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Tuesday, February 28, 2012

The Lord Giveth and the Lord Taketh Away

       Which is why I don't believe in the Lord! Here again, things seemed to be going pretty well both for the US economy and for me-I finally have a job, yes as my buddy Nanute points out, an entry level security guard job, but it's a start.

       Don't get me wrong the economy is still going well. We got some more great numbers today-a bunch of indexes today were much higher than expected.

      But wouldn't you know it-my laptop may now be destroyed. Last year in October or so I managed to leave my computer on a public bus-and against all odds and everybody telling me I likely had seen the last of it they had it for me at the lost and found.

      After being so lucky, what should happen today than a friend of mine spilling water on it. It wasn't that much but it seems to have fried the keyboard. So I'm stuck again writing on a public library computer which only gives you a few hours.

     I don't know. I don't want to be one of those people who comes down to hard on someone who makes an honest mistake. I've had my share of accidents in my time for sure. On the other hand I don't want to totally laugh it off-even if that's my nature as this really screws me. When you make under $300 a week after taxes it's not easy to come up with the money for a new computer that will likely be $400 or so. I'm going to look and see what it costs to fix it-my guess is probably at least $200-ie, at least half of just buying a brand new computer.

     I don't want the guy to feel too bad-don't want to be one of those people who crucify you over an honest accident.  But I guess bad enough that maybe he should at least help me with the costs. He did say something about if it's like "fifty dollars" going half and half-yeah right. Where does it cost $50? So he's offering $25?

     Maybe if he can agree to $100 or so. In any case this may cut into my production for a little while to I figure something out.

Sunday, February 26, 2012

The Rising Gas Prices Canard: Dems Should Not Be Scared

      In my view, this is the time to treat the American people like adults. Obama has done that this week to an extent by truly saying there is no panacea to bringing down oil prices and anyone who says otherwise is full of it.

      He has responded to the  Republicans' bankrupt demagoguery a little too much for my taste, as if he takes it to heart. True you don't want to be like Mitt Romney with a tin ear to the concerns of Americans and it's right for Obama to show empathy for Americans having to pay these high prices.

     But  it is not his fault, and realistically there may well be nothing that he should do. It's ironic how the GOP who allegedly is so about letting the market decide these things is trying to hang high oil prices on the President.

     I don't much like the headline today in Poilitico where Democrats are now "nervous" and pushing Obama to open the strategic reserve. He's done this before and oil prices did not drop. True they didn't rise after this and you can get into the counterfactual argument as whether they would or not have risen had he not done this-in any case he never sold it as leading to a price drop but simply to address a supply concern due to the Libyan war- but at this point I don't think Obama and the Democrats should even dignify the Republicans' desperate attempt to grasp at straws by becoming nervous or taking it to heart.

    Yet in Politico today we read that,

     "On Friday, Treasury Secretary Tim Geithner suggested the SPR is a possibility. "There's a case for the use of the (reserves) in some circumstances, and we'll continue to look at that and evaluate that carefully," he told CNBC Friday morning."

Read more: http://www.politico.com/news/stories/0212/73279.html#ixzz1nUQMsRFu

     Obama does not need to put himself on the defensive right now. The best defense is a good offense and there are plenty of targets.
    

Saturday, February 25, 2012

Marcus Nunes Regularly Reads Diary of a Republican Hater

      Forgive me, I'm giddy again. Whenever any major economic heavyweight reveal they read or have at any time read my blog I swoon just a little bit. Now Marcus Nunes has revealed that he not only has read me-which I knew-but does so regularly-he actually receives my blog in his email. I'm getting lightheaded again. Got to sit down! LOL

     If you haven't read his Faint of Heart blog, I can't recommend it too highly. I learn so much about monetary facts and history every time I read him, he's just a bottomless well of knowledge and insight.

     http://thefaintofheart.wordpress.com/2012/02/24/there-we-go-again-saying-monetary-policy-is-too-easy/#comment-2226

     In the above link, Marcus nails the Wall Street Journal for it's attempt to demagogue high oil prices. He shows that they're full of it to claim that monetary policy has been too easy and that this is responsible for high oil and gasoline prices.

    In truth of course, WSJ is just being it's usually politically opportunistic self, as usual acting as the informal organ of the Republican party's propaganda machine. The Republicans are running out of ways of scoring political points-the bad economy angle has fizzled with the economy improving and Romney's aborted attempts to engage on the economy, then they have hurt themselves by tyring to play the old wedge issue game on contraception-this has hurt them much more than the President.

     So now it's "high oil prices" which is a misnomer. In truth oil prices have been at trend. True gas was down to $1.87 per gallon when Obama came into office but that was only because of a radically depressed economy-as the MMers like Marcus put it, NGDP had crashed. When it stabilized, oil and gasoline bounced back.

    What I particularly appreciate about Marcus is he writes very regularly so there is plenty to shop for in the archives.

     I enjoy to be sure, all the Market Monetarist blogs-Christensen, Nick Rowe, David Glasner, and yes Scott Sumner-I give him crap partly because of his attempts to dismiss my criticism in the comments section by with the cop out that I'm over my head in reading his blog. To be sure I disagree with Sumner and all the Monetarists on some very important questions regarding fiscal policy and Keynesian.

   Let me say this for them however. Compared with my history at places like Firedodglake, Daily Kos, and the DemocraticUnderground, I find the MMers at least on a personal level very classy people. Even when I disagree with them they always treat my ideas respectfully-I do think that's partly because my analysis has merit whether or not they agree with me on everything. At liberal blogs like Firedoglake and Kos, who you might figure as a liberal myself I'd do well at I was banned quickly-I guess it's my style of going to blogs and not being shy about disagreeing with the consensus view. Believe it or not, being a supporter of President Obama is highly controversial in the big liberal blogosphere.

  Actually most of them are much less snarky than Scott who is something of an outlier. Lars suggested that I'm  a bit harsh on Scott. I'll change my tact when he admits that I'm not over my head reading his blog and that my blog is worth reading as well. He'd score some big points if he drops by and leaves a comment here at Diary! Just saying

   However Scott does deserve some credit. Unlike Jane Hamsher over at FDL he hasn't tried to censor me even though no doubt I have often gotten under his skin. I don't do this gratuitously is all I can say. I honestly desire a meeting of the minds whether Sumner realizes it or not.

The Golden Age of Economics

      Just read an interesting post over at Marcus Nunes' The Faint of Heart, that compared two economic "golden ages" the 60s and the 90s. Both were times of tremendous growth and economic expansion.

      http://thefaintofheart.wordpress.com/2012/02/22/the-60s-x-the-90s-golden-age-x-great-moderation-who-wins-the-economic-gold-i-could-also-call-the-dispute-obsession-w/

      If you haven't read his post I certainly recommend it. He is a Market Monetarist but while I certainly find Sumner and Lars Christensen worth reading-much as I give Sumner crap-Nunes writes an excellent blog. What I like about it is that he, kind of like me over here at Diary of a Republican Hater, makes a real effort to post early and often. You won't run out of things to read.

     In this particular post he compared the 60s and the 90s.

     "There are many similarities between the 1960s and the 1990s. They both started with a recession – the 1960/61 recession and the 1990/91 recession. Both were relatively mild and both recorded a drop of 1% in Real GDP at the trough."

      "President Kennedy was elected on November 1960 and immediately surrounded himself with a veritable “who´s who” of the intellectuals of the time as advisors and counselors. That was also true for the “economic team”, in particular the group that came to staff the Council of Economic Advisors (CEA)."

       Indeed, the 60s with the Kennedy and Johnson Administrations was not just a economic golden age, but a golden age of the economist. The economist starting with the Kennedy Administration occupied a very high place on the food chain.

       "This was a sea change from the Eisenhower presidency, where economists, with the exception of Arthur Burns, didn´t have much sway.  Walter Heller, Chairman of the first Kennedy Council (1961-64) even dubbed the period “The Age of the Economist”. In his 1966 book, New Dimensions of Political Economy, he recounts the following:

        "President Johnson underscored his esteem of economists at the swearing-in of James Duesenberry as new CEA member in early 1966. He predicted that the new Council member would “write a record here, as his colleagues… have written, that will excite the admiration of not only all their fellow Americans, but will excite the admiration of leaders in other governments throughout the world who frequently comment to me about the wisdom, the foresight, the stability of the United States of America and its policies”.

       Nunes leaves a link from a few Economic Reports to the President (ERP). It's a pleasure to remember that age and heroes of mine like Arthur Okun. Reading the ERP of 1969 you see how seriously the government took it's full employment mandate in the 60s:

       "The decline in the over-all unemployment rate since early 1961 has been accompanied by equally impressive gains by specific categories of the labor force, as shown in Chart 6. In particular, the unemployment rate for white adult males had fallen to 1.8 percent by the fourth quarter of 1968, a level last achieved in 1953. For nonwhite adult males the decline in unemployment has been especially dramatic—from an intolerable 11.6 percent rate in early 1961 to 3.9 percent in late 1968. This represents a significant narrowing of the differential between white and nonwhite unemployment rates for men, from 6.4 percentage points at the beginning of the period to about 2 percentage points by the fourth quarter of 1968. On the other hand, there has been little progress in reducing the unemployment rates of teenagers, especially nonwhites."

       "In the 1960s inflation was low and stable in the first half of the decade and quickly climbed during the second half. In the 1990s it trended down continuously. Observe in the RGDP growth charts that growth was much more stable in the 1990s and ended the decade higher and even more stable while it came down in the second half of the 1960s, when inflation began to show it´s “ugly” face"

      "When did inflation “rear its ugly head” in the 1960s? Soon after spending “took off”. In the 1990s spending evolved along a constant growth trend. Unemployment AND inflation came down."

      Marcus kind of sees both the 60s and 90s gripped by a certain kind of "obsession"-the 60s with unemployment, the 90s with:

      "obsession in the 1990s was with a constant level growth trend for spending. The “obsession” with inflation came “on board” with Bernanke and just as the unemployment “obsession” gave rise to the “Great Inflation”, the inflation “obsession” opened the door to (the final name ruling is still pending):

    
  1. The Great Recession
  2. The Lesser Depression
  3. The Second Great Contraction

       I'm not sure that the 90s can be dignified with a "constant level trend for spending" obsession. I think the inflation obsession was always present during the Great Moderation.

      I disagree with Marcus claiming that the 90s was better than the 60s hands down.
     

      In the comments section I made this point to Marcus:

       "the 90s ended no more seamlessly than the 60s-but to do see this you have to look at what happened 2000-20002. The 2001 recession was particularly bad."

       "After the 2001 recession the recovery was very weak. You can even note that the S&P index in inflation adjusted terms never got back to its peak in the late 90s."

      "I’d say that both golden ages ended with a thud."

       I think full employment has been given short thrift for too long even if it was "overdone" in the 60s-I'm not sure I agree with that in any case.

       Now you have people in Congress-the Brady Bill- demading that the Fed forget full employment altogether-yesterday Bulliard was on CNBC and pleased them a lot by saying he'd have no problem with it as the only thing they can effect is inflation anyway-somehow low inflation will always take care of employment.

      http://www.themoneyillusion.com/?p=13271
     

Friday, February 24, 2012

Now Romney's Really in Trouble-He Tells the Truth

      He's said a lot of weird things during this campaign, he's lately tried to out-conservative Santorum and so the other night he said some very reactionary things about for example immigration.

      He says many things that just make you scratch your head like saying that 'I love my home state of Michigan where the trees are a good height. I like cars!"

      And of course he says lots of stupid things like that he doesn't care a wit about the rich or the poor-as both are taken care of-but only about the middle class.

     The other night, though he did something far worse from the standpoint of trying to win the Republican primary nomination for President. He told the truth. Call it a "Kinsley Gaffe" as Jonathon Alter did the other night.

        http://www.bloomberg.com/news/print/2012-02-24/on-bailouts-romney-is-intellectually-bust-commentary-by-jonathan-alter.html

       I've been rather shamelessly shilling for a Santorum candidacy and have been trying to think of the best way to make sure that happens. Like Rachel Maddow says, liberals like me are like, "Shhh! The Republicans are about to nominate Rick Santorum. Don't say anything!"

      However Romney may have found the best way to assure himself a loss by telling the truth. Who thought of that? As Alter says in his well named piece "No Bailouts for Romney's Intellecutal Bankruptcy"

     "By all accounts, Mitt Romney is a smart businessman with a sophisticated understanding of how economies work. So why is he so tied up in knots over basic questions of government spending in a recession and the limits of the free market?"

     "Because he’s running for president in a party that has lost its economic common sense, its political bearings and probably Michigan’s electoral votes."

      "Here’s the Republican candidate off-script (the best way to find out what’s in his head) at a town hall meeting Tuesday in Shelby Township, Michigan: “If you just cut, if all you’re thinking about doing is cutting spending, why, as you cut spending you’ll slow down the economy, so you have to at the same time create pro-growth tax policies.”

     There is truth in what Alter says-Romney is not nearly as stupid as he has to pretend to be to win the GOP nomination these days. One of the reasons while all of the current candidates can on some level be called fake conservatives is that the rigid Republican ideology of today is so absolutely wrongheaded.

        The Club for Growth immediately came after Romney for his heresy:

       "Sure enough, Andy Roth, vice president for government affairs at the fiscally conservative Club for Growth, called Romney’s comments “hogwash.” Roth said the statement “confirms yet again that Romney is not a limited government conservative. The idea that balancing the budget would not help the economy is crazy. If we balanced the budget tomorrow on spending cuts alone, it would be fantastic for the economy.”

       As Alter says, "Oh, really? If we balanced the budget by immediately cutting $1.3 trillion in spending, as some Tea Party adherents advocate, unemployment would surge. Spending cuts (mostly through entitlement reform) are critical in the medium and long term, but they’re harmful when the economy is weak. If you don’t believe Romney or me on this point, ask any economics professor who isn’t a crackpot."

      "After Romney’s gaffe, a campaign spokesman undertook damage control with a tortured statement that amounted to saying that Romney supports the House Republican “Cut and Grow” economic policy. This is the one that shuns all “investment” as a Democratic codeword for spending (thereby repudiating 150 years of Republican support for infrastructure investments) and says that the route to economic growth is through tax cuts."

   
      

Latest From Michigan: Santorum 38 Romney 34

      There was yet another story in Politico today about Romney's struggle to "connect."

      "Mitt Romney was born in Michigan, went to high school in Michigan, married a woman from Michigan and called the state home until he left for graduate school in 1971. His father became an iconic hero in the state for saving an auto company in the ’60s — a feat that catapulted him to the governor’s mansion. Not long ago, Romney’s brother sat on the Michigan State University Board of Trustees."
     "The name Romney means something in Michigan, which is why Republican Party leaders counted on this favorite son landing an unambiguous win in Tuesday’s primary and effectively ending the chaotic GOP nominating season."

      
     "Now some of these Republicans are worried that the same issue that has plagued Romney from state to state is even more pronounced in his own backyard: his inability to connect on a human, personal level. If he can’t connect in his birthplace, they fret, maybe he can’t connect anywhere."

     
     “It’s a blue collar state and Romney is not blue collar. He’s like a stranger in a strange land,” said Michael Steele, the former chairman of the Republican National Committee who has not endorsed a candidate. “Where was his local grocery store? Where are his schools? Is he connected to the poor neighborhoods? These are the pieces that link someone to a community. And you don’t have to be poor to make those connections.”

      Steele is right that you don't have to be poor yourself to make the connection as no one made it better than FDR who was as close to an aristocrat as you get in America. That he still can't take control of this race on the Friday before Tuesday's primary is worrisome. Mitt of course calls about 5 different states home. But you would want to see him a lot stronger in his-original-home state.

      He in the most recently released poll, had a pretty comfortable lead in Arizona-Mormon country. However at 45-29 over Santorum in Arizona even this is not as commanding as Santorum's 45-16 lead over him in Pennyslvania.

     In another positive in Michigan-for those who are for anyone but Romney, Gingrich is more or less out of it with just 7% in the most recent poll

Rachel Maddow Nails the Santorum Strategy

      On Wednesday night, Rachel was funny, she nailed the exact way many liberals feel right now about the Republican race.

       She asked Nancy Pelosi if she would say the same thing about Rick Santorum that she said about Newt Gingrich-'it won't happen. It just won't'

      She did not say the same thing about Santorum. To the contrary she said that she respected the GOP's right to choose their candidate, and it's up to the marketplace of ideas to decide whose the best candidate.

      Rachel then wondered about Ms. Pelosi's motivations. Sure, Nancy probably means this, But...  As Rachel said among liberals there is just this sense of:

       "Shhhhh! Be very quiet. The Republicans are about to nominate Rick Santorum. Don;'t say anything!"

      That's certainly how I feel. If they are about to nominate Santorum I sure don't want to say anything to discourage them. That's why I don't even see the point of cataloging all the just plain weird things Santorum says and believes.

      That's what the general election is for. Santorum is pretty clueless about how to dial certain things back. Then again who knows, for today's Republican voter crazy is what sells.

      The beautiful thing as well is that Romney is being forced into saying some pretty far Right things as well. Yesterday he was in ecstasy over the draconian Arizona immigration laws promising to drop legal challenges to it within the first half hour after he is elected.

      Even if Romney ultimately wins, he loses. For that matter I don't see why some of the MSNBC hosts waste so much energy mocking Palin's "delusion" that she could win at a brokered convention. Maybe she is-probably she is-but so what?

     Rather than invite experts on the show just to declare she's clueless if she thinks there's any chance, why not bring on an expert to speculate that maybe it is possible? Right now you don't want to discourage any candidate but Romney.

     Well ok, it would be nice to discourage Newt. You have the billionaire that owns Las Vegas Sands putting millions of dollars into his campaign just to help Mitt by dividing the conservative vote.

     You might wonder why we are still about Anybody But Romney when the recent head to head polls vs. Obama show little difference between Romney and Santorum. Well first of all-that's good. That shows Romney has been discredited as being the best chance to beat Obama. Second, Romney is still the favorite, and especially the favorite of the Republican establishment.

    I got to think that Romney's more plausible to independents than Santorum. Of course the longer this drags out the further Right Romney has to drift and then the less plausible he becomes. As he has been the presumptive favorite and is clearly the pick of the GOP establishment, you at least want it to drag on as long as possible whether he wins or not. If it drags out he will be very tarnished by then anyway.

   The one thing you don't want is a quick Romney victory where he easily takes control. The chances of that have already dimmed greatly.

Thursday, February 23, 2012

If You Want a More Bearish Position on the US

     Evidently some people feel I'm a bit (overly?) optimistic. And by someone I have in mind particularly my buddy-and (very) loyal Diary of Republcian reader-Nanute.

     After writing this post http://diaryofarepublicanhater.blogspot.com/2012/02/dow-back-over-130000.html

     Nanute commented:

    "You get an entry level job in security, and all of a sudden you're bullish? LOL. Seriously though, I wish I shared your optimism. Still too much unemployment, excessive consumer debt, a depressed real estate market, and a batshit crazy wing of the Republican Party having a major impact on policy decisions in Washington and in state houses. And, let's not forget what's happening in Europe. The most recent kicking the can down the road with the Greek crisis, will come to a head sooner or later. Perhaps not before the election in November, but surely by the 1st quarter of 2013. All this additional austerity and additional debt will only increase Greece's debt to GDP ratio. (IMHO.) We may have dodge a bullet with the recent settlement on the mortgage mess, but here too, the devil is in the details. And we don't even know what the details are yet. See the Naked Capitalism post today "Will Expiration of Tax Break Render Much of Mortgage Settlement Moot?" I've got more, but I think this is enough for now."

    Yeah, I'm an optimistic guy. But while his much less optimistic scenario is highly plausible, I think most of his concerns can be answered. Unemployment is coming down, and with under 350,000 jobless claims that is indicative of economic expansion. The drop in claims has been consistent not just coming out of the blue a few weeks so I don't think it was a fluke. The GOP is a pain in the ass, but it's my prediction that Obama already punked them in the debt ceiling fight last Summer.

    Notice that no one seriously talks about austerity now. Prior to the debate the GOP had some level of a mandate-of course as usual they overplayed their hand-to push deficit cutting. Now it's wholly off the table. In that sense Laurence O'Donnel was right and the Obama haters were wrong last year.

    Consumer debt is actually being paid down very well. The one thing I can't answer so definitely is Europe. Today the headlines at CNBC show that the Eurozone is expected to shrink this year-a yearly GDP of -.3% down from a prior estimate of .5 growth in 2012. Now the EU is not expected to grow till 2013.  No doubt this could be a real problem as the EU represents 20% of worldwide output.

     http://www.cnbc.com/id/46493981

     The slowdown in the EU is what caused GM to miss its earnings per share target in the fourth quarter. If the EU does indeed shrink in the EU during 2012 can the US recovery survive it? I think so though it still remains to be seen.

   

    

Obama's Corporate Tax Overhaul

     I got to admit I'm not altogether sure about his proposal. What I don't get, and have never got, is how he on the one hand says he wants to let the Bush tax cuts on the wealthy expire and indeed even wants a new Buffett Rule tax where no one under a certain income level can ever pay less than a 30% income tax rate, and yet he claims that we need to lower corporate taxes.

    On the one hand it is claimed that somehow the current corporate tax rate is too high-we always hear about how it's "the second highest in the world" and yet under questioning yesterday, Geithner in speaking about Obama's plans before a hostile GOP Congress pointed out that the effective tax rate is actually very low. OK, but then how is it unfair at least to corporations?

    The U.S. already has the second lowest effective corporate tax rate in the world, and is raising historically low amounts of revenue from the corporate income tax. In fact, corporate tax revenue is at a 40 year low, according to the Congressional Budget Office, even though corporate profits have rebounded to their pre-recession heights. And the U.S. effective corporate tax rate is low compared to other developed economies, while U.S. corporations are taxed less than their foreign rivals

    "However, despite these numbers, the plan does not aim for an increase in revenue, above that which would allow for the extension of some credits to be paid for. “Everyone agrees on the basic principle of lowering rates in exchange for eliminating loopholes,” said Dean Baker, co-director of the Center for Economic and Policy Research. “However, I think it is important that the target be some increase in tax revenue.” Otherwise, the burden of deficit reduction will fall upon middle-class and low-income Americans and the services upon which they depend"

   http://thinkprogress.org/page/2/

   This is supposed to raise net revenues-some what at least. But if it's not much and as the corporate sector far from being overtaxed contributes less to GDP than ever what is the burning necessity behind this? I'd like to believe in this but I don't get it.

    Yet another impeccable liberal, Dean Baker, as we saw above everyone agrees with the principle of lowering rates in exchange for eliminating  loopholes. I still am missing the virtue of this even if everyone agrees on it. I'm not saying there is no virtue just that I don't understand it yet, assuming it is real.

   

Now Scott Sumner is Just Playing Mind Games

      A recent post of his was entitled "Did Krugman UNDERSTATE the fiscal multiplier?" I got to give him credit. He really is good.

    http://www.themoneyillusion.com/?p=13196

    With all the ingenuous arguments he comes up with for opposing fiscal stimulus this is one of the most impressive-talk about concern trolling?

    Not to spoil the ending for you but no he doesn't want fiscal stimulus in Britain, specifically, which is what the post is about. Here he is on fiscal stimulus:

    "I think there are two arguments for a fiscal multiplier, both of which are somewhat problematic:

    1.  The traditional Keynesian NGDP argument, which relies on incompetent central banks which fail to hit their nominal target (inflation or NGDP.)

    2.    Real arguments that work to some extent under any monetary regime, but are more likely to raise RGDP than living standards."

     Argument 2 is basically a convoluted argument that no self-respecting Keynesian would make. Argument 1 is important as it does show that Sumner's argument that fiscal stimulus is not effective, or that the "fiscal multiplier is roughly zero" is contingent on a Fed that is not "incompetent." His definition of not incompetent is one that will always work to neutralize any fiscal stimulus.

    What it comes down to is this-incompetent central banks were basically the pre-Volcker Fed, competent central banks are the post-Volcker Fed.

    If we had the Fed that took seriously it's aim of full employment we wouldn't have this fiscal multiplier of zero, though of course Sumner would denigrate it then as incompetent.

   
     "Take the current situation in the UK.  If I’m not mistaken, the British political system is different from that in America.  British governments are basically elected dictatorships, with no checks and balances.  Even though the Bank of England is independent, the government can give it whatever mandate it likes.  If I’m right then both fiscal and monetary policy are technically under the control of the Cameron government."

    
    "So I read the UK austerity critics as saying:


      "Because you guys are too stupid to raise your inflation target to 3%, or to switch over to NGDP targeting, fiscal austerity will fail.  We believe the solution is not to be less stupid about monetary policy, but rather to run up every larger public debts."

      Sumner claims that any criticism of austerity is "consdescending."

     "Don’t talk down to Cameron and Osborne!  Don’t say “austerity will fail.”  Say “austerity will work, but only if the BOE becomes much more aggressive, otherwise it will fail.”  That sort of advice would be USEFUL.  Instead we are getting a bunch of pundits getting ego boosts because they can say “I told you so.”

    The goal never changes  though novel plays in the playbook all the time. Old wine new bottles.

         

  

Wednesday, February 22, 2012

Knicks, Lin Blowout Atlanta 99-82

     No doubt the big battle is tomorrow night in Miami against Lebron James and Dewayne Wade. One price for Lin's early success will be that it puts a target on him. Big shots like James and Wade will take exception to all the questions about Lin's greatness.

    Wade will no doubt try to do to him and the Knicks what Devon Williams and the Nets did to them Monday night. Also, again, with news of a new Sports Illustrated cover for Lin comes, can Carmello handle it? Can he handle winning without always being the top guy? Still to be answered. I for one want to believe the best in him.

    Tonight the Knicks came back against the Hawks. Lin played only 33 minutes, the least he's played, scoring 17 points and 9 assists, with only 4 turnovers-that's the second game in a row his turnovers have been down.

    Carmello had 15 points in 27 minutes on 7 of 16 shooting. Stoudemire had only 7 points in 24 minutes on 3 of 8 shooting. Interestingly, Steve Novak tied Lin for leading scorer with 17 points including 5 of 10 from the 3 point arc.

      Overall the Knicks played a good team game with five players in double figures. There's reason to hope that the "depletion" that Antoni had spoken of after getting Anthony in exchange for most of their bench is over as the bench seems to have bounced back.

Bob McDonnell and the Ongoing War Against Women

     The trouble with the GOP in modern times is that there are limits to how many votes they can get. They have positions that please the evangelicals, the fundamentalists, but what about the fact that more than 50% of the electorate is female?

     But since the Southern Strategy begun with Goldwater, this is what they have to do. They take positions like opposing contraception hoping to seduce Catholics who need the Zizekean Other who believes and practice what they themselves don't believe and practice-almost all Catholics use birth control in America.

      They don't seem to worry about how much they may lose the female vote whether Catholic or other. Today even many Republican women have been concerned with the stridently women unfriendly policies that the GOP has been showcasing.

    Bob McDonnell, Virginia's Governor, has built up one of the most anti-women records in the country. The latest bill from the Virginian legislature that calls for forced transvaginal ultrasounds was something that McDonnell supported vigorously in the past and he had promised to sign this when it reached his desk.

   However thanks to the impressive political pressure exerted by fired up women's groups McDonnell has asked for an amended bill that will no longer make the transvaginal ultrasound mandatory. Note to be sure, that "external" ultrasounds will still be-the reason that a transvaginal ultrasound was originally demanded is that in the early stages of pregnancy they can be the most accurate.

   The state House GOP relented on this and accepted McDonnell's amendment, however last heard the state Senate is digging in its heels saying "transvaginal ultrasound" or nothing. Good-let's have nothing.

Is Sanotrum Too Weird to be President?

     Yes. That's not even up to discussion. Don't get me wrong, I'm a Santorum fan, I want him to beat Romney. I still do. I know he's a weirdo, that's the whole point. That's why I want it to be him against Obama in November.

    I'd rather not belabor just how weird Satorum is right now. Leave that for the general election. But, wow he is not helping me, or himself.

    To be sure the latest was actually something he said in 2008 though he stands by it. He thinks that Satan is out to get American in the person of President Obama. That's what he said in 2008. He's not real good at walking back from such comments.

    I wish he knew how to be a little more hypocritical0-maybe he can study Romney. Yes he's a true believer. Don't get me wrong, I'm not a fan of true believers. There mostly a pain in the ass. They also hurt themselves. That's what Santorum is doing.

    I'd like to think that Santorum's weirdness will resonate enough with the Right wing voters that vote in these Republican voters. But today even Rush Limbaugh admitted while offering all the usual Limbaugh caveats that it was all just a media conspiracy, all just spin, that nevertheless, Santorum did say this stuff and needs to make some sense out of  it.

    Again, I'm not happy with this. Santorum did a real great job of countering the Romney attack machine with that ad that showed Romney as a psycho robo mudslinger who finally gets the mud in his own eyes. Romney's usual negative ads have not worked as well against Sanotrum and there is even some signs that many of the Romney donors are tapped out.

    However, Santorum can't seem to tamp down on his own weirdness just for a little while. On the other hand I like Sarah Palin's idea that it would be a fine thing to have a brokered convention. I hope Santorum hasn't hurt this chance.

Tuesday, February 21, 2012

Dow Back Over 13000

     For the first time since 2008. Another reason to re-elect President Obama. Meanwhile the GOP is going to hit Obama how? The latest play is high oil prices.

     The Nasdaq already is higher than it's been since 2000-not only has it made up for the losses of 2008 but it is even making up ground lost in 2000. The Nasdaq is now just 52 points away from another symbolically important number-3000.

     Many on the Street currently believe the market is due for a correction. That could be true on a technical level-not saying that it is but it's not impossible. However in the long term, I am ready to do an Irving Fisher and declare, "The fundamentals of the US economy are strong!" I won't however claim that we have hit a "permanently high plateau."

     If the market does pull back it's only temporary. That's my take anyway. Right now if I were in a position to be a market participant again-maybe I will again soon, I am finally working again...-I'd look at the banks as a major area of being undervalued. Bank of America is a steal at $8. I would either back up the truck and buy a bunch of stock or buy some $12 calls that expire in say a year. The first strategy of buying it outright has very little downside risk.

    Still the GOP is trying to tell us things are terrible out there and getting worse. No. They remain highly challenging, certainly. You don't have to tell me that-before getting my current job in January I was out of work since last May. Incidentally, if you are currently looking for work, one market that definitely is hiring is the one for security guards.

    The GOP is trying to hang high oil gas prices on Obama. To the contrary, a big part of the problem is that the economy has come back. While high gasoline prices put strain on Americans, the fact is that that main reason they're up is because of the improved economy. It was a total drop in demand in 2008 which saw them plummet.

    Still even with gas at $1.87 when Obama came in this was cold comfort for the 750,000 Americans losing jobs every month. Honestly there's nothing Obama can really do about high oil prices. You could argue that a stronger green policy could help but this is hardly what the GOP has in mind.

    Their ideology is that if only Obama opened up off-shore drilling, etc. that would bring down prices. Of course the main thing this is about right now is trying to make the XL pipeline more popular. In reality Obama has opened up off-shore drilling-he already gets a lot of flack from some left-liberals for that.

 

Michael Jordan: The Winner's Burden

      I was reading this book about Jordan by the Washington Post sportswriter Michael Leahy "Michale Jordan's Last Comeback." Somehow I got in this mood where I got interested in Jordan and his career's trajectory.

     Leahy concentrates on his last two seasons with the Washington Wizards. Leahy spent a lot of time with Michael in these two years, with the verdict that Jordan made a mistake in coming back .
   
    Unquestionably he made a serious tactical mistake in not considering that by coming back as a player Owner Abe Pollin would now be able to dispatch him as  Director of Basketball Operations.

    Jordan did even  while reaching 40 in his last season in 2002-2003 manage to average over 20 points per game and was the first player to score over 40 points after his 40th birthday. But Leahy's verdict is that he made a mistake as he did not get to leave the game with any dignity.

    Jordan is an interesting case because he had initially pulled a Tiki Barber and retired at 30 after the Bulls won their third successive title. What led him to quit seemed to be a number of things. There was the murder of his father who he was so close to.

    Also he says that his father always wanted him to play baseball. Still he insisted that he didn't leave to play baseball. He also was frustrated by all the Bulls players that came in and felt that they were the real reason for the team's dominance-after all Michael had never won before had he?

    This all kind of suggests to me how hard it is to have an encore, how to repeat. as champion. In pro sports there is a winner every year. Arguably as even a busted clock is right twice a day it's possible for a team to simply "get lucky." The proof is how they do afterwards you might argue-this is how we sports fans think anyway.

    As a Giants fan of course I'm on cloud 9 about the G-men. Still can they repeat? Already I'm feeling like I need them to repeat or at least be pretty darn good as all the prognosticators seem to think that the Patriots are next year's favorite-how many times does Eli have to beat Brady until it's not just "luck?" And the Giants with their 4th Superbowl admittedly fell off pretty sharply after their previous 3.

     I think a large part of why Jordan left in 93-94 was he had lost is edge-by lose his edge I mean motivation. He was a very rich man, he had done everything a player could hope to do-scoring records, MVPs, championships. I mean if an NBA player coming into the league was told by an astrologer that he would lead the league in scoring or close to it every year, that he would be considered the best player on the planet, and win 3 straight titles before it's over would this player take this-or would he say let's see behind door number 2? We're imagining if this astrologist is sort of like a genie who can change your future if you ask. How many would ask for a change with the guarantee for all MJ had accomplished till he was 30?

    So he had nothing left to prove, he was kind of sick of other players-good players for sure, but let's be honest, good role players-tyring to deny his importance to the team, his father/s murder had rocked him and he was kind of bored. At the press conference when he announced his retirement he had said he had lost the will to play basketball.

    Add to that the idea that playing baseball was the wish of his deceased father and you have the rationale. You could chide him for losing his desire-but after all he had accomplished who could be in a position to do that? Ultimately of course, he had to come back. He had said when he left the Bulls could prove they could win without him.

    They couldn't. To be sure, they did pretty well, going 55-27 before losing a hard fought semifinal series to my Knicks-the only time we were able to beat them was when MJ was out. Never got a chance to beat him head on.

     In 1994-95 they slipped and might have missed the playoffs had Jordan not come back. They didn't make it this year but Jordan was back in top form the next year and they won the first of 3 straight. In that first year they had 72 wins, an NBA record.

    So while Jordan may have left early, even with those lost 2 years he had 6 NBA titles, with 2 three-peats. It goes to show what's so hard about winning. It makes it much harder to win again. You can win as a fluke once. To consistently win means you have to beat your worst enemy-that's always you. Jordan had succumbed to himself when he retired at 30 in 1993.

    But he made it back. While he had retired too early the first time, the irony of Leahy's book is that the book's claim is that while Jordan may have left too early the first time, he stayed too late the last.

    I was never a Jordan fan myself. Although it's true a lot of people held Jordan's greatness-and his conceit about his greatness-against him and I often claimed I did back then, the truth is that what I at least hated about MJ was that he wasn't a Knick. If he had came back to the Knicks in 95 rather than back to the Bulls I would have felt differently.

   Now, however, the Knicks have a player who scored more in his first five NBA starts than any player since the NBA-ABA merger in Jeremy Lin and he plays MJ's old position. Yes more than any player ever, even than the great MJ.

 

  

  

Can't Win Em All: Knicks Ripped by Devon Willam's Nets 100-92

      Talk about anticlimactic! I had been looking forward to this game for 2 weeks-when the unlikely star Jeremy Lin would finally get to play with Carmello as well as Stoudemire.

     Going into last night it seemed to be a recipe for a great night. I was visiting my brother and his wife and finally getting a chance to see their new baby-I'm an uncle! Closest I've gotten to fatherhood so far-on the same night. We could watch it on his real big screen and enjoy the great play of the Knicks.

     Didn't happen. Lin's numbers weren't bad. Actually he had only 3 turnovers so in that way he had his best night yet. He led the Knicks in scoring with 21 points 9 assists and 6 rebounds. Pretty solid play from the Knicks point guard-after not having a point guard for D'antoni for so long whose whole offense is predicated on a strong point guard to lead the offense.

    Unfortunately Devon Williams played better, a lot better, like a man possessed putting up 38 points and hitting 8 of 14 three point shots. Williams came in on a mission as Lin had his first game where he became a big story. That night the Knicks beat the Nets and Lin scored 25. His 21 last night was only a couple fewer, and again, he had only 3 turnovers which is the lowest he's had.

    On this night though Devon was better. It happens. You don't win them all in the NBA in an 82 game schedule-the Bulls that year with Jordan in the 90s almost did (72-10). It worked against the Knicks and for Devon in that they had the first game with them all together on the night Melo returned.

    Still obviously questions will remain as to if this team will have cohesion. On the face of it you would think that a team with Lin, Stoudemire, Carmello, Chandler, and some good role players like Landry can do better than 90 points at home against the New Jersey Nets.

    Last night maybe was not a great test as it's the first game. In announcing the game however, Clyde Frasier did wonder if Lin was holding back and being too deferential with Carmello on the floor. There are some who question Carmello too. There has been a knock on him since he came to the Knicks last year.

    The Knicks gave up a lot of quality role players for him-it seemed to me at the time to be more than worth it. However, the Melo skeptics-again I would not put myself in this group-can point to the fact that the Knicks had a better record before he came last year as well as leading the team early to an 8-15 start this year.

     Many see him as selfish-again, at least until now, this hasn't been my feeling. I do think though now may be the time to prove he's not selfish: can he handle winning if he's not always the main focus? I think the question as to the kind of player he is will be answered as we watch this story develop.

     Besides the rap about being selfish-kind of a character issue-you have the perhaps more substantive issue of whether or not he fits in with a D'antoni offense. Recall last year it wasn't him pushing for Melo to come here. D'antoni's system works best with a strong point guard to lead the offense. That's what the Knicks had been lacking before Lin.

     Melo for his part. is more about a perimeter game and banging up on people as he drives to the basket. He's not about layups, dunks, or a run and gun game. It remains to be seen whether this system works for him. The reality is that he may not be the most important player on this team anymore. Can he handle that? If he can't, if it becomes "Lin or Melo" it may just be Melo.

   



   

Sunday, February 19, 2012

Linkedin Knicks Beat Champion Mavericks 104-97

      The Jeremy Lin skeptics have even less to hang their hats on after today's tremendous performance by Lin leading the Knicks past last year's NBA Champion Mavericks 104-97. This is a team that in the past the Knicks had little success against.

      All Lin did was put up 28 points-he had 26 on Friday in his "disappointing" outing-and a career record 14 assists-an assist is every bit as valuable as a point, indeed an assist is when Lin helps someone else put up a few-though he did have 7 turnovers.

      He seems to have a proclivity to turn the ball over but maybe that doesn't matter so much? It may be that turnovers for him are like free throws were for Shaq-almost inevitable as if when someone does so many things right there's always gonna be a few things they do, that even seem basic, wrong.

     To be sure the only one who really seems to think that Lin is really over-hyped is Mayweather. Magic Johnson said today that he never had any doubt that Lin is the real thing. Just look at the numbers and tell me that if he weren't black the world would not be shaking on its axis.

     Interestingly Carmello did not make it. J.R. Smith played in his place after being signed from China on Friday. I tell you what I can't wait for is tomorrow night when Melo is expected to return against the Nets. I want to see Anthony and Lin jell. We'll see. It will be fascinating.

Women Who Want to be Beaten by Chris Brown?

      There has been a lot of reaction to these tweets by young women about how they would let him beat them up whenever he wants to, that he is "flawless."

      There was in a comments section at Black Male a black woman who pointed out that "she noticed" most of them were young white women-perhaps feeling this reflects well on black women? It;s an unfortunate attitude but that's where I suspect that commentator was coming from. For this comment and more see

     www.singleblackmale.org/2012/02/13/chris-brown-can-beat-me

      There certainly are plenty of black women who tolerate abuse. Indeed in some ways the ethics of the African American community make it harder rather than easier for black women to say no to that sort of abuse. The reasons I say this are complicated based on the very specific dynamic of the African American community.

     There was starting in the 60s a feeling among some that black women should put their loyalty with black men much more than white women. There is also a certain resentment of white women on the part of black women-I admit this is my opinion but I think it's justified, suggested even in that comment about how most of the women tweeting about wanting to be beaten up by Brown are white. Is she gloating that white women are masochists with no self-esteem and that no proud self-respecting sister would allow that?

    There's a feeling that black women should stand behind black men and even if there are problems maybe not be too quick to call up (the white) police against a brother-aren't they enough black men in jail? On my way to work I have become used to seeing a young attractive black woman with a guy a little older who treats her like a dog. As it turns out he's a criminal and has her hustling on the street for him-she goes around asking people for money and then gives it all to him. Again I think that the solidarity black women feel they should have with black men makes it harder to put a stop to this-in some ways. The reality is that in each culture women have their own issues with this.
     
     What do I make of these twitter comments? Does it send feminism back? Does it say something about where our young women are? I'm not sure.

      Honestly these were just jokes. I mean there is a long gap between what you really want and quips like this. Zizek once pointed out that to rape a woman who has "rape fantasies" is an even worst violation than raping a "truly assertive" woman who never imagines such a thing. Of course I use the phrase "truly assertive" somewhat ironically as of course a woman who dreams of rape may well be very assertive in her real every day life. You don't know that they would how many of these women would really let a man beat them in real life. Then again, Rihanna herself has certainly muddied the water by her song S&M where she spoke of enjoying whips, chains, and pain.

      Not that there is necessarily anything wrong with this-normally you may not make much of it but with the history it's a little striking-did  she enjoy the pain she suffered at the hands of 'Brown?  Now she has had a collaboration with him which is also problematic.


     Ultimately I guess I'm not sure if this whole episode denotes anything bad about young American women today or not. On a scale of 1-10 it could be anywhere. From 1 being no problem at all and 10 being a very big problem I can't say. Maybe it's like a 4 or 5-not totally serious but somewhat. After all everyone makes jokes, guys do it too. And there are men who fantasize of being submissive-not raped so much of course due to the very different physiologies of the two sexes.

     So I'm not going to give a declarative answer but will say that the question deserves more consideration and I will certainly listen to anyone who has an opinion. certainly can't rule out that it is a major problem.

Why Scott Sumner Hates Keynesian Talk

      This was actually the title of one of his peevish anti-Keynesian pieces in December. Why does he hate it so much? Sometimes the dislike of Keynesianism goes so deep that he even attacks Keynes, the man, writing a post that supposedly shows Keynes was not a great-or even an at all good-investor.  Why? He lost money in 1921 and his wealthy father backstopped him. If having a benefactor behind you disqualifies you from any conversation about great investing then there aren't many investors that can get in that conversation.

       Let's listen to some Keynesian talk-from Keynes himself. In this very interesting paper by Ambrosi we got the following insights. The paper was specifically discussing Keynes' relationship to Pigou but these comments make it clear why Sumner and Monetarists in general hold him in such low regard.

       "The orthodox { relative price oriented { school cannot accept Keynes' effective demand arguments because that contradicts their claim that it is only relative price adjustments that count and nothing else."
       http://www.postkeynesian.net/ucamonly/Ambrosi.pdf

      Let's look at how Keynes defines effective demand-the orthodox school doesn't like to admit there is any sense in effective demand but rather simply demand.

      "The amount of labour N which the entrepreneurs decide to employ depends on the sum (D) of two quantities, namely D1, the amount which the community is expected to spend on consumption, and D2, the amount which it is expected to devote to new investment. D is what we have called above the effective demand."

      Note that this definition makes total nonsense of Sumner's definition of saving as "spending on capital goods (!)"

      But the real punchline is that Keynes says there is more going on than relative price adjustments-that cuts Monetarism and this wounds them to their core. So they peevishly "hate Keynesian talk."

Saturday, February 18, 2012

Mitt Romney Not the Man His Father Was

     I was just watching Melissa Harris-Perry"s new show on MSNBC. It's a great show, coming right after the great Chris Hayes. She played a video of George Romney's speech he gave in 1967 and was really quite struck with how good he sounds.

     Seriously, if he were alive and out talking today I'd vote for him. He declared in a passionate, fiery voice, "Either America values all people regardless of race or it doesn't." In 1964 he supported the Civil Rights Act and was a clear, Rockefeller Republican. Melissa also had footage of Rockefeller at the 1964 convention and he too sounded so good I'd elect him to something now if only I could.

    Then recall that at a debate when Romney was asked if he like his father would release his taxes for multiple years he came back with "maybe." Keep in mind that George Romney was a pioneer in offering multiple years of his taxes, stating that just one year can be a fluke.

    It is striking how much /Romney is a step down from Geroge Romney. To be sure the elder Romney lost. The Rockefellers were right but they lost. The lesson of sons with fathers who lose-like Dubyah-seems to be that they should shift Right. And the country certainly has shifted Right since then though there's reason to hope that has been changing since 2008, and the rise of Occupy Wall. Street. Perhaps the start began even in 2000 with the stolen election.

    But watching George Romney you are even more struck by just how utterly bankrupt Mitt is. When he tries to relate to voters he's like Chris Mathews says-kind of like a conehead.

     www.youtube.com/watch?v=fSdSiBehQpI

    

    

Liberal Bias (Drops In) at Diary of a Republican Hater

      We have had a number of milestones here at Diary of a Republican Hater in our short existence of 8 months. We recently looked back on our Valentine's Day edition

      http://diaryofarepublicanhater.blogspot.com/2012/02/happy-valentines-day-to-all-diary-of.html

      We've had a number of great economists stop by-Nick Rowe, Brad Delong put us on his twitterfeed once, Scott Fullwiler, Warren Mosler, George Selgin-still waiting on Scott Sumner and Paul Krugman. Until Sumner admits how important this blog really is-LOL-he will get nothing but misery from me. And come on Krugman! Can't you put in a single appearance for the cause?

     Still I was particularly gratified to get this verdict by Liberal Bias who dropped by to leave this comment in the comment box

     "This topic was your advantage among other blogs out there. This blog contains and provide definitely unique ideas and information."

     Wow-to my advantage. My blog contains and provide definitely unique ideas and information. Now you're talking. Please mark those words-"definitely unique ideas and information" over at Diary of a Republican Hater.

      Just remember that when you're making your daily decisionsn of where to pick up your ideas and information-LOL!

      I'm gratified about this partly by the fact that I like those who like me-just giving you a hint of the way to my heart...

      However, in addition to that Liberal Bias is actually a great website that if you haven't yet, you should think about checking out.

        http://liberalbias.com/?aeee5d40  As Liberal Bias notes in their mission statement

        "Life just isn't fair to conservatives. Everywhere you look, there is liberal bias. When companies pollute, they are punished by the liberal environment with unsightly smog and all kinds of health problems. When taxes on the wealthy were raised in the 1950's and the 1990's, the liberal economy boomed in spite of good old conservative common-sense. Clearly, reality has a liberal bias."

        As they point out, funding for science has a liberal bias and even the oil companies who they try so hard to support show their liberal bias by having record profits during Obama's terrible energy crisis. Don't the oil companies know anything about Solyndra?

       Don't forget the liberal bias of the US auto industry-GM showed it's liberal bias by having its best profits every last year.

       

   
     

Do I Love Nancy Pelosi? Uh-Duh!

      There are many reasons I love Nancy Pelosi. Probably just as many reasons as Laurence O'Donnell rightly tells us there are for re-electing President Obama-last check about 277 reasons and counting.

      She summed up well the problem with that all male modern McCarthy hearing that Darrell Issa led last-you're discussing issues so important to women's health, well-being, and personal choice you should have some actual women allowed to speak-duh!

      She realy had me at that one word. She had me at duh.There have been other great moments in Nancy history like the time she was interviewed on MSNBC and she said "we have a Democratic President-thank God.

      After the Republican gains in 2010 we had a lot of people saying the Democrats for their own good should not vote her in as Minority Leader-as she had "failed" as Majority Leader. A lot of these people so concerned about the Democrats own good were of course Republicans with Al Gore's extra Y chromosome set who had been unabashed Nancy Pelosi bashers.

     That the Democratic minority voted her back resoundingly puts the lie to the idea that her party blamed her for the losses. Hopefully she will be back where she should be next year-as House Majority Leader.

I'll Say it Again: Vote For Rick Santorum

       Yes I know. He thinks that birth control is "wrong." He is opposed to abortion even in the case of rape. He even believes that sex is just for pregnancy not for pleasure.

       These views will make it very hard  impossible for him to win the general election. However I don't get why liberals at this stage of the game waste any time worrying about this or pointing it out.

       And you liberals who actually worry that we could be miscalculating somehow, that if we get what we wish for-Rick Santorum in the general election-we'll regret it.

       Listen, they like to say "be careful what you wish for you just might get it" but that's only true sometimes. This is not one of those times.

       So I can't get that there was so much objection to the Daily KOS writer recently who wrote advocating Operation Hilarity that suggests liberal Democrats vote in GOP primaries in states which allow it.  KOS further recommended if you like donating to help this happen. Donating to Rick Santorum? Who ever thought I'd consider donating to Rick Santorum?

       http://diaryofarepublicanhater.blogspot.com/2012/02/all-aboard-operation-hillarity-vote.html

       To Donate

       http://secure.actblue.com/contribute/page/operationhilarity?refcode=blog1

       Some of the comments to this KOS post show people who just think too much, who think that "be careful what you wish for." You got people saying it's wrong to use the "dirty tricks" and that we must not "descend to their level" and even people who claimed that it could backfire if Santorum wins.

      Santorum's not going to win. Just check out Santorum's positions above, particularly the part about being opposed to sex even in marriage that does not have pregnancy as the goal.

      

       

Friday, February 17, 2012

Everyone is Waiting for a Pullback in the Stock Market?

       At least according to a CNBC headline.

       http://www.cnbc.com/id/46434016

      "Analysts have been saying for much of February that the market is ripe for a pullback, but the indices continue to rise, taking the S&P 500 close to its 2011 high and the Dow and Nasdaq to multi-year highs."

      “The market continues to work its way higher. We are knocking on the door of the April 29 recovery high. It feels like there are an awful lot of people calling for a correction—or at least a digestion—and I’m one of them,” said Sam Stovall, chief equity strategist at S&P Capital IQ

       The Dow today finished just short of 13000 which is a psychologically important level. If it were able to get above that it would be important.

      "Stovall said with history as a guide, when stocks rally, off a ‘baby bear’ correction, like the one that ended in October, they on average rebound by about 23 percent within six months. The current market rally is ahead of schedule, and stocks have made similar gains in just 4-1/2 months."

      “We think we’re going to get to where we are now, or even as high as 1380 (on the S&P) and then maybe go down to the low 1300s before approaching 1400. That’s the scenario our technicians are talking about,” he said. He said he would then look for a steeper correction in the second or third quarter."

       I'm not going to guess if there couldn't be short correction, but in the long term I think the market is good. This is a very good time to be long America
 
       Thinking about the famous Efficient Market Hypothesis (EMH) that Lars Christensen tried to help out Scott Sumner with this week, I'm not a fan of it for sure. I don't buy it.

       However, it is true that things sure look different than they did during the 2008 bear market. Back then you had the traders on Fast Money declaring buy and hold dead-I thought they were right. However the market has changed. In 2008 the only money to be made was short term-I made some real nice winnings in September 2008-the worst month was the best for trading-shorting the banks.

     I like trading. My preference is not day trading-maybe some can but I can't figure out how to predict such short term moves-but anywhere from a few days to a few weeks is my time frame.

    But things have changed since the bottom of the market in early March, 2009. That March there was a lot of fast money to make as the bank stocks and the rest of the market came back like a rocket. However by April the easy, fast gains were over. Since then patient, longer term boring old stock holding has been the way to go.

    If you had bought Apple at its bottom-or Amazon or Google-you are up a bunch now. Apple is up almost 500%. Even now I'd say the way to go is to buy stocks for the long term. This can't make you rich quick like trading but will lead to gains. I mean Bank of America is at $8. Surely you have little to lose in backing up the truck on that right now-assuming you have any capital. Few do these days. Though things are getting better. Even I have a job now. I'm working the grave yard shift over at this gated community tonight-I'm a security guard now. Low bar to entry if you need something quick.

   If you were to buy in at $8 on BAC if it goes to $12 that's 50% on your money. To be sure it hasn't seen that in over a year. But at some point it will come back assuming that we really are coming back-most indicators point that we are.

   At this point I feel like doing an Irving Fisher and declaring, "The fundamnetals of the American economy are strong. The US stock market is in a permanently high plateau."

   Ok, not the second part really. There is no such thing as a permanent plateau in stocks.

    

Knicks Lose 89-85 to Hornets: Lin to Blame?

     To here a lot of commentators, Lin lost this game single handedly. The headline at Yahoo Sports declared "Knick lose as Lin is lackluster." This is perhaps the problem-this was a guy who was a bench warmer now he's given sole ownership of the outcomes of every game.

     Like coach D'Antoni said, he did score 26 points, what was he expected to do score 40? How can 26 points be lackluster? He did have 9 turnovers along with 5 assists. The turnovers are obviously not wanted but, this has been his modus operandi during the win streak as well. He always gets a lot of turnovers though this is his most so far.

     So Lin has gone from being a benchwarmer to having extremely high expectations. He did cut down the turnovers in the second half-8 of the 9 turnovers were in the first half, and he scored 16 of his 26 points.

     It will be interesting to see what happens on Sunday against Dallas if Carmello does make it back for that game. When you lose things look different. I'm a Knicks fan and I'm disappointed too. Still we had a 7 game win streak-were they expected to never lose again? I think everyone should calm a bit. If this is considered a subpar game from Lin what does that say?

   Let's see Sunday though, there are all kinds of questions about how Carmello and Lin will mesh along with Stoudemire. Can't wait for that one.

Pat Buchanan is Out But What About David Brooks?

      Ok, Brooks, unlike Buchanan didn't actually write a book with some blatantly racists themes.

       "The book "Suicide of a Superpower" contained chapters titled "The End of White America" and "The Death of Christian America." Critics called the book racist, anti-Semitic and homophobic, charges Buchanan denied"

      http://news.yahoo.com/pat-buchanan-msnbc-015053514.html

      Buchanan lashed out at "blacklisters."

     "I know these blacklisters," he wrote. "They operate behind closed doors, with phone calls, mailed threats and off-the-record meetings. They work in the dark because, as Al Smith said, nothing un-American can live in the sunlight."

     I can't pretend I'll particularly miss him over at MSNBC. What I really found interesting in a recent interview he had on CSPAN about the book is how he continues to demonize affirmative action even though he was the midwife for affirmative action while in the Nixon Administration-he started the Philadelphia Plan at Nixon's direction. Must be something to spend your whole life railing against your own law.

     But what about David Brooks. He hasn't written anything racist but Charles Murray has and Brooks sure seems impressed with Murray.

     Just recently again he was griping about the "materialist fallacy" that misses the fine work of Murray. Don't get me wrong, he criticizes Murray too, of course. He's not a conservative or liberal, he's just nonpartisan and "centrist."

     For Brooks centrism always means you find the mean point of an argument. If anyone fits Krugman's "opinions differ" people it's David Brooks. If Hitler were alive maybe he'd be impatient with these unreasonable liberals who argue that Hitler shouldn't gas Jews, rather than just fewer like Brooks believes they should call for.

     Are 6 million Jews being killed? Let's demand they only kill 3 million in the future. What never seems to happen is that in the face of a rdiculous argument you just say it's rdiculous rather than "compromise" between a ridiculous argument and a non-ridiculous one. Opinions differ.

    

Mitt Romney: Michigan Trees are a Good Height

      Sure he demanded that the state's biggest industry be allowed to fail, actually writing a Wall Street Journal called "Let Detroit Fail" and sure Michigan is only about one of six of his "home states" but he sure knows how to sweet talk them!

      Talk about sweet nothings-your trees are a good height! This is a guy who just is running on empty. When you gush about the height of trees, you have run out of things to talk about. Romney is more and more just looking like a straight out phony.

      His trouble is he has nothing to say because anything he might say authentically will get him in trouble. He can't run on his record-he passed the original Obama Care. He can't talk about his religious faith because his party's own voters think Mormonism is a cult.

     He is not only lucky enough to have been very rich but he as a congenital lack of empathy which makes him incapable of imagining what life is like for someone who's not very wealthy and doesn't have $10,000 to out down on a meaningless wager.

     He can't be a like Rick Santorum because he's not like Santorum. He was supposed to be the guy who could create jobs though his record is of eliminating jobs. Now the economy is coming back so what's next?

    Maybe the GOP will get in by attacking contraception. But Santorum is much better at this kind of crazy. So he talks about the height of trees. Like Chris Mathews says he really is a conehead.

Thursday, February 16, 2012

Difference Between NGDP and Inflation Targeting

     I wrote post not too positive about NGDP the other day in response to the posts by Lars Christensen and Scott Sumner about how allegedly Greenspan back in 1992 talked about doing NGDP. My reaction to that was if the Great Moderation was the age of successful NGDP targeting then it has been over-advertised by Sumner and company.

    I really don't think the Great Moderation was so great. During the Great Moderation we saw median wages stagnate. While creditors got to enjoy their vaunted "price stability" most Americans went backward. So if we have in fact had NGDP targeting for 30 years it is not the answer.

   http://diaryofarepublicanhater.blogspot.com/2012/02/so-you-mean-fed-targeted-ngdp-all-along.html

   However, I did read an archive piece from David Eagle at Lars Christensen's blog that made as good a case for NGDP as I've seen.

   http://marketmonetarist.com/2012/01/20/guest-blog-the-two-fundamental-welfare-principles-of-monetary-economics-by-david-eagle/

   The first thing it does right is distinguish between what an NGDP regime could look like and the inflation targeting regime of the Taylor Rule. For Eagle there are two "Fundamental Welfare Principles of Monetary Economics:

    Principle #1:    When all individuals are risk averse and RGDP remains the same, Pareto efficiency requires that each individual’s consumption be unaffected by the level of NGDP.

    Principle #2:    For an individual with average relative risk aversion, Pareto efficiency requires that individual’s consumption be proportional to RGDP

     Ok so there are the Two Fundamental Welfare Principles of Monetary Economics. Here is an application:

      "However, assume the central bank successfully targets either inflation or the price level so that the price level at the time of this loan payment is as expected no matter what happens to RGDP.  Then the real value of this loan payment will be constant no matter what happens to RGDP.  That would mean the lenders will be guaranteed this real value of the loan payment no matter what happens to RGDP, and the borrowers will have to pay that constant real value even though their other net real incomes have declined when RGDP declined.  Under successful IT or PLT, borrowers absorb the RGDP risk so that the lenders don’t have to absorb any RGDP risk.  This unbalanced exposure to RGDP risk is Pareto inefficient when both borrowers and lenders have average relative risk aversion as the Second Principle states."

      At the very minimum, this is a good critique of of inflation targeting or level inflation targeting. This is why I have always been skeptical of the very concept of inflation targeting-if done successfully it ensures that the debtor bears all the costs if the economy weakens-in the form of real GDP (RGDP). Eagle claims taht NGDP would not put all the risk on the shoulders of the borrower/debtor. If this is so then it could give us a regime much superior to the Great Moderation.

   

    

   

 

All Green Lights in the US

     Today saw the US market indexes hit levels not achieved in years.

     "The Dow Jones Industrial Average rallied 123.03 points, or 0.96 percent, to close at 12,904.08, finishing at its best level since May 2008."

     http://www.cnbc.com/id/46412121

     But check out the Nasdaq.

     "the Nasdaq soared 44.02 points, or 1.51 percent, to end at 2,959.85, logging its best close level since December 2000."

      So not only has the Nasdaq regained all the losses since 2007 but even since 2000. To be sure there is still a lot of ground to make up there-the Nasdaq hit a high of 5000 in March 2000, but it does show how hot tech has been. It looked at one time like the Nasdaq would never return to those previous seen levels.

     Of course to cross 3000 would be a major psychological hurdle as 13000 is for the Dow. As for the S&P it's crossing the 1350 level today was technically important as 1350 had been resistance.

    The day started with some positive numbers out of GM. True they did miss expectations on earnings per share-$.39 per share vs. $.41 expected. However this mainly was because of Europe which in the last quarter of 2011 went negative-"even Germany" who is now seen as the strong man of Europe after for years being the weak man.

     There is the question of the future of GM sales in Europe but this is a macroeconomic problem of Europe not reflecting on Europe.

     In the US and China sales were very strong, indeed US sales beat and exceeded all expectations. For the year GM made its most profit ever.

     Unempl;oyment claims for last week dropped to only 348,000 from a perviouis 361,000. Under 350,000 is generally seen as the level of an economy in expansion.

      Even Europe got some good news by the end of the day.

      "The euro rallied against the U.S. greenback after a report that the European central banks will exchange their existing Greek bond holdings for new ones in an effort to help the situation in the debt-ridden nation. The swap would take place over the weekend, according to sources. However, the ECB and Bundesbank would not comment on the report."

      "Housing starts gained more than expected, climbing to 1.5 percent to an annual rate of 699,000 units in January, according to the Commerce Department."

      "Meanwhile, the Philadelphia Federal Reserve said its business activity index climbed to 10.2 in February, topping expectations from a Reuters poll for 9.5."

       “Things look like all green lights in the U.S. so stay in the U.S. and invest in U.S. based companies,” recommended Peter Andersen, CIO of Congress Wealth Management. "We’re right at the beginning of a fairly strong rally and that psychological level of [Dow] 13,000 will really bring more sideline players into the market.”

        All green lights in the U.S. Kind of like "Halftime in America."

Scott Sumner's Lame Try at Trashing Keynes

     I was commenting at Lars Christensen's Market Monetarist on a post he wrote trying to salvage Sumner's never ending attempt to justify the Efficient Market Hypothesis. (EMH).

     http://marketmonetarist.com/2012/02/15/maybe-scott-should-talk-about-hayek-instead-of-emh/#comment-2899

     Not that this was the main point but I did include this comment:

     "By the way as you as usual knock Keynes I cant resist pointing out that he was a pretty successful investor. I know Scott tried to to claim this is exaggerated but is record is certainly more impressive than anything he’s done."

      Lars responded this way:

      "Mike, Keynes was not a great investor: http://gregmankiw.blogspot.com/2009/06/was-keynes-really-savvy-investor.html."

       I answered him with the observation that his dislike of Keynes goes so deep he refuses to believe anything good about the man even personally. I probably would deny that Keynes would brake for cats. I notice that this comment was not published yet. I wonder if he's going to censure this feeling that I have "gone too far."

     In any case I decided to check out Manikiw's "proof" that Keynes was not a great investor. As it turns out Greg rested his case on a Scott Sumner post.

    "I got to thinking about this issue last night while reading The Lords of Finance (which by the way is a fine book so far, despite one little point I will nit pick.) See what you make of this:
     “In early 1920, he [Keynes] set up a syndicate, with his brother, some of the Bloomsbury circle, and a financier friend from the City of London. By the end of April 1920, they had made a further $80,000. Then suddenly, in the space of 4 weeks, a spasm of optimism about Germany briefly drove the declining currencies back up, wiping out their entire capital. Keynes found himself on the verge of bankruptcy and had to be bailed out by his tolerant father. Nevertheless, propped up by his indulgent family and by a loan from the coolly acute financier Sir Ernest Cassel, he persevered in his speculation”

     Mankiw on the basis of this short paragraph declares:

     "Translation, without help from his rich daddy and rich friends, this cocky, arrogant, smart-aleck would have fallen on his face, ended up digging ditches somewhere and we would never have heard of him. But he did have a rich daddy, who bailed him out....


      "Don’t anyone write in and tell me that Keynes made lots of other good investments, because if you’ve got a rich backstop, none of that matters."

        So because he had a rich benefactor he wasn't a great investor, he was assured investment success? What about the history of great artists? You know that most of them lived off of rich benefactors. The idea that having a backstop means you deserve no credit actually means that virtually no one on Wall St can be called great.

       After all they got bailed out by Uncle Sam. It would also mean Mitt Romney deserves no credit for Bain Capital as he was a trust fund baby.

      Mankiw goes on with this strange logic:

      "What’s the point? If you have a rich backstop it’s relatively easy to come up with investment strategies that will usually (not always) make you look like a genius. From now on I will never believe anyone who tells me that Keynes was a great investor.

      "Does this matter? It shouldn’t, but unfortunately it does. If his investment reputation was like Fisher’s (calling stocks fairly priced in 1929) nobody would take seriously his Chapter 12 in the General Theory where he tries to shoot down the efficient market hypothesis."

      Ok. So this proves the EMH. Admire the intellectual casuistry of Sumner and Mankiw-the alleged "New Keynesian; isn't a Republican Keynesian a contradiction in terms? Keynes wasn't a good investor as he lost money in 1920 and his father gave him money. Since he wasn't a good investor and he criticized the Efficient Market Hypothesis he must be wrong and markets are efficient.