Saturday, December 31, 2016

Fortune — Grizzly Misstep: Security Experts Call Russia Hacking Report “Poorly Done,” “Fatally Flawed”

On Thursday, the Department of Homeland Security and the FBI released a joint report about Russian cyberattacks, titled “Grizzly Steppe.” The report had been expected to lay out more details about intelligence agency’s claims that the Russian government was directly linked to hacks on the DNC and other organizations, but security experts have expressed broad disappointment with the report.
Jeffrey Carr, author of Inside Cyber Warfare, wrote on Friday that the report “adds nothing to the call for evidence that the Russian government was responsible” for the campaign hacks. Robert Lee, a former Air Force cyberwarfare officer and cybersecurity fellow at New America, argues that the report is of limited use to security professionals, in part because of poor organization and lack of crucial details....
Grizzly Misstep: Security Experts Call Russia Hacking Report “Poorly Done,” “Fatally Flawed”
David Z. Morris

Washington's Blog — The Same Hackers Blamed for the DNC Email Hack Were Blamed for Hacking the German Parliament … But that Ended Up Being a Leak By German Insiders, Not a Hack At All

German security officials previously blamed Russia for hacking secret German communications and providing them to Wikileaks (English translation). And see this.
The claim? BBC reported:
"BfV [Germany’s intelligence agency] head Hans-Georg Maassen said Germany was a perennial target of a hacker gang known as Sofacy/APT 28 that some other experts also believe has close links with the Russian state. This group is believed by security experts to be affiliated with the Pawn Storm group that has been accused of targeting the CDU party...."
This is the same group blamed by the U.S. for the hack of the Democratic National Committee....
However, German officials now say that the communications were likely leaked from an insider within the German parliament, the Bundestag (English translation)....
Washington's Blog
The Same Hackers Blamed for the DNC Email Hack Were Blamed for Hacking the German Parliament … But that Ended Up Being a Leak By German Insiders, Not a Hack At All

Glenn Greenwald — Russia Hysteria Infects WashPost Again: False Story About Hacking U.S. Electric Grid

The Post has many excellent reporters and smart editors. They have produced many great stories this year. But this kind of blatantly irresponsible and sensationalist tabloid behavior — which tracks what they did when promoting that grotesque PropOrNot blacklist of U.S. news outlets accused of being Kremlin tools — is a byproduct of the Anything Goes mentality that now shapes mainstream discussion of Russia, Putin, and the Grave Threat to All Things Decent in America that they pose.
The level of groupthink, fearmongering, coercive peer pressure, and über-nationalism has not been seen since the halcyon days of 2002 and 2003. Indeed, the very same people who back then smeared anyone questioning official claims as Saddam sympathizers or stooges and left-wing un-American loons are back for their sequel, accusing anyone who expresses any skepticism toward claims about Russia of being Putin sympathizers and Kremlin operatives and stooges....
The Washington Pest (no typo) is coming in for it.

My take is that either the US elite has gone completely paranoid, or else there is method in this apparent madness.

The Intercept

Jan Oberg — Humans In Liberated Aleppo

Photo journalism by a Swede on the scene at the time of the liberation of East Aleppo. Photographs and commentary that exposes the Western narrative and fake news based on it as propaganda.

Humans In Liberated AleppoDecember 11-12, 2016
Jan Oberg

See also

What happens when you fund terrorists as proxies and give them weapons.

This is hardly isolated but similar to Afghanistan, Iraq, and Libya.

The Destruction of Eastern Aleppo, Syria

Sputnik — China Launches New Global Media Platform

China Central Television (CCTV), the country’s largest TV network, will launch a new global media platform New Year’s Day to tell the world more about the country, the network announced....
CCTV already has English, Arabic, French, Spanish and Russian-language channels and offices in Washington and Nairobi, the Independent notes. Following an announcement in 2009 that the country would spend $6.5 billion to help spread its message overseas, CCTV and the Xinhua News Agency have expanded, hiring journalists around the globe and leasing a giant display in Times Square to highlight its broadcast. (For comparison, the UK government is giving $289 million to the BBC World Service to expand over the next five years, Asia Times points out.)...
Sputnik International
China Launches New Global Media Platform

Matt Taibbi — Something About This Russia Story Stinks

The problem with this story is that, like the Iraq-WMD mess, it takes place in the middle of a highly politicized environment during which the motives of all the relevant actors are suspect. Nothing quite adds up.

If the American security agencies had smoking-gun evidence that the Russians had an organized campaign to derail the U.S. presidential election and deliver the White House to Trump, then expelling a few dozen diplomats after the election seems like an oddly weak and ill-timed response. Voices in both parties are saying this now.…
Then there was the episode in which the Washington Post ran that breathless story about Russians aiding the spread of "fake news." That irresponsible story turned out to have been largely based on one highly dubious source called "PropOrNot" that identified 200 different American alternative media organizations as "useful idiots" of the Russian state.
The Post eventually distanced itself from the story, saying it "does not itself vouch for the validity of PropOrNot's findings." This was a very strange thing to say in a statement that isn't an outright retraction. The idea that it's OK to publish an allegation when you yourself are not confident in what your source is saying is a major departure from what was previously thought to be the norm in a paper like the Post.….
We ought to have learned from the Judith Miller episode. Not only do governments lie, they won't hesitate to burn news agencies. In a desperate moment, they'll use any sucker they can find to get a point across. 
Rolling Stone
Something About This Russia Story Stinks
Matt Taibbi

Moon of Alabama — New False Claims Of "Russian Hacks" = Old Ukrainian Malware Found

Moar on fake news distributed by Jeff Bezos' Washington Post, to which I refer less than affectionately as the Washing Pest.

Again, consider that most people read only headlines. The major mode of distributing propaganda is through headlines and media ledes. Even with qualifications embedded in the narrative, or even later corrections, most people will remember the headlines or lede.

This is a full court press against both Vladimir Putin and Donald Trump simultaneously, with a side jab at Bernie Sanders, too.

Moon of Alabama
New False Claims Of "Russian Hacks" = Old Ukrainian Malware Found

See also

‘Russian hackers’ penetrate US power grid with ‘outdated Ukrainian malware’

Charles Lyons — The Alt Right: The American Resistance

Another backgrounder that will apparently be useful in the coming year(s) from the way things are going.

Alt-Right, or Identarian, manifesto. I assume it speaks for a at least a significant cohort that identifies as alt-right.

Radix Journal
The Alt Right: The American Resistance
Charles Lyons

Gilbert Doctorow — Letter from India: Local and global speculation about Henry Kissinger

While these two posts are not must-reads, they are important for understanding the subtext rather in order to avoid being taken in by flawed analysis and propaganda. Most Westerners don't understand the Russian world view, which is called Russkiy mir (Русский мир) in Russia. Failure to get this difference in understanding, based on cultural bias, results in the US foreign policy establishment, the US government, and US media in taking a confrontational attitude toward Russia that is based more on imagination than reality.

And this lack of understanding of other cultures doesn't apply only to Russia. Americans generally project themselves on the world and wonder why their analysis doesn't work out as planned, as in Iraqis greeting their liberators with flowers, instituting a Western-style democracy and everyone living happily ever after. Even the American cultural myth of falling in love, marrying a person of one's own choice and "living happily ever after" is fiction instead of reality, judging from divorce statistics and domestic violence.

The first post is a backgrounder on history, international relations, Henry Kissinger and the Realist School (Realpolitik) by an expert and scholar in foreign affairs. Detailed.

The second is a backgrounder on Russia and Russkiy mir (Русский мир) by the Saker, who is from a White Russian emigre family. Detailed.

Une parole franche
Letter from India: Local and global speculation about Henry Kissinger
Gilbert Doctorow | European Coordinator of The American Committee for East West Accord Ltd.

The Vineyard of the Saker
Could there be a grain of truth in the Ukrainian propaganda? (repost with new introduction)
The Saker

Edward Gibbon on public virtue and the collapse of the Roman Empire

Gibbon quote from The Decline and Fall of the Roman EmpireIncidentally,  historically, the Roman Empire includes the Byzantine Empire although most people in the West don't realize this.

Gedanken our Geschichte (Thoughts on History)
Edward Gibbon on public virtue and the collapse of the Roman Empire

Robert Paul Wolff — The Connection Between Expropriation and Exploitations, Part Two

… “Clearly,” I said to myself, “workers in a capitalist economy are getting the short end of the stick, but Marx’s explanation, invoking the distinction between labor and labor-power and all the rest, is wrong. So what is the explanation? What is more, how can we capture in our explanation the central feature of capitalism to which Marx devotes so much time in the opening chapters of Capital, namely its mystification of what is going on?”
So I went back to Marx’s text and looked again. And there it was, as plain as day. The workers in a capitalist economy get only a portion of what they produce by their skill and labor, because by a long historical process of expropriation, they have been denied ownership of their own means of production – of their tools, of their machinery, even of their skills – until all they have left is their labor, which if they wish to live they are compelled to sell in the marketplace as though it were a commodity whose natural price is the cost of its reproduction. Why don’t farmers get to eat all the food they grow, after setting aside what is needed for seed? Because they do not own the land and the farm tools. Why don’t factory workers get to wear the clothing they make or to sell it to buy the food they need? Because they do not own the wool or the cotton or the thread or the machinery with which they turn these materials into clothing.
How, I asked, can we capture this situation in a set of formal equations that explains exactly how the workers are getting screwed and simultaneously explains why in a capitalist economy it seems as though the workers are getting a fair return for their labor? Here is what I came up with:
The Philosopher's Stone
The Connection Between Expropriation and Exploitations, Part Two
Robert Paul Wolff | Professor Emeritus, University of Massachusetts Amherst

Steve Keen — Teaching Economics the Pluralist Way

This is a talk I gave in Amsterdam to launch the Amsterdam Rethinking Economics critique of the current state of economics “education” in the Netherlands. The text of my slides is reproduced below.
Steve Keen's Debtwatch
Teaching Economics the Pluralist Way
Steve Keen | Professor and Head Of School Of Economics, History & Politics, Kingston University, London

Jason Smith — Chris Dillow, information equilibrium is the framework you're looking for

I think Chris Dillow makes a fine point at the end of his review of The Econocracy about the role of the media with regard to how macroeconomics is disseminated and perceived. I just wanted to add a bit to something he said earlier in his post regarding teaching economics:
For example, some important basic facts in macroeconomics are that: there’s no such thing as a “representative firm” (see this great paper (pdf) by Nick Bloom and colleagues); that GDP growth in developed nations is often stable but interrupted by occasional crises; and that recessions are unpredictable. The sort of theory that can account for these facts is very tricky. A shift away from equilibrium theories towards complexity, evolutionary models and agent-based modelling would require massive changes for which students and perhaps academics are ill-prepared.
I'd like to proffer the information equilibrium/statistical equilibrium framework as a theory that can account for these facts without being "tricky"....
Awhile ago, I put together an outline of an "Economics 101" course that could be taught using the information transfer framework. You might think the math is tricky, but overall it can be understood in terms of the regular supply and demand diagrams with a couple changes: there's another "solution" where supply and demand are tightly linked and move together, non-ideal information transfer turns the supply and demand curves into bounds, and to understand macro you might have to look at ensembles of diagrams (a picture from this link is at the top of this post).

Since this isn't throwing out all of ordinary economics and has a simple diagrammatic representation, it might stand a chance. And it keeps all the hooks for complexity and agent-based modeling. You can even use the framework to understand the classic microeconomic experiments (here, here) and do real forecasting making it more empirical in light of the "credibility revolution".

But one important aspect of the information transfer framework is its plurality. It's a framework, not a specific theory. While I have taken to writing my own models in this framework, there is nothing preventing you from writing down a New Keynesian DSGE model, a stock-flow consistent model, "market monetarism", or even understanding completely different schools of economics.
This last paragraph is significant because it allows for a plurality of approaches in economics in terms of a single framework, where this is hardly possible now with no overarching framework in terms of which economics is pursued as a science.

Information Transfer Economics
Chris Dillow, information equilibrium is the framework you're looking for
Jason Smith

See also

Information transfer economics is getting some traction.

Information transfer economics: a year in review, and thanks

emptywheel — Your Weekly Alarming Anonymous Friday Night WaPo Dump: Vermont Electrical Grid Edition

Moar fake news. Most people just read the headlines.
Here’s the thing. Some of these security professionals are the same ones who’ve been saying for months that the DNC hack can be reliably attributed to the Russian state. I mostly agree (though I’ve got some lingering doubts). And while those of us who follow this closely can distinguish the two different kind of analyses, the general public will not. And — having been alarmed off a premature report here that was not sufficiently researched before publicized — they will be utterly justified in believing the government is making baseless claims to generate fear among the public.
As I said, I mostly agree with reports attributing the DNC hack to the Russians. But seeing inflammatory shit like this peddled anonymously to the press makes me far more inclined to believe the government is blowing smoke.
The boy who cried wolf.

Your Weekly Alarming Anonymous Friday Night WaPo Dump: Vermont Electrical Grid Edition
emptywheel (Marcy Wheeler, independent journalist)

Friday, December 30, 2016

Xinhua — China speeds up creation of social credit system

China's national social credit system gained momentum with guidelines issued on creating credit records of citizens and government agencies.
Two guidelines, issued by the State Council on Friday, specified priorities in building the system.
Real-name registration will be promoted in the fields of the internet, postal services, telecommunication and financial accounts to expedite the formation of personal credit records.
Individuals will first form track records in areas including traffic safety and paying of taxes, while civil servants and doctors are among the first group of professionals to register their credit profile.
The credit-worthy will be granted conveniences in education, employment and opening start-ups, while severe wrongdoing will be made public.
Meanwhile, China will offer better protection of personal information and privacy, and introduce a mechanism to restore mistaken and damaged credit records.
For government agencies, acts associated with government procurement, public-private partnership, local government debt are among key areas for improving creditworthiness.
Third-party institutions will participate in credit-rating for government agencies. Dishonesties will be recorded, collected by a national website and made public. 
China speeds up creation of social credit system
Xinhua | Editor: Feng Shuang

The Evidence to Impeach Donald Trump May Already Be Here

The left can't wait to get the impeachment ball rolling. But the problem is that three's no legal basis to stand on other than the emoluments clause.
But with the exception of the Emoluments Clause, which provides a pathway to impeachment if Trump seeks gifts from foreign agents, few laws govern the president’s behavior,
But you can be sure that Trump's enemies will be looking for any opening they can find or create.

Eric Zuesse — America’s Secret Planned Conquest Of Russia

Why Russia is so touchy. It's under attack by the US strategically, but not yet tactically.
The U.S. government’s plan to conquer Russia is based upon a belief in, and the fundamental plan to establish, “Nuclear Primacy” against Russia — an American ability to win a nuclear war against, and so conquer, Russia.
This concept became respectable in U.S. academic and governmental policymaking circles when virtually simultaneously in 2006 a short-form and a long-form version of an article endorsing the concept, which the article’s two co-authors there named “nuclear primacy,” were published respectively in the world’s two most influential journals of international affairs, Foreign Affairs from the Council on Foreign Relations, and International Security from Harvard. (CFR got the more popular short version, titled “The Rise of U.S. Nuclear Primacy”, and Harvard got the more scholarly long version, which was titled “The End of MAD?”.)
This article claimed that the central geostrategic concept during the Cold War with the Soviet Union, Mutually Assured Destruction or “MAD” — in which there is no such thing as the U.S. or the U.S.S.R. conquering the other, because the first of the two to attack will itself also be destroyed by the surviving nuclear forces of the one responding to that attack — will soon be merely past history (like the Soviet Union itself already is); and, so, as the short form of the article said, “nuclear primacy remains a goal of the United States”; and, as the long form said, “the United States now stands on the cusp of nuclear primacy.” In other words: arms-control or no, the U.S. should, and soon will, be able to grab Russia (the largest land-mass of any country, and also the one richest in natural resources).…
A far less influential scholarly journal, China Policy, published later in 2006 a critical article arguing against nuclear supremacy, but that article has had no impact upon policymaking. Its title was “The Fallacy of Nuclear Primacy” and it argued that, “American nuclear supremacy removes the root source of stability from the nuclear equation: mutual vulnerability.” It presented a moral argument: “U.S. leaders might try to exploit its nuclear superiority … by actually launching a cold-blooded nuclear attack against its nuclear rival in the midst of an intense crisis. The professors discount significantly the power of the nuclear taboo to restrain U.S. leaders from crossing the fateful threshold. If crisis circumstances grow dire enough, the temptation to try to disarm their nuclear adversaries through a nuclear first-strike may be too strong to resist, they argue.”...
The co-authors of (both versions of) the article that had proposed and endorsed nuclear primacy, then published in 2007 (this one also in International Security), a response to that critical article. This reply’s title was “U.S. Nuclear Primacy and the Future of the Chinese Deterrent”. But it had no more impact than did the obscure article it was arguing against.
Thus, nuclear primacy has become U.S. policy, and MAD no longer is U.S. policy (though it remains Russian policy). The U.S. government is planning to take over Russia (basically, to install a puppet-regime there). That’s the reality....
Whether Obama’s successor, Donald Trump, will continue with that longstanding (ever since 24 February 1990) plan to conquer Russia, or instead finally end the Cold War on the U.S. side (as it already had ended in 1991 on the U.S.S.R.’s), isn’t yet clear.
This is what happens when what President Eisenhower called “the military-industrial complex” takes over the country, and everything (including the ‘news’ media) serves it, rather than the military-industrial complex’s serving the public.
It fits in with the massive data which indicates that the U.S. government is run by an aristocracy or “oligarchy”, instead of run by people who represent the public — a “democracy.” Obama as President fit right in.
Of course, that's no secret to Russia — or China, which is next on the list. But it looks like the plan is to "do Iran" first.

These excerpts only scratch the surface of this well-documented article. Read it and understand the deviousness behind the US narrative — the actual fake news — for domestic consumption flogged in the US media's daily news cycle.

Zero Hedge
America’s Secret Planned Conquest Of Russia
Eric Zuesse, investigative reporter

Robert Paul Wolff — The Connection Between Expropriation and Exploitation, Part One

In this lengthy essay, I will explain the relationship between the claim that capitalism arises through the expropriation of workers, and the claim, specific to Marx’s economic theory, that capitalism rests on the exploitation of the working class. The term “exploitation” in Marx’s writings has a specific technical meaning which I shall explain in good time, but we should start by recalling that “to exploit” has two distinct and yet related uses in common speech. To exploit something means to use it for some purpose. “In his architectural designs, Frank Lloyd Wright exploited the particular physical and scenic characteristics of the site on which a building was to be constructed.” To exploit someone means to take advantage of that person for one’s own purposes. “Trump exploits contractors whom he hires on his construction projects by using the expense of legal proceedings to get out of paying the bills he has run up with them.” The first usage has no obvious normative implications. No one save a Mother Earth enthusiast would blame Wright for exploiting nature in his designs. The second usage at least prima facie does have normative implications. Marx deliberately plays on this ambiguity in Capital.
The Philosopher's Stone
The Connection Between Expropriation and Exploitation, Part One
Robert Paul Wolff | Professor Emeritus, University of Massachusetts Amherst

Rustem Falyakhov — Russia to be cleaned up by Putin

While the US prepares to gut the EPA, Russia gears up an environmental clean-up drive spearheaded by Vladimir Putin. China is already well into its own under the aegis of Xi Jinping. US under the Trump administration headed backward?

Russia & India Report
Russia to be cleaned up by Putin
Rustem Falyakhov,,

Michael Brenner — Hypocrisy Over Alleged Russian ‘Hacking’

As Official Washington rages over alleged Russian hacking of Democratic emails, a forgotten back story is how the U.S. government pioneered the tactics of cyber-war and attacked unsuspecting countries, recalls Michael Brenner.
The bipartisan war party should spare the world its false outrage.

In the first place, nothing about the provenance of the material changes the content or impact of the news that came to light roundly discrediting Hillary Clinton, the DNC, and John Podesta. If this was a causal factor in Clinton's defeat, the Democrats have no one to blame but themselves. The information simply confirmed what was already out there anyway. The Democrats are in deep denial over their stupidity and seek to distract attention from their incompetence. They are losers.

Secondly, if it was actually a hack rather than a leak, it is a black eye to the US intelligence community that it cannot secure domestic information. Heads should be rolling in the agencies responsible for incompetence. Instead of blaming Russia for this, the intelligence agencies would be better advised to show how it was a leak, as some experts suspect and there is also testimony to that effect. To top it off, Podesta's email account was not actually hacked into. He fell for a phishing scheme and provided his own password like only a moron would. If the intelligence services pushed the leak narrative, for which there is plenty of evidence, they would not be looking like the fools they are now. What a bunch of dopes. Keystone cops.

Instead, Russia is being made a scapegoat to distract from US corruption and incompetence. It's not going to work, and Donald Trump is very likely to rub it in their faces. 

The US political elite has lost the plot and doesn't deserve to rule. The quicker they are replaced the better — the lot of them. They should all just retire and live happily ever after on the generous pensions they have voted for themselves before they look like bigger nincompoops.

But getting back to Brenner argument that the US outrage is like the pot calling the kettle black. The US been a major employer of black ops for a long time and the first to commit cyber-aggression in planting the Stuxnet trojan horse in Iran's computer system, and then proving to the world that they were clueless by getting caught. Similarly in hacking into Angela Merkel and Dilma Rouseff's email accounts.
In all the excitement, it is easy to lose perspective. Perhaps the biggest piece of the untold story is the United States government’s pioneering role in electronic surveillance and hacking. We seem to have forgotten that the National Security Agency and the Central Intelligence Agency eavesdropped on heads of state in Germany, Brazil, Argentina, Iraq, Venezuela – and, at last count, several score other capitals. Also, the United Nations Secretary General, the President of the European Union Commission, the European Central Bank and God knows whom else.
This was not coincidental. It was part of a calculated strategy approved by two successive Presidents to monitor all electronic communications around the globe. Author James Bamford and other knowledgeable experts have provided us with a detailed history of the program.
Yet, the U.S. — as presented to us by the mainstream media and most commentators reflecting Official Washington –is portrayed as the innocent among the main protagonists. The plot line represents America as the victim of unprovoked cyber aggression by the Russians and, in other circumstances, the Chinese – these attacks coming out of the blue, an aggressive blow in an assumed contest for global dominance between the powers....
Consortium News
Hypocrisy Over Alleged Russian ‘Hacking’
Michael Brenner | Professor of International Affairs at the University of Pittsburgh and Senior Fellow the Center for Transatlantic Relations, SAIS-Johns Hopkins (Washington, D.C.)

Brenner is a heavyweight by the way.
Michael Brenner is the author of numerous books, and over 60 articles and published papers. Recent works on American foreign policy and the Middle East are "Fear & Dread In The Middle East", and "Democracy Promotion & Islam". He also has written "Nuclear Power and Non-Proliferation" (Cambridge University Press) and "The Politics of International Monetary Reform" for the Center For International Affairs at Harvard. His work has appeared in major journals in the United States and Europe, such as Europe’s World, European Affairs, World Politics, Comparative Politics, Foreign Policy, International Studies Quarterly, International Affairs, Survival, Politique Etrangere, and Internationale Politik. Directed funded research projects with colleagues at leading universities and institutes in Britain, France, Germany and Italy, including the Sorbonne, Bonn University, King’s College – London, and Universita di Firenze. Invited lecturer at major universities and institute in the United States and abroad, including Georgetown University, UCLA, the National Defense University, the State Department, Sorbonne, Ecole des Sciences Politiques, Royal Institute of International Affairs, International Institute of Strategic Studies, University of London, German Council on Foreign Relations, Konrad Adenauer Foundation, and Italian Institute of International Affairs. Previous teaching and research appointments at Cornell, Stanford, Harvard, MIT, Brookings Institution, University of California – San Diego, and Distinguished Visiting Fellow at the National Defense University.

Sputnik — Trump Faces Many Obstacles to Enhancing US-Russian Relations

Good summary of the issues today.

I suspect that the decisive factor in the outcome will be Henry Kissinger and he seems to be pro-detente and setting up an understanding among the US, Russia and China that avoids conflict, which is the opposite of what the bipartisan war party and MIC (military-industrial complex) want. Kissinger is likely Trump's ace in the hole.

Jon Rappoport — If you were Chief of CIA Consciousness Ops

Fun post. Before you read it, take the following test.

I. Multiple choice. Circle one option.

1. Matter alone is real.

2. Consciousness alone is real.

3. Mind and matter exist as polar opposites in a dualistic reality.

4. The solution is indeterminable. (skepticism)

5. Other (Specific _____________________)

II. Explain your choice.

Jon Rappport's Blog
If you were Chief of CIA Consciousness Ops
Jon Rappoport, free-lance investigative reporter

Trump's tweet on his reaction to Putin's reaction to Obama's latest move

(Sound of heads exploding in the background.)

Cliven Bundy’s “army” is back with more armed threats: “Time for another win”

They're baaack!

Cliven Bundy’s “army” is back with more armed threats: “Time for another win”
Matthew Rozsa 

Moon of Alabama — Master Judoka Putin "The Gracious" Outclasses "Lame Duck" Obama

Russian President Vladimir Putin has responded to the outgoing US administration’s efforts to provoke conflict through new sanctions in what some are calling the “most embarrassing” way possible for US President Barack Obama.…
Sputnik International
'Most Damaging and Embarrassing Answer We Could Receive,' - Putin Shocks Experts


Moon of Alabama
Master Judoka Putin "The Gracious" Outclasses "Lame Duck" Obama

Trump Forced to Choose Between Obama Sanctions and Putin Detenteby

We'll see in less that a month how big Trump's cojones are. The bipartisan war party is challenging his leadership. My money is on DJT jamming to them again. You can bet "the Donald" is taking names and making a list, as in "getting even."

The next four years is shaping up to be one amazing reality show with DJT not even inaugurated yet. It looks to make the campaign pale in comparison. Steve Bannon thinks so too.

Alexander Mercouris — Straight out of a spy film: here’s why Obama’s attributions of the Clinton hacks to Russia’s GRU and FSB don’t add up

Backgrounder on Russian intelligence services.
There are four Russian intelligence agencies which are publicly known, though there are certainly others. These are the GRU (“Main Intelligence Directorate”), the FSB (“Federal Security Service”), the SVR (“Foreign Intelligence Service”) and the FSO (“Federal Protective Service”), which incorporates Spetssvyaz (“Special Communications Service”), which is Russia’s equivalent to the NSA.
Contrary to some claims, I am sure all four of these intelligence agencies undertake electronic and signals intelligence, certainly up to the level needed to carry out the DNC and Podesta hacks. However given the large claims that are being made about the hacking – extending all the way to President Putin’s personal involvement – I would have thought that of Russia’s four intelligence agencies the GRU and the FSB are the two least likely to have carried the hacking out.…
The key point about the GRU is however that it is the intelligence agency of the General Staff of Russia’s Armed Forces. It is therefore a military intelligence agency whose personnel are serving officers of the Russian military. Its closest approximate US equivalent is the Defense Intelligence Agency (“DIA”).…
As for the FSB, its primary roles as an intelligence agency are supposed to be counter-espionage and counter-terrorism carried out on the territory of Russia, though it is sometimes claimed to have a foreign intelligence role in the other countries that were formerly part of the USSR such as Ukraine.…
Not only do both the SVR and Spetssvyaz specialise in foreign political intelligence of precisely the sort involved in the DNC and Podesta leaks, but since Russia is accused of electronic hacking, this would seem to fall squarely within Spetssvyaz’s remit...
… I can’t escape the feeling that the reason the Obama administration and the Western media have latched on to the FSB and the GRU as the two agencies they accuse of the hacking is because of all of Russia’s intelligence agencies they are by the far best known and most notorious, having been the subject of countless media stories and spy thrillers, including in the case of the FSB a James Bond film, and in the case of the GRU countless thrillers extending all the way back into the Cold War....
By contrast to the Western public the names SVR and especially Spetssvyaz mean little....
The Duran

Assad Abu Khalil — So were did all those Syrians in East Aleppo go?

Of 111,000 displaced fr east Aleppo, 74,951 or 2/3 went to Gov-controlled areas, & 36,086 to reb areas. v @aronlund….
Angry Arab News Service
So were did all those Syrians in East Aleppo go?
Assad Abu Khalil | Professor of Political Science, California State University, Stanislaus

See also
"According to a poll by the Yuri Levada Analytical Center last December, just 14 percent of Russians saw the country’s first president as a positive figure. The Levada Center has published other polls that suggest that a majority of Russians regret the fall of the Soviet Union, think that it could have been avoided and feel as though the Yeltsin years brought more harm than good."
Meanwhile, the US believes that regime change in Russia would bring another Western puppet to power.

Stupid US media insist that Russians should consider their puppet Yeltsin as the era of freedom

FTSE Ends Year at all time high

Meh.... so much for brexit.

Thursday, December 29, 2016

TASS — Trump may lift anti-Russian sanctions - White House official

The last minute actions against Russia can be viewed minimally as an effort to guarantee continuity of US foreign policy and maximally as a setting up a President Trump.

Obama knows that Trump can simply undo what he has done unilaterally as soon as he takes over. So the question is why is Obama doing this.

Obama is presenting his successor with a dilemma. President Trump either maintains the Obama anti-Russian policy, in which case the effort was successful. Or he doesn't and his presidency is torpedoed if he negates it, making him look soft on Russia or even giving credence to the claim that Trump is a "Russian stooge" planted by Putin, who controls him. This would undercut DJT, possibly to the point of impeachment by a Democratic congress people united in their hate fro him and GOP NeverTrumpers that would prefer Mike Pence as POTUS so they can get on with business as usual. without having to deal with outsiders.

Is President Obama preparing a poison chalice for both Presidents Trump and Putin, and by extension also President Assad, under the guise of being tough on Putin's Russia for alleged "crimes."

One need not be a cynic or a conspiracy theorist to view it that way. Politics ain't beanbag, as they say, and after all, the stakes are world domination.

Watch the narrative on this in the New York Times and the Washington Post. Oh wait, I don't touch either of them even with rubber gloves. But their narrative is reported elsewhere, and I'll link to that.

Trump may lift anti-Russian sanctions - White House official

Alan Fleischmann — It’s Time For CEOs To Be the New Leaders of the World

Because capitalism.

Alan Fleischmann is talking his book.

It’s Time For CEOs To Be the New Leaders of the World
Alan H. Fleischmann is Founder, President & CEO of Laurel Strategies, a global business advisory and strategic communications firm

Sputnik International — Aiming for Technological Superpower Status, China Buys Up German Companies

The acquisition of German companies by Chinese investors has reached record levels. According to financial consulting firm Ernst & Young, investors from mainland China and its financial hub Hong Kong have purchased 58 German companies in the first ten months of 2016, which is 19 more than the total purchased a year earlier....
There's another nuance, according to Spiegel. German companies doing business in China are often forced to disclose their technologies, "their products immediately copied without the intervention of the authorities."
Russian business journal Expert Magazine notes that "this fall, Berlin's patience finally seems to have snapped. German regulators' decision to prohibit Chinese investment fund Fujian Grand Chip Investment Fund LP from buying German microchip maker Aixtron SE for 670 million euros resulted in a scandal."...
German Economy Minister and SPD chairman Sigmar Gabriel has since sent a proposal to the European Commission which aims at empowering European Union member governments to block the acquisition of companies and assets in strategically important industries by investors outside Europe....
Sputnik International
Aiming for Technological Superpower Status, China Buys Up German Companies

Trump may not submit a budget

Well that would be one way to get around the sequestration; and leave all the Public-Private Partnerships off-budget in the future because they would use Accrual rather than the usual government Modified Accrual and would collect tolls/fees rather than taxes...

Here's a perhaps relevant section of USC which identifies the authorized Federal participation in roads/bridges, etc which might be helpful in trying to figure out what these guys have up their sleeves:

23 U.S. Code § 129 - Toll roads, bridges, tunnels, and ferries

(2)Ownership.—Each highway, bridge, tunnel, or approach to the highway, bridge, or tunnel constructed under this subsection shall— 
(A) be publicly owned; or 
(B) be privately owned if the public authority with jurisdiction over the highway, bridge, tunnel, or approach has entered into a contract with 1 or more private persons to design, finance, construct, and operate the facility and the public authority will be responsible for complying with all applicable requirements of this title with respect to the facility.

RT — ‘They are all spies’: Philippines’ Duterte speaks on US ambassador’s ‘destabilization blueprint’

The outspoken president of the Philippines has lashed out at the former US ambassador to the country, who reportedly left a ‘blueprint to destabilize’ the country’s government when leaving his post in November.

President Rodrigo Duterte said all ambassadors play a part in their respective countries' spying operations, but American ambassadors have a "forte" for undermining the government of their host countries.
"Most of the ambassadors of the United States, but not all, are not really professional ambassadors. At the same time they are spying, they are connected with the CIA," Duterte said in an interview with CNN Philippines.
Duterte was commenting on a Tuesday report in the Manila Times, which claimed that Philip Goldberg, who resigned in November his position as the US ambassador to the Pacific nation, has left behind a detailed plan on how to undermine the Philippines government and oust its president....
Duterte has been on bad terms with Goldberg for quite some time. On one occasion he infamously called the American envoy a "gay son of a bitch" for interfering with Philippines politics.…

‘They are all spies’: Philippines’ Duterte speaks on US envoy’s ‘destabilization blueprint’

Eric Schlosser — World War Three, By Mistake

Harsh political rhetoric, combined with the vulnerability of the nuclear command-and-control system, has made the risk of global catastrophe greater than ever.
What happens when retaliatory systems are locked, loaded and targeted 24/7. Over time there are bound to be "accidents." Fortunately, all of them have been detected and aborted before launch — so far.

The New Yorker
Eric Schlosser, investigative journalist

See also

Consortium News
Escalating the Risky Fight with Russia
Robert Parry

Summing Up Russia’s Real Nuclear Fears
Jonathan Marshall

Kira Radinsky and Yoni Acriche — How to Make Better Predictions When You Don’t Have Enough Data

"Transfer learning. "
.. in order to stay relevant, statisticians will have to get out of the purist position of fitting models that are based solely on direct historical data, and to enrich their models with recent data from similar domains that could better capture current trends. 
This is known as Transfer Learning, a field that helps to solve these problems by offering a set of algorithms that identify the areas of knowledge which are “transferable” to the target domain. This broader set of data can then be used to help “train” the model. These algorithms identify the commonalities between the target task, recent tasks, previous tasks, and similar-but-not-the-same tasks. Thus, they help guide the algorithm to learn only from the relevant parts of the data.
This has been used by military strategist from time immemorial. No battle is the same but familiarity with past operations and outcomes is needed to provide a structure for thinking about present cases by identifying similar patterns, for example terrain. Military strategists have incredibly detailed knowledge of historical operations extending back millennia.

There is a similar field in logic called fuzzy logic.

Bayesianism is a similar technique in statistics.

These are rigorous approaches to heuristics that are appropriate when it is neither practical or possible to do more rigorous analysis. 

Heuristics may be superior to rigorous analysis is time-critical situations, for example. There may also be transaction costs that make more rigorous analysis impractical.

As always, it is a matter of choosing the right tool for the situation and using the tool skillfully. The executives that can do this efficiently and effectively are the most highly paid, and to a great degree it accounts for outsized CEO compensation as long as results corroborate.

Richard Feynman and Enrico Fermi were known as exceptionally good at heuristics. At the time of the testing of the first atomic bomb, the physicists present were, of course, intent on determining the yield and had in fact made bets on it. Enrico Fermi threw some pieces of paper in the air simultaneously with the blast and watched their behavior to estimate the yield. He was remarkably close using this heuristic device. Obviously, a lot of background went into that.

These proto-algorithms are held in the brain as what Michael Polanyi, Karl's equally brilliant brother, called "tacit knowledge." This is a basis for "intuition" as "educated guessing."

The take-away is that there is no sharp distinction between heuristic thinking and rigorous thinking. They generally overlap. Focusing on the contrast between them leads to a false dichotomy. They are complementary modes of thought that blend as they approach each other and more data becomes available.

For example, engineers regularly begin with heuristics, first to estimate the problem and its solution, and secondly, to provide a reference against which to judge the results of more rigorous thinking. If rigor thinking produces a significantly different result from previous estimates, then the solution has to be checked closely to see which went off the rails and how.

Harvard Business Review
How to Make Better Predictions When You Don’t Have Enough Data
Kira Radinsky and Yoni Acriche

Lars P. Syll — For-profit schools — a total disaster

John Quiggin quote that is relevant in light of Donald Trump's appointment of pro-voucher pro-privatization Betsy DeVoss as US Secretary of Education. It's a concept that has been tried and failed.

Lars P. Syll’s Blog
For-profit schools — a total disaster
Lars P. Syll | Professor, Malmo University

See also

Public Goods

Jonathan Nitzan and Shimshon Bichler — Military Keynesianism and the Military-Industrial Complex

Theories of Military Keynesianism and the Military-Industrial Complex became popular after the Second World War, and perhaps for a good reason. The prospect of military demobilization, particularly in the United States, seemed alarming. The U.S. elite remembered vividly how soaring military spending had pulled the world out of the Great Depression, and it feared that falling military budgets would reverse this process. If that were to happen, the expectation was that business would tumble, unemployment would soar, and the legitimacy of free-market capitalism would again be called into question.
Seeking to avert this prospect, in 1950 the U.S. National Security Council drafted a top-secret document, NSC-68. The document, which was declassified only in 1977, all but explicitly called on the government to use higher military spending as a way of preventing such an outcome.…
Since then the US is addicted to military spending to support the domestic economy and exports. Military spending is so endemic to the economy and so politically entrenched since it is dispersed through so many congressional districts as to be impossible to address rationally. The US economy is now dependent on "military Keynesianism."

The authors point out, however, that the "Keynesian" aspect began to unravel in the 1970s when the contract between capital and labor was broken by capital and the initial phase of the welfare-warfare state began to be taken apart in favor of the market-warfare state instead.

Real-World Economics Review Blog
Military Keynesianism and the Military-Industrial Complex
Jonathan Nitzan and Shimshon Bichler

Math Problems

Assessing this is beyond my math chops to assess, but it is an interesting criticism of the use of math in economic by two math guys. 

Somewhat wonkish, but all verbal explanation. No math, although some familiarity with the context is required. Even without knowing the details, anyone should be able to catch the drift of these relatively short posts without being familiar with the references. 

The claim is that "mistakes were made."

Nassim Nicholas Taleb Blog
Inequality and Skin in the Game
Nassim Nicholas Taleb, scientific adviser at Universa Investments

This was posted in 2011 but it is still relevant.

Rick Bookstaber Blog
A Crack in the Foundation: An error that has wended its way through economics for 77 years
Rick Bookstaber | Research Principal in the Office of Financial Research

Robert Paul Wolff — Marx Without Marx, or He Who Must Not Be Named

Good one from Robert Paul Wolff today. Professor Wolff looks at primitive acquisition as the basis of expropriation of the commons, which led subsequently to further levels of expropriation based on class power.
The regular commentator who goes by the internet handle TheDudeDiogenes writes: “I have been wrestling with the concept of exploitation/surplus labor for a while now; my issue is, if the Labor Theory of Value is false (as you hold, and I think so do I, though perhaps based on misunderstanding), then what, precisely, does exploitation consist in? How can surplus labor be extracted from the laborer if the LTV is false?”

When I replied by referring to a paper in which I answer the question mathematically, he said, “I am neither good at nor fond of maths (though I value highly those who do understand them), and my intellectual interests are often more "big picture", but if you could write a post for a humanities semi-expert but mathematical novice, I would surely appreciate it!”

This request was seconded by two other readers, which in my rather parochial world constitutes a tsunami of demand, so I shall make an attempt. There are two ways in which I can respond. 
The first way, which is most natural to me, is to render my mathematical treatment of this question in plain English, leaving the formal proofs for the cognoscenti. This way has the great virtue of preserving one of Marx’s deepest insights, the mystified character of capitalist relations of production, which in my judgment is one of the greatest intellectual achievements of modern social theory. 
The second way is to justify the use of the concept of exploitation to characterize capitalism without referring either to Marx or to the Labor theory of Value. This way has the virtue of circumventing the sectarian squabbles that have absorbed so much of the energy and time of those who proclaim themselves Marxists – no labor/labor power distinction, no tendency of the rate of profit to fall, no negative labor values with positive prices [pace Ian Steedman], and all rest. [I say this, of course, as one who wrote an entire book offering my take on these urgent issues.]

After some reflection [not aided by a morning walk – rain today], I have decided to adopt the second course first. If, when I have finished, anyone has the stomach for more Marx shtick, I will attempt the first. With that said, let me begin.
[I have broken up the paragraphing for online readability.]

The Philosopher's Stone
Marx Without Marx, or He Who Must Not Be Named
Robert Paul Wolff | Professor Emeritus, University of Massachusetts Amherst

Lars P. Syll — New study shows marginal productivity theory has a ‘negligible’ link to reality

Those damn empirics keep getting in the way of theory. 
Mainstream economics, with its technologically determined marginal productivity theory, seems to be difficult to reconcile with reality. Although card-carrying neoclassical apologetics like Greg Mankiw want to recall John Bates Clark’s (1899) argument that marginal productivity results in an ethically just distribution, that is not something – even if it were true – we could confirm empirically, since it is impossible realiter to separate out what is the marginal contribution of any factor of production. The hypothetical ceteris paribus addition of only one factor in a production process is often heard of in textbooks, but never seen in reality.
When reading mainstream economists like Mankiw who argue for the ‘just desert’ of the 0.1 %, one gets a strong feeling that they are ultimately trying to argue that a market economy is some kind of moral free zone where, if left undisturbed, people get what they ‘deserve.’ To most social scientists that probably smacks more of being an evasive action trying to explain away a very disturbing structural ‘regime shift’ that has taken place in our societies. A shift that has very little to do with ‘stochastic returns to education.’ Those were in place also 30 or 40 years ago. At that time they meant that perhaps a top corporate manager earned 10–20 times more than ‘ordinary’ people earned. Today it means that they earn 100–200 times more than ‘ordinary’ people earn. A question of education? Hardly. It is probably more a question of greed and a lost sense of a common project of building a sustainable society.
Conventional economics as apologetics for ideology.

New study shows marginal productivity theory has a ‘negligible’ link to reality
Lars P. Syll | Professor, Malmo University

Holiday Sales Gains

Some reports starting to come in on this year.  Not surprising with the gas prices down for the full year and leading flow increasing also the most in several years.

Correlates with the decade high Consumer Confidence number from earlier this week, new highs in stocks.

Holiday shoppers abandoned their early reluctance and boosted spending as the season wore on, pushing U.S. sales to the biggest increase in more than a decade, according to research firm Customer Growth Partners 
On Tuesday, the firm raised its holiday sales estimate to a 4.9 percent gain over last year to $637 billion. That would be the biggest increase since 2005.

Wednesday, December 28, 2016

Nafeez Ahmed — Pentagon report predicted West’s support for Islamist rebels would create ISIS

A declassified secret US government document obtained by the conservative public interest law firm, Judicial Watch, shows that Western governments deliberately allied with al-Qaeda and other Islamist extremist groups to topple Syrian dictator Bashir al-Assad.
The document reveals that in coordination with the Gulf states and Turkey, the West intentionally sponsored violent Islamist groups to destabilize Assad, and that these “supporting powers” desired the emergence of a “Salafist Principality” in Syria to “isolate the Syrian regime.”
According to the newly declassified US document, the Pentagon foresaw the likely rise of the ‘Islamic State’ as a direct consequence of this strategy, and warned that it could destabilize Iraq. Despite anticipating that Western, Gulf state and Turkish support for the “Syrian opposition” — which included al-Qaeda in Iraq — could lead to the emergence of an ‘Islamic State’ in Iraq and Syria (ISIS), the document provides no indication of any decision to reverse the policy of support to the Syrian rebels. On the contrary, the emergence of an al-Qaeda affiliated “Salafist Principality” as a result is described as a strategic opportunity to isolate Assad....
Hey, Osama Bin Laden's "freedom fighters" worked so well in Afghanistan, what could go wrong?

Nafeez Ahmed — Insurge Intelligence
Pentagon report predicted West’s support for Islamist rebels would create ISIS
Nafeez Ahmed

Germany Moves To Impose Crippling Fines On Social Networks For “Fake News”

Censorship coming your way?
Now, Germany is considering imposing a legal regime that would allow fining social networks such as Facebook up to 500,000 euros ($522,000) for each day the platform leaves a “fake news” story up without deleting it. Governments have finally found a vehicle to get citizens to allow them to curtail or chill speech — ironically in the name of facilitating “real news” or “truth.” It is perfectly Orwellian and Merkel’s latest contribution to the erosion of free speech in the West.
The "fake news" button is on the way.
Few companies will risk such crippling fines, resulting in self-censorship from the chilling effect of the law. The bill would require companies to flag “fake news” and impose civil liability on companies. Germany’s parliamentary chief of the Social Democrat party, Thomas Oppermann is quoted as saying “If after the relevant checks Facebook does not immediately, within 24 hours, delete the offending post then [it] must reckon with severe penalties of up to 500,000 euros.”

Other lawmakers are reportedly moving toward criminalizing anything the government deems to be “fake news.”
Another step toward 1984.

Do these politicians not suspect there might be a populist reaction?

If so, it won't be coming from the left.
The left appears to be leading this crusade for greater government censorship in both Europe and the United States.
That leaves Libertarianism as the remaining option.

Germany Moves To Impose Crippling Fines On Social Networks For “Fake News”
Jonathan Turley | Shapiro Professor of Public Interest Law at George Washington University

Brian Romanchuk — Happy New Year!

Brian's projects for 2017. Sounds great.

Bond Economics
Happy New Year!Brian Romanchuk

Diane Johnson — The Bad Losers (And What They Fear Losing)

Diane Johnson makes it sound bad, but it is even worse. These people are not only losers or sore losers, they are pathetic.

As a result they are dangerous, like a wounded animal.

That would be the New Democrats and their camp followers.

Defend Democracy Press
The Bad Losers (And What They Fear Losing)
Diane Johnson

Noah Smith — Why Low Rates Failed to Boost Business Investment

This type of research is fraught with difficulties, and causality is very hard to determine, so it’s important not to read too much into this. But one conclusion seems clear -- if we want to increase business investment, policies to promote access to capital seem more promising than policies to reduce interest rates. The latter approach has been tried, and it didn’t work. We might want to give the former a chance. That would mean encouraging venture capital, small-business lending and more effort on the part of banks to seek out promising borrowers -- basically, an effort to get more businesses inside the gated community of capital abundance.
"Causality is very hard to determine."

There are several issues surrounding causality. The first is the identifying the relevant assumptions and avoiding hidden assumptions. This determines the relevance of the endeavor by targeting the relevant causal factors and their relationship. These are the variables in equations.

The second is parameter specification that determines the scope and scale of the endeavor. The parameters are the constants. They can be thought of as positions on dials that controls the output. Moving the dial affects the function and its output without affecting the variables.

In a function, inputs determine outputs in accordance with a rule. Dependent variables are affected by independent variables in accordance with the function as rule.

In the simplest situation, a single independent variable is used along with holding other factors equal, which is called ceteris paribus, abbreviated as cet. par.

Many if not most "narrative economics" is based on a simple model like the one Noah Smith employs in the post, first assuming the interest rate as a policy lever and then switching to credit standards as a factor.

However, a society and its economy are not only complicated, that is, multiple factors (variables) are relevant. But they also complex, that is, conditions change owing to feedback.

Causal systems (functions) are based only in past and present inputs, with no future inputs.

As a result it is difficult to construct a set of equations that specify the condition of the economy overall, that is, from the point of view of macroeconomics. Simple models are rarely sufficient where there is no dominant causal factor, and they are useless when they identify the wrong factor as being dominant.

Noah Smith points out shifting credit standards as a factor. This has been observed previously by Post Keynesian and MMT economists, as well as others that pay attention to institutional factors. Demand for credit is affected by the creditworthiness of potential borrowers and credit standards shift with changing financial and economic conditions.

The problem with interest rate based models is the assumption that the interest rate is a lever that always acts the same way. But shifting credit standards imply that the interest rates operates differently in different financial environments.

Conventional economic models don't take this into consideration and therefore see causality when the system is non-causal in this respect. The result is "pushing on a string."

While the interest rate seems to be completely specified by the nominal value, from which the real value can be computed by subtracting the inflation rate, it is not specified completely with respect to lending owing to shifting credit standards that adjust creditworthiness and therefore determine the potential pool of customers.

Interest rates are low during contractions. This correlation results from the mechanism a central bank employs to increase lagging investment by lowering the cost of borrowing and increasing the interest rate to cool the economy as inflation pressure rises, based on the assumption that the interest rate acts similarly across time as lever influencing leverage.

In some cases the interest rate is sufficient to produce a desired result, but in other cases it is insufficient. Simplifying, the difference is usually between ordinary business cycles in which firms' financial position does not change appreciably and economic conditions suggest that loans will be repaid with improving conditions, and financial cycles in which the financial position of firms is adversely affected.

During contractions, the central bank lowers the target rate, which is the baseline rate, resulting in interest charged by lenders declining. However, owing to economic conditions, lenders also tighten credit standards so that creditworthiness declines. Even though there may be notional demand for loans, many desire loans cannot qualify for them.

Noah Smith proposes this as a causal factor and seems to suggest that it may be a dominant one.

But this doesn't seem to be the case, since many of the largest US firms are in a strong financial position, with high retained earnings. Moreover, when these firms borrow to take advantage of low rates, they use the funds for equity buy-backs rather than new investment, indicating a low rage of return on existing opportunity and a lack of confidence in foreseeable economic expansion.

While agreeing that credit standards are causal factors in lending, Keynesians would dispute that credit standards are a dominant factor. Credit standards tighten for the same reason that liquidity preference rises in "bad times," when "animal spirits" are depressed with good reason —lack of sales.

Keynesians would argue that the dominant causal factor here is lagging effective demand, so that the solution is not trying to force or cajole lenders to loosen credit standards when their business is setting credit standards correctly with respect to conditions. The primary solution indicated is to augment effective demand.

"Money" enters the economy in three ways, from the activity of the private sector, the government sector and the external sector. When the private sector is underperforming, relief must therefore come from 1) increasing private sector lending for investment and consumption or disgorging private sector savings, 2) government spending, or 3) increasing exports.

The chief means for increasing private sector borrowing is lowering the interest rate or (inclusive) loosening credit standards. while there is a mechanism to lower interest rates, there is no mechanism to loosen credit standards, which many would regard as a dangerous solution. Moreover, liquidity preference increases in "bad times," prolonging the contraction. So even looser credit standards might not be effective either and loosening might exacerbate the financial issues the economy is facing.

The conventional thinking is that exports can be increased by lowering the exchange rate relative to other countries. This is a beggar thy neighbor strategy and it cannot be used universally, since the surplus of one country must be offset by other countries. This seems to be a preferred strategy, which is not working either.

That leaves the government sector to increase spending, which a currency sovereign is always in the position to do. The only constraint is the availability of real resources to purchase, which is never an issue during a contraction, when the economy can expand to meet increased demand.

Increased demand draws forth increased supply (production) when the economy is under-producing, that is, when there is an output gap and idle labor.

Put most simply, the world economy is capable of producing much more than is demanded. The reason is not lack of notional demand but lagging effective demand. While there is some leakage to saving owing to increased liquidity preference, the major factor seems to be lack of income, other than at the top tier, and top tier spending is not sufficient to break the cycle.

The Keynesian antidote is for government to use its purchasing power as currency issuer to put idle resources to use, both capital goods and labor, simultaneously increasing output and effective demand in order to spur economic expansion and thereby to create opportunity for private investment.

The current conventional predilection for fiscal austerity based on the disproved assumption that this will increase business confidence and spur investment is misguided.

Noah Smith's solution seems to be based on the assumption that the key fundamental of capitalism is capital formation and this is a result of a combination of technology, innovation and investment, so that capital formation must be stimulated artificially since it is not taking place "naturally."

The question is how to do this as effectively and efficiently as possible.

His solution seems to be "encouragement." To be persnickety, "Where's the model?"

Well, at least his moving off interest rates as the lever.

The Keynesian solution is to decrease demand leakage to saving and increase effective demand using the power of the currency issuer. See monetary economics based on sectoral balances and application of functional finance in policy for the model.

Bloomberg View
Why Low Rates Failed to Boost Business Investment
Noah Smith | Bloomberg View columnist

Bill Mitchell — All net jobs in US since 2005 have been non-standard

The Australian labour market has been characterised over the last 12 to 24 months by the dominance of part-time employment creation with full-time employment contracting. Over the last 12 months, Australia has produced only 84.9 thousand (net) jobs with 107.2 thousand of them being part-time jobs. In other words, full-time employment has fallen by 22.2 thousand jobs over the same period. This status as the nation of part-time employment growth carries many attendant negative consequences – poor income growth, precarious work, lack of skill development to name just a few disadvantages. Further, underemployment has escalated since the early 1990s and now standard at 8.3 per cent of the labour force. On average, the underemployed part-time workers desire around 14.5 extra hours of work per week. 
If we look at the US labour force survey data quite a different picture emerges, which is interesting in itself. Does this suggest that the US labour market has been delivering superior outcomes. In one sense, the answer is yes. But recent research based on non-labour force survey data (private sampling) suggests otherwise. That research finds that “all of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements.” That is, non-standard jobs have disappeared and are being replaced by more precarious, contract and other types of alternative working arrangements. The trend in the US has not been driven by supply-side factors (such as worker preference) but reflects a deficiency in overall spending. Not a good message at all.
Deconstructing the narrative that the US economy has returned to or is closely approaching "full employment."

[Paragraphing added for online readability.]

Bill Mitchell – billy blog
All net jobs in US since 2005 have been non-standard
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Tuesday, December 27, 2016

China Daily — If US won't pay its teachers, China's tiger moms will

Classes take place online, typically for two or three 25-minute sessions each week. Mi is capitalizing on an alluring arbitrage opportunity. In China, there are hundreds of millions of kids whose parents are willing to pay up if they can get high-quality education. In the US and Canada, teachers are often underpaid-and many have quit the profession because they couldn't make a decent living.
Growth has been explosive. The three-year-old company started this year with 200 teachers and has grown to 5,000, now working with 50,000 children. Next year, Mi anticipates she'll expand to 25,000 teachers and 200,000 children.
The scale is huge. Online and offline tutoring is already big in the US. It's a simple step to take it global.

China Daily
If US won't pay its teachers, China's tiger moms will
It starts with the idea that children must be trained early to prevail over robots in the workforce. Then it snowballs from there-$3,000 a year for tuition, $350 for a Lego robotics set, and $7,300 to test the newly acquired engineering skills at a competition in the United States.
That's what Zhuo Yu is spending on her 10-year-old son for a so-called STEM education in China-a problem-based approach to learning that combines knowledge in science, technology, engineering, and mathematics.
The concept created in the US is now stirring a craze across China, where about 10 million students are being fast-tracked for STEM success.
That number is poised to swell to 50 million by 2020 as parents seek to give their children a head start in computer coding and robotics, according to consultant JMD Education. It predicts the demand will create a $15 billion STEM-learning industry in China that's already attracted companies such as text-book publisher Pearson Plc, Lego Group, and Sony Corp.
"I don't have a cap on my budget," said Zhuo, who works in the internet industry in the eastern city of Hangzhou. "Yes, I'm investing a lot in his robotics education right now, but you have to take a long-term perspective and look at what opportunities it can bring him after he turns 18."
Her son, Wang Yizhuo, will enter one of the most competitive job markets on the planet after he finishes college. By 2030, China is predicted to have as many as 200 million graduates-more than the entire US workforce. As it is now, 40 percent of tertiary students in China obtain a STEM qualification, compared with less than 20 percent in the US and France.…
Parents mired by hefty costs for tech-focused education

Gordon M. Hahn — Russia, America, and Interference in Domestic Politics: Comparative Context

Ignoring or denying the well-established US interference in Russian elections and political affairs affecting Russia's national security is untenable. Equating alleged Russian interference in the US presidential election, so far undocumented, with well-established US interference in Russian elections and political affairs affecting Russia's national security is based on false equivalence.

Russian and Eurasian Politics
Russia, America, and Interference in Domestic Politics: Comparative Context
Gordon M. Hahn, analyst and Advisory Board member at Geostrategic Forecasting Corporation, member of the Executive Advisory Board at the American Institute of Geostrategy, a contributing expert for Russia Direct, a senior researcher at the Center for Terrorism and Intelligence Studies, Akribis Group, and; and an analyst and consultant for Russia – Other Points of View

Wilbur Ross and the dopey finance capitalists

It would be so easy to beat these dopey finance capitalists at their game. So, so, easy. If I were only in charge. If only there was a leader somewhere who understood the power of his/her nation's own sovereign money and what they could do. You could bury these guys who produce...nothing.

Don Trump's new Commerce Secretary, octogenarian loser hedge fund elf, Wilbur Ross, spoke these "pearls" of wisdom today.

"Brexit is a God-given opportunity to steal business away from UK."
"I recommend that Cyprus should adopt and immediately announce even more liberal financial service policies than it already has so that it can try to take advantage of the inevitable relocations that will occur during the period of confusion,"

Wilbur Ross is an elf
Wilbur Ross is an elf
So, our new Commerce Secretary is basically advocating for other countries (maybe for us, too) to zealously deregulate finance and give the banksters in Cyprus free reign to commit massive fraud like the banksters in the City of London and Wall Street did, which nearly destroyed the entire global economy.

This is great business, I guess, to him.

Finance creates nothing. NOTHING. It produces nothing. It's a tax on everyone that flows to a small few like the elf, Ross.

Ross should be promoting investment in infrastructure, health care, education, basic science and research, alternative energy, but instead, he's saying, steal London's financial casino's. What a dope.

If only I were in charge. I'd bury these guys. BURY THEM.

Finance needs to be shrunk down to practically nothing. Wilbur Ross, as I said before was a terrible pick for Commerce and he's proving it with these idiotic comments, but I am sure Trump thinks it's brilliant.

Actually, upon hearing Ross's comments the Brits ought to be laughing and cheering and saying, Here! Take the City for all we care, but, no, I am sure they are shaking in their misguided boots at what's about to be "stolen" away from them by Cyprus and Dublin.


David Glasner — Why Hayek Was not a Conservative

At the end of his classic treatise The Constitution of Liberty, F. A. Hayek added a postscript entitled “Why I am not a Conservative.” Like everything he wrote, what Hayek has to say about the weaknesses of conservatism can be read with profit even by those who disagree with his arguments. The following passage, for a number of reasons, seems especially apt and relevant now, some 55 years after it was written.…
Uneasy Money
Why Hayek Was not a Conservative
David Glasner | Economist at the Federal Trade Commission

Fabius Maximus — Fabius Maximus Good news: the singularity approaches

Summary of singularity.

Fabius Maximus
Good news: the singularity approaches

William Easterly — Democracy Is Dying as Technocrats Watch

I have no sympathy for Trump’s repulsive disregard for facts, truth, and legitimate expertise. Yet he was canny in identifying how both parties’ technocratic mindset — their approaching every problem with a five-point plan designed to produce evidence-based deliverables — had left democracy vulnerable. Trump knew that if he waged a war on democratic values, the technocrats who now monopolize the country’s political elite would be incapable of fighting back.
Technocrats have always shown little interest in fights over fundamental values. Their work proceeds from the assumption that everyone — or at least all the people who truly matter — already share the same enlightened commitment to democratic values. The only debate they are concerned about is over evidence on “what works” among policy inputs to produce the desired measurable outputs, like higher wages and GDP, less poverty, less crime and terrorism, or less war.
The problem occurs when some people turn out not to share those enlightened values and insist on challenging them. Technocrats, in these situations, don’t know what to say because they can’t rely on evidence to make their case. So when technocrats are all we have to defend democracy, fights over fundamental values become embarrassingly one-sided....
In the first place, the author conflates a liberal democracy as rule of, by and for the people with a modern republic, which is rule by a technocratic elite that is more an oligarchic plutonomy than a liberal democracy.

Secondly, the author ignores the role of power and accentuates knowledge and skill as determinants in governance based on numbers rather than tangible results, when the fundamental political question at election time is, "Are you better or worse off than four years ago?" What's good for America in terms of numbers is not necessarily good for most Americans in their wallets.

Thirdly, the author fails to understand that the two party system in the United States gives many if not most not one to vote for, but rather leaves them with the Hobson's choice of voting for the least bad candidate — or not voting at all to "send a message" that no one ever seems to hear.

Fourthly, the paradoxes of liberalism are ignored in the assumption that "Enlightenment values" spontaneously led to optimal governance and optimal social, political and economic outcomes. Owing to the many paradoxes of liberalism, this is not the case automatically.

Foreign Policy
Democracy Is Dying as Technocrats Watch
William Easterly | Professor of Economics at New York University and author of The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good.
ht Mark Thoma at Economist's View