Tuesday, January 23, 2018

Bitcoin Schadenfreude


the Sun - panicky Bitcoin investors struggle to withdraw cash. Ha ha!:

THERE are mounting fears that Bitcoin investors will struggle to get their cash out after the cryptocurrency's value fell 40 per cent in a single month.

Many are looking to put their money in gold instead, with some European gold traders reporting a "five fold increase" in demand amid fears Bitcoin could collapse entirely.

And before you say "oh, it's just the Sun", remember this is the kind of newspaper that potential new Bitcoin investors would be reading.

Stick a fork in it, Crispin!

Anchored expectations and wage stagnation?


It's a tremendously common-sensical explanation for wage stagnation in the face of massive economic growth, which explains why economists are only fucking stumbling onto the idea right now:

Jaren Bernstein - anchored expectations and wage stagnation. Quote:
Sen’s argument is that even employers who need new workers are avoiding raising their wage offers because they don’t want to have to raise the pay of their incumbent workforce.


When an employer in the Boston district was asked why the company didn’t raise wages as a way of attracting more workers, it responded that if it had done so, it would have had to pay all the existing workers more, which would be uneconomic. And another contact in the Boston district said that when a worker departs, the replacement typically ends up earning 10 percent more than the departing worker made.

This implies that incumbents could do much better if they left their jobs paying well below what they could get elsewhere given current conditions. That would show up as more labor-market churn, which has, in fact, been down in recent years (the economist Betsey Stevenson has long emphasized this development).

If so, then perhaps incumbent workers are just too used to a labor market market characterized by stagnating pay so they don’t bother looking for a better job elsewhere, under the assumption that, pay-wise, their next job would be no better than their current one. It’s “well-anchored expectations,” applied to a job market long characterized by wage stagnation. And just like with the Fed’s inflation problem–undershooting their inflation target for years on end–it takes a long time for expectations to change.
And, of course, the elephant in the room that no economist dare mention:
US employers have just thoroughly forgotten how to raise pay, and they don’t have too much by way of unions to remind them.

Monday, January 22, 2018

Wow, Branko Milanovic is getting to be quite the bolshie


I'm proud....

Branko Milanovic - dutiful dirges of Davos. OK, he just spoiled it with the alliterative title:

Thousands of people will gather next week in Davos. Their combined wealth will reach several hundred billion dollars, perhaps even close to a trillion. Never in world history will be the amount of wealth per square foot so high. And this year, for the sixth or seventh consecutive time, what would be one of the principal topics addressed by these captains of industry, billionaires, employers of thousands of people across the four corners of the globe: inequality…

Only in passing, and probably on the margins of the official program, will they get into the tremendous monopoly and monopsony power of their companies, ability to play one jurisdiction against another in order to avoid taxes, how to ban organized labor in their companies, how to use government ambulance services to carry workers who have fainted from extra heat (to save expense of air conditioning), how to make their workforce complement its wage through private charity donations, or perhaps how to pay the average tax rate between 0 and 12% (Trump to Romney). If they are from the emerging market economies they can also exchange experiences on how to delay payments of wages for several months while investing these funds at high interests rates, how to save on labor protection standards, or how to buy privatized companies for a song and then set up shell companies in the Caribbean or Channel Islands.

Still poverty and inequality which are, as we know, the defining issues of our time will be permanently on their minds.

It is just that somehow they never succeeded to find enough money, or time, or perhaps willing lobbyists to help with the policies they will all agree, during the official sessions, should be done: to increase taxes on the top 1% and on large inheritances, to provide decent wages or not to impound salaries, to reduce gaps between CEO and average pay, to spend more money on public education, to make access to financial assets more attractive to the middle and working class, to equalize taxes on capital and labor, to reduce corruption in government contracts and privatizations.

Since they have been singularly unsuccessful in convincing governments to do anything about rising inequality--will they lament-- it is not surprising that nothing has been done. Or rather that the very opposite policies have been conducted: Trump has, as he promised or threatened, passed a historic tax cut for the wealthy while Macron has discovered the attraction of latter-day Thatcherism. Nothing positive of note seems to have been done in the emerging market economies either (with perhaps the crackdown on corruption in China the only important exception).

This return to the industrial relations and tax policies of the early 19th century is bizarrely spearheaded by people who speak the language of equality, respect, participation, and transparency. None of them is in favor of “Master and Servant Act” or forced labor. It just so happened that the language of equality has been harnessed in the pursuit of structurally most inegalitarian policies over the past fifty years, or more.

All very true, but then again it's not like we can end it with a well-placed armed terrorist attack on Davos or anything.

Friday, January 19, 2018

Friday videos: forgotten 1991 UK dance


Nobody remembers Bizarre Inc., but this is pretty historic for its effortless switching between hard techno and Balearic in the same song.



Wednesday, January 17, 2018

Still no news, some theory instead


Did my seminar, it might have been good, I dunno.

No real news on the market front: despite yesterday, people are still in a loading-up-the-truck mode in the US equities. $USD has been dropping precipitously, which you should expect when the US government is generating massive new future deficits with their tax plan when the rest of the world is eating away at their deficits through economic growth. Of course, a drop in $USD is great for US businesses with a lot of foreign sales, and a drop in $USD means stocks have to rise in $USD terms to maintain real value.

Gold should go up because the other commodities have gone up. Although the scuttlebutt is that the rise in the price of oil is just being engineered by the Saudis to get the best possible price for their float of Saudi Aramco, in which case you should expect the price of oil to go back down in a year or so to kick US shale back out of the market.

Have been trying to consolidate my view of stock markets:

1. A stock price doesn't rise as a reward for booked earnings, because investors don't buy stocks to reward companies: they buy stocks in expectation of future appreciation.

2. If prices move because of expectations, then your most important factors in generating an algorithm for "fair price" should be expectation functions, not empirical values from the past (ignoring the idea of temporal correlation in time series, since after all that tends toward zero as t increases).

3. So the market is a mechanism for averaging over the expectation functions of all market participants. Importantly, expectation functions of non-participants are worth nothing (except to try to predict when they may change into participants), and expectation functions of participants are weighted by their size of participation.

4. Then, the job of the investor is to try to predict the inflection points for the expectation functions, not the inflection points for prices - though the latter will influence the former, obviously.

5. So basically, your job is to try to calculate E(E(x)).

Seems like the above is even beyond Shiller, so that's probably a pretty decent theory for now.

Friday, January 12, 2018

And some real news....


It's very problematic to put together a policy seminar in one week that's worth 30% of your total grade, in a 4th-year class that you really want to get an A+ in, taught by a prof whose reccie you want for grad school, just saying.

I'm dumbfounded and stupefied by the continued strength in SPY and QQQ: they've gone way too far, you shouldn't make this much money in a month, their technicals are very overextended.

Then again, the big Trump tax breaks are going to put a lot of new money into the pockets of buyers of equities, while simultaneously allowing companies to buy back shares to shrink the equity pool. So while the behaviour is abnormal, the environment itself is abnormal.

And of course this is going to blow one hell of a bubble, because Republicans believe in bubbles. But it can take years to play out: recessions happen for reasons, not because of disturbances in the quantum foam.

I disbelieve the inflation hype, by the way, because (1) nobody can measure inflation anymore, it's all been politicized; (2) price inflation is not asset inflation is not commodity inflation; (3) the institutional monetary system of the West has been successfully fighting "inflation" for 35 years now, they aren't going to stop anytime soon.

But with all that in mind, The Cookie Monster Himself laid out a few years ago why there's a good case to invest in gold... eventually. Now might be that eventuity.

But, with that in mind:

WSJ - the global economy's output gap has closed. This is a big thing. I'm not interested in explaining this to you: go read Wikipedia on the topic, and then get 3 years of an economics degree.

New Deal Demoncrat - JOLTS confirms November payrolls strength.

New Deal Demoncrat - a US economic boom in 2018? Then again, what's important for the US is whether there's a global boom, not a US one.

All the Trump news you can Trump


Just popped into Business Insider, and it seems they feel Trump stories are sufficient clickbait:


Business Insider - Botswana asks, 'are we a shithole country?' Dude, if you don't have a Trump tower, you're a shithole country. Russia, on the other hand, is a fantastic country.


Business Insider - Paul Ryan calls Trump's 'shithole' comment 'unfortunate'. Quote:

"I thought about my own family. My family, like a whole lot of people came from Ireland on what they called 'coffin ships' and worked the railroads," Ryan said. "It is a beautiful story of America, and that is a great story. That is the story today, and that is the story we had yesterday, and that is what makes this country so exceptional and unique in the first place."

See, Ryan is what you get when you let fucking Catholics into your country.

He continued: "We've got great friends from Africa in Janesville who are doctors, who are just incredible citizens. And I just think it's important that we celebrate that."

"Some of my friends are black!"


Business Insider - Trump asked if he's a racist at MLK address. The answer? He wouldn't let them touch his money, he leaves that to the Jews. Seriously, you had to ask?


And, of course:

Business Insider - Trump's lawyers paid a porn star $130,000 in hush money. Cuz if you paid her and she's a porn star, then it's okay.


Goldwankage


Yeah, I'm still here... I'm just working on a seminar that I have to present on Tuesday.

Here's two interesting articles from Jojo on gold and gold miners:

Get Back Jojo! - five reasons gold stocks will break out in 2018.

Get Back Jojo! - here are the key levels in gold and miners.



Friday videos: Medicine


Note to all the indie rock kids: Brad Laner was ten times the mad guitar god that Kevin Shields was.




Thursday, January 11, 2018

Proof that "fiat" isn't what you think it means


Reuters - South Korea to ban cryptocurrency, raids exchanges on tax evasion charges. Quote:

South Korea’s government said on Thursday it plans to ban cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil as the nation’s police and tax authorities raided local exchanges on alleged tax evasion.

The clampdown in South Korea, a crucial source of global demand for cryptocurrency, came as policymakers around the world struggled to regulate an asset whose value has skyrocketed over the last year.

Justice minister Park Sang-ki said the government was preparing a bill to ban trading of the virtual currency on domestic exchanges.

And of course it's more complicated than that, but the point remains:

"Fiat" doesn't mean "worthless money". "Fiat" means "stuff that the government declares to be money". Thus, anything that the government declares to not be money ends up not being money.

Because the government says so.

Thus endeth the lesson.

Tuesday, January 9, 2018

Three problems with James Damore's lawsuit


There's three problems with James Damore suing Google, alleging they fired him for being a "white male conservative":


1. His original memo isn't very "conservative" at all. It seems that he's only gotten that way recently out of bitterness over being fired.

2. Your company can fire you for causing trouble at work.

Oh... and most importantly,

3. Google is worth $771 billion. James Damore isn't. Ergo, he can never win a lawsuit against them, which makes you wonder how much of a tard he has to be to sue for this nonsense.


It's hilarious, by the way, that conservatives are in favour of fire-at-will legislation that gives an employer blanket right to terminate anyone for any reason, and yet the minute Google does this they're evil or something.

I guess conservatives admit after all that we need the heavy hand of government to force employers to hire people that they don't like.


Saturday, January 6, 2018

No, don't worry, Trump's actually a very stable genius


CNN - Trump: "I'm a very stable genius". Well, I guess we're all okay then:

"Actually, throughout my life, my two greatest assets have been mental stability and being, like, really smart," the President continued. "Crooked Hillary Clinton also played these cards very hard and, as everyone knows, went down in flames. I went from VERY successful businessman, to top T.V. Star ... to President of the United States (on my first try). I think that would qualify as not smart, but genius ... and a very stable genius at that!"

Darn right! And there's nothing that screams stability more than still fixating on Hillary Clinton a year after the election!

Or desperately trying to defend your mental status on Twitter!


Friday, January 5, 2018

All the Trump news, mental instability edition


Ha ha, turns out Trump is an incompetent retard who didn't even want to be president, you Republicans are idiots:


BBC - Trump seen as a child by staff. Quote:
Mr Wolff has hit back against White House attacks, saying the president has no credibility and that "100% of the people around him" question his fitness for office.

He added that White House staff described the president as childlike because "he has the need for immediate gratification. It's all about him... This man does not read, does not listen. He's like a pinball just shooting off the sides".
To be fair, the Republican party's god nowadays is a B-movie actor who was senile while in office.


CNN - book hits Trump where it hurts most: his ego. Quote:
But as Washington consumes a sensational West Wing exposé by journalist Michael Wolff, Trump is being forced to watch as his prized image is ripped to shreds.

When a presidency is anchored so fundamentally on an image, as it is with Trump, rather than a long history of political achievement or ideological consistency, any deterioration of that image can be especially perilous. For Trump, who may be more conscious of how he is perceived than any politician in history, the mockery is likely to be especially painful.
To be fair, most of the Republican insiders got heir start in politics working for a short balding sweaty man who was so paranoid that he recorded his own illegal schemes on audio tape.


BBC - everyone's talking about Trump's mental illness. Quote:
In his book, Fire and Fury, journalist Michael Wolff writes that President Donald Trump is showing worsening signs of mental decline.

"Everybody was painfully aware of the increasing pace of his repetitions," he writes in Hollywood Reporter.
To be fair, um... shit I already brought up Reagan. OK, the Republican party's ideological leader is a son of a goldbug who worships a Russian immigrant sci-fi author who hated socialism while spending her entire old age collecting welfare.


Vox - even psychiatrists are saying Trump should be evaluated by force. Quote:
Yet there is a growing call from a group of psychiatrists — the best medical experts at interpreting aberrant human behavior — for exactly this: an emergency evaluation of the president’s mental capacity, by force if necessary.

Leading this call is Bandy Lee, an assistant professor in forensic psychiatry (the interface of law and mental health) at the Yale School of Medicine who has devoted her 20-year career to studying, predicting, and preventing violence.

She recently briefed a dozen members of Congress — both Democrats and Republicans — on the president’s mental state. And this week, she, along with Judith Herman at Harvard and Robert Jay Lifton at Columbia, released a statement arguing that Trump is “further unraveling.” In October, a collection of essays from 27 mental health professionals that Lee edited, The Dangerous Case of Donald Trump, was published.
Come on! Everyone in the Republican party is a narcissistic psychopath with delusions of conspiracies. You'll have to do better than that!


The Guardian - Donald Trump eats McDonald's for fear of being poisoned? Quote:
Trump’s answer to the poisoning threat is to eat McDonald’s, by preference, all the time; the burger chain never knows he’s coming, and it’s all pre-made. This has the distinct ring of post-hoc justification – it would be much more reliable to get a nine-year-old to sit next to him and pre-taste his food. Besides which, even if the staff of McDonald’s don’t in general know who’s coming, it would be unusual for them to feed the president without a heads-up. Much more likely, Trump fears poison and he really likes McDonald’s.

This, too, was an open secret from the time of his trip to the Middle East, when his trailer requests read like the death row meals in a dystopian movie about 100 people all getting electrocuted on the same day.
OK... she wins.