Friday, October 9, 2015

Rich countries should prepare for levels of mass migration like those hitting Europe, but it could be the key to global economic growth, a report by the World Bank and International Monetary Fund says.

Inequality will continue to drive migrants toward developing states, the report explains, but these flows have the potential to reverse demographic imbalances, boost prosperity and ultimately end extreme poverty, according to Development Goals in an Era of Demographic Change, released in Peru at the start of the annual meetings of the World Bank and the IMF.…
"If countries with aging populations can create a path for refugees and migrants to participate in the economy, everyone benefits, Most of the evidence suggests that migrants will work hard and contribute more in taxes than they consume in social services," World Bank Group President Jim Yong Kim said in a press release. "With the right set of policies, this era of demographic change can be an engine of economic growth," he added.
Putting a good face on it.

Get set for decades of migration: World Bank, IMF
Kalyeena Makortoff

RT — Turning point? EU Commission head says relations with Russian ‘must be improved,’ US ‘can’t dictate’

Sanctions and refugees fleeing MENA chaos biting? Imperial overreach?

Turning point? EU Commission head says relations with Russian ‘must be improved,’ US ‘can’t dictate’

Sputnik — China Launches Yuan-Based International Payment System

China launched the first phase of its China International Payment System (CIPS) in Shanghai on Thursday, allowing cross-border transactions in the Chinese national currency, the yuan.

CIPS’ first phase provides clearing and settlement services, according to the People’s Bank of China announcement. Its launch is said to remove hurdles to the yuan’s internationalization by reducing transaction costs and processing times.
Up to 19 major banks were named as direct participants in CIPS, with 38 Chinese banks and up to 140 foreign financial institutions named as indirect participants.…
CIPS is vying to overtake SWIFT in the region.…
Sputnik International
China Launches Yuan-Based International Payment System

Thursday, October 8, 2015

Look at this...Ben Carson's totally clueless response to a question on the debt ceiling. He makes Obama look like an monetary genius!!


Here's what supposedly "brilliant," Ben Carson, said when asked about the debt ceiling.

"Let me put it this way: if I were the president, I would not sign an increased budget. Absolutely would not do it. They would have to find a place to cut," Carson insisted in a Wednesday segment with Kai Ryssdal of the American Public Media radio program "Marketplace."
The interviewer persisted...
Ryssdal pressed: "To be clear, it's increasing the debt limit, not the budget, but I want to make sure I understand you. You'd let the United States default rather than raise the debt limit."
"No, I would provide the kind of leadership that says, 'Get on the stick guys, and stop messing around, and cut where you need to cut, because we're not raising any spending limits, period,'" Carson asserted.

Absolute idiot.

People...we will NOT avoid a default. I am telling you. NOT.

Scientific American — Nobel Laureate Harry Kroto: The Threatened Enlightenment

Relevant to the recent study showing that the majority of peer reviewed economics papers in prestige journals cannot be replicated.
Harry Kroto (Nobel Laureate in Chemistry 1996): I'm gonna talk about what science is because it's a totally misunderstood sort of subject. There are aspects of science which are important and of course we know, the body of knowledge that you learn at school, all right?
The applications of those knowledge - technology, the only thing that journalists ever ask a general 99 percent of the time. Perhaps most important is the way that we discover new knowledge. But for me, the most important, by far, is that it's the only philosophical construct we have to determine truth with any degree of reliability.

Everyone should think about that. Because then it becomes a much bigger subject. In fact, for me, perhaps the most important subject there is. And the ethical purpose of education must involve teaching children how they can decide what they're being told is actually true. And that's not the case in general.

The teaching of a skeptical, evidence-based assessment of all claims - all claims - without exception is fundamentally an intellectual integrity issue. Without evidence, anything goes. Think about it. Common sense says the sun goes round the Earth. Who agrees with me?
Look at it. Starts over here, ends over there. It's uncommon sense that was needed to recognize that the Earth was turning on its axis. The uncommon sense of Copernicus, Galileo, Gendona, Bruna was burnt to death. We had to learn to be very careful and question everything.

Let me just check - how many of you know the evidence for Galileo to say that the Earth was going around the sun? Put your hand up. You've accepted it. Almost nobody's put their hand up. It's incredible.
Look at yourself. You've accepted this. You've accepted a lot of things without evidence. Find out what the evidence is for that. Find out what the evidence is for everything that you accept. 
And the pragmatic criterion clearly doesn't apply in the case of economics and policy.

Scientific American (July 25, 2013)
Nobel Laureate Harry Kroto: The Threatened Enlightenment
Steve Mirsky

McCarthy withdraws name...the crazies are about to take over. Default is coming!!!!

McCarthy just withdrew his name in the contest for Speaker of the House. Now it's the crazies that are about to take over full force: Ryan? Webster? Chaffetz?????

Default is coming!!!

You better be ready.

Here's my Forex course. Get in if you're not already in. You need to save yourself from a meltdown.

Aug 24, I was on Fox and the market opened down 1000. I said, "Stay calm. Buy!"

Can't do much better than this. And oh yeah...I followed it up by predicting that the Dow would rebound to 17,000. Here we are.

Dow back to 17,000

We called the whole Bill Gross demise right here on this blog a long time ago. Nobody else did. We called every aspect of it.

We called the whole Bill Gross demise right here on this blog, years ago. Starting with the infamous, "Who's gonna buy them now?" quote. We even predicted the billions $$ in outflow from Pimco and Gross's ongoing difficulties with the bond market.

The emperor has no clothes. He never did. He was a great marketer who had the benefit of a 30-year bull market in bonds. Until the financial crisis. Then things changed. That's when it became clear that he had ZERO understanding of the monetary system, government finance, sovereign money and central banking.

MIke Bird — Two Fed economists tried to replicate some top economic studies — and the results are dreadful

A new economics paper is making the rounds this week, and it's got some pretty damning conclusions for the state of the whole subject.
Federal Reserve economists Andrew Chang and Phillip Li set about researching how many of the results published in top economics journals could be replicated — repeating the study and finding the same results.
They looked at 67 papers in 13 solid academic journals.
It's a shocking result — without the help of the authors, only a third of the results could be independently replicated by the researchers. Even with their help, only 49% could.
That leads them to a pretty blunt conclusion: "Because we are able to replicate less than half of the papers in our sample even with help from the authors, we assert that economics research is usually not replicable."…
Business Insider UK

China Reserves Dropping

If they were not running a fixed exchange then their currency would be falling vs USD as their Chinese firms lower prices to US customers in USD terms in an effort to obtain/maintain orders.

DB warns of E6.2B loss


(why do people continue to think these people are smart?)

German Exports Slump

Bearish EUR factor.

Wednesday, October 7, 2015

Paul Street — Yes, There is an Imperialist Ruling Class

Contemporary history is neither a series of random occurrences nor the predetermined plaything of a small cabal of super-empowered conspirators. The truth is somewhere in-between. A sizeable cadre of class- and system-conscious deep-state and imperial planners from the heights of concentrated private and governmental power join together to shape the outlines of much of recent history. Along with professional class “experts” agreeable to their basic aims, they do so in accord with their shared interests in the endless upward accumulation of wealth and power. They serve the profits system that is still headquartered primarily in the United States even as it develops ever more and varied outposts across a globalizing world.…
Good read.

He mentions the Council of Foreign Relations as being seminal. When asked recently about his previous membership in the CFR, Stephen Cohen explained that while a member he was peripheral and the real power lay with the inner circle, which surrounded itself with "experts."

I think he focuses too much on the CFR, however. It's more complicated than that but there is basic agreement at the top regarding the rest. However, the top is not monolithic and there are different interests. Social class is more complex than this post it makes out as being.

He mentions the rivalry of the Libertarian billionaires who are anti-government as not being on the same page as CFR, which is more about capturing and using government. One could say symbolically that it's David Rockefeller versus the Koch brothers. But the people at the top have enormous egos and don't see eye to eye on everything, especially the pecking order. While the cronies and minions are in the loop to some degree, it is the top that calls the plays.

And, yes, capitalism and democracy are incompatible.
Acknowledging candidly that capitalism is opposed to popular governance, [CFR member and Harvard professor Samuel P.] Huntington argued that the U.S. was suffering from an “excess of democracy” and a “democratic distemper” resulting from disorderly citizen upsurges during the 1960s. To calm this dangerous overindulgence of popular sovereignty, Huntington recommended, among other things, a weakening of government expenditures and regulations and an expansion of private “free market” capitalism’s role. As Shoup notes, “The bluntness of Huntington’s and direct advocacy of the neoliberal[1] gospel violated a taboo among the powerful of U.S. society, namely that the rhetoric of the United States as a wonderful and exceptionally democratic society should never be openly challenged.”
The CFR has been around a while. Time to dig out the Carroll Quigley quote:
"The powers of financial capitalism had (a) far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank... sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
— Carroll Quigley (1910-1977) | Professor of History at Georgetown University, member of the Council on Foreign Relations (CFR), mentor to Bill Clinton

Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (PDF)
Volumes 1-8
New York: The Macmillan Company, 1966
Chapter 7, page 324

Yes, There is an Imperialist Ruling Class
Paul Street

Makenzie Murphy — 78% of Americans Want Citizens United Overturned—So Why Does the Media Never Cover It?

A recent Bloomberg poll showing 78 percent of Americans in favor of overturning the Supreme Court's 2010 Citizens United v. Federal Election Commission ruling received no coverage on national nightly news programs for ABC, CBS, NBC or PBS, nor Sunday morning political talk shows on ABC, FOX, or NBC. The court decision is once again having an enormous impact on the presidential election, with hundreds of millions of dollars expected to be raised and funneled into political super PACs through 2016.…
That makes 21% either crazy or out to lunch. The 1% have an interest in it. Bernie should be hitting this hard. Will Trump?

78% of Americans Want Citizens United Overturned—So Why Does the Media Never Cover It?
Makenzie Murphy, Media Matters

Jeff Cox — Bill Gross to the Fed: 'Get off zero, now!'

Bill Gross talking his book again.

Doesn't the Fed realize that rentiers are hurting? How insensitive.

Did Gross miss that the yield on T-bills sunk to zero at auction?

Bill Gross to the Fed: 'Get off zero, now!'
Jeff Cox.

Dmitry Orlov — The World's Silliest Empire


Club Orlov
The World's Silliest Empire
Dmitry Orlov

Laurent Brayard — The CIA recipe for bringing down a regime

It was simply by chance that I discovered the film Checkmate, the Romanian Revolution, a program that was broadcast by the Franco-German channel Arte in late 2004.

It was a decade ago that our media showed how the US had mounted its attack on the dictatorship of Nicolae Ceausescu at the end of 1989. Granted that the grotesque communist regime of Romanian dictator was a scourge for Romania, with its share of repression, political police and that ridiculous cult of personality of The Ceausescus; what is interesting in this film is the methodical and precise description of the means employed by American and Western intelligence agencies to bring down this regime. You will be struck by the parallels that can be matched up to the Ukrainian euromaidan.

It will of course not be in the spirit of my prose to defend Ceausescu's dictatorship, rather instead to show through this film that Americans have long mastered the techniques of destabilization of the regimes that are in their way.…
What is even more interesting is the declaration of a CIA network, indicating that one has to be careful not to suppose that only the Americans were on the job in this operation, suggesting an underground participation by other Western secret services.…
You will discover in this movie the incredible cynicism of those at the highest level who push the pawns with complete disdain for human life. The primary difference between the Romanian and Ukrainian case is that the latter has never been a dictatorship, and now the West, led by the Americans has passed from using these methods against dictators to using them against perfectly established democratic regimes.
The US and other Western clandestine operations services were doing this long before Romania 1989. It was already SOP (standard operating procedure) in 1989, at which time the MO (modus operandi) had been tested and set in place.

Fort Russ
The CIA recipe for bringing down a regime
Laurent Brayard October 7, 2015
Translated by Tom Winter

David F. Ruccio — Economist of the day

So, on one hand, according to [Fred] Mishkin, we have Too Big to Fail banks, which are “now a larger problem than before,” that need to be regulated. On the other hand, also according to Mishkin, the banks will resist regulation by hiring a lot of lawyers “to get around these regulations and undermine them.”
Why not then follow the logic to its real conclusion? We need to nationalize the banks.
Bill Mitchell's conclusion, too. Bank nationalization is a sine qua non of ending economic liberalism. 

But even that will be subverted without getting the money out of politics, shutting down the lobbying industry, and locking the revolving door.

Occasional Links & Commentary
Economist of the day
David F. Ruccio | Professor of Economics ,University of Notre Dame

Eric Schliesser — Al-Farabi On Treating People as Ends or Means (with nods to Spinoza, Rousseau, and Kant)

Only of interest to those into history of social and political thought. Al-Farabi aka Alpharabius is not well known in the West other than specialist circles, although he is renown in Islamic philosophy.
The quoted passage entails (animal rights' activists will not like this) that mankind has dominion over (most) other animals because they lack a rational faculty. But it also implies that by nature humans may not be treated by each other as a means because they have -- to use poetic language -- the spark of rationality. Let's call this Al-Farabi's rational humanism. It is compatible with his assumption that mankind is naturally hierarchically differentiated in many different ways and, in turn, cultivated and educated in ways that increase multiplicity.
"Rationality" in ancient and medieval thought signifies the ability to know and use universals and relate them through reasoning. This enables making a distinction between the rational appetite that human and shared with separate intelligences and sense appetite that is shared with animals. A good person and a good society are based on rationality, whereas a bad person and a bad society are devoted to sense gratification, which modern economics calls "utility" after Jeremy Bentham.

Al-Farabi On Treating People as Ends or Means (with nods to Spinoza, Rousseau, and Kant)
Eric Schliesser | Professor of Political Science, University of Amsterdam’s (UvA) Faculty of Social and Behavioural Sciences

Manchester Evening News — Anti-austerity rally: Pictures of police marksmen watching march from Manchester rooftops circulate on social media

Going viral.
Police spokesperson: “They are high up for that reason, to observe. And they [the guns] are used for their powerful sight, which is stronger than any pair of binoculars. They are not there to shoot people.”

Bill McBride — Defeatists Policies #NothingCanBeDone

BB blasts the GOP. Wish he had had the balls to do it while Fed chair. He didn't just figure this out now.

Calculated Risk
Defeatists Policies #NothingCanBeDone
Bill McBride

Ramanan — United States’ Net Wealth

The latest release of the Federal Reserve Statistical Release Z.1, Financial Accounts of the United States – Flow of Funds, Balance Sheets and Integrated Macroeconomic Accounts or just “flow of funds” has a new table B.1: Derivation of U.S. Net Wealth.
The release states:
The measure of U.S. net wealth also includes the market value of domestic nonfinancial and financial corporations, and is adjusted to reflect net U.S. financial claims on the rest of the world.
The stock of net wealth ("the wealth of nations") is highly volatile under this construction, fluctuating with market capitalization. I wonder if anyone will make a "wealth clock" similar to the "debt clock" so we can see it fluctuating trade by trade.

The Case of Concerted Action
United States’ Net Wealth

Cass R. Sunstein — Why Free Markets Make Fools of Us [book review]

Review of Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof and Robert J. Shiller

The New York Review of Books
Why Free Markets Make Fools of Us
Cass R. Sunstein | Robert Walmsley University Professor and Felix Frankfurter Professor of Law at Harvard Law School

John Metcalfe — China Rolls Out the 'World's First Driverless Bus'

Still in testing stage but almost ready to roll out.
The manufacturer also says the bus has an efficient driving style—one “that can only be attained by years of experience of an attentive and careful driver”—that will reduce energy waste and thus make the ride environmentally friendly.
This is another huge advantage of automation and robotics over human labor — standardization and optimization. Most people don't realize how important both of these factors are in the success of the modern industrial economy.

Now humanity is readying to take it to the next stage — and increase productivity, thereby making more leisure possible. Leisure is the material basis for freedom.

The Atlantic — City Lab
China Rolls Out the 'World's First Driverless Bus'
John Metcalfe
ht Tyler Cowen at Marginal Revolution

Elizabeth Boggs Davidsen — Social Entrepreneurship Enters the Mainstream

Once a niche concept at the intersection of business and development, “social entrepreneurship” is now mainstream. A social entrepreneur, according to Ashoka founder Bill Draper, who coined the term in 1980, is a person with system-changing solutions for the world’s most urgent social problems. A social enterprise is one that deliberately expands access to goods, services, income, and employment opportunities for vulnerable populations as part of its core business while seeking return on investment. Social entrepreneurship is increasingly appealing to people, and the idea of using a MBA degree to do good while doing well has grown in popularity on campuses and in businesses around the glob….
"Find a need and fill it" versus "manufacture a want and supply it."

Social Entrepreneurship Enters the Mainstream
Elizabeth Boggs Davidsen

Paul Romer — Human Capital and Knowledge

In the market state of economic liberalism, only that which is quantifiable is significant and everything economic can be capitalized. Workers' capitalization is the wage or salary figure they are able to demand. This is key in a technological society, according to Romer's assumptions.
Here is the true micro-foundation that I used to think about human capital. Human capital is stored as neural connections in a brain. For example, when a person reads from a book how to use a 3-4-5 triangle to construct a right angle using only a measuring rod, this information is stored in a set of neural connections in his/her brain. These neural connections increase the productivity of this person as a carpenter. To get empirical proxies for human capital, we measure the time someone spends reading or this increase in productivity, as reflected in the carpenter’s higher wage. 
Once you have this micro-foundation in hand, it is crystal clear that human capital is a rival good and that even without any legal protection, human capital is almost perfectly excludable. Short of torturing me, there is no way for you to get information out of my neurons that I do not want to give to you. When I give someone information, for example by answering a question, I’m engaging in voluntary exchange in exactly the same way as when I hand this person some object that is in my possession. 
Now, here is an alternative micro-foundation for human capital. There is a little homunculus inside each person’s head who knows everything the person knows and who has his own low-powered ham radio station. When two people come into proximity, neither of them can prevent the homunculus in each head from broadcasting over the ham radio to the other homunculus, all the things it knows. So the mere fact of close proximity causes valuable bits of knowledge, such as how to make a right angle using only a measuring rod, to flow from one person’s head to the other person’s head, which then raises the productivity of the other person as a carpenter. 
This micro-foundation justifies the idea that human capital is not fully excludable. In less precise language, it justifies human capital externalities or spillovers. As you may have noticed, this micro-foundation is also false. 
If you accept micro-foundations that are false, you can reach all kinds of incorrect conclusions. (Sprinkle around the phrase “as if” and they will still be incorrect.) But if you stick to micro-foundations that are true,  human capital is perfectly excludable. There are no human capital externalities. Zero. Nada. Zilch.
Unstated assumption:  methodological individualism based on ontological individualism.

What's false about this? It ignores the role of relationships is a social system. It is not even possible to think, which requires the use of symbols, without a pre-existent public context. There are no private languages.

Romer's excluded middle, which he uses to "prove" his assumption, is silly.

Human ability is socially determined as well as individually developed, and all use of human ability other than the most basic, shared with animals, is also socially embedded.

The notion that human knowledge is essentially rival and excludable is socially pernicious and it is the antithesis of a fundamental assumption of scientific method, that of shared results.

Paul Romer Blog
Human Capital and Knowledge
Paul M. Romer | Professor of Economics at the Stern School of Business at New York University, and formerly STANCO 25 Professor of Economics in the Graduate School of Business at Stanford University and a senior fellow at the Hoover Institution.

Bank of England — Minouche Shafik: Fixing the global financial safety net – lessons from central banking

The benefits of free trade are now well established. Similarly, economic theory provides compelling arguments for the potential advantages of integrated global capital markets based on the efficient allocation of resources. But, in practice, cross-border capital flows can be fickle and flighty, with destructive effects on the real economy. It is fair to say that the case for the free movement of capital took something of a knock following the string of crises since the early 1990s in Latin America, East Asia, Russia and most recently in Europe. As a result, a variety of means to insure against sharp changes in capital flows have developed at domestic, regional and international levels which are collectively referred to as the “global financial safety net”.3 The cross border impact of the global financial crisis has forced a fundamental rethink about whether this global financial safety net is functioning as efficiently as it should, and whether more needs to be done to contain the systemic spillovers from sovereign crises.….

Today, given my current role overseeing the Bank of England’s market functions, as well as my previous experience at the IMF dealing with the crisis in the Eurozone and in the wake of the Arab Spring, I would like to offer some thoughts on how lessons from reform to the domestic financial safety net for banks could be applied to sovereigns, to the IMF as international lender of last resort and to the global financial safety net more broadly. I will argue that we need a stronger and more resilient global financial safety net to reduce the systemic implications of sovereign crises and allow nations to cope with shocks in order to reap the economic rewards of an integrated system of trade and finance. I will also argue that the effectiveness of that safety net would be enhanced by implementing policies that strengthen surveillance and the stress testing of countries balance sheets, and better mechanisms for resolving sovereign debt crises when they occur. These are of course my personal thoughts rather than an official UK position, but I offer them in the spirit of encouraging debate.…
Another indication that capitalism gives rise to internal contradictions that only governments have the authority and capacity to address. That economic liberalism results in spontaneous natural order that optimizes distribution of scarce resource most efficiently and effectively as possible is a crock.

Minouche Shafik: Fixing the global financial safety net – lessons from central banking

Speech by Ms Minouche Shafik, Deputy Governor for Markets and Banking of the Bank of England, at the David Hume Institute, Edinburgh, 22 September 2015.

Matt Bruenig — Tired of capitalism? There could be a better way.

Capitalism is a coercive economic system that creates persistent patterns of economic deprivation.
Governments have typically dealt with capitalism’s more misery-inducing tendencies by creating institutions of labor protection — such as the right to organize unions — and by building out modern welfare states. Although these policy programs have been fairly successful, especially in the countries that have pushed them the furthest, they have not fully eliminated coercion and deprivation. To secure freedom and prosperity for all, it may ultimately be necessary to supplement the welfare state with a universal basic income — a program that would provide all citizens with a basic level of financial support, regardless of whether they’re employed.
By now, it is well established that capitalism is fundamentally built upon threats of force. As libertarian philosophers Robert Nozick and Matt Zwolinski have explained, the only way to turn unowned natural resources (such as land, minerals and other goods) into privately owned property is by violently preventing all others from using them. This one-sided exclusion destroys freedom of movement and cuts many people off from the things that they need to survive.
When the physical resources necessary for production are privately held in the hands of very few, as in the United States, the majority of the population is forced to submit itself to well-financed employers in order to live. The precarious position of most workers in this position — desperate for employment but aware that they could lose their jobs at any time — is coercive on its face and susceptible to exploitation and abuse.…
Pretty good analysis of enclosure of the commons and its maintain through "force of law"with emphasis on "force." But more weak suggestions for limiting excesses instead of addressing the issue of capitalism.

The only way to address capitalism effectively is through liberal democracy as government of the people, by the people and for the people based on universal human and civil rights that knock property rights off their pedestal.

Nothing short of the will do it because the choice is between first US Chief Justice JohnJay's, "Those who own the country should govern it," and President Abraham Lincoln's "government of the people, by the people, for the people."

The Washington Post
Tired of capitalism? There could be a better way.
Matt Bruenig

David F. Ruccio — Class and the Goldilocks principle

The elite prefer a smaller pie they control instead of a bigger pie that makes all better off.

Another reason that capitalism is antithetical to democracy.

Occasional Links & Commentary
Class and the Goldilocks principle
David F. Ruccio | Professor of Economics ,University of Notre Dame