Friday, April 1, 2016

SELF-DRIVING CARS GO NOWHERE - here's what you need to know

Reuters - self-driving cars stumped by shitty American roadways. Quote:

Volvo's North American CEO, Lex Kerssemakers, lost his cool as the automaker's semi-autonomous prototype sporadically refused to drive itself during a press event at the Los Angeles Auto Show.

"It can't find the lane markings!" Kerssemakers griped to Mayor Eric Garcetti, who was at the wheel. "You need to paint the bloody roads here!"

Shoddy infrastructure has become a roadblock to the development of self-driving cars, vexing engineers and adding time and cost. Poor markings and uneven signage on the 3 million miles of paved roads in the United States are forcing automakers to develop more sophisticated sensors and maps to compensate, industry executives say.

Tesla CEO Elon Musk recently called the mundane issue of faded lane markings "crazy," complaining they confused his semi-autonomous cars.

On the one hand, yes it's nice to gloat over the pathetic state of the US road system, and how it's the result of decade after decade of idiotic right-wing Grover Norquist blather about how all government spending is evil.

Then again, the free-market answer to this is "well, if your self-driving car needs paint markings and signage to function, why don't you car companies fucking pay for that yourself instead of demanding the taxpayer do it?"

Maybe the neo-Nazi right-wing fucktards from the corporate kleptocratic elite will learn from this that government spending generates positive externalities that allow a capitalist economy to function.

But even if they do, they'll just decide to tax the fucking slave class more.

SUMMERS TURNS COMMIE - he's finally catching up to my thesis

Larry Summers - corporate profits are near record highs, and that's a problem. He's finally figured out that secular stagnation is the inevitable result of the victory of the kleptocrats:

As the cover story in this week’s Economist highlights, the rate of profitability in the United States is at a near-record high level, as is the share of corporate revenue going to capital. The stock market is valued very high by historical standards, as measured by Tobin’s q ratio of the market value of the nonfinancial corporations to the value of their tangible capital. And the ratio of the market value of equities in the corporate sector to its GDP is also unusually high.

All of this might be taken as evidence that this is a time when the return on new capital investment is unusually high. The rate of profit under standard assumptions reflects the marginal productivity of capital. A high market value of corporations implies that “old capital” is highly valued and suggests a high payoff to investment in new capital.

This is an apparent problem for the secular stagnation hypothesis I have been advocating for some time, the idea that the U.S. economy is stuck in a period of lethargic economic growth. Secular stagnation has as a central element a decline in the propensity to invest leading to chronic shortfalls of aggregate demand and difficulties in attaining real interest rates consistent with full employment.

Yet matters are more complex. For some years now, real interest rates on safe financial instruments have been low and, for the most part, declining. And business investment is either in line with cyclical conditions or a little weaker than would be predicted by cyclical conditions. This is anomalous, as in the most straightforward economic models the real interest rate is the risk adjusted rate of return on capital. And an unusually high rate of investment would be expected to go along with a high rate of return on existing capital.

To reiterate, the basic economic models all assume that interest rates adjust to clear the savings/investment market. Real interest rates are negative, so that means any corporation who wants to invest in future production growth has a huge pool of money available to borrow. So why aren't they borrowing? Why has Dave Rosenberg's investment boom never come? Why is the US capital stock so goddamn old compared to the past?

He'll get there:

How can this anomaly be resolved? There are a number of logical possibilities. First, the riskiness associated with capital investment might have gone up and so higher rates of return could be simply compensating for higher risk rather than implying attractive investments. There are two major problems with this story. One is that available proxies for risk are not especially high in recent years. [...] Another problem is that if capital returns have become far more uncertain, then the stocks should have become less attractive in recent years rather than more. In the last 7 years, the stock market has risen to 250 percent of its spring 2009 levels.

A second explanation could be that a heightened demand for liquidity and a shortage of Treasury instruments, perhaps created by quantitative easing programs, has driven down bond yields, widening the spread between the rate of profit and these yields. This story does not provide a natural explanation for the relatively weak behavior of business investment. Further as Sam Hanson, Robin Greenwood, Joshua Rudolph and I pointed out in earlier work, the market is today being asked to absorb an abnormally high rather than an abnormally low level of long term Federal debt.

On top of that, if Treasuries were in short supply, one would expect that they would have their yield bid down relative to market synthesized safe instruments. Yet the so-called swap spread is actually negative and Treasury yields (vs swaps) are unusually high relative to history.

Third, it could be that higher profits do not reflect increased productivity of capital but instead reflect an increase in monopoly power. If monopoly power increased one would expect to see higher profits, lower investment as firms restricted output, and lower interest rates as the demand for capital was reduced. This is exactly what we have seen in recent years!

Well, now that he's clued in to the fact that greater market power can contribute to secular stagnation, all he needs is to add in the fact that a greater concentration of savings among the kleptocratic elite in secret Luxembourgeois bank accounts has resulted in the world's greatest ever global savings glut.

Basically, secular stagnation is what we had from 500AD to 1300AD. It is the inevitable result of feudalism. The return of feudalism is the thirty-year project of the kleptocratic elite that began with Reagan and Thatcher.

Someday everyone will fucking well clue in to this.

Friday videos: stop it with the old people's music already

Here's Bailey Quarters:

Seriously, she looks like Bailey Quarters, doesn't she?

Wednesday, March 30, 2016

VAGINA BEER - combining those two things usually ends in regret, uncomfortable genitals, and sometimes legal complications - vagina beer and yup I bet you've already clicked through haven't you.

Presenting Bottled Instinct. It’s beer. But made using vaginal bacteria.

Um... I fail to recognize the allure of beer made with vaginal bacteria.

Not just any vaginal bacteria, mind you. Lactic acid bacteria from the vagina of Czech model Alexandra Brendlova. Of course.

(Googles) (Comes back) Yup, still not really recognizing the allure of beer made with this particular Czech model's vaginal bacteria.

Created by vagina-themed start-up-

Oh god please, world of craft beer, let's jump even more sharks with this one.

-The Order of Yoni, Bottled Instinct is a beer that promises to capture the essence of femininity.

I thought that was Corona.

Its makers create it by taking bacteria from the vagina using a ‘gynaelogical stick’.

"Hey. Beavis. Heh-heh. I've got a 'gynaecological stick'. Heh heh. Where's my beer. Heh heh. Heh-heh-heh."

This stick then goes to a laboratory,

Oh I bet it does

where the lactic acid bacteria are ‘isolated and cleaned’ then multiplied.

That bacteria is then used in a culture starter kit, and is combined with water, malt, hops, wooden chips, and yeast to create the beer.

The Order of Yoni says the beer has ‘no vaginal smell or taste’, but it has been ‘flavoured with instincts’ and brewed with model Alexandra’s ‘lure’ and ‘grace’.

By a sweaty 57-year-old brewmaster named Vsevolod who suffers from an interesting skin lump disorder.

Why can't the Polish just do what they've done for the past 500 years and brew another shitty Pilsener that they stole from Germany?

Anyway, that's your news for today. I'd happily write this stuff for a professional website if they'd just fucking get back to me.

Tuesday, March 29, 2016




The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.6 percent on March 28, down from 1.4 percent on March 24. After this morning's personal income and outlays release from the U.S. Bureau of Economic Analysis, the forecast for first-quarter real consumer spending growth fell from 2.5 percent to 1.8 percent. The forecast for the contribution of net exports to first-quarter real GDP growth declined from –0.26 percentage points to –0.52 percentage points following this morning's advance report on international trade in goods from the U.S. Census Bureau.

That shouldn't be the sort of thing that inspires a continued advance in US markets.

Tim Duy on that whole oil price doom thing

Tim Duy - on the oil drop and inflation expectations. Wow. Some U. Oregon economist just caught Maurice Obstfeld with his pants down.

First, he points out that Obstfeld's inflation expectations vs oil price chart could easily get swapped out for an inflation expectations versus dollar chart. Then, he points out the drop in oil prices is still having a positive effect on vehicle miles travelled.

Then he points out that the correlation between 5Y/5Y and oil shows no underlying relationship.

Great post, read it if you were worried about that whole "oh why oh why hasn't the oil price drop resulted in a GDP boost" thing.

Monday, March 28, 2016

Some Monday news

It's the home stretch at university, and I seem to have mostly recovered from the lung infection.

Meanwhile, here's two news:

New Deal Demoncrat - weekly indicators, now with more indicators. His verdict:
The neutral to negative US$, and the surge in new orders in the regional Fed indexes, are evidence that the shallow industrial recession should be bottoming soon, and the positive turn in steel production augurs well also. Rail, however, is a solid negative. Gallup spending also argues that consumers are spending some of their gas savings. This is good news for the short term.

The problem is now with 2 of the long leading indicators. Interest rates have failed to make new lows for a long enough time to be counted a negative in the longer term forecast, although they are close enough to those lows to be positive for the shorter term "now-cast." Additionally, the very positive weekly housing metrics are not correlating well with the stalled monthly housing measures.
I'd ask how much he's expecting 2010 behaviour from 2016. We're in a different part of the expansion now, so shouldn't interest rates be doing something different than they did before?

Reuters - California lawmakers reach $15 minimum wage deal. Ermagerd! Think of all the unemployment this is going to cause, according to all undergraduate economics!

Sunday, March 27, 2016

Sunday night wonkish macro - Stephen Williamson's bullshit

So I had thought we'd left the childish Norquist/Rand economics behind this semester - micro was teaching us Edgeworth boxes and macro was teaching us our first microfounded macro model, out of Williamson's Macroeconomics Fourth Canadian Edition.

But now I've been let down again.

Williamson's microfounded model blathers the same old shit that government spending has a fiscal multiplier of no more than one, and probably less than one.

But you'd expect that because his "government", G, is just another consumer. It taxes other consumers, then it buys stuff.

Gee, you think that if I take $500 from your pocket, and spend it on booze and smokes, that there will be any net boost to demand?

Unfortunately, I worked in engineering for 15 years, and for at least 10 of those I was justifying Ontario Ministry of Transportation spending on high-mast lighting systems by conducting cost-benefit analyses - the idea being that if the lighting brought about a reduced cost of accidents (based on the old guidelines that MTO incorporated into the HEIR system) that was greater than the cost of installation and 30 years of maintenance, the lighting should be installed.

That's not "consumption" in a Williamson model. That's "investment".

Government spending on education is also "investment" - the government is taking an uneducated manual labourer and giving them human capital to turn them into a worker with higher marginal product of labour. The initial cost is outweighed by subsequent payoff, both to the government (higher income tax receipts) and to the wider economy (higher productivity and consumption).

Sure, different government spendings have different fiscal multipliers: government buying $100B in military-grade toilets, then dumping them down a disused uranium mine, won't produce a net benefit to the economy. Handing $100B in subsidies to corn farmers in Iowa won't either.

You won't see neocon economists whine about any of that sort of spending, though.

But when it comes to spending on infrastructure and education, and any other addressing of collective action problems and generation of positive externalities, of fucking course there is a positive multiplier.

You won't see neocon economists admit to any of that, though, either.

Wonder why?

Is it just an honest blind spot caused by Williamson's need to present, in my textbook, an admittedly childish, overly simplistic, classical-based, "My First Microfoundation" model, for us undertards to colour in in crayon? Well, on the one hand no because on his blog, unlimited by his textbook's simplistic model, he blathers the same nonsense (in between his constant begging for a completely unearned title match against Krugman).

But on the other hand, the twit also commits the kind of simplistic mathematical fallacy that shows he could never pass the comps in graduate school:

"In basic Keynesian analysis, each dollar spent by the government increases GDP by more than one dollar. If we followed this idea to its logical conclusion, we would let the government grow infinitely large, which would make everyone infinitely wealthy." (p.371)

Um... no, because there's an upside limit to money supply, an upside limit to the potential size of an economy, an upside limit to possible production and consumption amounts, upside limits to the derivatives of all the above, and apparently an upside limit to Stephen Williamson's math comprehension at around the highschool grade 12 level. GDP in his fantasy example would only grow along a logistic/sigmoid function til it reached its upside limit.

We took logistic functions in first-year humanities calc, already.

So Williamson is either being wilfully obtuse or deliberately misleading.