Links 8/2/10

BBC

Charles Lane, Slate

New York Times

Associated Press (hat tip Glenn Stehle). You cannot make this stuff up:

Even the people who make their living off the seafood-rich waters of Louisiana’s St. Bernard Parish have a hard time swallowing the government’s assurances that fish harvested in the shallow, muddy waters just offshore must be safe to eat because they don’t smell too bad.

Jim Quinn
Institutional Risk Analytics

Paul Krugman, New York Times

Wall Street Journal

Financial Times. Please, does anyone think the 2007-2009 growth revisions downward were “mysteries”? We’ve seen this movie before. In 2002, GDP estimates were successively cut from reasonable-looking to abjectly weak as revisions proceeded.

Wall Street Journal. Although we’ve been fierce critics of Goldman on many front, our analysis of AIG’s CDOs has indicated that Goldman’s marks of its deals pre the insurer’s failure were not unduly aggressive; rather, the insurer and the dealer community was in denial about how weak the market was for them.

John Lounsbury

Lucy Kellaway, Financial Times

billy blog

FT Alphaville

Ambrose Evans-Pritchard, Telegraph. If the US responds (as it really ought to), this could trigger a full blown trade row. Also illustrates the abject stupidity of US industrial policy by neglect (as in we do have industrial policy, just look at which industries get big subsidies, but dream if they are part of a cohesive economic strategy)

Antidote du jour:

Picture 24

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28 comments

    1. FrancoisT

      Mish’s “analysis” is anything but. He is heavy on anecdotes and folksy fuzzy logic, but short on data.

      As for his “correlation isn’t causation”…yeah! That is such a powerful argument…NOT!

      Newsflash! Even in a data-driven field like health care, 80% of ALL treatments do not benefit from a causal relationship as a rationale for a treatment X versus Y. So, just imagine economics; ain’t called the dismal science for nothing!

      Reasonable people can disagree, but the title of his post indicates clearly he had no intention of being reasonable.

      1. MyLessThanPrimeBeef

        We, by we, I mean the blogshere and the interent world, have a problem; we suffer from a excess supply of opinions.

        When the demand for opinions more or less stays constant (this might occur when people start thinking on their own instead of relying on others’ opinions), this means, of course, the cheapening of opinions.

    2. craazyman

      ha ha, if Mr. PhD were paid his marginal net benefit to the economy, like most of his bretheren, he’d owe a lot of people a lot of money. LOL.

      And then he’d be organizing all the economists to defend themselves from such insanity as that!

      He’s a bit of a looney. When I channel him I see a throng of gargoyles sucking on his upper right (facing him) etheric sphere. They are clogging his crown chakra.

      Not only that, but if capital can organize in the form of corporations and limited liability companies, then what is the problem with labor organizing. Because money = property like wave = particle, and there’s a clear metaphorical identity that goes like this: money = property = imagination = nature = labor; because GDP = capital + labor + nature + imagination. There’s more, but I don’t want to ramble.

      So there is really not a conceptual difference between the organization of capital (money) and manpower/imagination (labor). QED.

      -Duke and Mrs. Shirley EuJeste, PhD
      Uppper Saxony
      Germania

    3. DownSouth

      Mish certainly doesn’t have any problem letting his ideological biases hang out there front and center.

      Take the part about informal economies, for instance.

      I live in Mexico where, because about 30% of the workforce is employed in the informal economy, it is the subject of intense study and scrutiny, such as from a couple of professors at the University of Guadalajara.

      According to the authors, the informal economy is made up of “many various elements” which create a “complex problem.”

      Not so Mish. Referring to a world map that shows the countries with the smallest informal economies, Mish proclaims: “Correlation is not causation, but seriously, does anyone think that avoidance of government regulations and union work rules is not at the heart of those charts?”

      Well yes, Mish, there are quite a few people who do not think that. According to the authors of the study cited above, one’s doctrinal beliefs determine what one thinks causes the informal economy (see section 1.2). Each doctrinal school “highlights relevant aspects about the informal economy and locates it within distinct scenarios,” the authors write. “Each school sets out details, origins, causes, obstacles, tendencies and other angles” that conform to that school’s doctrine.

      Miranda and Rizo identify four schools, and the cause Mish declares as the cause is the third one Miaranda and Rizo cite within the neoclassical school (see section 1.2.3):

      According to this perspective…the informal economy is due to three fundamental reasons:

      (3)The externalities or market impediments (bureaucratic rigidness, obstacles…) that prevent supply and demand from regulating themselves automatically…

      But besides Mish’s pronounced ideological proclivities, I see another gaping hole in his analysis. There is no recognition, much less acknowledgment, of the fact that in the United States there is a glaring double standard when it comes to regulation. The BPs of the world operate with impunity, but small or medium-sized business get smashed into the ground.

      1. psychohistorian

        The following needs to be repeated and reinforced:

        There is no recognition, much less acknowledgment, of the fact that in the United States there is a glaring double standard when it comes to regulation. The BPs of the world operate with impunity, but small or medium-sized business get smashed into the ground.

        Unfortunately the public has been convinced that all regulation is bad while the big companies insure that regulation will hurt the smaller competitors and protect them….call it corpratism or fascism or whatever. That is what we have evolved/devolved to.

        I would add that the same double standard is true of rule-of-law in America, though maybe with rule-of law there is a triple standard for those of color or alternative sexual orientation to be further discriminated against. I am neither but am not blind to obvious social bias.

    4. craazyman

      on a somewhat more grounded and anecdotal note — on topic — there’s a deli down the street from my apartment, owned by a man in his late 70s. He likes to work. He’s in good health. He’s there every day. He lives down the block. It’s his thing, and he radiates a New York tough-guy joy of life, like a fist. It’s hard not to kind of like him. And he’s always in a good mood.

      He has two guys that have worked for him for 7 years, both from Bangladesh. These guys aren’t dumb. I’ve spoken at length with both. They could be bankers, if life spilled them out of another womb in another place. Not sure if they could be quants or not. Not sure how narrow their intelligence is. One seems a bit more “open” than the other, in that soul-knowing way. His vibe is empathetic and kind. The other is a little more frazzled, and confused.

      I spoke with the second one, the frazzled one, a few days ago. “Are you getting away at all this August?” I asked.

      He looked at me blankly, without malice or sarcasm, and plainly said.

      “I haven’t had a day off in 3 years.” He went on to say how he had to orchestrate any doctor appointments onto Sundays or late evenings. He works 6 days a week. Not Sundays. The first guy too.

      Neither have had a day off in 3 years.

      “That’s incredible” I said.

      He shrugged. Both have families to . What else will they do?

      “_____ won’t give you a day off?” I asked referring to the owner, incredulous and slightly embarrassed for even asking my first question.

      “No” he said, “He likes to work, and he wants us here. When my father died last year, I took off the afternoon, that’s it.” he said.

      I thought about that for a while. Not that you really have to think much about it to wonder why unions arose. I wonder what Mish would think. Probably he wouldn’t. Literally. Labor is mobile right? Just like capital? It’s all provable by the math.

    5. Anonymous Jones

      Ha! Mish strikes again.

      “I remain in awe of how people who can think clearly most of the time, occasionally stray off the deep end defending socialist idiocy.”

      I remain in awe of how often idiots accuse others of idiocy. [wait, did I just make fun of myself?]

      His “common sense” argument is precious, too. One of my friends is a well-known comedian, but is known by his close friends not only for humor but also for fierce defenses of occasionally less-than-coherent arguments. A classic moment occurred at a party with about ten other people standing around, all of whom were disputing some nonsense of his. Sufficiently riled up, he tried to end the debate by yelling at the ten other people, in all oblivious seriousness, “It’s just common sense!!!” The thing about funny people is that even their unintentional hilarity is more hilarious than that of others. Sadly, Mish is not funny.

      1. aaa

        To be honest, Mish’s article makes far more sense than the academic garbage supporting union that was posted here few days back. But then, what the heck do I know? I only have a PhD in theoretical physics/electrical engineering, and am not accustomed to subjects on economic matters as much as NC readers are.

        1. aaa

          In 2005, I wrote an article about inflation versus deflation, and concluded that deflation would be the most likely outcome of the huge credit buildup. When I showed it to my economist friends in academia, everyone said that I was wrong, because Bernanke would never let deflation come to US. They also mentioned that my article was folksy with no charts or real data. I always accept their verdicts, because I have little knowledge in economic matters, whereas they are all experts in the field (just like the above commenters) and wrote many papers to prove their point.

          P. S. I remember Mish was the only one preaching his ‘biased ideology’ of deflation at that time.

          1. RalphR

            I used to like Mish, but the fact that he was right on the housing bubble does not make him unique. There are people across the ideological spectrum who saw it coming, and saw its deflationary potential. He’s gone completely crazy on the topic of union-bashing, this is clearly an obsession with him.

            And you as someone who claims to be ought to know that, but your remark that Mish “makes sense” (when as you ought to know a lot of superficially pleasing explanations don’t stand up to rigorous scrutiny) says your positive reaction is a function of your predispositions.

        2. craazyman

          hey big Mr. Letter-man,

          If you had a PhD in survival, you’d realize that all groups can degenerate into mobs. Capital can assemble itself and wreak wanton destruction. So can people. So can unions. So can corporations. It’s all in the assembly. Hard to put an equation on that one . . . even though people try.

          Yours truly,
          Delerious Tremens, PhD, MA, BA, GED, Jr. High and elementary school.
          Institute for the Propagation of Clarity

          lol in miniature

          PS all in good fun, I appreciate your knowledge and am frankly a little jealous I didn’t go that route, Instead, I hit the bars and Wall street. What a mistake that was. :)

          1. Skippy

            Mish needs to sober up, hell we all do! The asset valued electrons pinging back and forth at near speed of light demand our full attention and hate it when we act as Compton scattering. Bloody solitary (free) electron laggards.

            They write, “While our estimate of the cost to co-workers of alcohol use by heavily drinking colleagues is large, it may represent the tip of the iceberg.” Alcohol consumption was also related to work efficacy thy said. “The cost of alcohol use in the workplace is multi-faceted and considerable… (It) can be caused by a reduction in the productive workforce from premature mortality or morbidity, absenteeism due to alcohol-related sickness, and reduced productivity while at work.”

            I would add iPhone launches, star wars opening day, sexpo when it hits your town, when the wife goes into labor, etc.

            Skippy…what a bunch of lazy monkeys, were just drag on productivity…shezz

      2. NOTaREALmerican

        Let’s not forget, though, that Mish is making two arguments at the same time. The Libertarian part of his brain is telling the libertarian fantasy that: all people are of relatively equal “personality” characteristics. The “bad people” are “regulated” by competition; the “good people” will be helped by competition. If anything “bad” results (like people working 3 years straight) this is simply the result of a lack of competition (the evil of government, no doubt). All “isms” exist on bullshit (stories) generated by the brain to reconcile inconsistencies in the observed reality.

        Of course, the article that Mish is criticizing (“Debunking the Notion that Unions Hurt Productivity”) is also based on a believer of an “ism” (let’s call it “Progressivism”); the belief in the “goodness” of people.

        Unions have one role in life: to screw upper management using their collective power. Upper management’s role in life is to screw the stockholders and the unions. Middle-management’s role is the screw the customers hoping to move into upper management where the screwing opportunities are even better. Business is about screwing people, nothing else.

        Believing that unions wouldn’t attempt to work less for more is pretty unrealistic; isn’t that the entire POINT of a union? So, of COURSE, unions result in less productivity. It’s better for management never to let people take time off, unions prevent this ideal situation (less productivity).

        Why do “progressives” assume the amoral scumbags are only in the nobility? Upward mobility IS basically the smart amoral scumbags moving from lower-class to upper-class. “Progressives” have a self-delusional view of humanity that ends up hurting their cause (but, I suppose, if you admit that most people were scumbags it would be hard to be a “Progressive”) .

        1. MyLessThanPrimeBeef

          Are most peopel scumbags?

          I think where you stand (whether you’re one or not) depends on where you sit, or is it, where you sit depends on where you stand?

          In any case, do not under-estimate the versatility of Homo Not-So-Sapiens Not-So-Sapiens. They can be scumbags and saints simultaneously.

      3. DownSouth

        Anonymous Jones,

        Yep. Mish is definitely not funny. Get a load the first couple of comments over on Mish’s blog in response to his post:

        Karl Marx, a bisexual freak, never stepped foot in a factory, but lived off the dividends of his boy-friend Engels, yet had the nerve to dream up the ultimate union nightmare……communism.

        John Maynard Keynes, well composed fairy, never stepped out of the closet, but lived behind the awkward front of his Russian ballerina wife, yet had the nerve to unleash the horrors that today’s fraudulent, racketeering banksters terrorize both citizen and state alike with …capitalism. …er um, Keynesian economics.

        The labor-hater and labor-baiter is virtually always a twin-headed creature spewing anti-gay or anti-Mexican epithets from one mouth and anti-labor propaganda from the other.

  1. alex

    Re: Hot political summer as China throttles rare metal supply and claims South China Sea

    The lack of concern about China’s current near monopoly and their restricting the exports of rare earth metals continues to amaze me. In times gone by, while the national security card might have been overplayed, at least it led to action about securing supplies of important natural resources like rare earth metals. Now, almost no one seems to notice.

    BTW, restricting the exports of key raw materials like rare earth metals is part of free trade, right?

  2. Greg

    Lowering GDP estimates in 2009 will both lower growth rates reported in 2009 and increase growth rates in 2010.

  3. Francois T

    Re: Hot political summer.

    Well…isn’t it what is bound to happen when you replace an hands on done by those who’ve been in the trenches industrial policy with a psychopathic obsession with quarterly results done by MBAs and finance graduates?

    When you replace those who have done stuff by those who move money around, you get this:

  4. S Brennan

    Anybody who has read my comments knows I am no friend of Obama’s, but to Charles Lane Editorial-like Article I have the following points to:

    Unaffordable at Any Speed

    1] All technologies require the wealthy to be early adopters, mass production prices require…wait for it…mass production. You can not go from 0 to 2,000,000 units in a single production run. Learn a little about manufacture before blissfully commenting on it.

    2] Internal combustion automobiles are highly subsidized that is why they are so cheap when compared to electric vehicles.

    3] This point is clearly wrong, “For E.V.s to become popular, they must mimic the experience and performance that drivers have become accustomed to,” Deloitte notes. Ev’s have already been popular in California, this comment contradicts that factual data set. Also EV’s were around in the beginning, but rural America had not been electrified. As far as acceleration is concerned, EV’s already outperform internal combustion automobiles.

    4] To “The Obama administration says it knows better. There’s $2.4 billion in stimulus money for electric-car component factories, such as a Volt battery plant in Holland, Mich…” Without government spending upfront the US will not be competitive with the EV industry being launched by Beijing government…Mr. Lane are the Chinese rarified snobs too?

    5] To “…a recent study by Boston Consulting Group projects…” If you call out a study could you at least name the group so we can at least check for bias?

    6] Mr. Lane this is bullshit: “and for the most part, cell phone and computer industries grew with private, not public, capital at risk.” The chips that drive cell phones and computer industries had a long incubation period under the US government…your ignorance is appalling.

    7] This is true as far as it goes “strong income tax credits for the purchase of new diesel, hybrid and plug-in hybrid vehicles are essentially ineffective at reducing GHG emissions from transportation.” so long as we continue to burn coal. In France the answer would be very different, do little reading and find out why.

    Further you choose to talk about only one form of pollution…internal combustion automobiles produce widespread multipoint forms of pollution, that oil slick you see down the middle of the road is from oil lubricating high temperature steel, something that doesn’t happen in EV’s. Oil lubrication and it’s pollution goes away, also Ev’s don’t require a liquid coolant system. Truly a myopic view point, but I guess you’re in the sound bite business, because you’re no reporter.

    8] This is idiocy, we shouldn’t make electric cars because a federal law is e’ffed up? “Under federal Corporate Average Fuel Efficiency standards, carmakers can use the high fuel efficiency ratings of a few electric models to offset slower improvement in the rest of their fleets.” Change the law…you moron!

    9] Mr. Lane you start this article by saying that electric car subsidies are bad because they subsidize the rich and at the bottom of the article you advocate for a tax that would affect the lower incomes the hardest “Fuel Efficiency standards may help in that regard, though they are suboptimal compared with higher gas taxes”. How stupid do you think the reader is Mr. Lane?

    This is an ill-informed hit piece. Mr. Lane is a hack.

  5. Pepe

    I inadvertently taught my dog how to sneak up on people. My 150 pound Rottweiler. Fun times.

  6. RE: Antidote du jour:

    OMG! Soooooo wonderful!!! Totally the best owl picture I’ve ever seen!

    That’s complete bird sweetness.

    1. MyLessThanPrimeBeef

      Is it just me or does it look like an approaching sandstorm in the background?

  7. Jim

    Getting back for a moment to some of the earlier comments by and in response to Mish.

    This commentary (both pro an con Mish)tends to lend support to the never-ending(and I would argue) misleading narrative of market vs. state–a narrative which only ends up strengthening the present system of domination.

    I would hypothesize an alternative narrative to describe more accurately the new structual system of domination we are presently faced with.

    This system of domination succeeded in integrating American labor fully into its logic by the late 1930s(think federally mandated collective bargaining) in the U.S. while fascism and Stalinism did the job of the disempowerment of labor elsewhere.

    This new logic of domination(which eventually resulted in the integration of American labor into the status quo) was originated at the turn of the 20th century in the U.S. when many of its business and industrial elites recognized that the transformation from entrpreneurial capitalism to Big Capital could only be worked out in partnership with the Federal Government.

    Consequently our new system of domination must also be discussed in terms of the evolving concentration of political power within the nation–not market vs. state but marked and state in a public and private bureaucratic alliance.

    Finally, Cfdtrade ought to look more closely at the emerging role of many intellectuals (in both the public and private centralized bureaucrcacies)as key players in this emerging managerial social formation.

    Again, this latter topic (the role of intellectuas in our modern system of domination)is considered verboten since it is mostly intellectual who discuss thses issues.

    Such news(if accurate) is upsetting to the Old Left, New Left, Old Right, New Right political ideologies but it certainly seems that now is the time to move beyond these tired catagories of analysis.

  8. Sundog

    A new book by Andrew Bacevich is published today, called “Washington Rules: America’s Path to Permanent War”.

    Huffington post editorial:

    A print interview:

    An audio & video interview:

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