Thursday, December 28, 2017


Ha ha, if the Seth Meyers hitpiece wasn't enough, now there's this:

The Guardian - South Korea to shut down Bitcoin exchanges. Ha ha, stick a fork in it:

South Korea, which is one of the biggest markets in the world for bitcoin, said it was preparing a ban on opening anonymous cryptocurrency accounts and new legislation to enable regulators to close coin exchanges if they felt there was a need to do so.

According to Reuters, the government issued a statement saying it had “warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility”.

The move comes less than two weeks after the high-profile bankruptcy of one of the country’s digital currency exchanges, after the Seoul-based platform was hit by hackers for a second time.

The exchange, called Youbit, shut down after losing 17% of its assets in a cyber-attack which was later blamed on North Korean hackers. The incident followed several other attacks against cryptocurrency platforms, such as a hack earlier in the month against the crypto-mining marketplace NiceHash, which lost around 4,700 bitcoins in the attack.

The crackdown in South Korea comes amid repeat warnings from leading figures in finance and some of the world’s top economists, who have said the currency is a vehicle for fraudsters and drug dealers. There are also fears that its rapid increase in value this year could quickly unwind, causing severe losses for investors.

Seriously, if hackers are attacking the thing, it costs a fortune in fees to sell, it's only useful for buying child porn and unlocking your hacked computer, and it has no fundamental value, then how exactly is it an investment?

Wednesday, December 27, 2017

Year-end post

It being the Xmas season, there's not a whole lot of news for me to repost, thus the blog has been quiet for a little bit.

I finished my exams, but the university's system seems to have crashed, so I can't see my marks. I know I got 2 A+ and an A-, but my other two marks are still up in the air.

I might have gotten as bad as a B+ in Metrics II, because I drew a blank with "unit root", which was 15% of the mark. Frankly the reason I drew a blank was because I've realized economics doesn't have a clue how to do math beyond grade 12 algebraic manipulation, they just make shit up.

I mean seriously, I was taught grad-entrance econometrics by someone who didn't know how to take the determinant of a 2x2 matrix or how to calculate confidence intervals of a log-linear regression using exponentials. "Graduate economics requires strong math skills, including Measure Theory and Real Analysis" my ass!

I might have aced the Monetary exam, though, and that's what I'm very curious about.

Right now I have to decide whether to buy a new computer so I can run ArcGIS at home: my existing computer is old and probably can't handle it. But something I really can't stand is the tedium of porting everything over to a new computer, so unfortunately I'm putting it off for now. Thankfully I can use the arctic cold gripping Ontario as an excuse for not wanting to leave the house.

I mean, if I wanted to live in Winnipeg I'd fucking move there.

Anyway, this winter I'm going to have nothing but geography classes, mostly GIS-oriented stuff. I'm coming across a lot of World Bank books on economic geography where they're heavily applying GIS to economic analysis, and that really interests me because of how non-ideological and pro-empirical it is, compared to all of academic economics nowadays. So I'll definitely be doing grad school in geography, although I still really like the look of the Ryerson International Econ & Finance MA program.

As for the markets:

S&P is up hard for the year, but apparently it's due to massively increased profits, so I wouldn't necessarily listen to the clowns who say 2018 will be a bad year. This market is, fundamentally, not the 90s, nor is it the 80s, nor is it the 70s: kleptocracy now rules, and before the long-term destruction of the economy is completed we first have to see the completion of the great redistribution to the rich, and that means high economic rents for large American corporations for the time being.

You can buy China and buy EU all you want next year to "reduce US risk exposure", but frankly FXI's ten year chart looks pathetic for such a growing country, and nobody's ever made money on the EU except for the kleptocrat class.

Gold was walked down to the low $1200s this month, but it the action on the chart strongly suggests to me that it must have just been an orchestrated flush. My guess is next year it breaks thru $1400 and stays there. If I were you I'd ignore any TA who takes this month's spike-down seriously: in TA, there are some signals that you have to read the other way round.

As for politics:

Stay tuned for another year of Trump. As for the sensible country in the world, Young Trudeau is still unbeatable, he'll be with us forever. Ontario will probably elect that Conservative moron, because Horwath is a useless clown running a bourgeois pseudolabour party, and frankly Kathleen Wynne is the only good thing that the Liberals have in their favour.

I could see that Conservative clown screwing up the election by shooting off his mouth about evil lesbians or promising free tuition for religious schools, but frankly I don't think he can do enough damage to his party to lose.

As for the blog:

Interestingly, some clowns with French IPs have been trying to DoS my blog for a while now. I assume they're probably Russians. Apparently, according to an article I read a week ago, all the good Russians are still leaving the country in droves. In the long run, this does great damage to the country's IQ distribution, but we pretty much knew that already. Good job, Pooty-Poot! You've permanently destroyed Russia!

So, that's basically it from me for this year. I'm still going to be here, the blog will still just be my opinions about stuff, and there'll still be good music videos every Friday.

Monday, December 25, 2017

Have a very Bitcoin Christmas!

"It bitcoins!"

Seth Meyers must have a good writer on his team:

So good that this sketch crashed the price of Bitcoin.

Sunday, December 24, 2017

Friday, December 22, 2017

Friday, December 15, 2017

Friday videos: Belle and Sebastian

Here's a nice summery ditty for the fucking dead of winter, starring Roj Blake from Blake's 7:

Wednesday, December 13, 2017

Alabama Senate election: the line?

Well, looks like Alabama is sending a Democrat to the Senate. Roy Moore just couldn't win the state.

Which gets me to thinking:

Used to be, the Republicans were successful in getting elected with overt racism (Reagan's "welfare mothers") and chickenhawk sabre-rattling (Bush's Iraq invasion).

But they had to up the ante when the Democrats decided to join them (Clinton's "welfare reform" and continued bombing of Iraq).

So they became the party of angry Tea Party populism and Obama hating.

But then the Democrats crowded them out of that too (Bernie Sanders).

So, recently, the Republicans experimented with swinging even farther right, into rape apologia, worship of Russian fascism, and impersonating mentally retarded compulsive liars and sociopaths.

And finally, even the Republican base said no, that's just a bit too far for us right now, give us a few years.

So Alabama means nothing in the grand scheme of things, except that maybe Republicans will need to "swing back to the centre".

Saturday, December 9, 2017

So Brexit wasn't about hating foreigners?

der Spargel - As Brexit nears, Britain grows increasingly hostile to EU citizens. Oh, so it's not about hating foreigners?:

The Pasieczna family moved to Great Yarmouth 12 years ago from their hometown of Wroclaw. There were jobs here, with the rural hinterlands dotted with farms, feed lots and meat processing plants. The Polish newcomers felt welcome and settled in quickly. They painted their living room mint green, hung deer antlers on the wall and bought two Yorkshire terriers. When Agnieszka gave birth to a daughter, she named her Diana, "like the princess." Life was good - until the summer of 2016.

It started with little things. "This is England, speak English," said one woman to Agnieszka as she was speaking Polish with her children. "Go back to your own country," Diana was told in school. Then, this spring, her neighbor mounted the first of the cameras on the wall and said: "I'm going to take care of this damn Polish problem!" After several instances of intimidation, Agnzieszka called the police. She was told: "If you don't like the cameras, maybe you should move away."


In Stockport, a car dealership wouldn't let a German who had lived in the town for 20 years to test drive a car, arguing that the man's driver's license was no longer valid due to Brexit. Universities are refraining from hiring professors from Spain or the Netherlands in anticipation of Brexit. Banks are refusing loans, landlords are illegally demanding to see British passports. Across the country, people with Romanian, Lithuanian or other accents have had their windows smashed.


Theresa May, in her previous role as interior minister, made it abundantly clear that she intended to reduce net immigration to "below 100,000." And she was willing to use any means necessary to achieve that, those close to her said, adding that it seemed to be the only issue she was really passionate about.

May announced back then that she wanted to create a "hostile environment" for illegal immigrants. The residency permit application form was bloated from 12 to 85 complicated pages and the process was made more expensive. In 2013, she sent out billboard vans onto the streets of Britain reading: "In the UK illegally? Go home or face arrest!" It was the same tune that the Brexiteers played three years later: Foreigners, whether they were from Brussels or Bratislava, made things in the UK worse than they should be. In future it should be Britain First.


In practice, however, things look quite a bit different - as can be seen in the case of Klaudia Orska, a Polish woman who has remained remarkably cheerful despite the bureaucratic odyssey she's been forced to go through.

The 45-year-old has lived for 11 years in the UK. She works for an apartment realtor, pays her taxes and speaks perfect English. In May, she sent off her application for a residency permit to the Home Office. It consisted of hundreds of pages, including notarized documents, photographs, spreadsheets - an entire life reduced to 3 kilograms of paper.

The package arrived and the application fee was deducted from her account. Then nothing happened. Radio silence. After three months, she was sent back all the documents along with a rejection notice and was told to prepare to leave the country. The justification cited for the rejection was her alleged failure to send passport photographs. Even though the photographs were attached to the pile of papers - a pile that seemed to not have been touched.

Orska sent the package back with a complaint, and reapplied. Three weeks later, she was rejected again, this time because her bank account details were allegedly missing and it was not possible to deduct the fee. "It's like Monty Python," she says and even manages to laugh about it. Who knows for how much longer, though. She now finds herself threatened with deportation to Poland.

Friday, December 8, 2017

Tuesday, December 5, 2017

All news is bitcoin news

Blah blah, gold miners lose their support and come crashing down, blah blah Mueller investigating Trump's bank accounts at known Russian money launderer Deutschebank, blah blah Republicans vote to add a trillion dollars to the US deficit to give the rich a tax break....

No, I can see in the stats that what you really want is "bitcoin sucks" news.

So here you go:

Barkley Rosser - yup, bitcoin is a bubble, the bad kind. Don't bother reading it: he's an economist, even a very intelligent one.

Cecchetti and Schoenholtz - yup, bitcoin is a bubble, grannies are investing in it now. Though I'd like to point out that the dividend discount model is utter fucking nonsense: portfolio theory is the only model of asset price that makes sense. Also, the one guy is named Kermit, seriously.

And, more related than you might think:

BBC News - who's buying this "hugely popular Putin calendar" that the Russians are on about? Answer: nobody. Nobody's actually buying it. It's fake news. The real kind of fake news, the kind that's actually fake.

But if you have decent Photoshop skills, you could make a fucking fortune selling parody Putin calendars this month. Just send me $0.25 per unit sales for giving you the idea.

gold quickie

Well, at 9:15 someone tried to bust gold down through the SMA(200) and the -2SD Bollinger.

So I guess we'll be seeing a fun attempt at constructing a technical failure for gold today.

John Quiggin on Buttcoin

John Quiggin - Bitcoin now a much bigger waste of energy. It's now taking several gigawatts of energy just to mine Bitcoin, more than the energy draw of most countries.

But also, John says other fun things:

Despite the huge increase in the market value of bitcoins, they seem further than ever from becoming an actual currency. Unsurprisingly, there’s no sign that governments are willing to accept bitcoins as legal tender. Nor is there any sign that they are displacing standard forms of money. On the contrary, bitcoins now seem to be seen as a financial asset, with no real suggestion that they will ever be a general medium of exchange.

As a check on this, here’s a list of firms that accept bitcoin as payment, which fits easily on to a single page. Sydney readers who would like to buy a beer with bitcoin are in luck, or were back in 2014 when the Old Fitzroy got a bit of coverage for saying it would accept bitcoins. There’s another pub listed in London, and that’s about it as far as drinks are concerned. After nearly a decade, Bitcoin acceptance remains the stuff of publicity stunts, not a serious commercial option.

At least by repute, bitcoins are used more extensively in covert transactions such as those involving drug trading, tax evasion and money laundering. But that’s scarcely a good reason to bet on them being around for a long while. If the scale of the problem gets large enough to cause real problems, governments will act to shut the whole system down or regulate it to the point where the compliance costs make the whole idea unattractive.

Keep buying bitcoin!

Monday, December 4, 2017

NDD on the overpriced S&P: not really

Just like that, New Deal Demoncrat wades into the argument about the overpriced S&P:

New Deal Demoncrat - corporate profits versus stock prices. If the companies are actually making the money, then the valuations are absolutely fine.

Short Monday morning market comment

OK, so if you look up a chart for SPY, you'll see it's going parabolic right now.

It seems a bit stupid for the S&P 500 to fly up 83 points in just 3 weeks, especially after a very strong year.

Yes, the US economy is doing fine. Yes, blah blah tax breaks, though those were baked in already over the past year. But 10% since August? Come off it. Things are getting silly.

Weekly SPY RSI(14) is 85. Daily SPY RSI(14) is 77. Not that it can't continue, but it's not very healthy looking.

It almost makes me want to start saying "Shiller P/E!!" to everyone, and you know what I think about Shiller P/E, right?

Might need to switch to another equity market come next year, cos I doubt there's anything left on the table for SPY.

And when I look at the weekly chart for GLD and GDX, I'm not particularly concerned. Still looks like it's bottoming, to me.

If you want to predict where $USD is going, you should figure out what elementary trade theory says a trillion dollars in debt-funded tax breaks should do to a currency's value.

I'm not interested in doing that because I have a ten page essay on minimum income due next Monday. So, it's up to you to do the research.

Saturday, December 2, 2017

Weekend Bitcoin news

Just for shits and giggles:

FT Alphaville - why Bitcoin futures and a shoddy market structure pose problems. Wow, so they're initiating an official futures market in Bitcoin, and doing it badly? That's kinda a top signal....

CNBC - North Korean hackers stealing people's bitcoins. Gee, it's sad that you need to rely on a government to protect your private property rights, eh?

Reddit - I am a time traveller from the future here to beg you to stop using Bitcoin. Just cos it's funny.

Wednesday, November 29, 2017

See, this is why America can't have nice things

Oh, Donald. The brain damage that just keeps on giving....

NY Times - Trump retweets British neo-Nazi videos. Don't call them far-right. Britain First is ex-National Front. They are Nazis.

And how does The Donald respond?

He apologized!

Haha jk no, he doubled down:

CNN - White House defends anti-Muslim Trump tweets.

Actually, that's not all of the title:

CNN - White house defends anti-Muslim Trump tweets, AND SAYS IT DOESN'T MATTER IF VIDEOS ARE REAL.

This crazy, wacky post-truth world we live in....

Tuesday, November 28, 2017

More Bitcoin hype

Even Business Insider is writing about it....

BI - bitcoin price shoots over $9900. Quotes, with commentary:

As for how high bitcoin will go, billionaire businessman Mark Cuban told Business Insider the coin will continue to push higher as retail investors pour into the space and folks with large bitcoin holdings continue to treat it more as a collectible than a currency.

"The number of people opening up new accounts and buying bitcoin, even fractionally, is skyrocketing," he said.

Dunno why they interviewed Mark Cuban instead of someone who knows something, but he raises a point.

What happens when they run out of people to open accounts? NASDAQ 2000 happens, is what.

"Yet the people who have it as a true store of value have no reason to sell it as long as demand continues."

Yeah, and then what?

See, one problem is that the bitcoins in your account aren't worth $9900 (or whatever it is as you're reading this).

The marginal bitcoin is worth $9900. And the price of the marginal bitcoin will be different when there are more available relative to demand.

The stuff in your account is only worth what you can sell it for. That's what a "true store of value" means, Mark.

Since the list of merchants that accept bitcoin is still relatively small, so-called holders (or hodlers as they are referred to in bitcoin circles) don't have many places where they can spend their coins, either.

"They can't spend it, so they keep it," Cuban said.

That doesn't make it a store of value or an asset, then. It makes bitcoin a collectible.

"If big holders don’t sell and the number of Coinbase users keeps going up, the sky is the limit."

Um, no, the sky isn't the limit. Earth has a finite investor population, and there is a finite level of reasonable portfolio allocation to bitcoin.

Total value of all the world's gold is $7.5T or so. Total value of all the world's equities is $80T or so.

If total blockchain cap goes over that, then it will have become unbelievably silly. And, parenthetically, it'll also be hilarious to watch as a significant portion of the world's wealth then vanishes overnight.

I don't think it can get that far, but then again I believe humans aren't, in the aggregate, total idiots.

Monday, November 27, 2017

Bitcoin to break $10,000?

Bitcoin is apparently breaking $10,000 tonight.

Which again indicates that people will buy fucking well anything.

John McAfee has only 5000% more to go to save his own penis.

That's eDigital-level multiples right there.

And, by the way, nowadays you buy EDIG on the pinks.

The Amazon effect

Tim Taylor - the Amazon effect. Interesting possibility, that retail prices are kept low by Amazon prices.

I guess you could interpret it as brick-and-mortar stores having pricing power due to geographic monopoly, and that power disappears once all sellers are forced to compete in the same marketplace.

Quick note on gold and miners

So normally, these past couple years, investors have vomited gold and gold miners in December, as part of the typical yearly loss capitalization and port rebalancing.

That alone is reason to think they'll do something different eventually. The market tends to go in the opposite direction to what everyone expects.

There also aren't that much in the way of losses in the gold miner market his year, unless everyone has bought at the tops. Most of the volume in GDX (easily 60-70%) has been in the $22.50-$23.50 range this year.

Also, GDX is threatening a crossover of the SMA(50) under the EMA(20). When that happens people will take it as a signal to dump. But the gold action this morning suggests that might be a fakeout: a pop above the SMA(50) (i.e. GDX=$23.10) may signal a failed crossover attempt, which is a good buy signal.

Frankly, selling has been decelerating since September (actually it's decelerated all year), and there's a nice intermediate bottom forming in the chart.

And at this second gold is up to $1296. $1300 is a nice round number where something interesting should happen.

So the GDX now looks very interesting to me.

There, I just jinxed the gold miners.

Sunday, November 26, 2017

Once again, the lower class gets screwed

Bloomberg - the retail apocalypse is only just beginning.

Apparently, it's not so much an Amazon problem, it's an idiotic leveraged buyout after idiotic leveraged buyout problem:

Until this year, struggling retailers have largely been able to avoid bankruptcy by refinancing to buy more time. But the market has shifted, with the negative view on retail pushing investors to reconsider lending to them. Toys “R” Us Inc. served as an early sign of what might lie ahead. It surprised investors in September by filing for bankruptcy—the third-largest retail bankruptcy in U.S. history—after struggling to refinance just $400 million of its $5 billion in debt. And its results were mostly stable, with profitability increasing amid a small drop in sales.

Making matters more difficult is the explosive amount of risky debt owed by retail coming due over the next five years. Several companies are like teen-jewelry chain Claire’s Stores Inc., a 2007 leveraged buyout owned by private-equity firm Apollo Global Management LLC, which has $2 billion in borrowings starting to mature in 2019 and still has 1,600 stores in North America.

Just $100 million of high-yield retail borrowings were set to mature this year, but that will increase to $1.9 billion in 2018, according to Fitch Ratings Inc. And from 2019 to 2025, it will balloon to an annual average of almost $5 billion. The amount of retail debt considered risky is also rising. Over the past year, high-yield bonds outstanding gained 20 percent, to $35 billion, and the industry’s leveraged loans are up 15 percent, to $152 billion, according to Bloomberg data.

Even worse, this will hit as a record $1 trillion in high-yield debt for all industries comes due over the next five years, according to Moody’s. The surge in demand for refinancing is also likely to come just as credit markets tighten and become much less accommodating to distressed borrowers.

The numbers are tiny from a debt standpoint, though, so it's not going to really hit the broader economy except in terms of working class people getting fucked yet again.

Don't go holding your breath for inflation.

Yeah right

Google called to say that I was PROBABLY going to be named “Google/Blogspot Blogger of the Year", but I would have to agree to an interview and a major photo shoot. I said fine, as long as there's hot chixxx.

Because I'm read more than other econ bloggers like Bonddad or Branko Milanovic, or even One Red Paperclip, Google Maps Mania or Vegan Lunchbox.

Yeah right.

Friday, November 24, 2017

Thursday, November 23, 2017

Thought police at Laurier

As a preface, understand that Laurier has never had a reputation for being a good university. And that's why a clown with barely any publication history (Rambukkana), a MA from Trent and Ph.D. from Concordia, who's only an assistant prof, gets together with another essentially unpublished assistant prof who took 8 whole fucking years to complete a Ph.D. (Herbert Pimlott) to bully a grad student with all the zeal of a fucking scientologist.

Well, also, Laurier has no union for TAs.

Global - Laurier's handling of Lindsay Shepard case 'inexcusable'.

And actually, even if you leave the bullying out, and leave the fascist thought policing out, it's still inexcusable because of the following:

1. They've created a toxic workplace for Shepard. The bullying interview is malicious, and she has valid grounds for a lawsuit.

2. Because the toxic workplace is tied to her MA studies, she's got valid grounds to sue for her Laurier tuition and living expenses back, as well as for future career damage.

3. In addition, they slandered Jordan Peterson (no, not with the Hitler bit: they explicitly asserted that he intentionally and maliciously inflicts criminal damage on people who disagree with him, and the assertion is false). Peterson has grounds for a lawsuit.

I'm not a Rebel Media person (frankly, while I'm a hardcore classical liberal, I also believe your right to your opinions stops the moment you make me want to kick your teeth in for being a fucking asshole), and Peterson made his own trouble by aligning with Ezra Levant's dipshit website.

But I can tell you, as a university student, that there are hundreds of professors like this in the country, who have contributed nothing to scholarship but instead managed to get jobs by writing pseudointellectual bullshit. Their books are read by nobody, and whatever articles they do bother to write are essentially vanity publishing.

And by the way: they're not left wing, quit calling them that. Not a single one of these people will ever bring class or labour into their political analysis, because they were born into the petit bourgeoisie, they recognize themselves as thoroughly bourgeois, and they are thoroughly aligned with bourgeois class interests.  That's why they feel they deserve six-figure salaries for spewing wordsalad.

So it's not "left wing" to advocate rabidly for trans rights, to the point of sounding like a lunatic: it's just cultist nonsense by bourgeois entitled pseuds  whose university careers save them from having to fucking work for a living, who feel no need to contribute any real scholarship to the world.

As for Lindsay Shepard, she also made her own bed by doing an MA in Communication Studies.

Basically, it's all a war between useless entitled brats of the kleptocratic elite. Welcome back to the 18th century.

Wednesday, November 22, 2017

Wednesday news

Gotta remember to watch Mr. Robot tonight, I missed it last week:

New Deal Demoncrat - still no DOOOOOM in the yield curve. No, it hasn't inverted. And as the charts show, the yield curve being flattish can go on for five years... of fantastic expansion like the late 1990s.

Calculated Risk - chemical activity barometer really positive. It's got a lead of about a year on industrial production. Though, actually, the US economic cycle is mostly governed by real estate, not industry.

Reuters - in Trump strongholds, some Dems want to go for broke. Frankly, I wouldn't be surprised if Beto O'Rourke's campaign to legalize marijuana and bring in universal health care wins him a Texas Senate seat. #1, Texas is demographically swinging left, we've known this for a decade. #2, maybe the reason Dems haven't been able to win in hardcore-Republican states is because they try too much to sound to sound like slightly-less-hateful Republicans?

I mean, if I were living in Nazi Germany I wouldn't vote for Mr. Slightly Less Hitler. I'd want to vote for Mr. About As Unlike Hitler As You Can Get.

Tuesday, November 21, 2017

INTERSTELLAR SPACESHIP ARRIVES: here's what you need to know

I don't know why this isn't getting more play:

Guardian - interstellar spaceship arrives in our solar system. And yet they continue calling it an "asteroid" because the PTB don't want us mouth-breathing natives to get all worked up:

Astronomers are now certain that the mysterious object detected hurtling past our sun last month is indeed from another solar system. They have named it 1I/2017 U1(’Oumuamua)

'Oumuamua means "scout" in Hawaiian. Is there something they don't want us to know?

And if so, why are they telling us?

It is thought to be an extremely dark object, absorbing 96% of the light that falls on its surface, and it is red. This colour is the hallmark of organic (carbon-based) molecules. Organic molecules are the building blocks of the biological molecules that allow life to function.

Yeah, "red" like a warship, not like organic carbon molecules.

They are travelling too fast to be captured by the gravity of the sun.

Ask yourself: how likely is it that a dumb piece of rock can travel too fast to be captured by the Sun's gravitational well?

And if that's not enough, here's an "artist's representation" of this "asteroid":

Does THAT look like an "asteroid" to you? Yeah, right.

How likely is it that an "asteroid" is going to be so long and thin? Why hasn't it broken up along the long axis from torque or collisions, or compressed due to gravity? Was it just made a couple years ago?

In a spaceship factory by aliens?

This, ladies and gentlemen, is an interstellar spaceship. We have been found. Soon the aliens will attack.

Buy gold, cos blockchain won't mean dangly wobbly donkey dick when they take out all global communications and computers with their worldwide EMP attack.

Where the fuck is Jeff Berwick when you need him?

Monday, November 20, 2017

Some Monday evening reading

Home stretch before exams. Here's stuff:

New Deal Demoncrat - housing slump looks like it is ending. Is there no end to the bull market?

Bonddad - quit piddling your frilly pink panties. The junk bond doom is not all it's cracked up to be.

IPE Zone - Norway's $1T SWF divesting from oil. Frankly, they should have done this years ago: their income is heavily correlated with oil to begin with, and you're supposed to count your income stream as part of your investment portfolio.

FT - world's pool of negative-yielding debt swells to $11T. Because there's too much money and not enough places to invest it. I mean, what would you rather hold, cash?

BBC - Indonesia's Orang Rimba forced to renounce their faith. I guess now that we evil white colonizers have learned how evil we were to forcibly convert natives and steal their land, the brown people of the world can have their turn at being evil.

Friday, November 17, 2017

Friday videos: all the videos are coming back

FFS, never saw this Pale Saints video before:

I think Meriel was already in the band at this point.

Thursday, November 16, 2017

Not all FRB economists know their ass from a hole in the ground

FRBSF - stock market evaluation and the macroeconomy. It pretty much illustrates why economists are so stupid when it comes to markets:

One valuation metric, the cyclically adjusted price-earnings or CAPE ratio for the Standard & Poor’s (S&P) 500 stock index was originally developed by Campbell and Shiller (1998) to help judge whether the stock market is overvalued. The CAPE ratio is computed as the real, that is, inflation-adjusted, value of the S&P 500 divided by the real earnings of companies in the index averaged over the most recent 10 years. Campbell and Shiller found that higher values of the CAPE ratio predicted lower future real returns on stocks over subsequent 10-year periods.

Yes, and Shiller today says not to put too much stock into the CAPE, but you've never listened to him, you've only read about CAPE in university.

A parsimonious set of macroeconomic variables can account for much of the movement in the CAPE ratio over the past five decades. These variables include the “natural” real rate of interest, the growth rate of potential GDP, and the core inflation rate. Reasonable projections for these same macroeconomic variables over the next 10 years can provide a prediction about future movements in the CAPE ratio, which, in turn, will influence the magnitude of future stock returns.

#1, You can't project shit without including political inputs.

#2, r-star is something you made up. It doesn't exist in the real world. Nobody knows the natural rate of interest. And you might want to look under the hood to see what r-star is derived from, as I'll show later....

#3, Whose r-star are you using? The USA's? The entire world invests in US-listed equities, not just the USA. And there's no reason to expect r-star of each nation to converge.

#4, 5 decades is a heterogenous dataset. Regressing on it will be misleading.

A simple regression model can be used to assess how well macroeconomic variables explain movements in the CAPE ratio. Specifically, the model regresses the quarterly average CAPE ratio on a constant, the Laubach-Williams (LW) two-sided estimate of r-star, the CBO four-quarter growth rate of potential GDP, the 20-quarter change in the LW r-star estimate, and the four-quarter core PCE inflation rate. The explanatory variables are each lagged by one quarter in the regression equation to help account for real-time data availability issues.

Figure 4 plots fitted values of the CAPE ratio from the regression model through 2017:Q3. The fit is quite good, accounting for 70% of the variance in the actual CAPE ratio over the past five decades.

So you're finding co-movement between the CAPE and the following:

a) GDP growth and core PCE inflation, which are highly correlated with earnings.
b) Laubach-Williams r-star, which is a made up thing, and probably uses as its inputs things that are highly correlated with earnings, GDP growth and core PCE.

No wonder your R-squared is 70%! If you want to get it higher, maybe you can try dropping Laubach-Williams r-star entirely!

Absent further changes in the ratio, stock prices can rise only as fast as earnings. Over the past 30 years, real earnings for the S&P 500 have grown at an average compound rate of about 4% per year. A decline in the CAPE ratio from current levels would imply that stock prices must grow slower than earnings.

No, it wouldn't imply that. Because despite your graduating with an MA in Finance, Kevin, you've forgotten your basic portfolio theory: stock prices are dependent on supply and demand, and wealth is growing faster than growth in available investments.

Again, here's the simple question that I always ask: where else are people going to put their trillions? Bonds? Real estate? Cash?

Republicans are self-destructing

WaPo - Democrats win seat in deep-red Oklahoma. Eventually the chickens come home to roost:

Democrats have flipped another statehouse seat in deeply conservative Oklahoma amid growing frustration over years of state budget shortfalls and recent scandals that led to the resignation of Republican incumbents.

Democrat Allison Ikley-Freeman defeated Republican Brian O’Hara in Tuesday’s special election for a state Senate seat representing parts of Tulsa. Complete but unofficial election results show that Ikley-Freeman, who is a therapist at a nonprofit mental health agency, won by 31 votes.

Doesn't sound particularly amazing, til you realize the district went for Trump by 40%.

That's what happens when your party are idiots: eventually everyone gets fed up with you:

The Legislature’s controlling party has failed during an ongoing special legislative session to push through tax increase plans that would bring new revenue to state coffers. Lawmakers now are considering bills that would balance the budget by raiding savings accounts and imposing cuts of about 2.5 percent to most state agencies.


Michael Whelan is a Democratic consultant who helped manage Ikley-Freeman’s campaign and the races of Democratic Reps. Karen Gaddis in Tulsa and Jacob Rosecrants in Norman, who both won Republican-held seats in special elections this year.

He attributes the Democrats’ success to a combination of factors that includes the state’s budget woes, voter dissatisfaction with President Trump and a series of scandals that have led to the resignation of four GOP incumbents this year.

“The formula has been very similar for each of these races,” Whelan said “There are a lot of Republicans out there with buyer’s remorse with President Trump, which naturally suppresses turnout.

“Then you’ve got scandal after scandal happening locally, and I think Republicans are losing faith in their brand a little bit.”

Proof that literally everyone eventually looks in the mirror.

One small step for Joe Kernen

On CNBC this morning, Joe Kernen took one small step toward not being a self-important Republican flak who babbles inane shit over everyone when he admitted his problem is that he has a "very small dongle".

Wednesday, November 15, 2017

Someone failed propaganda school

Oh, those wacky Russkies. If they weren't trying to subvert democracy and replace it with a worldwide authoritarian kleptocratic plutocracy commanded by Vladimir Tiny-Penis Putin, you'd almost want to hug them for trying so hard:

BBC News - Russkies post screenshot of a video game to prove Americans are helping ISIS. No, really:

Russia's Ministry of Defence has posted what it called "irrefutable proof" of the US aiding so-called Islamic State - but one of the images was actually taken from a video game.

The ministry claimed the image showed an IS convoy leaving a Syrian town last week aided by US forces.

Instead, it came from the smartphone game AC-130 Gunship Simulator: Special Ops Squadron.

What a doomed pathetic nation Russia is.

Even better Trump news

The Trump news just keeps on Trumping!:

BBC - American government doesn't trust Trump with the nukes. Gee, wonder why:

Some senators present said they were troubled about the president's latitude to launch a nuclear strike.

Chris Murphy, a Democrat from Connecticut, said: "We are concerned that the president is so unstable, is so volatile, has a decision-making process that is so quixotic, that he might order a nuclear-weapons strike that is wildly out of step with US national-security interests."

One of the experts, C Robert Kehler, who was commander of the US Strategic Command from 2011-13, said that in his former role he would have followed the president's order to carry out the strike - if it were legal.

He said if he were uncertain about its legality, he would have consulted with his own advisers.

Under certain circumstances, he explained: "I would have said, 'I'm not ready to proceed.'"

One senator, Ron Johnson, a Wisconsin Republican, asked: "Then what happens?"

Mr Kehler admitted: "I don't know."

People in the room laughed. But it was a nervous laugh.

The same laugh they laughed when Orange was elected, except now with nuclear weapons.

Monday, November 13, 2017

Brexit drives out furriners, then British realize they need furriners for things

IPE Zone - rotting crops in Cornwall. Yup, apparently the Cornish, who voted to leave because they hate smelly Romanians, didn't realize that those smelly Romanians were the only ones in Cornwall who would pick their crops for a pittance.

Sunday, November 12, 2017

Vanadium: the next story you're going to be fleeced by

Klendathu Capitalist - Vanadium, the next commodity. He says blah blah supply, blah blah demand. I respond that you don't invest in an iron ore byproduct, and for fuck's sake how stupid do you have to be to listen to Raoul Pal?

Trump eclipses all previous forms of stupid with new MegaStupid

This is hilarious:

LA Times - Trump judge nominee, 36, who has never tried a case, wins Federal appointment. Oh don't worry, being a Federal judge is something you can learn on the job:

Brett J. Talley, President Trump’s nominee to be a federal judge in Alabama, has never tried a case, was unanimously rated “not qualified” by the American Bar Assn.’s judicial rating committee, has practiced law for only three years and, as a blogger last year, displayed a degree of partisanship unusual for a judicial nominee, denouncing “Hillary Rotten Clinton” and pledging support for the National Rifle Assn.

Hey! I'm a blogger and not qualified! Can I be a Federal judge too?

On Thursday, the Senate Judiciary Committee, on a party-line vote, approved him for a lifetime appointment to the federal bench.

Talley, 36, is part of what Trump has called the “untold story” of his success in filling the courts with young conservatives.

Hey, I can be conservative too! I can ban gay marriage, have compulsory gun ownership for wife-beaters, and force schools to teach that Jesus rode a dinosaur! Can I be judge?

“The judge story is an untold story. Nobody wants to talk about it,” Trump said last month, standing alongside Senate Majority Leader Mitch McConnell (R-Ky.) in the White House Rose Garden. “But when you think of it, Mitch and I were saying, that has consequences 40 years out, depending on the age of the judge — but 40 years out.”

Civil rights groups and liberal advocates see the matter differently. They denounced Thursday’s vote, calling it “laughable” that none of the committee Republicans objected to confirming a lawyer with as little experience as Talley to preside over federal trials.

“He’s practiced law for less than three years and never argued a motion, let alone brought a case. This is the least amount of experience I’ve seen in a judicial nominee,” said Kristine Lucius, executive vice president of the Leadership Conference on Civil Rights.

Why not go one better? Find a 16 year old mentally retarded pedophile serial rapist, get him adopted by Fred Phelps, and appoint him to the Supreme Court. He'll be turning out conservatism for the next 90 years. Take that, Dems!

The group was one of several on the left that urged the Judiciary Committee to reject Talley because of his lack of qualifications and because of doubts over whether he had the “temperament and ability to approach cases with the fairness and open-mindedness necessary to serve as a federal judge.”

Some conservatives discount the ABA’s rating. “The ABA is a liberal interest group. They have a long history of giving lower ratings to Republican nominees,” said Carrie Severino, counsel for the Judicial Crisis Network, which supports Trump’s nominees.

Maybe Republican nominees are rated lower just because they're all fucking idiots? Like, 36-year-old bloggers who have never tried a case? Might that be a reason they're rated lower? Or is it all a librul conspiracy to... um... stack the courts with people who will defend liberty?

Saturday, November 11, 2017

A bunch of economics stories

Here's some fun general reading:

Marginal Revolution - finding archaeological sites using economics. Although, as the post's comments note, (a) they're using economic geography, not economics; (b) uh, they've been doing this for decades.

Medium - could Rome have had an industrial revolution? Interesting bit of speculative fiction, but I think part of the requirement for an industrial revolution is the weakening of the plutocratic rentier class. You can't have industrial revolution when the landed gentry rule the country. I think that's even an Acemoglu theory, which makes me feel dirty now.

New Deal Demoncrat - predicting US elections with net strong disapproval. Interesting theory, but some of the other graphs (which are VERY interesting) gave me an idea for an undergrad thesis.

Thursday, November 9, 2017

The pope just keeps getting better and better

You tell 'em, Your Holiness!

BBC - Pope Francis: mass is for prayers, not mobile phones. Do what he says or go to hell:

Pope Francis has chided the Catholic faithful for using their mobile phones during Mass.

He said it made him sad when many phones were held up, and even priests and bishops were taking photos.

The pontiff is not known to have used a mobile phone in public since his election and once asked young people to carry Bibles instead of phones.

However, he is an avid user of social media and regularly allows himself to be snapped with pilgrims for selfies.

He has millions of followers on Twitter.

OK, that last bit needs some context.

Ellen DeGeneres has 5 times as many followers as the Pope. Which, actually, says something about the world today when a lesbian comedienne can beat the apostolic successor to St. Paul by 5 to 1.

I've got nothing wrong with that personally, I just find it interesting.

Speaking at his weekly audience in St Peter's Square in Rome, Pope Francis said that Mass was a time for prayer and not a show.

"At a certain point the priest leading the ceremony says 'lift up our hearts'. He doesn't say 'lift up our mobile phones to take photographs' - it's a very ugly thing," he said.

"It's so sad when I'm celebrating mass here or inside the basilica and I see lots of phones held up - not just by the faithful, but also by priests and bishops! Please!"

Y'know, Your Holiness, you do have the authority to excommunicate these people for offending God.

Monday, November 6, 2017

Trump indictment news

The Guardian - there's a lot more there. It's getting juicy:

For a moment in court, the mask slipped. Paul Manafort glanced at his lawyer and smirked, like a TV mafia boss with reasons to be confident. It was the look of a man who, after decades of work as a lobbyist for murderous dictators in Africa and Asia, was not about to be rattled by the prospect of house arrest.

But less than a mile away, another man displayed rather less equanimity. Donald Trump woke before dawn on Monday and, instead of heading to the Oval Office, lingered in the White House residence. “Trump clicked on the television and spent the morning playing fuming media critic, legal analyst and crisis communications strategist, according to several people close to him,” the Washington Post reported.

Until that moment, the justice department investigation into his election campaign’s alleged collusion with Russia had seemed somewhat theoretical, dismissable by Trump as a “hoax” and “witch-hunt”. But here was the concrete of the courthouse, the accused escorted in by marshals, standing before a robed judge, swearing on oath and pleading for liberty. Suddenly Trump understood the five-month investigation by special counsel Robert Mueller – probing whether the American president has been compromised by a foreign power – had entered a new and dangerous phase.

“Overall this week what we learned is that Bob Mueller knows a lot more about what happened during the presidential campaign than anyone on the outside thought he did,” said Matthew Miller, a partner at strategic advisory firm Vianovo and former director of public affairs at the justice department. “We have an incomplete picture and we don’t know what the final picture might look like.”

Manafort, who served as Trump’s campaign chairman for five months, and his business associate Rick Gates, who also played a role in the campaign, were indicted on 12 counts including conspiracy against the US, conspiracy to launder money, acting as an unregistered foreign agent, making false statements and failing to report foreign bank and financial accounts.

There was a silver lining for the president: the indictment did not reference the Trump campaign or coordination with Russia. But it did allege a criminal conspiracy was continuing into February this year, after Trump had taken office, and that the pair funneled payments through foreign companies and bank accounts as part of their work for Ukraine’s pro-Russia former president Viktor Yanukovych.

Frank Figliuzzi, former assistant director for counterintelligence at the FBI, told MSNBC: “If you look at this through a counterintelligence lens, you see the fingerprints of the Russian government here … He [Manafort] got a primer on how the Russians can influence a campaign when he represented the Ukrainian candidate [Yanukovych] and he saw what Russia could do to influence a campaign. And he liked it.”

Appearing in a tense courtroom on Monday before a packed public gallery, Manafort and Gates pleaded not guilty and were released on multimillion-dollar bonds but confined to their homes. Lawyers for Manafort – also among the participants of a June 2016 meeting at Trump Tower with a Kremlin-linked lawyer after Donald Trump Jr was promised “dirt” on rival Hillary Clinton – defended him in a court filing on Thursday as a “successful, international political consultant” who was necessarily involved in foreign financial transactions. US district judge Amy Berman Jackson has set a possible date of 7 May for the trial.

And so on, as we know it will.

I'd personally like to see a few dozen Republicunt senators and congressmen rounded up, but I guess we'll have to depend on the Paradise Papers for that....

Saturday, November 4, 2017

Oh, Bitcoin is SUCH a bubble.

This is such a bubble, it's only a matter of when:

Reuters - craptocurrencies' market cap surpasses $200 billion. Note: the mortgage-backed securities whose implosion destroyed the world economy reached a total peak value of $7.3 trillion. So we're only about 3% of the way there.

And the MBSes actually had an underlying value, they were never "worth" $0, it was just the immediate drop in price that was the problem.

And the coming crash in craptocurrencies hopefully won't bankrupt any banks and cause a liquidity crisis; all it'll do is bankrupt a bunch of weekend-anarchist fruits, which is fine because in an ideal world they'd all be broke anyway.

No, you say? No, it's not a bubble? Well, just look at this:

FT Alphaville - how Buttcoin is marketed to the masses. Yup, they send invitations out to stupid people, bring a bunch of said stupid people into a seminar, and pitch them a get-rich-quick scheme:
It was this feeling that Mr Ahonsi and his associates targeted last week. One man, who identified himself as Dev Patel, told the crowd: “You want a bigger house, better car, nice clothes, private school for your kids, exotic holidays, etc. […] It’s that cryptocurrency that’s going to get you the financial freedom.”

He was more explicit later. “If you follow us and you go through what we’re going to say, you will make money and you will get your financial freedom that you’re looking for,” Mr Patel said.

Mr Ahonsi and Mr Patel were speaking at an event run by Pro FX Options, a firm based at the WeWork in Aldgate that trains ordinary people to trade binary options, a controversial form of fixed-odds gambling.

The free seminar on cryptocurrencies lasted around two hours. At the end the attendees were encouraged to sign up for a £420 one-day course where they would be taught how to trade and helped to sign up with Coinbase, which pays Pro FX Options a referral fee.
Multiply 200,000 stupid millionaires by a million dollars each, and you get Bitcon's capitalization.

And let me tell you: here at university I'm surrounded by idiot children of the 905 bourgeoisie, whose mommies and daddies are worth over a million, who spend years at university for a rubber-stamp BA without ever having to read a book or have a coherent thought, who think in a fourth-year seminar class that prefacing their answer with "I think that..." and then going on about their feelings and stupid beliefs counts as academic discussion.

Put succinctly, there are literally millions of stupid millionaires in their 20s and 30s out there today, who need to get fleeced and lose their wealth. I applaud the Russian pedophiles, Moldovan pimps, and American neo-Nazis who will fleece these people out of their mommies' and daddies' cash via craptocurrencies, because at least the money's going to go to people who have a bit of character.

The idiot bourgeoisie has been handed nothing but fucking candy by the kleptocratic elite in government for the past 40 years, their lives have been so fucking easy. And, just like you'd expect, their race has now devolved into semi-intelligent Eloi. They're stupid and slow-moving, and they need to get fucking eaten.

And now any Morlock out there who wants a meal knows where and how to get it.

Let's fleece all the rich fuckers.

Yup, I'm finally on board with this Bitcoin thing. Yay Bitcoin!

Friday, November 3, 2017

Friday videos: I Break Horses

Here's a song that Jason Pierce wishes he had written:

On Boston pulling its 2024 Olympics bid once the figured out what they'd signed on for

This is fucking nuts, but then again, you'd expect it when the Olympics is run by tax-dodging, corrupt thieves.

Tim Taylor - on Boston and the 2024 Olympics. Quote:

On January 8, 2015, the US Olympic committee chose the city of Boston from among four finalists to be the US city that would compete for the right to host the 2024 Summer Olympic games. By July, the USOC had retracted the invitation. What happened? Andrew Zimbalist, who had a ringside seat for the controversy from his position at Smith College as well as a professional interest as a researcher in sports economics, tells the story in "Boston Takes a Pass on the Olympic Torch: Scholarly research does sometimes have a positive effect on public policy," which appears in the Fall 2017 issue of Regulation magazine (pp. 28-33)

Part of the issue was a lack of transparency so complete that it blended into outright disinformation. For example, a group called Boston 2024 had submitted Boston's proposal to the USOC, but the proposal was not publicly released. The mayor of Boston, without a vote of the city council or a public debate, signed a "joinder agreement" that committed the city to accept all terms of the US Olympic Committee and the International Olympic Committee if the city was chosen.

As the details came out, they weren't pretty. As Zimbalist reports:

"One such term [of the joinder agreement] was that the city would provide a financial guarantee to cover any deficits in the event of a cost overrun or revenue shortfall. ... The 2012 Games in London alone had a nearly threefold overrun, with a final cost in excess of $18 billion. Given that background and the fact that the entire Boston city budget was only $2.7 billion, it was not a trivial matter that Walsh had signed this agreement."

Other elements of the plan turned out to include a gag rule: "The City, including its employees, officers, and representatives, shall not make, publish, or communicate to any Person, or communicate in any public forum, any comments or statements (written or oral) that reflect unfavorably upon, denigrate or disparage, or are detrimental to the reputation or stature of, the ICO, the IPC, the USOC, the IOC Bid, the Bid Committee, or the Olympic or Paralympic movement. ..."

Other requirements turned out to involve tax breaks, shutting down the Boston Common, and more[....]

And so on.

Suggestion: maybe we should let the Olympic Games be held by corrupt totalitarian dictatorships from now on. That's essentially what the Olympics organization is, anyway.

Thursday, November 2, 2017

Why did Manafort work for Trump, anyway?

Back to doing lots of work for school. Strangely, this means I mostly post here at night now.

And here's your evening Trump news:

Talking Points Memo - why did Manafort work for Trump? We need to ask, because he's not the type of person to work for free:

It was an extremely bad idea for Paul Manafort to get involved in a presidential campaign on the way to the nomination when he was sitting atop so much dirty laundry.

Unless of course, he had no choice.

This is not simply a nasty comment. Even based on what is publicly known, what was publicly known a year ago, that Manafort has been involved in highly questionable foreign representation for decades and a lot of financial transactions that look like money laundering. As I said last night about President Trump, lots of people slip through for years or decades without getting in trouble for their financial crimes. Some never get caught. Going to the white hot center of the US political process is a really good way to get caught.

Why would Manafort do that?

One plausible explanation is simple hubris. Arrogance makes people stupid. But there are other indications that Manafort needed money, that he was overextended and desperate. But he, quite conspicuously, worked for Trump for free.

That’s odd. Because there’s nothing about Paul Manafort and his forty years in the US political world that suggests he works cheap or for free. But a salary is not the only way or even the primary way someone like Manafort could restore himself financially through getting tight with Donald Trump. The big pay off would be in the influence he would gain and the money he could make off the work – either re-juiced for the US political game or to get the big money in Russia or the Ukraine with his influence batteries recharged. We know about exchanges Manafort had with colleagues speculating about how he could ‘make himself whole’ based on the newfound celebrity, particularly in the former Soviet sphere.

After Manafort sealed his arrangement with Trump, he asked his Ukrainian fixer Konstanin Kilimnik to pass on word to top Russian oligarch Oleg Deripaska that he could provide briefings on the campaign if Deripaska would find that helpful. Manafort and Deripaska had a longstanding business relationship. Manafort also asked Kilimnik “How do we use [this] to get whole?” In other words, can do we use working for Trump to recoup their finances.

And so on....

K-dog says Paul Ryan likes autofellation

The Krugginator - Paul Ryan is choking on his own mystery meat. Bonus points to the Kruggatolah for that reference to sucking one's own dick, though it's not entirely apropos here:

Now, a cynic might have expected Republicans to go for full-on cynicism: “What, you took it seriously when we talked about fiscal responsibility? The joke’s on you! Ha ha ha!” And to a certain extent that is what they’ve done: after all the deficit-hawk posturing, they’re openly admitting that their intention is to increase the deficit by $1.5 trillion.

But they apparently didn’t feel free to cut completely loose: they did set a deficit target, and as I understand the mechanics of reconciliation, the budgets passed by the House and Senate, while they don’t actually set policy, kind of leave them stuck with an upper limit on just how much they can blow up the deficit.

And they have no idea how to get there. Try to cut one set of deductions, and the homebuilders get mad at you. Try to cut another, and upper-middle-class suburbanites in blue states who still vote GOP get mad. And so on.

The point is that these problems were always predictable, which is why the Ryan budgets were always obviously fraudulent. Ryan’s fakery may have fooled his naive constituents — by which I mean practically the whole Beltway pundit class — but never fooled anyone who could do the math.

So will the GOP pass something? Probably — but it’s more likely to be a miniature Christmas tree of handouts to the wealthy than the grand tax reform they’ve been promising.

And let’s hope that whatever happens gets reported as the failure it is. Ryan and company promised big stuff, but never had any way to deliver.

As a side note, I wonder what happened to all the Republicunts who spent eight years screaming about how badly Obama was doing? Because they're awfully silent now that their own clowns are fully and completely in charge.

I mean, they're not fully silent, sure, because they still scream about Killary and open borders and Sharia and terrorism... but they seem to have forgotten that their own party of clowns and thieves is now in charge, and could easily do something about all America's "problems" if they felt like it.

Yup, Papadopoulos wore a wire

The Atlantic - Yup, Papadopoulos wore a wire. Quote:

The inquiry is examining potential collusion between the Trump campaign and the Russian government in what American intelligence agencies have said was an attempt by the Kremlin to sway the 2016 election in Trump’s favor. The special counsel is also reportedly looking into whether the president himself sought to obstruct the investigation.

Although the plea was unsealed Monday, Papadopoulos was arrested at Dulles Airport on July 27. The next day, in the motion to seal the filings associated with his arrest, the office of the special counsel argued that “public disclosure of the defendant’s appearance” would “significantly undermine his ability to serve as a proactive cooperator.”

“I assume that means he wouldn’t be able to wear a wire and trick a target of the investigation into making incriminating statements, because his cooperation would then be known,” said Bruce Green, a former associate counsel in the Iran-Contra affair and a Fordham Law School professor.

That phrase, “proactive cooperator,” is what implies that between the moment of his arrest and the unsealing of his plea agreement, Papadopoulos might have engaged his former colleagues on behalf of federal investigators.

“I take ‘proactive cooperator’ to mean that he’s out on his own gathering information for the investigation that it is interested to have him continue to gather before he is exposed as a cooperator,” said John Q. Barrett, a law professor at St. John’s and a former associate counsel for the government in the Iran-Contra case.

And what does it mean for Trump and the Republican Party's chances of staying out of jail?

“Everyone who had previously dealt with Papadopoulos knew knew there was an investigation; they may have been incautious,” Green said, “but they’d have to have been truly stupid to engage in incriminating conversations with Papadopoulos at this point.”

Truly stupid? Check!

Wednesday, November 1, 2017

Russia uses Interpol to harass critics

QZ - how Russia is using Interpol to harass Bill Browder. Intro goes like this:

Bill Browder used to be Russia’s biggest foreign investor; now he is one of its harshest critics. The Russian government tried three times between 2012 and 2015 to get Interpol, the international policing organization, to issue a global “red notice” for Browder—a request for other countries to arrest him.

All three times, the attempts failed, with Interpol declaring them politically motivated. This year the Kremlin has changed tactic and twice unilaterally issued a different type of notice—a “diffusion,” an arrest request that isn’t public and isn’t vetted by Interpol itself. The latest one was filed last week, on Oct. 17, and within the US immigration bureaucracy it apparently triggered an automatic ban on Browder, who is a UK citizen. It took the US a day (paywall) to realize its mistake and revoke the ban. Interpol took nine days to finally block Russia’s warrant, Browder says.

“It’s outrageous that Russia has repeatedly abused the Interpol diffusion system for political and criminal purposes,” he wrote in an email to Quartz. “The only way to stop their abuse is to take away Russia’s right to unilaterally post diffusions and have any future notices vetted by non-Russians at Interpol headquarters.”

Why not just shut Russia out of Interpol? I mean, sure, then all the world's child molesters, mass murderers, terrorists and mafia would move there... but most of the world's child molesters, mass murderers, terrorists and mafia live there already, right? Why not stick all of them in one country so we know where they all are?

Machine learning sux

Still catching up on the last week's news items....

FT Alphaville - machine learning sux. Quote:

But the failure of all of the algorithms to perform well in 2016 and 2017 highlights the age-old problem with models.

“2016 was a kind of a tricky year,” says Oikonomou, noting that the algorithms “didn’t handle sharp changes in the market”.

“Even this year you could argue that the market is not driven by fundamentals,” he adds, which is maybe not the best environment for a model trained to detect historical patterns in fundamentals.

Or, just maybe, once you put enough algos into the market, all the beta gets arbed.

First iron law of the markets 1, twentysomething quants with grad school training and a working knowledge of Matlab 0.

Tuesday, October 31, 2017

Papadopoulos has worn a wire for the FBI for months

This is just luscious.

BBC - The real Trump indictment story. Quote:

If there's anyone in Trump's campaign circle with something to hide, they should be concerned that Papadopoulos was arrested back on 27 July. He struck a plea agreement with the Mueller team on 5 October.

That was nearly four weeks ago and, according to the court documents, Papadopoulos has been co-operating with government investigators ever since. In fact, Mr Mueller told the relevant court he did not want the arrest made public because it would "significantly undermine his ability to serve as a proactive co-operator".

So who has Papadopoulos spoken to since his arrest? And what sorts of topics could he have discussed?

According to Dan Dale of the Toronto Star, a former prosecutor told him the term "proactive co-operator" can indicate someone who is willing to wear a wire tap.

HotAir Blog goes through an extended what-if scenario that envisions how Papadopoulos could go about surreptitiously gathering incriminating details from members of Trump's campaign inner circle. He could ask for their "advice" on how to disrupt Mr Mueller's investigation after disclosing that he had been arrested.

"Suddenly those people woke up this morning and realised they'd had conversations with Papadopoulos recently about how to throw Mueller off the trail and only now do they realise he's been in cahoots with Mueller for three months," the theory goes. "Hoo boy."

Ha! And now all the Trumptards are triggered!

Three newsblobs


Calculated Risk - are house prices in a bubble? tl;dr: no.

Uneasy Money - more on John Taylor being a twit. He's pretty sure that the Fed chairship instead goes to Powell if Yellen doesn't keep it. This blog seems to have more common sense than the wharrgarblers who are still harping on about Taylor.

The Nation - what killed the Democratic Party? Well, to me, it's probably a mix of bailing out Wall Street instead of Main Street, and spending 2 years pretending to stand up for the people til they lost the 2010 midterms and had no power anymore. Frankly, 2012's Obama victory was just momentum.

Hey, remember eDigital? Yeah, blockchain has become like that.

FT Alphaville - this is the dumbest thing we've ever seen. When's the crash? For those of you who remember eDigital, which is probably only just Pharmasave Dave if he's still around:

On-Line PLC is a little AIM-listed business whose website looks like this:

Its primary asset is a stake in ADVFN, a markets data site that looks like this:
Yesterday, On-Line PLC said it would be adding the word ‘Blockchain’ to its name. And now its shares look like this:

Monday, October 30, 2017

Longer-form reads for those of you as intellectual as me

Here's some longer-form reading to help you get up to my admittedly very advanced level:

Simon Wren-Lewis - why is the government making such a mess of A50? The British really have utterly no bloody clue how to secede from Europe.

Grow The Con - where did all the investment go? Short story is, you don't need it in an oligopolistic plutocracy. Need help getting your head round that? Read some history of medieval economies, or the history of the Antebellum south. I don't see how this should be news... except for an economist.

Stumbling and Mumbling - capitalist triumphalism, a brief history. Here's the intro to get you interested:

Ken Burns’ history of the Vietnam war is getting many plaudits. What’s not been noted about it, though, is that it reminds us of something we’ve forgotten – that the victory of capitalism over communism was not generally regarded as inevitable at the time. The idea that it was owes more to the hindsight bias than to historic fact. Indeed, capitalist triumphalism – of the sort we see from CapX, the IEA and Very Selective Reading of Wealth of Nations Institute – is relatively new.

What I mean is that the American government did not commit mass murder, sacrifice tens of thousands of its own young men, cause vicious domestic social divisions and jeopardise the economy in order to save Vietnam from a flawed economic experiment. It did so because it feared communism would succeed, not that it would fail – that communism could supplant capitalism. Equally, the Macarthyism of the early 50s was aimed not at rooting out cranks but genuine threats to American capitalism.

When Khrushchev spoke of “burying” and “overtaking” western capitalism, nobody laughed. The danger was a serious one. And the launch of Sputnik suggested to the world that Communism could produce technologies that eclipsed capitalist ones. As Francis Spufford showed in Red Plenty (discussed here and here) the Soviets had a genuine optimism that they could beat capitalism – and cold warriors feared they were right.

NDD on treasury market DOOOOOM

New Deal Demoncrat - treasury market DOOOOOM. Quote:

The top chart is the IEIs, which represent the 3-7 section of the treasury curve. The middle chart is the IEFs, which are the 7-10 year section of the curve, while the bottom chart is the TLTs, which represent the 20+ year section of the curve. All three fell through technical support yesterday; all are below their respective 200-day EMAs.

There are two reasons for this. First, the market believes Trump will nominate a more hawkish Fed governor, probably John Taylor. Second, the market is betting the Republicans will pass a large tax cut. Traders believe this will lead to higher growth and more inflation. Therefore, they are selling bonds, which under-perform in a higher growth, higher inflation environment.

Um, #2 only applies to idiot Republican traders who trade based on ignorant beliefs. The tax cut can't lead to higher growth and more inflation, because the Fed's duty is to respond to zero-unemployment growth and higher inflation with higher rates.

#1 is the only explanation.

Or, alternatively, traders have found somewhere else other than bonds to put their money into. Idiot republicans only came out of cash last November, so now they're probably running up the risk chain.

Three from New Deal Demoncrat

New Deal Demoncrat - leading indicators negative for second straight quarter. Quote:
There are two long leading indicators in the GDP report: real private residential investement and corporate profits. Since the latter is not released until the second or third revision, the less leading proxy of proprietors' income serves as a placeholder.

Real private residential investment declined at a -6.0% annual rate, following a revised -7.8% annual rate for Q2 (blue in the graph below). That's even worse when you take into account that the best measure is housing investment as a share of GDP (red). Since housing investment declined and GDP rose, that's an even bigger hit.
Yes, and that's especially bad if the housing cycle is the economic cycle.

Yeah seriously, he's been wharrgarbling about Trump for a while, but now with actual data backing him up he's got my attention.

New Deal Demoncrat - weekly indicators: mortgage rates turn negative. And just imagine how worse it'll be with a new Fed chair hell-bent on raising rates by a couple percent because of all the hyperinflation we've been having.

New Deal Demoncrat - real cost of renting versus home ownership. I guess what the working class is supposed to do is go back to living 6 to a room, like in the age of Dickens.

Sunday, October 29, 2017

Stock valuation: portfolio theory versus discounted PV

Apropos of nothing,

1. Stock (or bond, or land, or anything) market prices don't depend on their discounted net present value of future flows.

Yes, the underlying value of an investment is its discounted NPV of future flows, but "underlying value" doesn't mean much.

Investment prices depend on how much money chases how much paper. That's all.

2. The population is heterogeneous in consumption and saving; the marginal propensity to consume is real. In fact, any "economist" who doesn't admit this is a fraud.

3. The population at the low end of the pay scale (where all money is going into consumption) contribute directly to a business' NPV of future flows.

Thus, when low-pay people are seeing big raises, the underlying value of investments will tend to go up.

4. The population at the high end of the pay scale invests more than it consumes. Thus, when the high-paid population are seeing big raises, they contribute to inflation of investment prices.

5. Thus, any long-trend divergence between underlying investment values and market prices is indicative of more money going to the rich.

6. Equities and bonds are not capital; capital investment is productive investment, while equity and bond investment is just the purchase of money flows.

Yes, when investment in productive capital provides a higher return than investment in (say) zero-real-yield-or-worse bonds, then money should flow into investment in productive capital. Productive capacity will increase, and thus the economy grows in size.

But, money will not flow into generating new productive capital when there's no expectation of consumption growth. (Capital investment behaves according to a risk-averse utility function.) It also won't flow into generating new productive capital when monopolistic/oligopolistic power contributes to a new firm entry cost that's higher than the paltry expected returns in a no-consumption-growth market.

Thus, the only place for money to go is bonds and stocks.


Plutocracy results in a stagnant economy and grossly inflated asset prices.

Inclusive economic equality will result in deflated asset prices and high economic growth.

You can give me my Nobel Prize any time.

Friday, October 27, 2017

Friday videos: Lanterns on the Lake

Turns out the kids of today are still making fabulous music, I just had to hit dislike on 200 videos by skinny-jeans brats to get new recommendations.

Wednesday, October 25, 2017

John Taylor and gold

So if John Taylor really wants to jack up interest rates super high because of his idiotic right-wing pseudo-theory, then if he gets selected as chair of the Fed you should expect the price of gold to superhypercollapse.

Because conservatives know what they want, and deserve to get it good and hard.

Sunday, October 22, 2017

Some Sunday reading

Still recovering from a cold, and I also have a lot of work to do over the next while.

But here's a bit of reading for you:

Jared Bernstein - a must-listen podcast from steel country. You can call all Trump voters racist and sexist, or you can listen to them and see what explanation they have for switching support from Obama in 2012 to Trump in 2016 - which some of them must have done, since Trump carried more states than Obama did, and it's not like retired angry old men have been outbreeding the general population.

FT Alphaville - eight centuries of the risk-free rate. Seems like, secularly, there really is a demographic push downward in rates, modified at times with spikes as the world switches from benchmarking one country to benchmarking another. Then again, that might just be how they set the chart up.

Noah Smith - the Taylor Rule is not what the Fed needs. Especially since Taylor isn't even trying to use his own rule like a grownup - he's just arbitrarily using 50% coefficients. That shows he's not even trying to be methodical or empirical: And if he doesn't know how to do that he has no fucking place on the Fed committee.

Bloomberg - psychopath hedge fund managers make less money than nice guys. Out of curiosity, what does that suggest about newsletter writers who underperform the S&P 500 year after year?

Daily Beast - on women's health, Trump is even dumber than we thought. Yes, apparently he's going to ban all birth control now? Or is he going to leave condoms legal?

Friday, October 20, 2017

Tuesday, October 17, 2017

On gold, world markets, and R2K

Some other reading:

Reformed Borker (Bork Bork Bork!) - it's the global economy, stupid. Read this and you'll want to go long global equities!

All Star Charts - bull flag in small caps. Read this and you'll want to go long IWM!

Jesse's Cafe Americain - gold to da moon Alice! Read this and you'll want to go long gold! Oh but wait:

Jesse's Cafe Americain - one market day later.... Read this and you'll... um... blah blah evil bear raid, blah blah Goldman Sachs, blah blah international Jewry.

Some perspective from Liz Ann Sonders

I'm still sick with a cold, and in addition now have to make up a week's worth of work at school, so thus the lack of posting.

But I just remembered today that I'm still not following Liz Ann Sonders as much as I should, so here's her latest market update:

Liz Ann Sonders - 13 Oct market perspective.

Salient points:
U.S. stock indices have continued to push to record highs, with little apparently able to throw them off course. The grind higher has pushed through natural disasters, the Las Vegas tragedy, domestic political failures, international political tensions, and missile tests and threats from North Korea—an ample “wall of worry” for stocks to climb.


Although there is little of the excess that would suggest recession risk is near, we do see signs that the characteristics of the economy and market may be changing. Bond yields have crept higher, international markets have performed better, and cyclical sectors such as energy and materials have outperformed—all potential signs of the latter stages of a cycle.


Strong surveys indicate improving economy

ISM manuf. vs. ISM non-manuf.

Source: FactSet, Institute for Supply Management. As of Oct. 9, 2017.
Additionally, the U.S. Citigroup Economic Surprise Index has moved back into positive territory, while several measures of capital expenditures have started to move higher. 
Economic surprises are positive

Citi Economic Surprise Index- US
Source: FactSet, Citigroup. As of Oct. 9, 2017.
And capex looks to be improving

nondefense capital goods orders ex-aircraft
Source: FactSet, U.S. Census Bureau. As of Oct. 9, 2017.
Philly Fed Capex Index
Source: Federal Reserve Bank of Philadelphia. As of Oct. 9, 2017.

Read her, she's an example of the exceedingly rare analyst who knows what they're talking about.

Saturday, October 14, 2017

Mr. Robot commentary

And as for this week's episode of Mr. Robot, two observations:

1. It is obvious from Elliot's monologue that Sam Esmail feels personally responsible for the election of Donald Trump. Good, that'll teach him.

2. It is obvious from, hell, like ten whole minutes of this episode that Sam Esmail has been reading the Mr. Robot reddit threads for ideas, came across the "Whiterose is building a time machine!" thread, and has decided to incorporate it into the series. Whether it'll be for real or just a troll is still to be determined.