Thursday, December 18, 2014

How To Get Economists Off The Back Of Humanity? Develop A More "Informable" Electorate.

(Commentary posted by Roger Erickson)

Sanjeev, from India, writes: "How do we get [India CB Head] RR off our backs?"

Well, the root cause of every addiction lies in the user base. So start by sending this article - and my commentary - to every department head of every university department in the world, and to their Deans too. Seriously.
It's obvious that economists aren't paying much attention to the obvious ...
... (even now, not just for the past 200 years, or even all the way back to before Alexander the Great & Hannibal formally glorified the dynamic power of organization; not that it hadn't been documented before, for those with the wit & experience to discern it).

Plus, send it to the equivalent of your Military Officer & Troop Training institutions. Ask them what it'd be like if citizens arrived to military service already understanding teamwork. Doh!

Quite seriously. One obvious suggestion would be to formally fuse Econ-101, Biology-101, Ecology-101, Sociology-101, Ethics-101 and Governance-101 as a start, so that no member of any those professions could again be so grievously ignorant of so much of our expanding and evolving context.

Maybe Accounting-101 and Banking-101 too, so people wouldn't forget what THOSE professions are for.

A minimal step back towards the rudiments of a Broad Education?

What could be more obvious?

Here's what: If our future citizens don't learn this expanded perspective on human culture by ~age 10, we're dooming ourselves to be far less than we could be. We can't stay in an Adaptive Race without going back to our own basics, and maintaining a more "informable" electorate.

Wednesday, December 17, 2014

Dante – The Curse on Those Who Do Nothing in the Face of Evil

This was a quote used by John F. Kennedy and then augmented by Dr. Martin Luther King Jr. It is adapted from Dante.

“The hottest places in Hell are reserved for those who in time of moral crisis preserve their neutrality. He who passively accepts evil is as much involved in it as he who helps to perpetrate it. He who accepts evil without protesting against it is really cooperating with it.”  

The actual passage from Dante here:

Here sighs and lamentations and loud cries 
were echoing across the starless air, 
so that, as soon as I [Dante] set out, I wept.
Strange utterances, horrible pronouncements, 
accents of anger, words of suffering, 
and voice shrill and faints, and beating hands -
All went to make a tumult that will whirl 
forever through that turbid, timeless air, 
like sand that eddies when a whirlwind swirls.
And I - my head oppressed by horror - said: 
"Master [Virgil], what is it that I hear? Who are 
those people so defeated by their pain?"
And he to me: "This miserable way 
is taken by the sorry souls of those 
who lived without disgrace and without praise.
They now commingle with the coward angels, 
the company of those who were not rebels 
nor faithful to their God, but stood apart.
The heavens, that their beauty not be lessened, 
have cast them out, nor will deep Hell receive them - 
even the wicked cannot glory in them."
And I: "What is it, master, that oppresses 
these souls, compelling them to wail so loud?" 
He answered: "I shall tell you in few words.
Those who are here can place no hope in death, 
and their blind life is so abject that they 
are envious of every other fate.
The world will let no fame of theirs endure; 
both justice and compassion must disdain them; 
let us not talk of them, but look and pass."
And I, looking more closely, saw a banner 
that, as it wheeled about, raced on - so quick 
that any respite seemed unsuited to it.
Behind that banner trailed so long a file 
of people - I should never have believed 
that death could have unmade so many souls.
After I had identified a few, 
I saw and recognized the shade of him 
who made, through cowardice, the great refusal.
At once I understood with certainty: 
this company constrained the cowardly, 
hateful to God and to His enemies.
These wretched ones, who never were alive, 
went naked and were stung again, again 
by horseflies and by wasps that circled them.
The insects streaked their faces with their blood, 
which, mingled with their tears, fell at their feet, 
where it was gathered up by sickening worms.

We must keep fighting, even if we go down defeated!!

Peter Cooper — Why Do We Accept Fiat Currency?

Most people have probably wondered, at one time or another, why national currencies gain wide acceptance. Why, for instance, do so many Americans choose to hold and transact in dollars rather than some other currency?...
Why Do We Accept Fiat Currency?
Peter Cooper

Randy Wray — What’s Wrong with Heterodox Economics Journals?

I just came across a very interesting bit of research, A Guide to Paradigmatic Self-Marginalization: Lessons for Post-Keynesian Economists by Leonhard Dobusch and Jakob Kapeller; you can find it here
I realize this is not going to be of interest to many of our readers, as it is a sort of “inside the halls of academia” analysis. What the authors do is to look at the strategies of editors running the top orthodox and the top heterodox journals in economics. Actually it might be a bit unfair to label these strategies, as the authors do not mean to imply that editorial policy knowingly pursues the strategies. Instead, the article looks at the ex post results. 
In a nutshell, what they find is that the articles published in orthodox journals do not cite the research published in heterodox journals. NO SURPRISE THERE! But they also find some startling self-defeating practices pursued by heterodox journals....
New Economic Perspecives
What’s Wrong with Heterodox Economics Journals?
L. Randall Wray | Professor of Economics and Research Director of the Center for Full Employment and Price Stability, University of Missouri–Kansas City

Economists Finally Admit Their Whole Discipline Is >200 Years Behind The Times

   (Commentary posted by Roger Erickson)

Economists admit "humans are .. a social species with interaction patterns that shape their behaviors."
Well duh! Talk about what is obvious to everyone else!

Where have these people been since the Renaissance & Reformation? Since Wallace & Darwin and their countless predecessors in ecology and biology, chemistry, biology, geology and physics?

Clearly social species appear to be at least 130 million years old (and are undoubtedly far older as old as physical autocatalysis itself) .. and they've just now finally been acknowledged by the economics field?
That is the most sweepingly damning condemnation of the economics field ever heard on planet earth.
Weepin' Buddha on a decline! That's a pathetic admission by economists, but at least they finally admit it, and that they've blithely ignored the near totality of other human knowledge for hundreds of years, and actually for far longer.

Teamwork works? THAT is a revelation to economists?

Adaptive impact of dynamic assets far outweighs impact of static assets? Be still my beating heart!

Someone should have informed Alexander the Great and later Hannibal that organization pays off ... in time to make a difference to those practitioners of that truly ancient art. :(

What's next? Will economists come right out and renounce Divine Right?

Admittedly ...

Yet I do hope that the economics discipline can survive it's former self. Then maybe we could survive them, and ourselves too.

Tuesday, December 16, 2014

RT — Slumping ruble should push Russia to ‘live in new reality’ – Bank chief

The plunging ruble is a signal for the Russian economy to adapt to new conditions, Russia’s Central Bank Chair Elvira Nabiullina said, following the surprise midnight decision to hike the key interest rate to 17 percent.… 
“We must learn to live in a new reality, to focus more on our own resources to finance projects and give import substitution a chance,” the bank chief said in a televised address Tuesday.… 
Nabiullina said that the Central Bank has special tools not to restrict development and growth within Russia, citing finance of investment projects, and small and medium-sized business and commodity exports as target industries.
Slumping ruble should push Russia to ‘live in new reality’ – Bank chief

Warwick Smith — Why the federal budget is not like a household budget

MMT in Oz.

The Conversation
Why the federal budget is not like a household budget
Warwick Smith | Research economist at University of Melbourne
h/t Steve Keen

digby — President Obama's greatest torture mistake

This may be Obama's biggest mistake, bar none. It's colossal and will reverberate through time, affecting America as deeply as the moral rot of slavery Native American genocide whose aftermath festers are the heart of the culture and remains an indictment of "American exceptionalism" globally. It's hypocritical to say, "That's no who we really are,"without self-correction.
Here's something I didn't know, from Jane Mayer's piece this week in the New Yorker:
There was a way to address the matter that might have avoided much of the partisan trivialization. In a White House meeting in early 2009, Greg Craig, President Obama’s White House Counsel, recommended the formation of an independent commission. Nearly every adviser in the room endorsed the idea, including such national-security hawks as Secretary of State Hillary Clinton, Secretary of Homeland Security Janet Napolitano, and the President’s chief of staff, Rahm Emanuel. Leon Panetta, the C.I.A. director at the time, also supported it. Obama, however, said that he didn’t want to seem to be taking punitive measures against his predecessor, apparently because he still hoped to reach bipartisan agreement on issues such as closing Guantánamo.
What was he thinking?
We can't know what was going through his mind. But if this is true, it was one of his biggest errors in judgement. We are now living in a country that endorses torture and, at best, sees it as a political issue. And the world knows that if the US Government continues to use it, the people will back it. That has made us far more vulnerable and far less safe. We are an extremely powerful rogue nation that openly says we don't care about the rule of law or international norms of behavior.…
Back in the day people used to rhetorically ask: "Why do they hate us?" and people would either shrug their shoulders or sputter about how we are misunderstood. Today if someone asks the question, the ready answer is: Because the US is a barbaric superpower that will stop at nothing, not even torture. I can't argue against that.

Hillary Clinton thinks our problem as a culture is that we don't tell the good stories about ourselves anymore. Since more than half the people in this country are torture advocates, I'm not sure how you make any case for our "goodness" anymore. Good luck with trying to paper this over.
President Obama's greatest torture mistake

Don Quijones — Spain’s Brief Flirtation with Democracy Comes to Abrupt End

Neoliberalism shows its true colors — fascism. Anyone doubt that economic and politics are joined at the hip and that neoliberalism is political as much as economic?

Raging Bull-Shit
Spain’s Brief Flirtation with Democracy Comes to Abrupt End
Don Quijones

Also Offering ‘Example of Resistance,’ Nationwide Strike Against Austerity Hits Belgium

Aleksei Kettunen — Ruble Exchange Rate Fluctuations and the Economic War

Another view of what's going on with the RUB.

The Vineyard of the Saker
Ruble Exchange Rate Fluctuations and the Economic War
Aleksei Kettunen

Also Letter from Diogenes on Interest Rate and Russian Central Bank


Matias Vernengo — Business Schools, Liberal Arts Education and Heterodox Economics

So we're having a discussion about the new Management College at Bucknell. Traditionally resources are the main problem in the relation between business schools and economics departments. Often, as in the University of Utah, were I was before, there are issues related to the curriculum, in particular if the economics department is heterodox. In a liberal arts environment, the issues are not only associated to resources, but also to the teaching of what is assumed to be more practical knowledge or marketable skills in a milieu in which the main goal of education is to develop the essentials for civic life, where critical thinking and the ability of learning how to learn are at the center of the curriculum. 
Is it possible? Or would the management goals undermine the liberal arts experience. Note that many think that liberal arts education is doomed anyway (an old topic by the way). The fear is that students cannot (given tuition costs) afford the luxury of an education for education's sake, but need 'practical knowledge,' that would be useful in the market (the market analogy was used freely in the faculty meeting). I have my doubts about how useful 'practical knowledge' is compared to a broad education that prepares citizens to think independently and critically about the world, but that's difficult to evaluate, I guess.
It's only difficult to evaluate because of different standards based on different views of human being — homo economicus versus homo socialis — and different context — chiefly economic or chiefly social and political. This depends on whether one adopts methodological individualism and rational choice theory based on the philosophical assumption of ontological individualism or a system approach based on a complex web of variable networks and feedback, in which families are fundamental rather than individuals "rationally" pursuing maximum utility.

What could be more important for a liberal democracy than education that develops "the essentials for civic life, where critical thinking and the ability of learning how to learn are at the center of the curriculum." Like Matias, " I have my doubts about how useful 'practical knowledge' is compared to a broad education that prepares citizens to think independently and critically about the world.…  My feeling is that a liberal arts education is often more practical than practical knowledge."

I come at this from the perspective of philosophy and its history. The idea of liberal education, as well as participatory democracy, comes from ancient Greece, in particular the Athens of Socrates, Plato and Aristotle, also other schools also made contributions, such the Stoic emphasis on society based on brotherly love. After the decline of Rome, European civilization was eclipsed by the barbarian invasions, followed by the religious dogmatism of medieval Scholasticism. The ancient learning was revived during the Renaissance and flowered into the Age of Enlightenment that produced modern liberalism, the scientific age and industrial society based on quickly proliferating technology.

In both ancient and modern times, a liberal education was only possible for the elite, since in the Agricultural Age productivity was low and most everyone was required to work the fields and then the factories. Only the rentiers were considered "free men" capable of governing because they had the leisure for a "liberal" education instead of on-the-job training from an early age owing to practical necessity for the rest of the society, whose surplus production supported the lifestyle of the privileged elite who alone were actually free and had the ability and leisure to participate in governing.

In postmodernity, productivity has increased to the point that enough leisure is available for universal education and the concept of liberal democracy has been established in most developed countries. Liberal democracy as participatory democracy cannot flourish in the absence of liberal education, which is the preparation for it. In a liberal democracy, focus on "practical" education rather than liberal education is impractical since it erodes the foundations of liberal democracy in free inquiry and critical thinking.

Naked Keynesianism
Business Schools, Liberal Arts Education and Heterodox Economics
Matias Vernengo | Associate Professor of Economics, Bucknell University

Lynn Parramore — Joseph Stiglitz: Economics Has to Come to Terms with Wealth and Income Inequality

Clear and concise presentation of Stiglitz's position relative to the approach of Picketty. Many solid points including monopoly power and capital share versus labor share through exploitation based on market power favoring capital. Stiglitz also hones in on rent and rent-seeking.
I think that the thrust of my book, The Price of Inequality, and a lot of other work has been to question the margin of productivity theory, which is a theory that has been prevalent for 200 years. A lot of people have questioned it, but my work is a renewal of questioning. And I think that some of the very interesting work that Piketty and his associates have done is providing some empirical basis for doing it. Not only the example that I just gave that if you look at the people at the top, monopolists actually constrain output. People who make the most productive contributions, people who make lasers or transistors, or the inventor of the computer, DNA researchers, none of these are the top wealthiest people in the country. So if you look at the people who contributed the most, and the people who are there at the top, they’re not the same. That’s the second piece. 
A very interesting study that Piketty and his associates did was on the effect of an increase in taxes on the top 1 percent. If you had the hypothesis that these were people who were working hard and contributing more, you might say, ok, that’s going to significantly slow down the economy. But if you say it’s rent-seeking, then you’re just capturing for the government some of the rents.
Joseph Stiglitz: Economics Has to Come to Terms with Wealth and Income Inequality
Lynn Parramore

James Petras — Imperialism and the Politics of Torture

Torture is not publicized domestically even as it is ‘understood’ by ‘knowing’ Congressional committees. But among the colonized, occupied people, through word and experience, CIAand military torture and violence against suspects, seized in neighborhood round-ups, is aweapon to intimidate a hostile population. The torture of a family member spreads fear (and loathing) among relatives, acquaintances, neighbors and colleagues. Torture is an integral element in spreading mass intimidation – an attempt to minimize co-operation between an active minority of resistance fighters and a majority of passive sympathizers.
People often think of torture as applying exclusively or predominantly to interrogation. However, this is not the case. It is also used institutionally for control and also retribution.

In addition to the torture practiced by the US clandestine service documented in the Senate Intelligence Committee report, another "secret" that is seeping out is how torture has been and is used rather prevasively as a tool of control within the United States, especially in the "corrections" system but also in "ordinary" policing. For example, search on "torture" and "solitary confinement," and consult the 2014 United Nations Committee Against Torture that cites the United States.

Why is this significant economically? Because economies are based on law and law is based on enforcement, that is, the use of force for controlling individuals and populations. Certain populations are more susceptible to this than others and realize it through their shared experience. Another class of people does want is in its interests with impunity. The leads not only to inequality and gross inequity but also to fraying the social fabric and periodic social unrest that is a drag on the society socially, politically and also economically.

Where there is no voluntary reciprocity, there is some form of control and therefore the implicit use of force. The question is when force becomes excessive and applied unjustly.

Popular sovereignty and self-determination are supposed to address this on the basis not of the majority view in any case, but rather one the basis of human rights and civil liberties. In a liberal democracy, the basis of this is a constitution establishing the rule of law, equality before the law, and and impartial justice system.

However, modern liberal democracies are republics, that is, representational democracies. Representatives are subject to elite capture, and this has been the history of most republics. When that happens the real seldom matches up with the ideal.

Indeed, I have noticed over the past few days that attention is being called to the similarity between torture of individuals and terrorism of populations through a policy of austerity that undermines the social fabric and benefits only a few. When people are driven to suicide owing to the dire straits in which they find themselves not due to their own fault but government policy that benefits an elite, is this not tantamount to torture?

The James Petras Website
Imperialism and the Politics of Torture
James Petras | Bartle Professor (Emeritus) of Sociology at Binghamton University

Today's podcast: Interview with Justin Santopietro.

My interview with Justin Santopietro. Great conversation. We cover politics, economics and the strength and failings of MMT. Justin is a contributor here and specializes in political commentary.

Dec 16. Interview with Justin Santopietro.

Kristina Rus — Russian PM Evgeny Fedorov: Central Bankers Suppressing Russian Economy

RCB purposely tanking Russian economy?
Economic hardship is being created by the foreign-controlled Bank of Russia's monetary policies, to spread mass discontent and facilitate a Maidan in 2015 to remove Putin. So claims Evgeny Fedorov, citing the colonialist Central Bank law, established after Washington's victory in the Cold War, and the system of fifth-column levers, methodically operated to steer the revolution.

2:59 Foreign banks own the production in Russia.
8:23 Putin has no authority over the Central Bank.
13:56 Bank of Russia is legally a foreign-controlled Central Bank.
15:21 Road map to Maidan 2015.
English subtitles.
Fort Russ
Russian PM Evgeny Fedorov: Central Bankers Suppressing Russian Economy

Kristina Rus


Federov sees a color revolution in the making.

Socio-Economics History Blog
Evgeny Fedorov, Deputy in the Russian Parliament: US to Attack Russia in 2015!
  • Video is in Russian with English subtitles.
  • Published on May 31, 2014A coup d´état under the guise of an ‘Orange Revolution’ is being prepared in Russia. The big picture and the details are given by Evgeny Fedorov, a deputy in the Russian parliament, and coordinator of the People’s Liberation Movement. The coup facilitator is the fifth column, which dominates the mass-media and public servants all the way up to government ministers, a point barely known within Russia, never mind outside. However, the people’s insurrection in Ukraine could wake up enough people in Russia to restore national sovereignty. In the next few years it will come to a head, with only two possible outcomes : the destruction of Russian civilization or the collapse of the American empire.
    Major segments:
    0:19:51 Washington’s mechanisms of control via the fifth column in Ukraine (coup launched) and Russia (coup in preparation).
    0:47:03 Novorossia could mobilize an army big enough to liberate all Ukraine.
    0:55:34 The armed coup was launched even though Yanukovych was capitulating, in order to establish conditions for terror and massacres.
    1:03:46 Novorossia has eliminated the fifth column. This will be emulated in neighboring territories.
    1:08:57 The foreign ‘mercenaries’ are likely equipment operators (tanks, planes,..).
    1:25:31 Fifth column agitators will try to get Putin overthrown for his “inaction” over Ukraine.
    1:30:00 Mechanisms for construction of the fifth column.
    1:39:19 The global crusade of the Anglo-Saxons — banditry & exploitation, obscured by style, finesse and copious marketing.
    1:45:18 Parallels between the German and American invasions of USSR/Russia (then and now).
Federov may sound extreme, perhaps on the level of conspiracy theory (Socio-Economic History is something of a conspiracy theory site), but he is not alone in the Russian government entertaining this view. Something like this is probably indicative of Putin's view also, based on what he has said recently about the US clandestinely manufacturing color revolutions through clandestine operations and NGOs, and putting Russia in its sights for regime change. Foreign Minister Larov has confirmed the view of the Russian Government that Washington's actual agenda of the Ukraine crisis and sanctions is regime change in Russia, just as are sanction imposed on Iran.

John Helmer — IMF, World Bank Halt Lending To Ukraine

Multi-billion dollar lending to Ukraine by the International Monetary Fund (IMF) and World Bank has stopped amid growing doubts among country board directors at the two international organizations that the Ukrainian Government can meet repayment commitments and loan covenants for 2015, or deliver on reform promises and budget financing targets tabled in Kiev this week. 
For the first time since the change of government in Ukraine last February led to civil war in the east of the country, European bankers and multilateral fund sources acknowledge that Kiev is now likely to default on its international debts, and will seek a reorganization of its bond debt.
Ahead of Lipton’s visit to Kiev, William Murray (right), a spokesman for IMF managing director, Christine Lagarde,revealed that because of doubt that Ukraine can meet current IMF financing requirements, conditional lending by the Fund may be suspended, while a fresh bailout is pursued outside the Fund’s member states without conditions. According to Murray, “we need financing assurances, programs have to be funded, and it’s a 12 month horizon… it’s really important that the donor community step up and provide financing to Ukraine.”
US and EU on the hook for Ukraine's bill, with tips to the oligarchs.

Dances with Bears
Going To The Dogs — IMF, World Bank Halt Lending To Ukraine – $4 Billion Ukraine Bond Wager Goes Bad For Franklin Templeton
John Helmer

Lars P. Syll — Alfred Marshall on the proper use of math in economics

Alfred Marshall on the use of mathematics in economics. Keeper quote.

Lars P. Syll’s Blog
Proper use of math in economics
Lars P. Syll | Professor, Malmo University

Pew Research Center — About Half See CIA Interrogation Methods as Justified

Following the Senate Intelligence Committee’s report on CIA interrogation practices in the period following the Sept. 11, 2001 terrorist attacks, 51% of the public says they think the CIA methods were justified, compared with just 29% who say they were not justified; 20% do not express an opinion. 
The new national survey by the Pew Research Center, conducted Dec. 11-14 among 1,001 adults, finds that amid competing claims over the effectiveness of CIA interrogation methods, 56% believe they provided intelligence that helped prevent terrorist attacks, while just half as many (28%) say they did not provide this type of intelligence.…
Overall, the public expresses the most doubt not about the CIA methods and program itself, but about the Senate committee’s decision to release its report: as many call the decision to publicly release the findings the wrong decision (43%) as the right decision (42%).
Pew Research Center

Pepe Escobar — Tomgram: Pepe Escobar, Eurasian Integration vs. the Empire of Chaos

MacKinder's Eurasian land mass as the geographical pivot of history is waking up.

Tom Dispatch
Tomgram: Pepe Escobar, Eurasian Integration vs. the Empire of Chaos
Pepe Escobar

Neil Wilson — Russian Roulette

Neil schools the Russian government and central bank about handling a currency crisis.

Russian Roulette
Neil Wilson

Sectoral Balances In Culture, Not Just Currency: Cheney on Torture, Shame, Disgrace and National Ruin: "I Would Do It Again in a Minute"

(Commentary posted by Roger Erickson)

Cheney channels his inner Nero, and Ariel Sharon.

How did we get to this point? Are NeoLiberals the ONLY humans that think that Sectoral Balances apply only to currency - and even then, only when they want them to, for personal gain?
My own son asked me a question about the culture that we want for the USA. As answer, I have to tell him that I am ashamed of Dick Cheney, not proud.
Jerrit: "The short version is that he was questioned about the innocent victims of the CIA rendition program, some of whom died, and said he was more concerned with the guilty ones who we mistakenly let free. 
I was stunned. Isn't there an opposite quote from either Jefferson or Franklin? I was thinking it's one thing to have such a thought if you're a bitter, spiteful person, but another level of brazen, insensitive sociopathy to say it on national TV."
An honest answer isn't long in coming, if we actually are honest.


People that knew Cheney personally have said that he was always that way.

There's an immediate, follow-up question. What has gone horribly wrong with our policy-staff selection process, that sociopaths like Cheney even get into politics, let alone promoted to the highest levels of our government?

Yes, we do have a few countering quotes. Quotes that previously led our destiny in an adaptive direction which we could always build upon, and be proud of.

“It is more important that innocence be protected than it is that guilt be punished, for guilt and crimes are so frequent in this world that they cannot all be punished. 
But if innocence itself is brought to the bar and condemned, perhaps to die, then the citizen will say, 'whether I do good or whether I do evil is immaterial, for innocence itself is no protection,' and if such an idea as that were to take hold in the mind of the citizen that would be the end of security whatsoever.
John Adams, The Portable John Adams

“Should any American soldier be so base and infamous as to injure any [prisoner]. . . I do most earnestly enjoin you to bring him to such severe and exemplary punishment as the enormity of the crime may require. Should it extend to death itself, it will not be disproportional to its guilt at such a time and in such a cause… for by such conduct they bring shame, disgrace and ruin to themselves and their country.” - George Washington, charge to the Northern Expeditionary Force, Sept. 14, 1775

Wasn't security what Dick Cheney SAID he wanted all along?

You have to wonder whose security he was really looking out for. Certainly not our security, in aggregate.

If we can't select people guiding us to a better/faster/leaner cultural Adaptive Rate than our recent policy actions, then there are some pieces missing from our culture's current adaptive processes. George Washington had it right.
Dick Cheney can't procure security by practicing treason.
People like Cheney showing up in our history are a sure sign of cultural decline and cultural death. He'll be linked in our history the same way Nero & the fall of Rome were.

When it comes to an argument between Dick Cheney, versus George Washington AND John Adams, I'll go with the Founders, every time.

While Cheney pontificates on his personal, faux morality, his own immorality is plain to see.

Would YOU elect Cheney again, in a minute?

Monday, December 15, 2014

Interest Rate Craziness

Snip from Drudge Report below just put up on the headline so that means the world is watching this.

Excerpt from the jump at Drudge:

In a surprise announcement just before 1 a.m. in Moscow, the Russian central bank said it would raise its key interest rate to 17 percent from 10.5 percent, effective today. The move was the largest single increase since 1998, when Russian rates soared past 100 percent and the government defaulted on debt. 
The news prompted an immediate gain in the ruble, with one-month ruble forwards up 1.6 percent in Asian trading.

To the extent that this new policy rate will negatively effect the terms by which the Russian Central Bank provides USD liquidity to member banks over there going forward, this should lead to more weakness in the rouble once the Central Bank engages tomorrow.

We should learn something from the way the system responds to this pretty drastic policy rate adjustment in any case.

Brian Romanchuk — The 'Widowmaker' And Yen Crash Theories

There has been a recent shift amongst those predicting the collapse of the Japanese economy to switch away from the so-called "widowmaker trade" - short Japanese Government Bonds (JGBs) - towards forecasts of a collapse in the Japanese yen (pictured above). Although this may result from learning a lesson from roughly two decades of failed "JGB collapse" predictions, I suspect that this is the result of learning the wrong things. Being structurally short the yen is hardly the safest trade in the world either.…
Bond Economics
The 'Widowmaker' And Yen Crash Theories
Brian Romanchuk

Michael Hudson — Pipeline Politics

Video and transcript. Short.

Pipeline Politics
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, and Distinguished Research Professor of Economics at the University of Missouri, Kansas City

My podcast for Monday, Dec 15

The theft of our freedom, liberty, wealth and futures by the elites has become brazen to the point where they are not even trying to hide, in the least bit, what they are stealing from us.

Podcast for Dec 15.

Michael Stephens — Working Paper Roundup 12/15/2014

Outside Money: The Advantages of Owning the Magic Porridge PotL. Randall Wray
Multiplier Effect
Working Paper Roundup 12/15/2014
Michael Stephens

The Century of the Self (and it's unending attack on the aggregate)

   (Commentary posted by Roger Erickson)

The Century of the Self

Nice to find this again. It disappeared from YouTube, when the BBC sued for copyright protection.

Of course, Bernays claimed to have recanted later on, or so his publicist says.

Russian rouble falls to new low against US dollar

Boy, those people at the Russian CB sure know how to get a better deal for the Russian taxpayers.  They make our U.S. CBers look like pikers.

They must drive a really hard bargain in obtaining a higher price in roubles from their member banks for their USD balances at the Fed.

Story at BBC here.

Russia's central bank has tried unsuccessfully to stabilise the currency, buying roubles in the markets and raising its main lending rate to 10.5%.
So you have one part of the govt there raising interest rates, while another part of the govt there is reacting to these rate increases by requiring a higher swap rate in roubles for their USD balances...

As we know about Swap Rates from the post below:
As forward expectations for interest rates change at the CB, so will the fixed rate that the CB demand to enter into new USD swaps.
So then as the one group there that provides short term liquidity to members is anticipating higher rates coming from the other IR policy setting group there, they are simply reacting in self interest and demanding a higher swap rate from their member "borrowers" and "getting a better deal for the Russian taxpayers..." while simultaneously lowering the real terms of trade for all of their fellow citizens.

The results of all of this activity we are witnessing is what is known as "return on non-coordination".

Swap Rate

Excerpt below from the wiki entry on "Swap Rate" which seems to be solely within the context of the LIBOR market.

Swap rate is the fixed rate that receiver demands in exchange for the uncertainty of having to pay the short-term LIBOR (floating) rate over time. At any given time, the market’s forecast of what LIBOR will be in the future is reflected in the forward LIBOR curve. At the time of the swap agreement, the total value of the swap’s fixed rate flows will be equal to the value of expected floating rate payments implied by the forward LIBOR curve. As forward expectations for LIBOR change, so will the fixed rate that investors demand to enter into new swaps. Swaps are typically quoted in this fixed rate, or alternatively in the “swap spread,” which is the difference between the swap rate and the U.S. Treasury bond yield (or equivalent local government bond yield for non-U.S. swaps) for the same maturity. In most emerging markets with underdeveloped government bond markets, the swap curve is more complete than the treasury yield curve, and is thus used as the benchmark curve

Now re-written or edited for more general applicability to the current situation in Russia:

Swap rate is the fixed rate that Central Bank demands in exchange for use of USD balances over time. 
At any given time, the Central Bank’s forecast of what this interest rate will be in the future is reflected in the forward interest rate curve. 
At the time of the swap agreement, the total value of the swap’s fixed rate flows will be equal to the exchange rate for USDs. 
As forward expectations for interest rates change at the CB, so will the fixed rate that the CB  demand to enter into new USD swaps. 
Swaps are typically quoted in this fixed rate, or alternatively in the “swap spread,” which is the difference between the swap rate and the U.S. Treasury bond yield (or equivalent local government bond yield for non-U.S. swaps) for the same maturity. 
In most emerging markets with underdeveloped government bond markets, the swap curve is more complete than the treasury yield curve, and is thus used as the benchmark curve
This or thereabouts.

As usual per textbook MMT 101:  "All prices are a function of... what the govt lets their banks lend against things..."

But I would add that we should not assume that the people in government positions realize this; and can instead usually be seen acting in what they see as the self interest of the specific section of the government institution they work for.

Sunday, December 14, 2014

Michael Hudson — Russian Pivot

Russian pivot to Eurasia.

Michael Hudson
Russian Pivot
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, and Distinguished Research Professor of Economics at the University of Missouri, Kansas City