from the West Spurs Eurasian Integration and Russian Globalization
Gordon M. Hahn, Analyst and Advisory Board Member of the Geostrategic Forecasting Corporation, Chicago, Illinois; Senior Researcher, Center for Terrorism and Intelligence Studies (CETIS), Akribis Group, San Jose, California Analyst/Consultant, Russia Other Points of View – Russia Media Watch; and Senior Researcher and Adjunct Professor, MonTREP, Monterey, California

Gilbert Doctorow — Sanctions Have Failed. 'Buy Russian' Is Working

It is now more than a year that Russia imposed its food embargo on the EU and other states which had applied sanctions to it over its absorption of Crimea and intervention in southeastern Ukraine. The results of the change-over in overseas suppliers and rising import substitution through the efforts of domestic producers have now become fairly clear.
In this brief report based on visits to retail outlets ranging from convenience stores and market stalls to hypermarkets and from the St Petersburg city center to hamlets 80 km away in the hinterland, I will try to make some sense of what has occurred, how Russians’ shopping basket has changed so far and where the trend lines are leading. Put another way, I will start with a number of small and specific observations and end with some generalizations and forecasts of what broad processes are underway and how they can affect the global food trade.…
Sanctions are helping Russia to restructure its economy, avoid Dutch disease, and become more competitive as a food exporter.

Russia Insider
Sanctions Have Failed. 'Buy Russian' Is Working
Gilbert Doctorow

Robert Parry — Why Russia Shut Down NED Fronts

The NED is a CIA front organization. Washington Post covers it up, as does the rest of the media in echoing US deep state propaganda.
…NED is a U.S. government-funded organization created in 1983 to do what the Central Intelligence Agency previously had done in financing organizations inside target countries to advance U.S. policy interests and, if needed, help in “regime change.” 
The secret hand behind NED’s creation was CIA Director William J. Casey who worked with senior CIA covert operation specialist Walter Raymond Jr. to establish NED in 1983. Casey – from the CIA – and Raymond – from his assignment inside President Ronald Reagan’s National Security Council – focused on creating a funding mechanism to support groups inside foreign countries that would engage in propaganda and political action that the CIA had historically organized and paid for covertly. To partially replace that CIA role, the idea emerged for a congressionally funded entity that would serve as a conduit for this money. 
But Casey recognized the need to hide the strings being pulled by the CIA. “Obviously we here [at CIA] should not get out front in the development of such an organization, nor should we appear to be a sponsor or advocate,” Casey said in one undated letter to then-White House counselor Edwin Meese III – as Casey urged creation of a “National Endowment.”… 
The National Endowment for Democracy took shape in late 1983 as Congress decided to also set aside pots of money — within NED — for the Republican and Democratic parties and for organized labor, creating enough bipartisan largesse that passage was assured. But some in Congress thought it was important to wall the NED off from any association with the CIA, so a provision was included to bar the participation of any current or former CIA official, according to one congressional aide who helped write the legislation. 
This aide told me that one night late in the 1983 session, as the bill was about to go to the House floor, the CIA’s congressional liaison came pounding at the door to the office of Rep. Dante Fascell, a senior Democrat on the House Foreign Affairs Committee and a chief sponsor of the bill. The frantic CIA official conveyed a single message from CIA Director Casey: the language barring the participation of CIA personnel must be struck from the bill, the aide recalled, noting that Fascell consented, not fully recognizing the significance of the demand. 
The aide said Fascell also consented to the Reagan administration’s choice of Carl Gershman to head the National Endowment for Democracy, again not recognizing how this decision would affect the future of the new entity and American foreign policy. Gershman, who had followed the classic neoconservative path from youthful socialism to fierce anticommunism, became NED’s first (and, to this day, only) president.…
…Gershman took a personal hand in the Ukraine crisis and recognized it as an interim step toward regime change in Moscow. On Sept. 26, 2013, Gershman published an op-ed in the Washington Post that called Ukraine “the biggest prize” and explained how pulling it into the Western camp could contribute to the ultimate defeat of Russian President Putin.…
Gee, I can't understand why Russia booted NED out.

Consortium News
Why Russia Shut Down NED Fronts
Robert Parry

Friday, July 31, 2015

Mikhail Delyagin — Russian universities are a battleground for Russia's future

Such education once again reveals the focus of the liberal clan on a systematic destruction of Russia. Because hostility of a critically important part of the youth towards the foundation of the existence of Russian society, which is the state, simply deprives our country of the future.
The position of the liberals is based on the position of global business, which they serve
Fort Russ
Russian universities are a battleground for Russia's future
Mikhail Delyagin
Translated by Kristina Rus

Noah Smith — Econ 101: Chicago? M.I.T.? Nope, Berkeley's on Top

The point is that Berkeley has done something similar to what the old Chicago School did -- it has changed the entire game. Through intellectual force and creativity, it has turned the ship of the profession in a new direction. We might call it the Berkeley Reformation. The Chicago School made economics about theory; the Berkeley Reformation has made it more about data. The Chicago School made economics about efficiency; the Berkeley Reformation has made it about inequality as well. The Chicago School was Panglossian in its belief that markets work well; the Berkeley Reformation showed deep, fundamental reasons that they break down. The Chicago School described the world in terms of perfectly rational agents; the Berkeley Reformation added the complexity of flawed decision-making.

In the 1980s and 1990s, it could rightly be said that Chicago had conquered the economics world. But in the 2010s, the profession has pointed in Berkeley's direction.…
Bloomberg View
Econ 101: Chicago? M.I.T.? Nope, Berkeley's on Top
Noah Smith | Assistant Professor of Finance, Stony Brook University

Frances Coppola — In defence of the (conflicted) ECB

It is the conflict of interest between ECB-as-creditor and ECB-as-liquidity-provider that makes the ECB ineffective as a lender of last resort. And because NCBs are controlled and restricted by the ECB, they too cannot act as lenders of last resort. So the Eurozone banking system effectively has no lender of last resort. The lack of a lender of last resort is terribly dangerous, since it vastly increases the likelihood of devastating systemic runs. Deposit insurance helps, but since that too is dependent on sovereign solvency there is a gaping hole in the infrastructure supporting the Eurozone financial system.

How to resolve this? The "doom loop" between sovereigns and banks must be broken: the funding of banks must be separated from the solvency of sovereigns, as must the funding of deposit insurance. That means full banking union, common deposit insurance and the issuance of Eurozone-level bonds that can be used by banks as safe assets. The ESM is a step in the right direction, but the current "banking union" is utterly inadequate. Much more needs to be done if the Eurosystem is to become effective as both lender and dealer of last resort.
Frances examines EZ structure and law. The EZ is set up without a lender of last resort, which all but guarantees serious breakdowns.

Coppola Comment
In defence of the (conflicted) ECB
Frances Coppola

Dirk Ehnts — The nature of the game: euro zone does not agree while unemployment rises again

French chartalism versus German ersatz commodity model based on running the central bank as if the currency zone were still on the gold standard, with the German view winning at present. Result? Unemployment rising in the EZ.

econoblog 101
The nature of the game: euro zone does not agree while unemployment rises again
Dirk Ehnts | Berlin School for Economics and Law

See also, Phelps on what is wrong with the West’s economies

David F. Ruccio — What comes next?

Technological innovation increases possibilities. Technology alone does not bring any of those possibilities into actuality on its own. This involves people making choices, and that involves many often competing and conflicting factors — the interests of ownership, the interest of the environment, and the common interest.
…we do need to be aware of the ways the existing set of relations—the relations of capitalist commodity production—not only create capitalist subjects, but also noncapitalist subjectivities.
The way I’ve put it in my own writing, capitalist commodity production both presumes and constitutes particular kinds of individual subjects (which Marx referred to as “commodity fetishism”). But it also brings into existence new collective subjectivities—new ways of “being in common”—that can transcend capitalism.…
That alternative subjectivity—that “being in common” in relation to healthcare—can serve as the basis of a noncommodified, noncapitalist form of healthcare. And, pace Mason, new kinds of information technologies might even be useful for connecting producers and consumers in postcapitalist ways. There’s nothing automatic about it, of course. Still, both signal the possibility of ways of moving beyond capitalism.
The key is to find ways to combine emerging information technologies and ethical concerns in a political movement that is inspired by a fundamental critique: both what is wrong with the existing order and an imagining of a concrete alternative.
 The issue become much more obvious when the traditional factors of production — capital, alnd, and labor — are called what they really are — technology, the environment, and people.
The Rectification of Names (Chinese: ; pinyin: Zhèngmíng; Wade–Giles: Cheng-ming) is the Confucian doctrine that to know and use the proper designations of things in the web of relationships that creates meaning, a community, and then behaving accordingly so as to ensure social harmony is The Good.[1] Since social harmony is of utmost importance, without the proper rectification of names, society would essentially crumble and "undertakings [would] not [be] completed." — <a href=""> Wikipedia </a>
Then we might have a meaningful debate on what constitutes a good life ethically in a good society socially.

Occasional Links & Commentary
What comes next?
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Lars Syll’s Blog — On the poverty of microfoundationalist fantasies

Kevin Hoover quote on microfoundations based on representative agent modeling. Aggregation based on similarities of individuals assume similarity of individuals. In some cases that hold, in many others, not, and where it doesn't hold are the points of interest.
Not only does the representative-agent model fail to provide an analysis of those interactions, but it seems likely that that they will defy an analysis that insists on starting with the individual, and it is certain that no one knows at this point how to begin to provide an empirically relevant analysis on that basis.
You can't get there from here.

Lars P. Syll’s Blog
On the poverty of microfoundationalist fantasies
Lars P. Syll | Professor, Malmo University

Bill Mitchell — Italy’s time to demonstrate leadership

When the Brussels bullies call them up to demand more austerity, Italy would be best to flex its muscle. It is too big for the Troika to steam roll.
And, I suspect, the Italians have a better understanding of their place in Europe than Greece and won’t fall for any threats that they will be expelled from Europe.
It is a bit hard to cut of ones ‘boot’ without also severing the ‘foot’!
I would recommend that Italy take the initiative and ignore the fiscal rules and introduce some large public spending programs – like Job Guarantee – to get the economy moving.
Brussels can fulminate in whatever fashion they like – probably by taking it out of the defenseless Greece. But they can do very little against a nation as powerful within Europe as is Italy.

Merkel, Schäuble & Co. think that making an example of Greece will "send a message" to other countries of the EZ if they don't tow the line. Bill points out that Italy is not Greece.

Of course, France is not either, and if Yanis is correct in reporting that the example is also aimed at France, then things are going to get interesting.

Bill Mitchell – billy blog
Italy’s time to demonstrate leadership
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Neil Wilson — Taxes for Revenue are Obsolete - a précis

We have known for over 70 years that Taxes have nothing to do with government spending. However it is an idea that has taken root again in the recent past, and we really need to get beyond it if we are to build the society of the future. There is a faint whiff of punishment in a lot of tax proposals, which is very reminiscent of the treatment that the Greeks have received in their recent attempts to improve the lot of their population. Most unpleasant.
The following is a simple précis of the points from the Beardsley Ruml article from 1946 and the Bill Mitchell piece on the same article from 2010 - and targeted at the UK.…
Taxes for Revenue are Obsolete - a précis
Neil Wilson

John T. Harvey — The Real Argument For Raising The Minimum Wage

There continues to be a great deal of debate over the economic impact of the federal minimum wage. Does it serve as a drag because it raises firms’ costs or do businesses experience higher sales as a result of the rise in their customers’ income? Obviously, if you consider only one side of that equation or the other–as most amateur analysts do–you reach a biased conclusion. The real question is, what is the net impact after all the relevant relationships are considered?
Fortunately, this has already been addressed in myriad professional, peer-reviewed studies using both mathematical modeling and statistical evidence. And there appears to be something of a consensus: changes in the minimum wage have little to no impact on employment (see for example: Why Does the Minimum Wage Have No Discernible Effect on Employment?). Apparently, the change in cost is largely offset by the change in demand and other factors. A little boring, perhaps, but it’s always a cause for celebration in my discipline when we get anything close to an agreement!
But if that is true, then what is the point of raising or lowering it?….
Forbes — Pragmatic Economics
The Real Argument For Raising The Minimum Wage
John T. Harvey

Thursday, July 30, 2015

Ian Parker — The Greek Warrior

The personal details.

The New Yorker
The Greek Warrior
Ian Parker
ht Clonal

Jon Schwarz — Jimmy Carter: The U.S. Is an “Oligarchy With Unlimited Political Bribery”

President Carter calls out bipartisan corruption.

"Aw, mom, all the kids were doing it."

The Intercept
Jimmy Carter: The U.S. Is an “Oligarchy With Unlimited Political Bribery”
Jon Schwarz

Zero Hedge — 70% Of Americans See Economy Worsening, Consumer Comfort Collapses By Most In 10 Month

Rather amusingly an intriguing 1% of Americans see the state of the economy as 'excellent' - wonder which 1% that is...
Zero Hedge
70% Of Americans See Economy Worsening, Consumer Comfort Collapses By Most In 10 Month
Tyler Durden

For a laugh now look at this.

Why Do So Many Working Age Americans Choose Not To Enter The Workforce?
Via ConvergEx's Nick Colas

Conference on the Greek Debt Crisis led by Sen Bernie Sanders

Conference on the Greek Debt Crisis

Rm 902 Hart Senate Office Building

Sen. Bernie Sanders will convene a panel of three nationally-known economists to discuss the debt crisis in Greece and throughout the world. The panel will be moderated by Stephanie Kelton, the chief economist of the Senate Budget Committee minority staff.


U.S. Sen. Bernie Sanders

Joseph Stiglitz, Senior fellow and chief economist at Roosevelt Institute

James Galbraith, University of Texas

Jacob Funk Kirkegaard, Peterson Institute for International Economics

Stephanie Kelton, University of Missouri – Kansas City


2:30 PM, Thursday July 30th


Hart Senate Office Building, Room 902


Yanis Varoufakis — Will the IMF throw the spanner in the works? – as I feared and Dr Schäuble hoped?

The key issue, of course, is not so much whether the IMF will be part of the deal – a typical fudge could, for instance, be concocted with the IMF providing ‘technical assistance’ to an ESM-only program.
The issue is whether the promised debt relief which, astonishingly will be discussed only after the new loan agreement is signed and sealed, will prove adequate – assuming it is granted at all. Or whether, as I very much fear, the debt relief will be too little while the austerity involved proves catastrophically large.
Yanis Varoufakis
Will the IMF throw the spanner in the works? – as I feared and Dr Schäuble hoped?

Felipe Rezende — S&P threatened to downgrade Brazil to junk

Brazilian Left. buying into neoliberal analysis, crashes and burns. That would be you, Dilma.

New Economic Perspectives
S&P threatened to downgrade Brazil to junk
Felipe Rezende, Hobart and William Smith Colleges

Damn! Did You Ever Imagine It Would Come To This?

   (Commentary posted by Roger Erickson)

"In other words, this is a bullshit report written by neocons in order to foment war with Russia."

What did Marriner Eccles say?

Marriner Eccles gloomy last speech, 1977:
"... the wrong road was taken every time we had a chance to alter course ... "
That's from a lifelong Republican, mind you, who was for the New Deal, for normalizing relations with China in 1950, and against the Vietnam war.

Didn't Khrushchev say something very similar to Marriner's words, as soon as Stalin died? "We could have been a great country."

Institutional momentum = tangents to evolution .... over-adapting to transient context (aka, playing with death).

In a country this big & talented ... we have much better things to do than waste time conquering other countries & looting their natural resources. Our best return comes from investing in all of our own talents (not just in weapons to use on others).

NeoCons:  If they can't find it (reality), they must be hiding it from themselves. 

Zachary Keck — The Insane Nuclear Bomb US Has in Its Arsenal

It’s a guided, low-yield tactical nuke - by appearing relatively benign it increases the chance the cowboys in the Pentagon will break the taboo on use of nuclear weapons - and help deliver armageddon.
Oh well, the long run we are all dead anyway.

Russia Insider
The Insane Nuclear Bomb US Has in Its Arsenal
Zachary Keck

Wednesday, July 29, 2015

Mohamed A. El-Erian — In Defense of Varoufakis

From blaming him for the renewed collapse of the Greek economy to accusing him of illegally plotting Greece’s exit from the eurozone, it has become fashionable to disparage Yanis Varoufakis, the country’s former finance minister. While I have never met or spoken to him, I believe that he is getting a bad rap (and increasingly so). In the process, attention is being diverted away from the issues that are central to Greece’s ability to recover and prosper – whether it stays in the eurozone or decides to leave.
That is why it is important to take note of the ideas that Varoufakis continues to espouse. Greeks and others may fault him for pursuing his agenda with too little politesse while in office. But the essence of that agenda was – and remains – largely correct.
Project Syndicate
In Defense of Varoufakis
Mohamed A. El-Erian, Chief Economic Adviser at Allianz and a member of its International Executive Committee, is Chairman of US President Barack Obama’s Global Development Council. He previously served as CEO and co-Chief Investment Officer of PIMCO

Blankfein on rate hike

You hate to agree with Blankfein but I think he is correct here.

A rate hike is our best chance of getting any increase in the leading government spending flows any time soon.

Goodyear's Profit Drops

Report here at Nasdaq.

Goodyear Tire & Rubber Co. reported a 10% drop in its second-quarter profit but exceeded analyst expectations as currency fluctuations and some restructuring charges overshadowed its strong financial performance. 
The company took a $401 million hit to its sales, suggesting that the strengthening dollar rather than a slower China economy is now a big issue for U.S. auto-parts makers as they attempt to manage their businesses through the second half of the year.
This write up misses the mark in the way of explanation.

Foreign tire sellers lowered their prices in USD terms FIRST, which acted to increase their sales and market shares in the U.S. to the detriment of Goodyear's share ....... THEN the international financiers of the tire trade made regulatory adjustments which resulted in what is termed here a "strengthening dollar" in forex terms.

More empirical evidence here that the forex terms are a resultant function of the leading pricing actions of the international merchants.

Dirk Ehnts — Von Mises and the Position of the State in the Market

The state is not external to the people, enterprises and other institutions. I think that it is wrong to divide state and market. In modern states, they are intertwined. Maybe this topic should go in my course to create a debate about what terminology to use (dichotomy of state and market) and what we recognize as (economic) “science” over the centuries.
The view that market imperfections result chiefly from the side of the state versus the market, that the market and state can be disentangled, and reducing the influence of the state decreases market imperfections is an article of faith of economic liberalism. It is a foundational assumption that is regarded as self-evident. That's doing speculative philosophy, not empirical science.

econoblog 101
Von Mises and the Position of the State in the Market
Dirk Ehnts | Berlin School for Economics and Law

Sigrún Davídsdóttir — Lies, damned lies, and Greek statistics

Long and thorough post on the previous corruption in Greece that led to the present crisis.

Coppola Comment
Lies, damned lies, and Greek statistics
Sigrún Davídsdóttir

John Weeks — Third Bailout and the Third Punic War

After his defeat by the Roman leader Scipio Africanus at the battle of Zama in 201 BC, the great general Hannibal pleaded with the Carthaginian Senate to accept the draconian peace terms demanded by Rome. Polybius has him say to the Senate, “I beg you … to declare your acceptance of the [peace] proposals unanimously” (The Rise of the Roman Empire, Book XV).
The draconian treaty proved too burdensome for the Carthage Senate to implement. This led to a Third Punic War and yet another Roman victory in 146 BC, over an enemy far weaker after fifty years of austerity due to payment of tribute to the Roman overlords. No treaty ended this third war. The Roman army sacked Carthage, razed it to the ground and sold the population into slavery.
Those in Greece whose hope is that the Third Bailout has bought them time for a better deal with the Troika in the future might reflect on the outcome of the third Punic War.
Triple Crisis
Third Bailout and the Third Punic War
John Weeks | Professor Emeritus of the School of Oriental and African Studies of the University of London

David F. Ruccio — “Thought is the courage of hopelessness”

So, the current situation does appear hopeless.
However, in challenging the terms of the bailout—first, in supporting the “no” vote in the 5 July referendum and, then, in Prime Minister Alexis Tsipras’s statements that his government would not implement reform measures beyond those agreed with lenders at a euro zone summit this month—the Greek government has come to represent all the “thinking and suffering people” of Europe and to expose the “passive and thoughtless existence” that characterizes the tiny elite that currently reigns on that continent.
That, perhaps, should fill us with hope.
Sorry, I haven't got my hopes up. If the European elite is to be defeated in their attempt to impose neoliberalism on Europe, indications are that it will likely be by the nationalist Right rather than a resurgent Left. The Left has had its chance on several occasions in different countries and has consistently blown it.

Occasional Links & Commentary
“Thought is the courage of hopelessness”
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Yanis Varoufakis — Treason charges: What lurks behind the bizarre allegations

The bizarre attempt to have me indicted me on… treason charges, allegedly for conspiring to push Greece out of the Eurozone, reflects something much broader.

Yanis Varoufakis
Treason charges: What lurks behind the bizarre allegations

Tuesday, July 28, 2015

teleSUR Extreme Poverty in Venezuela Drops to 4.5%

The number of Venezuelans living in extreme poverty has dropped to a historic low of 4.5 percent, according to figures released Monday. “In the midst of an economic war, extreme poverty has dropped below 5 percent,” Planning vice president Ricardo Menendez said. He said the continued decline of poverty is vindicating “the model we are building.” “This figure represents the strengthening of the battle ... from the beginning of the great (social) missions there has been an outright decline in indicators of poverty, (such as) unsatisfied basic needs,” he said. The figure of 4.5 percent is nearly half that of neighboring Colombia, where over 8 percent of the population lives in extreme poverty according to 2014 statistics. It's also the lowest level in decades for Venezuela. When President Hugo Chavez was elected in 1998, 21 percent of homes were registered as experiencing extreme poverty. Under Chavez, the Venezuelan government created a series of anti-poverty programs called missions. Each mission targets a specific aspect of poverty, such as housing and education. Government funding for social spending including the missions has skyrocketed over the last decade. By 2014, extreme poverty had dropped to 5.4 percent. The massive reduction in poverty has been praised by international organizations including the United Nations Economic Commission for Latin America.…
Extreme Poverty in Venezuela Drops to 4.5%