Friday, April 17, 2015

Salon — Paul Krugman takes the gloves off: Radical ideologues tanked economies, ignored reality

Paul Krugman takes the gloves off in Friday’s New York Times, bashing economists who insist on believing in phony austerity models and offering a full-throated defense of old-fashioned Keynesian economics, even if it’s not a fashionable or trendy “new idea.”

“It’s hard to argue against new ideas in general,” Krugman writes. “In recent years, however, innovative economic ideas, far from helping to provide a solution, have been part of the problem. We would have been far better off if we had stuck to that old-time macroeconomics, which is looking better than ever.” 

Krugman writes that right-wing European politicians especially buried their heads in the sand, seeking justification from economics for the horrible political and ideological agendas they wished to impose. The exciting new research all proved grounded in phony assumptions. The old-school Keynesians were right. The ideologues refused to listen.
He singles out one in particular, Wolfgang Schäuble, the German finance minister….
Paul Krugman takes the gloves off: Radical ideologues tanked economies, ignored reality

Simon Maloy — Ted Cruz’s frightening gun fanaticism: When a presidential contender encourages armed insurrection

As incredible as it sounds, there’s an argument going on right now between two Republican senators (and, potentially, two Republican candidates for the presidency) over whether the American citizenry should be ready to fight a war against the federal government. The two senators in question are Ted Cruz and Lindsey Graham, and they can’t seem to agree whether the Second Amendment serves as bulwark against government “tyranny.”

It all started with a fundraising email Cruz sent making the case that “The 2nd Amendment to the Constitution isn’t for just protecting hunting rights, and it’s not only to safeguard your right to target practice. It is a Constitutional right to protect your children, your family, your home, our lives, and to serve as the ultimate check against governmental tyranny — for the protection of liberty.” TPM’s Sahil Kapur asked Graham what he thought of his Texan colleague’s view of the Second Amendment, and the South Carolina senator was not impressed. He even invoked the Civil War, which should make Cruz’s people plenty upset. “Well, we tried that once in South Carolina,” Graham said. “I wouldn’t go down that road again.”
This view of gun rights that casts personal firearm ownership as a check on the abuses of government doesn’t make a great deal of practical sense, and it betrays a lack of faith in our democratic institutions. But it’s become increasingly popular among high-level Republican officials who quite literally scare up votes by telling voters they’re right to keep their Glocks cocked just in case the feds come for them. Iowa’s new Republican senator Joni Ernst famously remarked that she supports the right to carry firearms to defend against “the government, should they decide that my rights are no longer important.”

The obvious question raised by statements like those from Cruz and Ernst is: when does the shooting start? What is the minimum threshold for government “tyranny” that justifies an armed response from the citizenry? In 2014, Nevada rancher Cliven Bundy was ready to start a shooting war with the feds to defend his illegal grazing practices, and he garnered the support of top-level Republican officials (they only abandoned him after he started wondering aloud whether black people would be better off as slaves).
It’s an important question because Republicans and conservatives – Ted Cruz included – tend to throw around terms like “tyranny” sort of haphazardly when criticizing policies and politicians they disagree with.…
Off the deep end. Feel like your living in a world gone mad?

Ted Cruz’s frightening gun fanaticism: When a presidential contender encourages armed insurrection
Simon Maloy

The New York Times “basically rewrites whatever the Kiev authorities say” — Patrick L. Smith interviews Stephen Cohen

There's an alternative story of Russian relations we're not hearing. Historian Stephen Cohen tells it here.
The second piece of this conversation will run next week.
What’s happened in Ukraine clearly has plunged us not only into a new or renewed—let historians decide that—Cold War, but one that is probably going to be more dangerous than the preceding one for two or three reasons. The epicenter is not in Berlin this time but in Ukraine, on Russia’s borders, within its own civilization: That’s dangerous. Over the 40-year history of the old Cold War, rules of behavior and recognition of red lines, in addition to the red hotline, were worked out. Now there are no rules. We see this every day—no rules on either side.
The rest of the interview elaborates on the dangerous situation that the American leadership is stumbling into.

The New York Times “basically rewrites whatever the Kiev authorities say”: Stephen F. Cohen on the U.S./Russia/Ukraine history the media won’t tell you.
Patrick L. Smith interviews Stephen Cohen, professor emeritus of Russian studies, history, and politics at New York University and Princeton University

Here we go with the wheels coming off:

Russia Insider
Israel May Send Arms to Ukraine If Russia Delivers S-300 to Iran

Patrick J. Buchanan
A US-Russia War over Ukraine?

The chief of the General Staff of the Russian Armed Forces [General Valery Gerasimov] has warned the European countries planning to host the US-led NATO missile systems that Moscow considers the installations "priority targets," as the systems possess offensive capabilities.…
Meanwhile, Russian Defense Minister Sergei Shoigu said Washington has crossed all lines by attempting to drag Ukraine into its league as part of its wider plan to expand NATO and alienate Russia's neighbors.
"NATO countries are actively pursuing an expansion of their geopolitical space, building up the military capabilities in Eastern Europe and closing in on Russia's border. The focus of their drills in the alliance's eastern front and Arctic region indicates their anti-Russian nature," he said.
Shoigu also accused NATO of increasing the potential for war in Eastern Europe by practicing "the use of American tactical nuclear weapons deployed in several European countries."
This is the Russian military talking, not Putin.

Russia Insider
NATO Warned: Russia Considers Missile Facilities in Eastern Europe to be "Priority Targets"

Documents from the Clinton administration confirm the slavishly pro-Western policies of the post-Soviet criminal oligarchy
Enemy Within: Declassified U.S. Documents Show Russian Oligarchs Supported NATO Expansion

This is the most worrisome. Weaponizing space.

Russia & India Re;sort
Russia preparing for “Star Wars”
Alexander Korolkov

Bill McBride — Goldman Sachs: "An Update on Student Loans: A Bigger Headwind but Still Not a Deal Breaker"

Translation: If student loan debt becomes too much of a drag, it's no biggie since almost all of it is held by the feds who can just eat it without imploding the economy.

Calculated Risk

Matthew Martin — The irrefutability of neo-fisherism

Not irrefutable if the direction of causality can be demonstrated in a compelling way. Instrumentalism (versus realism) does not differentiate direction of causality ontologically; it only establishes invariance of variables. 

Realists hold that without understanding causality ontologically, it isn't possible to know which variables are independent and which are dependent, since if they correlate, they can just be reversed. No problem is there is no difference, but it could be a big problem if there is a difference that the assumptions make it difficult or impossible to detect. So it is necessary to employ methodological assumptions that enable ontological differentiation in addition to formal analysis.

From the MMT vantage of changes in accounting balances, increasing interest rates adds to non-government net financial assets by increasing interest payments on government securities, which is potentially inflationary at full employment at the time the central bank uses monetary policy to address inflation. Here is a a causal argument for neo-fisherism. It has been advanced by Warren Mosler, for instance.

The counterargument is that raising interest rates not only increases interest payments on government securities but also increases the cost of capital, reducing borrowing for investment. The housing market is a major source of investment driving economies and investment in housing is sensitive to mortgage rates because it influences how much PITI a purchaser can afford to pay monthly.

So the result is something of a wash and how much of a wash depends on the actual context. 

Separating Hyperplanes

The U.S. is the biggest debtor nation in the world. Said all the quacks ...

Varoufakis again with his empty threats. This guy is getting really tiring. Will somebody please just give him a job at Goldman already?

Varoufakis again with this fake threats. The Troika must be laughing their asses off. He's added 12 years onto their lives.

First it's, "No more austerity and privatizations."
Then, "Oh, we've got to make cuts and privatize the Port of Piraeus."

Followed by, "We won't be able to make the bond payment so we need a deal."
Then, "Okay, here's the money. We'll just take it from pensions."

Now it's, "Don't push us or, we'll default."
"Oops, we were only kidding?"


Give me Josephine Witt any day.

The only thing in this world that gives orders is balls!

Trans Pacific Partnership put on Fast Track and supported by Obama

The Trans Pacific Partnership is an anti-democracy trade deal that has been negotiated completely in secret and Congress has now put in on the "fast track" meaning that it could become law very soon.

The deal gives foreign corporations the ability to avoid our domestic laws and regulations with respect to labor, the environment, taxation, patents, industrial policy, etc.

This is diktat by the global corporatocracy that subverts our democracy, our sovereign status.

Why the fuck do we vote? For this??

(Why the fuck do we vote, anyway?)

Call your Congressional representative and tell them you stand against this terrible deal that will lead to more outsourcing, more wage destruction, more pollution, more exploitation.

Central planning at its finest. This is why we have surging income inequality under Obama. For all his phony concern for workers and the Middle Class, he is nothing more than a puppet of the corporate elite.

Eric Lonergan — Bond bubbles, MMT, and the limits to fiscal policy


sample of one
Bond bubbles, MMT, and the limits to fiscal policy
Eric Lonergan
ht/ Brad DeLong

Frances Coppola — Colds, strokes and Brad Delong

Economic and policy malpractice. Who do we sue for damages?

Having said that, Brad's last comment is spot on:
The key questions of macroeconomic political economy then are not the questions of the construction of nonlinear multiple-equilibrium models that Frances Coppola wants us to study. They are, instead, the questions of why ideological and rent-seeking capture were so complete that North Atlantic governments have not deployed their fiscal and credit policy tools properly since 2008.
This is only half right. It's treating a preventable condition after the fact. Why did governments adopt ideologies that enabled not only rent capture but also state capture in the first place. 

The answer is simple. It is the result of a failure of representative democracy to prevent the development of oligarchic "democracy." This is a form of plutonomy similar in many ways to feudal aristocracies. It is based on institutional arrangements dictated by special interests, namely, the vying factions of a ruling elite who carve up the spoils among themselves based on their ability to gain and wield power.

Coppola Comment
Colds, strokes and Brad Delong
Frances Coppola

Inflation is about to pick up. This time it's real.

We saw a small uptick in the CPI for March this morning, but the real issue here and the one not reported (you will only get it here), is that we are going to experience the first significant increase in government spending this year in six years.

My projections, based on all the data on Federal spending (from the DTS) so far this fiscal year, and the rate of spending, is that we will hit $4.38 trillion. That would be a $200 billion increase from the prior year.

Here is a graph with the projection for this year.

The only other increase in spending that we saw was in 2013 and that was only $20 billion over 2012. So this year's increase is serious.

Government spending is different from central bank monetary operations. The former adds to net financial  assets ("printing money"), while the latter is only an asset swap. That's why all the "inflationista's" got it wrong these past years. It was because they believed monetary operations were money printing. It's not.

Therefore, based on this development here is my outlook...

  • The top is in for the dollar. It's going down.
  • Bonds are headed lower. Rates will go up and YES, the Fed will raise rates this year, possibly even in June.
  • Stocks will continue to climb for a while until rates get high enough to siphon away investment (and we're still a long way from that).
  • Gold will rally.
  • Commodities and oil have bottomed.

P.S. Some may claim that they predicted, all along, that the euro would rally, but that would be false.

Zero Hedge — Meet The Woman Who Attacked Mario Draghi: In Her Own Words

Pictures, too.

Zero Hedge
Meet The Woman Who Attacked Mario Draghi: In Her Own Words

TASS — Russia, China to deepen military cooperation — China defense minister

Good-neighbourly relations between Russia and China contribute to stability in the region and the whole world, the countries intend to further deepen cooperation between their military departments, Defense Minister of China Chang Wanquan told journalists on Thursday at the 4th Moscow International Conference on Security.
According to him, Russia and China are strategic partners, and the relationship between the states and their armed forces is developing at a high level. "This meets the interests of not only our countries, it is also beneficial for peace and stability in the region and the world in general," he said.
Russia, China to deepen military cooperation — China defense minister

Sputnik — EU Can Afford Anti-Russia Sanctions If Economy is Strong - German Minister

Maintaining the EU economic sanctions against Russia will depend on the overall economic strength of the Union, German Finance Minister Wolfgang Schaeuble said at a Brookings Institution conference in Washington, DC on Thursday.
Schaeuble of all people — the guy that is driving the EZ into the ground. Just keep pouring that austerity on.

ROFLMAO. The level of stupid is astounding.

EU Can Afford Anti-Russia Sanctions If Economy is Strong - German Minister

Thursday, April 16, 2015

Sputnik — Intensity of US Propaganda ‘Very Dangerous’ - John Pilger

John Pilger, the award-winning journalist and film-maker, talks to Sputnik about US foreign policy, the propaganda wars and the US Congress lawmakers.

Intensity of US Propaganda ‘Very Dangerous’ - John Pilger

Sputnik — Not-So-Free Lunch: Texas Woman Faces $2000 Fine for Feeding Homeless

This is really damning internationally. Especially with the cop smiling about it.

Not-So-Free Lunch: Texas Woman Faces $2000 Fine for Feeding Homeless

Here's the story at Zero Hedge
San Antonio Woman Fined $2000 For Feeding The Homeless

Sputnik — Russia’s Multipolar Concept Runs Counter to US Hegemonic Ambition

Unlike the Unites States, Russia is interested in building a multipolar world based on balanced relations and mutual respect, analysts told Sputnik on Thursday.
They commented on Russian President Vladimir Putin's remark about Washington claiming exclusivity as the sole center of power and seeking "vassals," rather than allies. The Russian leader was speaking during his annual Q&A session on Thursday.
China and India's view, too, being mature civilizations and former empires themselves. This also includes Iran (former Persian empire) and Turkey (former Ottoman empire). They view the US as the new kid on the block and still wet behind the ears. They learned to share power and the US hasn't yet.

Russia’s Multipolar Concept Runs Counter to US Hegemonic Ambition

Sputnik — US, EU Concerned Over Russia's Import Substitution Program

The United States and the European Union expressed their concern over Russia's import substitution policies during a session of Investment Measures (TRIMS) Committee of the World Trade Organization (WTO), a source familiar with the negotiations told RIA Novosti.
According to the source, the United States and the European Union were concerned over Moscow requiring priority for Russian-made products for state purchases.
Sour grapes. These people really are clueless. Did they think that Russia was just going to roll over?

What is really concerning is that they may so clueless as to stumble into provoking a war with Russia through stupidity and that war could go nuclear very easily.

US, EU Concerned Over Russia's Import Substitution Program

Joaquin Flores — Are 'Bloomberg Business' War Criminals?

Rhetorical question? This is egregious even by US standards of media propaganda, where the competition is Fox and the paper of record is the New York Times.
In a rare western interview of the leader of the Donetsk Republic, Zakharchenko was given 'the full treatment' by Bloomberg. In doing so, they indeed may have violated international law, and committed crimes against humanity and crimes against peace.
Today's article in the US publication was indeed particularly instructive. It tells us how the US and the European Atlanticists will try to spin the actual Ukrainian violations of the Minsk II Agreement and ceasefire. The US and its direct and proxy agents working in the ostensibly 'private/independent' (but de facto state controlled) media are creating the pretext to use the UN Security Council resolution which enshrines the Minsk II Agreement against those which it favors; against those whose battlefield victories made it possible. Barring that, at the very least they are breeding an internal climate and setting the national discourse to justify things which are in violation of international law.

Western media is going to do it by twisting Zakharchenko's words to fit a tremendous lie. Specifically they will do this by taking what he said out of context and then inserting them into a fictional context of western media invention.…
It may escape these criminals, big and small, that what they peddle is no different than what Julius Streicher was hung for.

Yes, the convictions at Nuremberg were not just those in the military command, or policy - but also in media. We must remember Streicher, like Joseph Goebbels - only wrote words. They only created a discourse which justified aggressive wars of conquest.
Fort Russ
Are 'Bloomberg Business' War Criminals?
Joaquin Flores

G. Doctorow — A fresh look at Strobe Talbott’s The Russia Hand: A Memoir of Presidential Diplomacy

Getting to know Strobe Talbott, the most likely contender for Secretary of State in a Clinton administration through his memoir.

Use Parole Franche
A fresh look at Strobe Talbott’s The Russia Hand: A Memoir of Presidential Diplomacy
G. Doctorow | European Coordinator, American Committee for East West Accord, Ltd. and Research Fellow of the American University in Moscow.

Strategic Culture Foundation — More Than 100 People Were Killed By Police In March Alone: State Terror w/in US Society

According to the website, more than 100 people died at the hands of law enforcement in the month of March.

The figure, which comes 31 days after the release of the White House Task Force on 21st Century Policing report, averages out to more than three people killed in America each day by police officers.

Out of the 111 people who died during police encounters, the majority have been unarmed men of color. Many of the victims were mentally ill. And a number were both, Think Progress points out.…

Strategic Culture Foundation
More Than 100 People Were Killed By Police In March Alone: State Terror w/in US Society

Strategic Culture Foundation — Iran Ready to Cooperate With Russia, China, India to Oppose NATO in Europe

Iran calls for cooperation with Russia, India and China to oppose NATO's plans for military expansion in Europe, the country's Defense Minister Hossein Dehghan said Thursday at a press conference in Moscow.
"We would like to support the idea of developing a multifaceted cooperation between China, Iran, Russia, and India to oppose the purposeful expansion of NATO to the east and placing a missile shield in Europe."

The new Axis. What did the US expect?

Chris Dillow — Forecasting vs explaining

I think that one reason the recent crisis is not a good test of economic models is that the crisis was a financial crisis rather than an economic crisis. The financial crisis morphed into an economic crisis owing to inadequate response in a timely fashion to prevent contagion. As a result the crisis "went viral" and is still healing.

Obviously, economic modeling could not foresee a gathering financial crisis because conventional economic models don't model finance. Moreover, the financial crisis was not merely financial in origin. A significant contributing factor was forensic. As a matter of fact, the forensic factor was caught by authorities. The US Federal Bureau of Investigation warned of rampant fraud in the mortgage industry, and further wrongdoing was latter discovered as a consequence of investigating the crisis after the fact.

Minsky's (conceptual) financial model of the three stages leading to financial instability. Minsky's analysis shows that a financial boom-bust cycle is not the same as a business cycle resulting from over-investment and a consequent production cut back to reduce mounting unplanned inventory with supply outpacing demand. A business cycle is about firms perception of customer demand and the level of expectations about future demand. A financial cycle is about credit extension from overly tight to overly loose.

Stumbling and Mumbling
Forecasting vs explaining
Chris Dillow | Investors Chronicle

George Friedman — Limits of the American Empire

"Empire" is a dirty word. Considering the behavior of many empires, that is not unreasonable. But empire is also simply a description of a condition, many times unplanned and rarely intended. It is a condition that arises from a massive imbalance of power. Indeed, the empires created on purpose, such as Napoleonic France and Nazi Germany, have rarely lasted. Most empires do not plan to become one. They become one and then realize what they are. Sometimes they do not realize what they are for a long time, and that failure to see reality can have massive consequences.…
The reluctant empire, or being in denial.

Limits of the American Empire
George Friedman, Stratfor Global Intelligence

Dani Rodrik — Turkish economic myths

Preparing for a panel discussion on Turkey gave me the opportunity of putting together some notes and slides on the country’s economy.
That Turkey is not doing well at the moment, economically or politically, is well known. But the roots of the problem remain misunderstood. Many analysts blame the weakening of “structural reforms” (on economics) and the turn towards authoritarianism after the Gezi protests in 2013 (on the politics). See for example here. In truth, Turkey’s problems on both fronts predate the recent slowdown in growth and have been long ingrained in the governing party’s (AKP) strategy. I have discussed the politics before at length. Here I focus on the economics.….
Of the rails here.
The AKP government was able to move the public sector into surplus (except for the crisis year of 2009), an achievement for which it receives great credit. But this improvement was more than offset by a substantial deterioration in the private sector balance. What has happened, in other words, is that the private sector has been encouraged, through easier access to credit, to go on a borrowing binge. Financial indiscipline and reckless have not disappeared; they have moved from the public to the private sector.…
If the government increases its surplus ("net saves"), then the private sector must increase its deficit ("net borrow") unless the external sector offsets the increase in government "saving" by saving less, that is, net exports much increase correspondingly.

Dani Rodrik's Weblog
Turkish economic myths
Dani Rodrik | Albert O. Hirschman Professor of Social Sciences at the Institute for Advanced Study in Princeton, New Jersey

Mariana Mazzucato — The Creative State

The conventional view in mainstream economics today is that governments have little capacity to spark innovation. The state should play as limited a role in the economy as possible, the thinking goes, intervening only in cases of “market failure.” This is far from the truth.
In fact, governments can and do play a critical role in spurring innovation – actively creating new markets, instead of just fixing them. To be sure, advocates of a limited economic role for government believe that market failure justifies some funding of infrastructure and basic science. But such limited intervention can hardly explain the billions of public-sector dollars that have flowed toward downstream applied research, even providing early-stage financing for companies. Indeed, in some of the world’s most famous innovation hubs, the state has played a key “entrepreneurial” role, envisioning and financing the creation of entire new fields, from information technology to biotech, nanotech, and green tech.…
Project Syndicate
The Creative State
Mariana Mazzucato | Professor of the Economics of Innovation at the Science Policy Research Unit of the University of Sussex and author of The Entrepreneurial State: Debunking Public vs. Private Sector Myths

Michalis Nikiforos — Not All Macro Models Failed to Predict the Crisis

Noah Smith has a post on the failure of macro theory to predict the crisis. He concedes that DSGE models did very badly on this score, but, he continues, “There are no other models out there that did forecast the crisis” and there is no better alternative.
The word “better” is important here because some “angry heterodox” people have pointed Smith to at least one alternative—Wynne Godley’s Seven Unsustainable Processes—that had in fact predicted the crisis.….
Multiplier Effect
Not All Macro Models Failed to Predict the Crisis
Michalis Nikiforos

telesur — Latin America: From US Corporate Hegemony to Regional Autonomy

The U.S. and UN sought to make dangerous interventions at the Summit of the Americas, in support of a neo-liberal economic agenda. These interventions were swiftly challenged by latin leaders promoting increased regional autonomy.…
Business innovation has failed to make social improvements comparable to Venezuela’s in other countries throughout our globalized world. Yet, business innovation is still deemed as the solution to our social, economic and environmental woes.….
Countries such as Venezuela and Ecuador prove that alternatives to relying on business to address social, economic and climate disasters exist. They prove that big business cause the social, economic and climate disasters, and that relying on them to solve the problems they create simply does not make sense. Instead of touting the underlying assumptions of neoliberalism and regional empire, perhaps Ki-moon, Obama and others should take a closer look at the substantive social transformations occurring in many Latin American countries and that have cleared the path for further regional autonomy and alternative economics.
Latin America: From US Corporate Hegemony to Regional Autonomy

RT — Ruble passes 50 against USD for 1st time since November

Ruble on a tear and still rising against the dollar as I write this. USD/RUB = 49.70

Ruble passes 50 against USD for 1st time since November


Brazil Business Today
Russia, Brazil Best Emerging Bond Markets - HSBC Specialist

Wednesday, April 15, 2015

Oil price rally means a big Forex opportunity. Sign up for my Apr 27-May 1 online FX trading boot camp and get the knowledge to cash in on this move!

Oil prices have bottomed and with it, so has the Canadian dollar, a very oil sensitive currency.

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