Simon Wren-Lewis — On the Stupidity of Demand Deficient Stagnation

In my last post I wrote about “why recessions caused by demand deficiency when inflation is below target are such a scandalous waste. It is a problem that can be easily solved, with lots of winners and no losers. The only reason that this is not obvious to more people is that we have created an institutional divorce between monetary and fiscal policy that obscures that truth.” I suspect I often write stuff that is meaningful to me as a write it but appears obtuse to readers. So this post spells out what I meant.

Mainly Macro
On the Stupidity of Demand Deficient Stagnation
Simon Wren-Lewis | Professor of Economics, Oxford University

My comment there:

Props for crediting MMT.

As you say, this is not innovation in macroeconomics or politics. At the time of the Great Depression, New Deal and WWII, it was advised by Fed chair Marriner Eccles and FRBNY director and then chair Beardsley Ruml, for instance.

As Paul Krugman has noted, what was known previously has been forgotten. MMT economists admit that most of their contribution has been weaving various existing thread together, for example, Wynne Godley's SFC macro modeling using sectoral balances, Abba Lerner's function finance, and Hyman Minsky's analysis of financial instability, as well as his proposal for an employer of last resort-job guarantee similar the the WPA and CCC of the New Deal, which was later the inspiration for the Peace Corps created by JFK. 

BTW, as you may have heard, MMT economist Stephanie Kelton has just been hired as chief economist for the minority of the US Senate budget committee, and she is taken a two year leave of absence from the University of Missouri at Kansas City. Hopefully, she can get the ball rolling on some of this in the US Congress.

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Daily Kos — GOP Columnist: The VERY Bad News FOR THE GOP in the GOP's Midterm Victory

The 2014 wave election was hardly the indication of coming GOP sweeps, as some conclude. The GOP looks to have a serious demographic problem. They have boxed themselves in with wedge issues that don't have mass appeal. Worse, there is no one on the horizon that can change this declining direction and survive a GOP primary under present conditions.

The upshot? The decisive elections will be decided in Democratic primaries between the neoliberal and progressive wings until the GOP can get its act together again. This is a pretty strong predictor for HRC in 2016 if the analysis holds. After 2016, the GOP collapses demographically unless they can regroup.

Daily Kos
GOP Columnist: The VERY Bad News FOR THE GOP in the GOP's Midterm Victory
murphthesurf3

Francis P. Sempa — The Geopolitical Vision of Alfred Thayer Mahan

One hundred years later, the insights of the American strategist continue to have extraordinary relevance today.

The Diplomat
The Geopolitical Vision of Alfred Thayer Mahan
Francis P. Sempa

see also

James R. Holmes, Taiwan's New Stealth Corvettes: Just What the Doctor Ordered?

Getting practical.

Bryan Caplan — The Evidence of Altruism

The logic of collective action versus the free rider problem. Take that, economic liberalism.

Each of these stories appeals to self-interest, but economists almost uniformly reject them as absurd. Why? Because they ignore another beloved economic insight: the logic of collective action. When actors have a small effect on big social outcomes, and their only incentive to act is the big outcome itself, selfishness urges them to stand down, twiddle their thumbs, free ride, and yawn "Let someone else do it."

Econolog
The Evidence of Altruism
Bryan Caplan | Professor of Economics at George Mason University, research fellow at the Mercatus Center, adjunct scholar at the Cato Institute.

Bryan Caplan is a Libertarian (anarcho-capitalist). But see his Why I Am Not an Austrian Economist.

Apparently, some Libertarians (right libertarians) get it about the logic of collective action and the free rider problem that arises from economic liberalism based on self-interest (rational pursuit of maximum utility).

On the other hand, all left libertarians get this, as well as social democrats and heterodox economics of the left — which is why they are on the left. Caplan links to the Wikipedia article on the logic of collective action, which is chiefly about the book of that title by Mancur Olson. What it fails to mention is Nobel laureate in economics Elinor Ostrom's collective action and social development. See her paper, Collective Action and the Evolution of Social Norms.

Oh, and contrary to Libertarian assumptions to the contrary, some people are actually motivated by altruism. Moreover, this is the normal path of human development toward self-actualization and unfolding human potential.

Altruism one manifestation of spiritual maturity. Caplan seems to think that his explanation is comprehensive, whereas it is only partial. Just as humans develop physically, emotionally and intellectually, they are also capable of developing spiritually, that is, the the direction of greater universality as the boundary of individuality recedes toward the horizon of wholeness.

Spiritually immature people imagine that altruism means giving up individual desire, choice and action, which kill one's individuality, one's sense of personal self, that to which one relates everything, which is what one is. However, the opposite is the case. As one grows spiritually through actualizing one's potential as a human being, one becomes more fulfilled, more complete, and happier. As Aristotle observed in Book One of Nichomachean Ethics, happiness or well-being (eudaimonia) is the by-product of excellence (arete). This is consistent with the perennial teaching of those to whom humanity looks to as sages about the spiritual path and the progressive realization of inherent potential. To miss this is to miss what is truly important in life.

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Ezra Klein — This is how the government should budget. But it probably can’t.

Proof positive that Ezra Klein is a moron. Why do people like to him? Oh, they are morons too.

If the government cuts spending on Social Security by $10 billion then it really has saved $10 billion.

VOX
This is how the government should budget. But it probably can’t.

Ezra Klein

Micah White — 9 Notes On The Future Of Revolution

If there’s gonna be a revolution, it’ll happen non-violently. I think it’ll be a very peaceful kind of. It’ll be more like an awakening, you know?

You think maybe maybe he read The Fourth Turning?

Esquire Magazine

9 Notes On The Future Of Revolution

Micah White, cofounder of the Occupy movement

William Blum — American Exceptionalism and American Torture

 Lest we forget...

If you open the window of torture, even just a crack, the cold air of the Dark Ages will fill the whole room.

Cold air or stench?

No, Obama didn't end torture.

BTW, if you haven't seen Brazil (1985 film), it's as apropos as Orwell's 1984.

Counterpunch

American Exceptionalism and American Torture
William Blum

Also

Truthout
We Need Moral Certainty on Torture

Victoria Bassetti, Brennan Center for Justice | Op-Ed

We need to reestablish that foundational, incontrovertible moral certainty we once had about torture. The Senate report was a bold and important step toward reestablishing that certitude. More is needed. 

There is a less known coda to the Milgram experiments. When dissent was added into the equation, when someone objected to the shocks being administered, the experiment participants’ willingness to inflict abuse diminished substantially. 

"The social psychology of this century reveals a major lesson: often it is not so much the kind of person a man is as the kind of situation in which he finds himself that determines how he will act," Milgram wrote after more than a decade’s work.

Washington's Blog
Senior U.S. Government Officials: Release the Full Torture Report

With permission from Veteran Intelligence Professionals for Sanity.

MEMORANDUM FOR: Senator Mark Udall 

FROM: Veteran Intelligence Professionals for Sanity (VIPS) 

SUBJECT: Stopping Torture 

We, the undersigned are veteran intelligence officers with a combined total of over 300 years of experience in intelligence work. We send you this open letter at what seems to be the last minute simply because we had been hoping we would not have to.…

For the Steering Group, Veteran Intelligence Professionals for Sanity (VIPS)

William Binney, former Technical Director, World Geopolitical & Military Analysis, NSA; co-founder, SIGINT Automation Research Center (ret.) 

Thomas Drake, Defense Intelligence Senior Executive Service, NSA (resigned) 

Daniel Ellsberg, former State Dept. & Defense Dept. Official (VIPS Associate) 

Mike Gravel, former Senator from Alaska; former Army intelligence officer 

Larry Johnson, CIA analyst & State Department/counterterrorism, (ret.) 

John Kiriakou, former CIA counterterrorism operations officer; federal prison, Loretto, Pennsylvania 

Edward Loomis, former Chief, SIGINT Automation Research Center, NSA 

David MacMichael, USMC & National Intelligence Council (ret.) 

Ray McGovern, Army Infantry/Intelligence officer & CIA presidential briefer (ret.) 

Elizabeth Murray, Deputy National Intelligence Officer for Middle East (ret.) 

Todd Pierce, MAJ, U.S. Army Judge Advocate (ret.) 

Coleen Rowley, Minneapolis Division Counsel & Special Agent, FBI (ret.) 

Peter Van Buren, Department of State, Foreign Service Officer (ret.) 

Kirk Wiebe, Senior Analyst, SIGINT Automation Research Center, NSA (ret.) 

Ann Wright, Col., US Army (ret); Foreign Service Officer (ret.)

Max Blumenthal — Exposed: How Republicans and Cops Are Teaming Up to Take Down deBlasio

How much does it cost you to live in your house? If you are a renter, the answer to that question is fairly straightforward (although if your rent includes a gym membership and heat, it is not clearcut what the simple cost of occupying your place is). 

But suppose you are an owner. What is it costing you every month or every year to live in your house? The truth is, you don't know with a great deal of precision, and neither does anyone else. 

There are two ways to look at the issue.…

Pretty much like the right wing went after Clinton and Obama. Now it's De Blasio's turn.

More divisiveness that is ripping the US apart and hemorrhaging American soft power on the world stage.

AlterNet
Exposed: How Republicans and Cops Are Teaming Up to Take Down deBlasio
Max Blumenthal

See also

AlterNet
Whistleblowing Officer Makes Tape of Top Cop Ordering Stop-and-Frisks of Black Males
Walter Einenkel, DailyKos

Stop “the right people, the right time, the right location,” Deputy Inspector Christopher McCormack is heard saying on the recording.
[...] 

“So what am I supposed to do: Stop every black and Hispanic?” Serrano was heard saying on the tape, which was recorded last month at the 40th Precinct in the Bronx.
[...] 

“I have no problem telling you this,” the inspector said on the tape. “Male blacks. And I told you at roll call, and I have no problem [to] tell you this, male blacks 14 to 21.” 

The tape and testimony are a part of a class-action lawsuit against the NYPD's stop-and-frisk policy.

Crooks and Liars
Mayor DeBlasio: Fire The Commissioner And Discipline Insubordinate Police Officers
Susie Madrak

Democracy Now
NYPD Officer Speaks Out on Fellow Cops Who Turned Backs to Mayor & Why People of Color Fear Police

Amy Goodman interviews Adhyl Polanco

Jacobin
Smash the Lynch Mob
Ari Paul

rjs — November PCE up 0.6%, PCE price index down 0.2%, real PCE on track to jump at 4%+ rate in Q4

Last week the Bureau of Economic Analysis released their report on Personal Income and Outlays for November, which in addition to the important personal income data, also reports the monthly data on our personal consumption expenditures (PCE), which as you all know is the major component of GDP. From that data, the BEA also computes personal savings and the national savings rate, as well as a price index for PCE, the inflation gauge the Fed targets, and which is used in this report to adjust both personal income and consumption expenditures for inflation to arrive at 'real' change figures.. Like the GDP reports, all the dollar amounts referenced by this report are seasonally adjusted and at an annual rate; so the nominal monthly dollar changes, which are not reported, are actually on the order of one twelfth of the reported amounts. However, the percentage changes are expressed as a month over month change and are confusingly used within the report as if they refer to the annualized amounts, making for a difficult report to unpack and report on correctly...

The Economic Populist
November PCE up 0.6%, PCE price index down 0.2%, real PCE on track to jump at 4%+ rate in Q4

rjs

Yanis Varoufakis — Greece is about to give European democracy a chance

Democracy is in big trouble in the EZ. Can the birthplace of Western liberal democracy extricate it.

Yanis Varoufakis
Greece is about to give European democracy a chance

Federal Outlays vs. Net Federal Withdrawals at $700B Divergence for FY 2014

Here is a snip from the latest Monthly Treasury Statement which includes the total Outlays for the previous FY:

So we can see here that Treasury has last FY's total "Outlays"at $3.5T.

While if we look at the Daily Treasury Statement for last FY and examine net Withdrawals from the Treasury account at the Fed here:









































If we subtract the total amount of these withdrawals due to UST redemptions of $6.885T from the total withdrawal figure for the FY of $11.071T we are left with about $4.2T of net withdrawals from the US Treasury account.

So the difference between this cash basis amount of 'withdrawals' from the US Treasury account and the accrual basis amount of "outlays" is running at about $700B annual rate, or about 20% of accrual basis "outlays".

So this divergence between the cash basis number in the DTS vs the accrual basis number of the MTS, each of which is supposed to be representative of what the federal government is "spending", is pretty substantial here for last FY at 20%.

Tages Anzeiger — 100 Top Global Thought Leaders 2014

Predominantly liberal.

Pope Francis is the most influential thinker of today. Until 13 March last year he was still known as Jorge Mario Bergoglio and had little worldwide influence as an Argentinian cardinal. Close on his heels is the ‘Internet Pope’ Tim Berners-Lee. The number of researchers and scientists from the USA and Europe is striking, as is their age. Among the top ten, there are only two persons under 60. And only two women, which is less than could have been expected from their representation of 37% in the top 100.

It is also interesting that the economists who were once the centre of public attention have lost ground since the world economic crisis of 2008. The two best-placed economists don’t stand for highly competitive positions in debates on tax and economy; they stand for value-orientated discourse: Amartya Sen (rank 3) and Muhammad Yunus (rank 5) are both pioneers in the fight against poverty.

The fact that discourse about values is more important than debates on the economy or technology can be seen by the ranking of philosophers (an increase from 6 to 10 representatives in the top 100) and theologians – including the evolutionary biologist Richard Dawkins in rank 19. The relationship between state and religion has become a hot topic, particularly due to Islam. In the Catholic Church, too, a whole host of new debates was triggered by the appointment of the new Pope.…

Tages Anzeiger
100 Top Global Thought Leaders 2014

My podcast for Dec 29.

My podcast for today.

Forex trading. Police insubordination. The weakness of liberals and progressives. Obama's love of neoliberalism.


Podcast for Dec 29.

The Arthurian — "No government in history has been known to evade this pattern."

"Governments, if they endure, always tend increasingly toward aristocratic forms. No government in history has been known to evade this pattern. And as the aristocracy develops, government tends more and more to act exclusively in the interests of the ruling class -- whether that class be hereditary royalty, oligarchs of financial empires, or entrenched bureaucracy." — Frank Herbert, Children of Dune

The New Arthurian Economics
"No government in history has been known to evade this pattern."
The Arthurian

As we enter 2015, it is not useless to look backwards in order to try to guess the trends of the future. I would argue that the age that we are, to some extent exiting now, and which extended from the early 1980s, can be called the “second age of imperialism”--the first one, in the modern history, having been the age of high imperialism 1870-1914.

I will focus here on some of its key manifestations in the ideological sphere, in the areas I know, history and economics. But it should be obvious that ideology is but a manifestation of the underlying real forces, which were twofold: (i) the failure of most developing countries by 1980 to become economically successful and self-sustaining after decolonization and the end of Communism as an alternative global ideology, and (ii) the relatively solid economic record of Western countries (masked by the expansion of borrowing for the lower classes), and regained self-confidence of the elites in the wake of the Reagan-Thatcher (counter-) revolutions and the fall of Communism. The violent manifestations of the second age of imperialism were invasions of Afghanistan and Iraq, brutal war in Libya, and the defensive imperialism of Russia in Ukraine and Georgia. But here we are concerned with the superstructure.…

In economics, the second age of imperialism was best reflected in many doctrines and concepts that became discredited during the Great Recession (efficient markets, rational expectations, costless transactions, representative agent, “trickle-down” economics), but even more so in the Washington consensus. While the Washington consensus, the list of ten desirable economic policies to be implemented in the Third World, drawn by John Williamson and reflecting the views of the Washington establishment, had valuable insights, it provided a template for mindless imposition of policies that often, within the context of countries that were forced to implement them, were counterproductive. The Washington consensus was a perfect complement to Fukuyama’s “end of history” because it offered the ultimate economic policies to go together with Fukuyama’s ultimate political organization.

Milanovic broadly summarizes his view of the history, geopolitics, and political economy underlying the rise of the global economy under liberalism.  Outlook? Pessimistic.


Global Inequality
The second age of imperialism
Branco Milanovic | Visiting Presidential Professor at City University of New York Graduate Center

Michael Sankowski — Business Cycles: Are they really that mysterious?

It's housing, stupid. Which is a proximate cause of the lagging "recovery" that isn't for most people. The housing channel is not only a major component of investment but housing also drives consumer spending on house and home related items such as furnishings.  The obvious question is why housing remains in the tank with so many years of historically low mortgage rates. Here is the income channel, as well as a higher propensity to save (increased liquidity preference owing to heightened uncertainty and reduced expectations).

Monetary Realism
Business Cycles: Are they really that mysterious?

Michael Sankowski

Marshall Auerback — Expect A Bad Fourth Quarter Growth Surprise

So what did Americans supposedly spend so much more on compared to the previous revision released one month ago? Was it cars? Furnishings? Housing and Utilities? Recreational Goods and RVs? Or maybe non-durable goods and financial services? 

Actually no. The answer, according to Paul Craig Roberts was Obamacare: [chart]

As Roberts notes, “two-thirds of the ‘boost’ to final Q3 personal consumption came from, drumroll, the same Obamacare which initially was supposed to boost Q1 GDP until the “polar vortex” crashed the number so badly, the BEA decided to pull it completely and leave this “growth dry powder” for another quarter. That quarter was Q3.” 

This is actually almost correct. It’s not politics but practical problems with quarterly estimation of an enlarged service sector (2/3 of consumption), for which the statistical system here is not designed, a short-coming that is hard to remedy while Congress starves BEA of funds. They have come up with a Quarterly Services Survey to fill the gap but it systematically causes wild swings like the one described above, not because of dark political motivations but because of their methods.…

Macrobits by Marshall Auerback
Expect A Bad Fourth Quarter Growth Surprise
Marshall Auerback

See also

The Center of the Universe
ecri still negative

Warren Mosler

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Putin Wants Sky-High Rates to Come Down. But Will They? And When?

Key question here... story at Bloomberg via Yahoo here.  Could be potential bad news on the horizon.

While there are plenty of obstacles to lowering rates with inflation at a 3 1/2-year high and the ruble set for the biggest drop since 1998, derivatives used to predict future borrowing costs signal cuts are in store in the first quarter. 

Central bank Governor Elvira Nabiullina unexpectedly raised the benchmark to 17 percent from 10.5 percent two weeks ago, putting the economy at risk of a deeper recession to prop up the ruble.

I hope they don't cut rates so soon.

We need them to keep the rates up for a meaningful period to see if the true effects of an interest rate raise are actually stimulative as the govt is a net payer of interest and as such, high rates are fiscally supportive.

If this hypothesis is true we should see a fairly rapid domestic Russian recovery if they keep rates up at 17% for rouble savers long enough.

David F. Ruccio — Bad ideas of mainstream economics

The following post was contributed by Richard McIntyre, in response to Alan Blinder’s review of Jeff Madrick’s book, Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World, in the New York Review of Books.

Occasional Links & Commentary
Bad ideas of mainstream economics
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Red Pill Times — Greek Prime Minister goes full fear monger mode in last ditch effort to avoid elections

They did it with Scotland and they are at it again with Greece. 

In an all out effort to avoid snap elections in Greece and more Eurozone woes, Brussels lapdog and Greek PM Antonis Samaras is going full fear monger mode in order to convince 12 more MPs to vote for his choice for President this Monday. If the Greek Parliament fails to reach the 180 voted needed to approve Stavros Dimas as Greece’s new President (a purely symbolic role) then, as stipulated in the constitution, elections must be called, and that’s when things get interesting.

The Guardian reports….

Failure would automatically trigger elections that radical leftists would be likely to win. The ballot has therefore electrified Greece, rattled markets and unnerved Europe. “I am once again appealing to all MPs, of all parties, to vote for the president of the republic,” Samaras told state television. “If we don’t elect a president the responsibility will hang heavily over those who don’t vote for [him]. They will be remembered by everyone, especially history.”

Red Pill Times
Greek Prime Minister goes full fear monger mode in last ditch effort to avoid elections
alexrpt

William Pesek — China Steps In as World's New Bank

Sour grapes, or bitter pill? Looks like a bit of both. Any rate, it's a wake-up call for the West.

The sanctions against Iran and now Russia may turn out to be a bigger geopolitical and geostrategic blunder than the invasion and occupation of Iraq and Afghanistan, along with the Asian pivot and excluding China from the TPP.

Bloomberg View
China Steps In as World's New Bank
William Pesek

The Rutherford Institute — U.S. Supreme Court Rules 8-1 that Citizens Have No Protection Against Fourth Amendment

In a blow to the constitutional rights of citizens, the U.S. Supreme Court ruled 8-1 in Heien v. State of North Carolina that police officers are permitted to violate American citizens’ Fourth Amendment rights if the violation results from a “reasonable” mistake about the law on the part of police. Acting contrary to the venerable principle that “ignorance of the law is no excuse,” the Court ruled that evidence obtained by police during a traffic stop that was not legally justified can be used to prosecute the person if police were reasonably mistaken that the person had violated the law. The Rutherford Institute had asked the U.S. Supreme Court to hold law enforcement officials accountable to knowing and abiding by the rule of law. Justice Sonia Sotomayor, the Court’s lone dissenter, warned that the court’s ruling “means further eroding the Fourth Amendment’s protection of civil liberties in a context where that protection has already been worn down.” 

The Rutherford Institute’s amicus brief in Heien v. North Carolina is available at www.rutherford.org. 

“By refusing to hold police accountable to knowing and abiding by the rule of law, the Supreme Court has given government officials a green light to routinely violate the law,” said John W. Whitehead, president of The Rutherford Institute and author of the award-winning book A Government of Wolves: The Emerging American Police State. “This case may have started out with an improper traffic stop, but where it will end—given the turbulence of our age, with its police overreach, military training drills on American soil, domestic surveillance, SWAT team raids, asset forfeiture, wrongful convictions, and corporate corruption—is not hard to predict. This ruling is what I would call a one-way, nonrefundable ticket to the police state.”

What would possibly count as "unreasonable" if then police discovery something "by chance." This is carte blanche, or even an invitation to abuse.

The Rutherford Institute — On the Front Lines
U.S. Supreme Court Rules 8-1 that Citizens Have No Protection Against Fourth Amendment Violations by Police Officers Ignorant of the Law

Press Release

Akin Oyedele — Goldman's Top Economist Jan Hatzius Just Answered The 8 Most Important Questions For 2015

Goldman Sachs's chief economist Jan Hatzius just published answers to what he believes are the eight top questions for next year. 

Here's a list of the questions and our quick summaries of his thoughts…

So in summary, the US economy will grow together with the dollar, faster than its global peers. But inflation below the Fed's target will push its rate hike back to at least September, and the impact of lower oil prices will continue to be felt throughout the economy.

Basically good new. Low wage growth is good news for capital, bad for labor though and bad for inequality, the driver of which is capital share versus labor share.

Business Insider
Goldman's Top Economist Just Answered The 8 Most Important Questions For 2015
Akin Oyedele

Matias Vernengo — The meaning of Structuralism: a very short reply to Krugman

By the way, his lack of appreciation for Structural theories of inflation is also based on this obsession with the Natural Rate. For him all inflation is caused by excess demand (it turns out that Krugman is a Monetarist). Latin American structuralists pointed out that the changes in the structure of production created cost push causes for inflation. Logic and evidence suggest that they were right. By the way, same reason you shouldn't, as Krugman isn't, afraid about inflation in the US right now. Not close to full employment, and bargaining power of labor class at all time low, with no wage cost pressures. For a slightly longer discussion see this entry on the meaning of structuralist macroeconomics, and thisone on the evolution of Latin American Structuralism which is still around (yep, the news of our demise are greatly exaggerated).

Naked Keynesianism
The meaning of Structuralism: a very short reply to Krugman
Matias Vernengo | Associate Professor of Economics, Bucknell University

L. Randall Wray — Not Dead Yet: Post Keynesian Economics Lives On At UMKC

Leading Post Keynesian Modern Monetary Theorist (MMT) and Chair of the Economics Department at the University of Missouri-Kansas City (UMKC) is leaving there to become the Chief Economist of the Minority at the US Senate Budget Committee. She is reported to have been hired by Bernie Sanders, who will be ranking member of that committee after the Dems lose control of the Senate in January. 

http://econospeak.blogspot.com/2014/12/stephanie-kelton-goes-to-washington.html
Barkley Rosser goes on to claim I’ve also left UMKC, and frets that this might be the end of Post Keynesian Economics at UMKC. 

Nothing could be farther from the truth. Yes, I’m half-way through what is arguably a well-earned and long-overdue year-long sabbatical. And Professor Kelton is taking a two year leave of absence to go to Washington to try to knock some sense into beltway politicos, pundits, and progressives. 

But Post Keynesian economics, as well as other heterodox strands of economics, is alive and well at UMKC.…

Economonitor — Great Leap Forward

Not Dead Yet: Post Keynesian Economics Lives On At UMKC

L. Randall Wray | Professor of Economics, University of Missouri at Kansas City

Puja Mehra — Free market model has failed: Kaushik Basu

“World Bank too has changed its goal to fighting no longer for just eradication of poverty but also for shared prosperity”

There is now a consensus the world over that the free market economic model does not work, said World Bank chief economist and former Chief Economic Adviser to the government of India Kaushik Basu on Sunday.…

Just as complete state control fails, leaving all decisions to markets results in grave inequalities and so it doesn’t work even politically, argued Dr. Basu. “The things that were ideologically rooted on the extreme right and extreme left, those fringes have now fallen off.” 

Now, “sharing of the pie” with the bottom 40 per cent of people is gaining traction even with the International Monetary Fund and economists such as Thomas Piketty, Dr. Basu said.

Reflecting the new consensus, Dr. Basu said the World Bank formally changed its goal to fighting no longer for just eradication of poverty but also for shared prosperity.

Dr. Basu’s statement assumes significance as the Economic Survey states that the Narendra Modi government plans to bring in a “pure market economy” through legislations and new processes where the role of the state would be limited to intervening in case market forces fail.…

Them's fighting words (for neoliberals).

The Hindu
Free market model has failed: Kaushik Basu
Puja Mehra

Also important: Dr. Basu also said that the World Bank was planning to create an ‘Ease of Living Life’ rating of countries that would be on the lines of the ‘Ease of Doing Business’ in which India ranks poorly. The rating being planned will rank countries on the costs incurred by ordinary people in interface with the bureaucracy.

See also

Forbes
Is Homo Economicus A Psychopath?

Peter Ubel

So far then, we have learned that the small percent of people who qualify as Homo economic [HE] – who kept all the money for themselves in all these games – are smarty-pants who, feeling appreciated, manipulate others to their own ends. That is already a scary prospect. But it gets worse. HEs and qHEs demonstrate psychopathic traits, caring little for the well-being of others…

To make matters even worse, as opposed to full on psychopaths, who tend to be a disorganized lot, HEs demonstrate above average self-discipline….

The researchers paint a powerful picture of Homo economicus: “We see a person who is intelligent, driven to excel and to dominate other people, and capable of impulse control and of working toward long-term goals. In other words, Homo economicus is the prototypical member of the social and economic elite.”

Directed Acyclic Graph of "the deficit"

I've used the Dagitty software to produce a causal relationship diagram in the form of a Directed Acylic Graph presented below to illustrate the causation related to "the deficit".

I've thought about this a bit and can come up with no other causal outcome that results from the computation of "the deficit" other than "Rantings of Morons" outcome that I've diagrammed here.

If any of our readers can come up with another causal outcome, I would appreciate that they would provide this in the comments and I'll try to update this diagram if indeed "the deficit" can be shown to be a causal ancestor of the reader's proposed resultant outcome.

So short of this, we should never be using the phrase "the deficit (level) is causing (insert economic outcome here)....." as the only thing "the deficit" causes is the outcome identified above.

At least at this point I can identify no other causal outcome that results from the computation of "the deficit".

Joseph Lawler — Sanders names 'deficit owl' his chief economist

Congratulations, Stephanie!!!!!!

A prominent advocate of bigger deficits and unconventional economics will be Sen. Bernie Sanders’ chief economist when he becomes the ranking member of the Senate Budget Committee in January. 

Stephanie Kelton, a self-described “deficit owl” and a leading proponent of the alternative economics theory known as modern monetary theory, announced that she would be the chief economist for the minority on the Budget Committee Friday. 

“We’re very excited to have her on our team,” Sanders aide Warren Gunnels told the Washington Examiner, noting that Kelton has “very strong academic credentials.”
Kelton is currently the chairwoman of the economics department at the University of Missouri-Kansas City. In addition to her academic career, she has a strong presence on social media, especially on Twitter. 

Since the financial crisis, Kelton has developed a following as a defender of larger deficits to counteract the recession, as well as one of the leading exponents of modern monetary theory, popularly referred to as MMT.….

Bernie's Christmas present to the US and world. MMT is now on the political map with an official "insider."

Washington Examiner
Sanders names 'deficit owl' his chief economist
Joseph Lawler

Dara Lind — Why police officers often resort to lethal force as their first response

Why you are in mortal peril if a police officer thinks he is in mortal peril. As the fear factor rises, it doesn't take much.

VOX
Why police officers often resort to lethal force as their first response
Dara Lind

Also

Truthout | Op-Ed
A New Year's Resolution: Don't Call the Police
Mike Ludwig

Max Fisher — Putin couldn't make Russia a great power, so he made it a geopolitical racketeer

A US view of Russia under Putler.

VOX
Putin couldn't make Russia a great power, so he made it a geopolitical racketeer
Max Fisher

Another one

The World Post
Russia's Economy Headed For Even More Trouble
Reuters

Siluanov also said the country would run a budget deficit of more than 3 percent next year if the oil price did not rise.

The horror of it. (Russia has been running a surplus as a net exporter.)

Peter A. Coclanis — The Year of Piketty

Exploration of inequality and how it applies in context.

I prefer the more denotative and less connotative "asymmetry" to "inequality." Sociology, history, politics and economics can be viewed as inquiries into different types of asymmetry and how they interact in different contexts.

Counterpunch
The Year of Piketty — The Complications of the "I-Word"
Peter A. Coclanis | Albert R. Newsome Distinguished Professor of History and Director of the Global Research Institute at the University of North Carolina, Chapel Hill

Andrei Volodin — Italy – Russia: Peace Geopolitics in Eurasia

Multipolar globalization is underway despite the US. Multipolar liberal globalization versus unipolar neoliberal globalization is now on the table and it will be a major issue in the coming year. The big question is which way European powers will tilt.

Strategic Cultural Foundation
Italy – Russia: Peace Geopolitics in Eurasia
Andrei Volodin

Yanis Varoufakis — The euro’s first inkling – a piece in lieu of Best Wishes for 2015

Fascinating piece of history well told.

Yanis Varoufakis
The euro’s first inkling – a piece in lieu of Best Wishes for 2015

Strategic Culture Foundation — Russia’s new military doctrine lists NATO, US as major foreign threats

Russia has adopted an updated version of its military doctrine, which reflects the emergence of new threats against its national security. NATO military buildup and American Prompt Global Strike concept are listed among them. 

The new doctrine was approved on Friday by President Vladimir Putin. Its core remains unchanged from the previous version. The Russian military remains a defensive tool which the country pledges to use only as a last resort. 

Also unchanged are the principles of the use of nuclear weapons which Russia adheres to. Their primary goal is to deter potential enemies from attacking Russia, but it would use them to protect itself from a military attack – either nuclear or conventional – threatening its existence.…

"Partners" no more?

Strategic Culture Foundation
Russia’s new military doctrine lists NATO, US as major foreign threats

Also

Common Dreams
Amid Heightened Tensions With the West, Russia Declares NATO is Top Military Threat

Nadia Prupis

The doctrine, which Putin signed as Russia's economic power and international relations continue to deteriorate, maintains many of the provisions put into place in its previous edition, signed in 2010. Among those is the possibility of Russia using nuclear weapons in retaliation to other nations targeting Russia or its allies with weapons of mass destruction—though the doctrine concedes that those scenarios are unlikely. 

A new provision, however, adds that Russia could use precision weapons "as part of strategic deterrent measures," without elaborating on how and when those weapons would be used.…

Ahead of the doctrine's release, the Russian government said NATO was turning Ukraine into a "frontline of confrontation." The Defense Ministry also posted a Tweet on Wednesday warning that Ukraine's "accession to alliance will bring Russia-NATO relations to complete collapse."

****

Bloomberg
Russia Hardens Military Doctrine Amid NATO Standoff Over Ukraine
Henry Meyer

Russia hardened its military doctrine, identifying new threats after tensions with its Cold War foe NATO increased over the conflict in Ukraine.
The revised document posted today on the Kremlin website names attempts to overthrow neighboring governments as a major threat, as well as the North Atlantic Treaty Organization’s buildup close to the country’s borders. The previous draft was published in 2010. 

Russia also cited as threats information campaigns aimed at corrupting the Russian population, sabotage by foreign intelligence, the deployment of missile-defense components and high-precision conventional weapons, and the use of information technology for military purposes.…

“Russia is the target of an unprecedented information-propaganda campaign,” Popov said. “It’s being cast as an enemy and its political course is seen as a new threat for NATO.”

Andre Vltchek — The Empire is Crumbling, That is Why it Needs War

Some will view this as a rant, others as a call to arms, and yet others as a rather accurate view of the state of global affairs and the trend of geopolitics. Regardless of viewpoint, it is an increasingly widely held point of view that is exerting an impact geopolitically. And anyone that can't hear the war drums beating is deaf.

The mask has fallen and what is now exposed is horrifying: the face of amonster, with blood and pus, a greedy grin and merciless fangs. It is a monster that is still in love with itself, unable to see its dreadfulness. It remains proud of its fundamental religious dogma, which it often doesn’t even see as ‘religious’. It dwells on self-righteousness, and at the same time, on its twisted market-fundamentalist faith that everything and everybody are for sale. It is a monster full of complexes – both those of superiority and inferiority. 

It is not a happy monster and the people it produces are mostly miserable, lonely and scared. But it cannot change, it cannot back-up, it cannot let go. It would rather destroy its children and the world, than to admit that it went totally wrong, for years, decades and centuries. 

Now many people have had enough, and some have even forgotten how to be scared! And the monster knows it, and it is actually scared itself, of those who are not scared of it.

The voices of the voiceless are now resonating louder and louder – we make sure that they are! 

Except in the countries where the intellectuals and ‘elites’ have totally sold out, like in Indonesia or Malaysia, the horrendous deeds of the colonialism and neo-colonialism of Europe and North America, are finally being discussed, analyzed, and understood.
And the monster, the Empire, knows that it is the beginning of the end.

It cannot live as an equal. Therefore, it will fight its final battle. It will try to win. Or, it will try to destroy the world. Because life is not worth living for it, if it is not in full control; if its God is not in control, if it is not perceived as the enforcer of the divine manifesto….

Counterpunch
The Empire is Crumbling, That is Why it Needs War
Andre Vltchek

Also from Counterpunch

Ron Jacobs, The Sense of Disconnection is Unreal

Raheel Hayat, The Torture Industry

FRBSF — Global Aging: More Headwinds for U.S. Stocks?

The boomers have had a marked influence economically as they passed through the stages of life. No reason to think that won't happen as they retire and start to draw on accumulated savings. Will this be offset?

The retirement of the baby boomers is expected to severely cut U.S. stock values in the near future. Since population aging is widespread across the world’s largest countries, this raises the question of whether global aging could adversely affect the U.S. equity market even further. However, the strong relationship between demographics and equity values in this country do not hold true in other industrial countries. This suggests that global aging is unlikely to create additional headwinds for U.S. equities.

FRBSF Economic Letter
Global Aging: More Headwinds for U.S. Stocks?
Zheng Liu, Mark M. Spiegel, and Bing Wang

Geopolitics, Geostrategy, Neoliberalism, and Globalization

Catching up on geopolitics, geostrategy, neoliberalism, and globalization.

Increasing China’s outbound investment is part of Beijing’s long-term economic and political strategy.

Enter the dragon.

The Diplomat

China Urges Companies to ‘Go Global’
Shannon Tiezzi

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This is a geopolitical and geostrategic scenario that I have been alluding to. Hopefully it won't prove correct and cooler heads will prevail. 

But this is essentially the same scenario that led to WWI, when Britain and France became concerned that the rising German Empire was upsetting the balance of power in Europe after the Franco-Prussian War aka the War of 1870.

The problem is that by way of pure demographics the Western Alliance concedes a majority of the world’s assets will be owned by the East within the next few years and with majority of wealth typically comes control. James Wolfensohn, ex president of the World Bank, lays out the global power shift very clearly in his address at Stanford University. But so how does the Western Alliance hold onto global control whilst no longer holding the majority of the world’s assets? Well that is the challenge James presents to students in his address. In reality the Western Alliance is not calmly passing the challenge onto these future leaders but is very much initiating the battle to end all battles. You see it is natural for the Alpha dog to eventually pass on the crown. It happens in all top-of-the-food-chain species, lions, wolves, bears, etc. The dominating male will eventually be challenged by a more impressive up and comer. And while that alpha dog can hold onto his top rank for a few years past his prime by putting on a show of strength eventually it comes down to his last fight.

I see that as where America and the Western Alliance stands today. You see we’ve been barking very loud and putting on an impressive show of strength by taking on very weak challengers since the beginning of the new millennium, however, the real challenger is China. And we’ve all known that for some time. As Wolfensohn discusses it is becoming a now or never reality for the Western Alliance. Either they find a way to contain the impressive beast or they give up their Alpha status. And so here they are in the fight for global control. In that earlier piece I wrote I describe how the Western Alliance is targeting energy, as it is China’s achilles heel. China’s energy source for the future is Russia. Given its economic, military and energy prowess, a Sino-Soviet Alliance will trump the Western Alliance. The objective then is to destroy the Soviet variable before the Sino-Soviet Alliance is fortified. Control China’s energy and you can contain China.…

China’s future growth is dependent on Russian energy, and so on Russia itself. As such, China will never allow the Western Alliance to crush Russia as China understands the end objective is not a containment of Russia but China itself. I made the point in the previous article that China will not only step in economically, which we’ve already seen by example with the signed energy deals and now explicitly stating they will back the Russian economy but, if comes to it, China will be prepared to step in militarily, they have no choice. 

That is a very scary WWIII proposition and one might wonder why in the hell are we headed in that direction? It is obviously not something citizens of any involved countries would want. Again the reason goes back to that very natural process of Alpha selection. It requires a final fight of the Alpha dog, the one in which he loses his reign of power to a new more impressive Alpha dog. Sometimes this is done without violence when the Alpha simply knows he is no longer top dog and he moves on. Often times it ends is horrible violence.

The is the history of elites confronting each other from time immemorial.

First Rebuttal

Reuters Objectively See’s Russia’s Options as Losing or… Losing Badly

Thad Beversdorf

**************

The rise of neoliberal corporatism as the global market society under oligarchic "democracy."

Much has been written, at least in the alternative media, about the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), two multilateral trade treaties being negotiated between the representatives of dozens of national governments and armies of corporate lawyers and lobbyists (on which you can read more here, here and here). However, much less is known about the decidedly more secretive Trade in Services Act (TiSA), which involves more countries than either of the other two. 

At least until now, that is. Thanks to a leaked document jointly published by the Associated Whistleblowing Press and Filtrala, the potential ramifications of the treaty being hashed out behind hermetically sealed doors in Geneva are finally seeping out into the public arena. 

If signed, the treaty would affect all services ranging from electronic transactions and data flow, to veterinary and architecture services. It would almost certainly open the floodgates to the final wave of privatization of public services, including the provision of healthcare, education and water. Meanwhile, already privatized companies would be prevented from a re-transfer to the public sector by a so-called barring “ratchet clause” – even if the privatization failed. 

More worrisome still, the proposal stipulates that no participating state can stop the use, storage and exchange of personal data relating to their territorial base.…

Wolf Street
LEAKED: Secret Negotiations to Let Big Brother Go Global
Don Quijones

**************

Michael J. Glennon is a professor of international law at Tufts University and a member of the Council on Foreign Relations. He’s written a book, National Security and Double Government, which has garnered the attention of news outlets like the Boston Globe. The book is an expanded edition of a journal article which is available online. …

Glennon likewise posits that the United States is also afflicted by a double government, and that in domains related to national security presumably extrinsic agents like the President and Congress have very little say in matters. Glennon states that “judicial review is negligible, congressional oversight dysfunctional, and presidential control nominal.[i]” 

In Glennon’s worldview real power lies elsewhere: down in the bureaucracy where actual decision making is conducted by “several hundred executive officials who manage the military, intelligence, diplomatic, and law enforcement agencies[ii].” According to Glennon this explains the striking continuity in national security policy despite the transition from the Bush administration to the Obama administration.

AlterNet
Blaming Government Surveillance on the Government Ignores the Plutocrats Behind the Curtain
Bill Blunden

**************

The American global war on terror (GWOT) has devolved into a bi-partisan foreign policy shambles. The U.S. government careens from one crisis (usually of its own making) to another, without any introspection into the reasons why its policy is creating enemies faster than it is killing them. 

At the same time, on the home front, the political leaders of both parties have exploited the politics of fear to (a) debase civil liberties (b) condone the use to torture and arbitrary incarceration in a network of secret prisons, and (c) incite a compliant mass media to propagandize and traumatize the people, and thereby suppress demand for a coherent political debate at home.…

The result is an insecure, tuned-out, and dumbed-down public, together with its corollary, the absence of a corrective feedback loop to place a dysfunctional political decision cycle on a salutary pathway into the future. A fearful, tuned out, and dumbed-down public is exactly what James Madison feared in his famous letter to W.T. Barry dated 4 August 1822, when he said: 

"A popular government without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy, or perhaps both. Knowledge will forever govern ignorance, and a people who mean to be their own governors must arm themselves with the power which knowledge gives."…

The Blaster
GWOT: A Prologue to a Farce, a Tragedy, or Both?
Chuck Spinney

**************

When Castro ousted Fulgencio Batista’s despotic rule, he nationalized foreign corporate assets. Originally valued at around $1.8 billion. 

At 6% simple interest, now worth around $7 billion. From sugar processing plants, other factories, mines, oil refineries, power plants, hotels, 75% of Cuba’s arable land, cattle ranches, other assets. 

US companies have 5,913 outstanding claims. Including from ExxonMobil, Coca-Cola, Freeport-McMoRan, Colgate-Palmolive, Procter and Gamble, Goodyear, Firestone, General Motors, Owens-Illinois, Avon Products, Starwood Hotels & Resorts Worldwide and many others…. 

Rights linked to claims remain enshrined in US statutes. America’s embargo was imposed largely in retaliation for nationalizations.…
It’s unclear precisely how Obama officials intend doing it. A fact sheet released coincidentally with Obama’s announcement didn’t say.… 

America wants things its way. It remains to be seen how tough issues are handled. Expect months of negotiations to follow.

Global Research

Corporate Predators Want Compensation for Lost Cuban Assets They Stole
Stephen Lendman

**************

Contrary to rumour, the Brazil-Russia-India-China-South Africa alliance confirmed it would avoid challenging the unfair, chaotic world financial system at the Fortaleza summit on July 15. 

The BRICS “are actually meeting Western demands,” as China Daily bragged, “to finance development of developing nations and stabilize the global financial market.”
If BRICS subservience continues, remarked financier Ousmène Jacques Mandeng of Pramerica Investment Management in a Financial Timesblog, “it would help overcome the main constraints of the global financial architecture. It may well be the piece missing to promote actual financial globalisation.” 

Fawning to finance reminds us of the term Brazilian political economist Ruy Mauro Marini coined a half-century ago, ‘sub-imperialism’: i.e., “collaborating actively with imperialist expansion, assuming in this expansion the position of a key nation.”

Global Research

How BRICS Became Co-Dependent Upon Eco-Financial Imperialism

Patrick Bond

**************

At the same time, against the background of the evident cooling of the EU-Ukraine relationship, the EU-Russia relationship is returning to a more cordial format.
For example, on December 19 Angela Merkel unexpectedly said that Putin “ought to be taken at his word.”

Merkel reviving to Ostpolitik?

Fort Rus
EU is Tired of Ukraine and Poroshenko
Anatoliy Shariy

**************

Fears of German neutrality are not new. In the early 1970s, Henry Kissinger, then the U.S. national security adviser, warned that West Germany’s Ostpolitik could play into the hands of the Soviet Union and threaten transatlantic unity. He argued that closer economic ties with the Soviet Union would increase Europe’s dependence on its eastern neighbor, thereby undermining the West. The danger Kissinger foresaw was not so much that West Germany might leave NATO but, as he put it in his memoir, that it might “avoid controversies outside of Europe even when they affected fundamental security interests.” Fortunately for Washington, the Cold War kept such impulses in check, as West Germany relied on the United States for protection against the Soviet Union.
 

Now, however, Germany finds itself in a more central and stronger position in Europe. During the Cold War, West Germany was a weak state on the fringes of what became the EU, but the reunified Germany is now one of the strongest—if not the strongest—power in the union. Given that position, a post-Western Germany could take much of the rest of Europe with it, particularly those central and eastern European countries with economies that are deeply intertwined with Germany’s. If the United Kingdom leaves the EU, as it is now debating, the union will be even more likely to follow German preferences, especially as they pertain to Russia and China. In that event, Europe could find itself at odds with the United States—and the West could suffer a schism from which it might never recover.

Ostpolitik is one of Washington's worst nightmares.

Foreign Policy
Leaving the West Behind — Germany Looks East

Hans Kundnani

What Psychology Says About Materialism and the Holidays — APA interviews Tim Kasher

Well-being is inversely correlated with materialism.

APA: What does psychological research say about materialism’s link to happiness? 

Kasser: The connection between materialism and well-being is the longest-standing strand of research in the materialism literature. My colleagues at the University of Sussex and I recently published a meta-analysis that showed the negative relationship between materialism and well-being was consistent across all kinds of measures of materialism, types of people and cultures. We found that the more highly people endorsed materialistic values, the more they experienced unpleasant emotions, depression and anxiety, the more they reported physical health problems, such as stomachaches and headaches, and the less they experienced pleasant emotions and felt satisfied with their lives.

The most supported explanation for why well-being is lower when materialism is high concerns psychological needs. Specifically, materialistic values are associated with living one’s life in ways that do a relatively poor job of satisfying psychological needs to feel free, competent and connected to other people. When people do not have their needs well-satisfied, they report lower levels of well-being and happiness, as well as more distress.

As Abraham Maslow's hierarchy of needs suggests. An economy is the material life-support system of a society but well-being only begins with material sufficiency. Material sufficiency is a necessary but not a sufficient condition for well-being. Material abundance is neither a necessary nor a sufficient condition for human well-being, regardless of the neoliberal propaganda and advertising to the contrary. There's more to living the good life in a good society than money and toys.

Happy Holidays!

American Psychological Association
What Psychology Says About Materialism and the Holidays
Six questions for materialism expert Tim Kasser, professor of psychology at Knox College in Galesburg, Illinois

Libertarian Cochrane vs. Keynesian Baker

Looks like this libertarian Cochrane guy took a shot at "Keynesians" the other day in a WSJ op-ed and now "Keynesians" are all up in arms in defense.

Here is a link to Cochrane's thing at CATO.

Here is a link to Dean Baker's response at CEPR.

This from Baker:

He sees the U.K.’s turn to austerity as a brilliant success; and the continued U.S. growth, in spite of deficit reduction, as further proof of the failures of Keynesian economics.

This is interesting from Baker here because if you CTRL-F Cochrane's article for the character string "deficit", it does not yield a result.

Let me translate:  Cochrane NEVER mentions "the deficit".

What is going on with this "Keynesian" obsession with "the deficit"?

Its like Baker is trying to refute the assertion that if savings are reduced within a period of time, it could very easily coincide with increased domestic economic activity over that same time period.

(btw this is probably a point related to savings that libertarian Cochrane probably cannot even comprehend)

Within the context of "libertarians" vs. "Keynesians", imo libertarian Cochrane makes some pretty good points of argument against some perhaps typical "Keynesian" reasonings and Baker simply can't do a very good job refuting them.

India, China interested in development of Russia's deposits - Energy Ministry

“Now that some of our foreign partners in conditions of sanctions, contrary to their own benefit leave Russian projects, we have to solve two tasks at once: seek new partners to develop deposits and replace technologies,” he said. 

In order to remain competitive, “it is necessary to master new technologies, and Russian companies are doing that,” Novak said.

Russia & India
India, China interested in development of Russia's deposits - Energy Ministry
TASS

Also, India to construct a pharmaceutical plant in Crimea

Chinese major Internet holding Alibaba opens office in Russia

Sanctions have created a vacuum, and India and China are rushing in to fill it.

Halyna Mokrushyna — Novorossiya Is to Eastern Ukraine as Euromaidan Was to Western

An excellent scholars conference on Ukraine was held early this month at the University of Ottawa. 

We've already featured much from there including the lectures given by the Canadian military historianPaul Robinson and James Bisset the former Canadian Ambassador to Yugoslavia, Bulgaria and Albania. 

A summary of all the days' lectures has also been produced since. 

We are citing parts of summaries of two other lectures, by Canadian-Ukrainian scholars Olga Ostriichuk and Halyna Mokrushyna that make an important point. 

This is an excerpt from an article that originally appeared at Truthout

Russia Insider
Novorossiya Is to Eastern Ukraine as Euromaidan Was to Western
Halyna Mokrushyna | Truthout

Chris Weafer — Putin stays

Although not saying so publicly, the Kremlin has adopted a deliberate strategy –to let the rouble continue falling and accept the painful economic consequences over the medium term as the 'lesser of two evils.' The weak rouble protects the country’s budget revenues and provides a soft stimulus for domestic manufacturers. It allows the country to survive the crisis but at the expense of growth and investment flows, both of which are being sacrificed over the medium term in order to try and remain in a relatively better shape to recover after the crisis and also to ensure that any loss of public support for the government is contained. As the Kremlin sees it, trying to limit the decline in financial reserves in order to protect the budget, and to preserve the investment grade rating, is a better strategy than burning though the money while oil remains weak.…

Open Democracy
Putin stays

Chris Weafer, co-founder of Macro Advisory, and former Chief Strategist at Sberbank CIB

Robert Stevens — SYRIZA makes fresh pledge to defend Greek capitalism

SYRIZA folds.

WSWS
SYRIZA makes fresh pledge to defend Greek capitalism
Robert Stevens

David Levine — Ukrainian government prepares extreme austerity measures

Back to Dickensian times. Or maybe Dickensian times will look good in comparison as the Ukraine is looted because freedom and capitalism.

WSWS
Ukrainian government prepares extreme austerity measures
David Levine

Raheel Hayat, The Torture Industry

Alex Lantier — China challenges US economic war against Russia

On Sunday, Chinese Commerce Minister Gao Hucheng told Hong Kong’s Phoenix TV that Beijing would strengthen ties with Moscow in energy and manufacturing, predicting that Chinese-Russian trade would hit its target of $100 billion this year despite the ruble crisis. As the ruble’s value in dollars or euros swings wildly, Gao proposed moving away from the dollar in financing Chinese-Russian trade and instead using the Chinese currency, the yuan or renminbi. 

Gao said China would focus on “fundamental factors such as how the two economies complement each other,” Reuters reported. “Capital investors may be more interested in a volatile stock or foreign exchange market. But in terms of concrete cooperation between the two nations, we shall have a balanced mentality and push forward those cooperations,” Gao said.

WSWS
China challenges US economic war against Russia
Alex Lantier

Andrew Korybko — America’s Guide To Dismantling The Multipolar World

Bird's eye view of America's global geopolitical and geostrategic posture. "The land of 1000 bases." But the US prefers to operate clandestinely.

Oriental Review
America’s Guide To Dismantling The Multipolar World
Andrew Korybko

Pepe Escobar — Russia, China mock divide and rule

As it stands, what we do know is that 2015 will be a hair-raising year in myriad aspects. Because from Europe to Asia, from the ruins of the Roman empire to the re-emerging Middle Kingdom, we all still remain under the sign of a fearful, dangerous, rampantly irrational Empire of Chaos.

Asia Times Online — The Roving Eye
Russia, China mock divide and rule
Pepe Escobar

James Petras — China's Second ‘Cultural Revolution’

From the first to the second cultural revolution — another story of liberalization and corruption.

James Petras Website

China's Second ‘Cultural Revolution’

James Petras | Professor (Emeritus) of Sociology at Binghamton University in Binghamton, New York and adjunct professor at Saint Mary's University, Halifax, Nova Scotia

Matias Vernengo — A brief and dispassionate note on 'GDP'

Short summary of GDP (and NIPA) as the basis of macro.

Naked Keynesianism
A brief and dispassionate note on 'GDP'
Matias Vernengo | Associate Professor of Economics, Bucknell University

John Helmer — The Oligarchs To Lead Russia A Dance In 2015 – Choosing Your Partners When You Are At War

Machinations in Russia. Alexei Kudrin is the person to watch.

Alexei Kudrin, the former finance minister (right), started by criticizing Putin and Nabiullina last week for their timing on managing the rouble crisis. For Kudrin’s tweets, click. This week Kudrin has announced through the Financial Times that Putin is obliged to choose between capitulation in eastern Ukraine and capitulation on the home front. 

“As for what the president and government must do now,” Kudrin declared, “the most important factor is the normalisation of Russia’s relations with its business partners, above all in Europe, the US and other countries.” Kudrin claimed to the newspaper that 40% of the rouble depreciation is due to the sanctions war. 

Kudrin announced his candidacy for prime minister in Washington in September of 2011, before he was fired; Putin said at the time that Kudrin had suffered abreakdown. This time Kudrin’s candidacy to run Russia is sponsored from London, as he places himself at the head of what the Kremlin faction of security officials is calling the Fifth Column. The security faction is led by chief of staff Sergei Ivanov; it is represented in public by the Novorussian commander Igor Strelkov. Read more. 

Look back at the table setting — at Friday’s meeting with the oligarchs, Ivanov was in first place on Putin’s right.

Dances with Bears

The Oligarchs To Lead Russia A Dance In 2015 – Choosing Your Partners When You Are At War

John Helmer

Robert Paul Wolff — Fascinating Trivium [about Elizabeth Warren's senate seat]

The U. S. Senate seat now held by Elizabeth Warren is, of course, Ted Kennedy's old seat. But did you know that that seat was previously held by John Quincy Adams, Daniel Webster, Chales Sumner, Henry Cabot Lodge, Henry Cabot Lodge, Jr., and John F. Kennedy, among others? That is a brief history of America right there.

Big chair to fill. Will Warren fill it?

The Philosopher's Stone

Fascinating Trivium

Robert Paul Wolff | Professor Emeritus, University of Massachusetts Amherst

Warren Mosler — OPEC leader vows not to cut oil output even if price hits $20

The Saudis never ‘cut production’ 

They just set price and let the world buy what it wants at their price. 

No one seems to know that.

The Center of the Universe
OPEC leader vows not to cut oil output even if price hits $20

Warren Mosler

Learn to trade Forex. Major Forex moves coming in 2015!

There will be some major Forex market moves in 2015, possibly dwarfing the moves we saw in 2014. 

Will you be ready to trade?? Sign up for my Jan 12-16 Forex class to ensure that you have the knowledge and skills needed to profit from what is likely to be a huge year in the Forex market.

Some events to watch:

• A new, Republican controlled Congress coming into power with a whole new fiscal agenda
• The debt ceiling will be a major issue by March. Will the Republicans default or, will they throw the Federal Government into balanced budget mode, sending the United States on the path to a "full Europe?"
• And speaking of Europe? Will 2015 be the year Europe comes apart?
• Greece will be holding elections and the leading poltiical party is staunchly anti-Europe. Will Greece be the first country to abandon the euro?
• How about Spain where anti-Europe sentiment is also boiling over? Is Spain about to jettison the euro, too, sending it plummeting?
• Some say the yen's a "crowded trade." There's a $40 billion speculative short position in the yen that has been two years in the making. Will something trigger a massive short covering rally?
• Russia, the ruble. What next?

Check out what one student said...

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