The Economic Populist
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The war on the middle class
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It's time to live within our means once again
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US oil supplies at a 36½ year low, SPR at a 39 year low; oil+products supplies at an 18½ year low
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California to be bankrupt in 10 days
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Wow! 243,000 New Jobs Created in January
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Jobs For U.S. Workers Stripped Out of Stimulus Bill Behind Closed Doors - Update It Lives!
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The states budget crisis about to get much worse
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The war on the middle class
- 315525 reads
It's time to live within our means once again
- 49927 reads
US oil supplies at a 36½ year low, SPR at a 39 year low; oil+products supplies at an 18½ year low
- 184767 reads
California to be bankrupt in 10 days
- 33219 reads
Wow! 243,000 New Jobs Created in January
- 50515 reads
Jobs For U.S. Workers Stripped Out of Stimulus Bill Behind Closed Doors - Update It Lives!
- 26049 reads
The states budget crisis about to get much worse
- 23429 reads
The Golden Rule
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Will the NY Attorney General Bring Doomsday Charges Against Wall Street? If So, How Long Will He Survive?
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New York Post Claims Census Falsifies Unemployment Figures
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How Many Jobs Are Needed to Keep Up with Population Growth?
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VAT or Value Added Tax is Getting a Look in D.C.
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U3 and U6 Unemployment during the Great Depression
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The war on the middle class
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House discusses 401k/IRA confiscation
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Tax Cuts for the Rich Do Not Generate Jobs
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To compute, run a mathematical model to create a CDO, it is required to leave out some information. Else, one cannot crank the numbers, in some, at all in others, not in real time, i.e. not in a day or two. Think about encoding your home movie to make a DVD in 1997. Think about how that took 8 hours to do. Then raise that time concept you have in your head by an exponential amount. In other words, you will be Rip Van Winkle waiting around for some of these things to finish processing on your computer if you do not constrain the data and model before letting it rip on your PC.
So, automatically the ones creating the CDO already know the missing information. They had to limit it to even create a CDO on their computers. They had to add constraints to their mathematical models.
This is before intentionally stuffing a CDO with one standard deviation, assuming a random Gaussian distribution, of toxic crap waste to pretty much guarantee that CDO will blow up and default.
Now with synthetic CDOs, I went over how modelers were using CDSes, evaluated on a mark-to-market, at the close of each business day. The problem is those CDSes are not 1:1, i.e. there isn't one CDS issue per home which pays out when that mortgage goes into foreclosure. It's not a 1 to 1 relationship. That violates the mathematical properties of a Copula (a), which is the "mathematical black box" which they are using to calculate some synthetic CDOs, and (b) assuming they reflect true market value and the probability of default....well, that's some serious statistical fiction, since they haven't even been around long enough to prove CDSes are correlated over time to actual default rates.
I also am wondering if they reason the Mathematics and Science communities did not do some deep investigative work previously into structured finance....
Could it be that Goldman Sachs pays these guys $200k+ per year while the Scientific and Technical traditional jobs are busy trying to get rid of Americans with these backgrounds and offshore outsource their job?
Who would not want to get some real buckos for one's skill and brain, even if it is spinning some serious statistical fiction.
...and they worried about those Russians in 1998, now out of a job and broke....selling Nuclear materials and secrets....
of course Nuclear Scientists weren't gonna sell those secrets....how could they make the mortgage if they were then dead? Hell no, they went to the Mafia and rigged up many a statistical scam and a hell of a lot of online spam.
More to the point:
oopsy, I guess they missed all of the Americans from 2000.....out of a job and broke.....selling their mathematical souls to pay the mortgage!
We need a new billboard, made along the Got Milk? ads...
Got Geeks? They ain't for offshore outsourcing their jobs anymore.
(China btw is front loaded with Geeks on their economic strategy teams).
(Geeks being slang for STEM occupations)
I was taught the financial markets are "informationally efficient".
RebelCapitalist.com - Financial Information for the Rest of Us.
I know I am wasting my time on this but here is a potential model:
Proposal: A New Mortgage Finance System
Fannie/Freddie should be merged and serve as the basis to this new finance system.
RebelCapitalist.com - Financial Information for the Rest of Us.
That's part of the game. With out them we have nothing.
RebelCapitalist.com - Financial Information for the Rest of Us.
We are going to have a whopping 3% growth in GDP, stable unemployment with stable wages (lower) and a strong service sector with a dominate finance sector. We have nothing to worry about.
Happy New Year!
RebelCapitalist.com - Financial Information for the Rest of Us.
As usual, you highlight the problems our country faces with great clarity. I agree that the confidence in U.S. debt rightfully appears misplaced. I can't believe we aren't on the brink of sovereign default already.
So what happens when all of this comes to a head - when no one will buy a penny more of U.S. debt? Maybe we should all start stocking up on MREs and firearms.
http://jims-blog.com
To me, the U.S. should threaten tariffs if China does not float it's currency. They have our jobs, and now threaten to stop this absurd game, which obviously cannot continue, and U.S. manufacturing cannot get a leg up it seems (and I was surprised by this) by China's currency manipulation alone. We're not even talking about their other numerous manipulations on trade, from tariffs schedules, to their VAT...
Great piece midtowng! Scares the shit out of me and unless something drastic happens....
Well, let me put it this way, I really cannot understand why U.S. debt is considered so safe, why the U.S. in no way is at risk of sovereign default...
I can't, not with those numbers and the cost of the "financial crisis", those numbers just make my blood boil! (I believe most of America's blood is boiling over it as well!)
Great piece, although I almost would prefer some fantasy fiction just because this freaks me out so badly....I have visions of Russia, 1998 in my head!
I think I can shed some light on the "small business mindset," having been a small business that sold out in 2007 (while we were profitable):
1. The previous comments about the uselessness of a cap gains tax are right. I was happy to sell for about what we had into the business (a farm - about a a mil and a quarter$$ investment in land, equipment and crops). We could see the real estate mess coming up fast, as well as future instability in fuel and fertilizer prices.
2. Cuts in the payroll tax would have helped... but without a better explanation of when they would be withdrawn and how much warning we'd have, it probably would not have induced us to hire any additional people.
3. What most people here (and I'm sure most people in the Obama administration) completely miss is that small (< 100 employee and especially < 50 employee) businesses don't have a crack team of lawyers and CPA's to unravel regulatory changes to allow management to plan how to respond to them. No, there's just the folks who started the business, most of the time they're not MBA's, they're just people with a good dose of common business sense. They don't have time to wade through more than perhaps one large change of assumptions to their business model per year.
Since 2007, here's what many small businesses have to cope with in the way of changes:
- all assumptions about fuel prices (and more importantly) the stability of fuel prices are now gone. In the ag sector, small businesses live in fear of the next fuel price shock, and many smaller businesses in the ag and transport sector will not survive the next fuel price spike. Also, inputs that spike when fuel prices spike (eg, fertilizers, petro-based chemicals) or when commodities spike (metal inputs) as well as power, natural gas and other energy inputs - small businesses are not big enough users to allow them to create a cost-effective hedging program, and they typically don't have their pricing set up as "cost+margin+fuel surcharges" the way many large businesses have now.
Want to really help small businesses? Stabilize the price of diesel fuel going forward for the next five years.
- no one is explaining (or even attempting to explain) what the impact of "health care reform" will be on small businesses. So businesses aren't in a hiring mood until they see what the real impact of this is going to be on them.
- no one is attempting to explain (or mitigate) increases in costs as a result of Congress effecting some form of "climate change" legislation.
- small business credit is very difficult to come by, even if you have been profitable for the last five years, even if you have clean books. The general rule of thumb now is this: if you need a loan, you won't get a loan. If you really don't need a loan, they might give you a loan. And if your collateral is land or real estate, fuggetaboutit.
Now, in this environment, the small business is supposed to not only continue his/her business, but expand and *hire* people.
Riiiight.
We'll get right on that.
What did help (a bit) over the last 10 years was the increase in the Section 179 deduction. It would be useful to allow businesses to accelerate their depreciation of some items. For example, if Congress wanted to accelerate the uptake of newer truck emissions requirements, allowing buyers of heavy trucks (I'm not talking pickups here people, I'm talking about Peterbilts) to write the entire expense of a new tractor or a engine replacement off in one year would be a smart thing. The increase in Sec. 179 deductions resulted in a big flush of orders in the ag sector for things like irrigation equipment and other equipment improvements. If we wanted to target certain sectors, then we could target the deductions to certain sectors and certain capital expenditures - with a generic description that benefits US-based manufacturing businesses first and foremost.
Lastly, tell Congress to quit playing with the income tax system. Just leave it alone. When Congress gets into these stupid games every year or every other year, it drives small business up a wall. I really didn't care exactly what the tax rate was, as long as it wasn't confiscatory. 35 vs. 39% at the top end, or 33 vs 35% in the middle? Not my biggest worry. I want Congress more than anything else to simply STFU and quit meddling with it, so that I can plan from one year to the next, because again, there's no crack team of CPA's and tax lawyers on my staff to do this stuff for me. There's just me, and every hour I spend responding to regulation and tax changes is another hour I'm not doing business or making money.
This post is on "your blog", did you write it?
You know you can cross post over here, even a few excerpts...
just a matter of changing a few things to fake out the Google to make sure it's not classified as an exact duplicate piece.
On the post itself, here's the thing that bothers me and why I put the Gomory and Baumol book at the top of the reads list....what we have today is not free trade and that's by the theory itself...
so, when we get these people singing songs about "free trade" I think they just don't have the mathematics chops or even maybe a basic macro econ text crack ability...
or maybe they never even read one line about what is in a single trade agreement, never mind read them....to realize that's just ain't free trade and that's by the theory itself.
Even worse, if one implemented free trade, what Gomory/Baumol prove....is the equations can clearly indicate a trade strategy, in the national interest and do it the "wrong way" and one can literally destroy their own economy.
This DRIVES ME NUTS, because these "free trade" people clearly don't even know what they are talking about and that's by your classic Ricardo equations, your basic trade theory 101.
(I want an autographed copy of Gomory's text at this point, I talk about enough to promote probably 10 sells....
does anybody do their friggin' homework these days? ;))
Just in case this gets confused with his son who has been outspoken on the bail out, son is James K. Galbraith.
Happy Holidays back!
While I'm not too keen on some elites deciding what is good for the people, which from a philosophical bullet point, is Friedman's theme, what happened sure isn't much of a choice. Getting fired as cannon fodder isn't a lot of choice involved and I do think this is a fundamental issue...
Should government be the former of societies or is it just this bare bones thing which wages war and little else?
Frankly I don't think we have either, we have corporate lobbyists running the country.
That's just awesome. Looks like Uncle Sam will do anything to prop up these failed institutions and the overpriced housing market. Sooner or later they are going to have to stop kicking the can down the road and take a loss. I hope I am dead then.
http://jims-blog.com
I did not know of these before! You de Man! Thanks and HAPPY HOLIDAYS to you and yours!
Nice find too. Generally, links to recommendations for either FNV, or SMC are really welcome. I can spend hours hunting and digging and not come up with any fish!
/explanation on
On the rest of this, I guess I'm just very worried that the great immigration debate destroys our very cool site and space. I'm highly active in STEM labor issues on the side and so I already know the bill will cruxify U.S. STEM workers/professionals so I'm kind of "gearing up" for the war....and then on the rest of it, I do want the labor economics realized...hey, I don't like it, who would like some of the results but ya know, denial of reality ain't gonna help anyone craft solutions that actually do help all workers everywhere.
/explanation off
Back to our regularly scheduled class warfare fight, brought to you by working in the trenches stiff 1,230.222, 249.
Hope you didn't think I was name calling when I use the word 'denial'. It's a characterization of how I perceive your philosophy of economics. Please note the last word in my comment 'respectfully'. I'm talking philosophy (epistemology) of social science in general and economics in particular.
Would you consider the following for Friday Night Movies "American Ruling Class"
http://www.snagfilms.com/films/title/american_ruling_class/
I think it's dramatically brilliant and it goes to my point.
Thanks This is the only blog that this type of discussion can take place. It's like Socrates' market place. There's plenty of heat in Plato's dialogues.
Best
Although I'm sure commongood and I share similar attitudes, I have to take a very subtle point with this post and with commongood's statement:
I have been bewildered by some of Ms. Hamsher's blogs in the past, wondering why she was pushing this so-called "public option" longer after they had deep-sixed anything remotely resembling such an option.
I had a private conversation with her last summer (so I won't go into the specifics) but suffice it to say I found her reasoning neither particularly liberal nor following any logical pattern.
In fact, I came away with the newly formed opinion that perhaps her site was simply another diversionary ploy.
There are any number of organizations out there, seemingly working on behalf of "environmental" concerns, but which under deeper scrutiny appear to be working against the likes of Greenpeace and other truly concerned organizations.
So too on the purely political end, and I frequently find myself wondering and confused with freepress.net, Bill Moyers (although he does have a checkered background to anyone familiar with political history), the ACLU and other organizations (most notably one I am convinced is an environmental diversionary outfit, League of Conservation Voters).
Just ask yourself what has been accomplished or achieved during the last decade or during their existence. I am suspicious of any organization which never appears to be accomplishing anything, yet is always asking for donations to accomplish something!
While I don't doubt what they have said about Rahm, being intimately familiar with his background, the same malfeasance could have been levelled against Bernanke, Geithner, Summers (require a special investigation into the dismissal of Iris Mack -- who questioned the concentration of Harvard's investments in credit derivatives and swaps -- and was she ever correct!! -- back when Summers was pres of Harvard) and a number of other Obama appointees.
I'm just wondering if this isn't yet another diversion on their part, although I do applaud Ms. Hamsher for FINALLY advising her readers (after much pleading for donations and wasted activity and action on their part) to vote against this so-called healthcare reform legislation.
And for anyone even remotely familiar with business and contract law in the federal venue, to require the compulsory purchase of private insurance while excluding arbitrary groups due to preexisting conditons would have definitely thrown such legislation into the federal courts --- therefore, halting refusal of compulsory purchase of private insurance given the existence of preexisting conditions is not a bonus, giveaway or achievement, IT IS A GIVEN!
Firstly, no name calling on EP or hostility please.
Secondly, all this thread is about is one cannot write on EP that anyone who disagrees with unlimited global migration or a particular legislation or whatever is....therefore a racist xenophobe.
It's ridiculous and also is a major agenda item,a strategy, a technique, a public relations/propaganda campaign, created by lobbyists....so people will not look at labor economics or whatever actual detailed agenda is at hand.
Case in point this rhetoric is used on guest worker Visa demands by corporate lobbyists, esp. the BPO industry. (Business Process Outsourcing).
Secondly, the mathematics explain exactly how and why the middle class is getting screwed.
It's no mystery, multinational corporations make more money when they labor arbitrage their workers and they can do this by moving to the lowest cost areas of production, including labor costs.
I don't know why people are so afraid of mathematics and calculations, but contained within them, are "people".
Just because I am a strong math head and strong on economic theory, does not mean, contained within that math and theory are not "people".
That's the point of the site, because the theory itself, the statistics itself show the American people are getting screwed.
If you think I am saying you cannot name call Tim Geithner, Larry Summers or Tom Friedman, well, I hope some actual substance behind the deed is there and not just a bunch of name calls, the site should focus on policy, actions, substance.......but if you slip in a few things it's ok.
I think many do not understand what the issue is here but from the overreaction I think my original point, to keep that entire political name calling insanity of other people when it comes to immigration related topics...off of this site.
Remember the phrase of EP is "be good to each other".
WOW! Man you are in denial. You live in a world of computer programs crunching numbers. The absolute verifiable fact is that PEOPLE constitute economic CAUSALITY. If you don’t know who the people are you do not know WHY the economy is the way it is. And those people are the very rich and their political hacks. Models will DESCRIBE for you how the middle class are get crushed but they will not tell you why. Politics is the most important fact in economics. It is the causal fact.
Science begins with descriptions and moves to mathematical relational models. But, ultimately the goal of science is to explain causality. In the social sciences (e.g. economics) CAUSE = PEOPLE. People create trade policy and implement it. If you do not know who they are and why they do it, then you do not know the cause of trade policy. Talking about the people who cause economic policy is not name calling it's identifying the cause of economic policy which is the goal of economic science. If you don't know the cause than you cannot make change. Change is the goal of Populistism.
Respectfully
frankly there is only politics and I'd like to escape to some facts.
We maybe called "Populist" but the site motto is also "when in doubt, use a calculator"...
and that's because from the mathematics itself in econ, the models themselves, it's clear to me that those equations when wrongly implemented, can indeed screw the U.S. middle class.
I'd say when one gets deep into Academic research, the good stuff, not the lame stuff, really the statistics, the research, the theory come much more to the forefront than "politics".
Look at Ralph Gomory, Baumol's work, it's loaded with mathematical proofs...is that "politics" to show that trade is highly dependent upon implementation?
Or did they simply spell out a blueprint for implementing strategic trade that can also be in the national interest instead of what we have now?
Did they plan on that politically when they went about their mathematical proofs? I have no idea but the mathematics itself, well, it's pretty logical. ;)
To me, it's just math with that squeezed variable in those equations being the U.S. middle class it symbolizes when implemented incorrectly.
JV loves taxes....except for a transaction tax. (I can't remember if you live a VAT or not. ;) )
Glad someone sees my point.
My point is discussion has to be econ focused and based in real labor economics and that includes no special interest group, special agenda lobbyist spin papers. On this topic, ONLY established Academia level analysis.
It's too full of spin and fiction to not stick to the most objective analysis.
Also, the focus must be on legislation, the actual bills, as well as labor econ on this topic.
Just like the above, not only are the proposals not so simple, the solutions are by no means simple and the key element that is missing is....wages. Jobs, economy and if one really wants to get into it....I just put up a death notice of someone who "gets it" in many ways....and that is around the globe, one needs strong labor laws, minimum wages and so on. If all the world had strong labor laws of say Finland, France or Sweden, this would not be such an issue it has become.
But I hope my point is clear, this really is a major element of not only labor economics but also major initiatives to labor arbitrage, the infamous "race to the bottom" on wages, jobs and very much has major economic ramifications.
I don't want those masked by simplistic thinking and esp. the use of name calling things which are not that....
since it is a major corporate lobbyist initiative to claim it's all "racist" so the monetary impacts are obfuscated.
All of what I just say has no implications of "amnesty o no", which in reality is simply not what bills in Congress even are. Not even close, which is why one must be very exact on this topic....
Advancing offshore outsourcing, technology transfer, manufacturing transfer and displacing U.S. workers has nothing to do with "amnesty" yet it's all in these bills. No surprise since corporate lobbyists have written major portions of them.
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