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Monday Morning Market Stomp

by coldwarrior ( 117 Comments › )
Filed under Economy, Open thread at August 24th, 2015 - 1:59 am

Good Monday Morning.

 

The Rout Is On:

Asian stocks swoon as China stock rout accelerates

Asian stocks swooned further on Monday, touching multi-year lows, as the meltdown in China’s equity markets accelerated in the morning trading session.

“We are going to see a fearful Asia today, as risk selling activity is expected to blanket the regional markets. Geopolitical tensions in the Korean peninsula are going to add to the weak sentiments,” IG’s market strategist Bernard Aw wrote in a note released early Monday.

Read MoreWeek ahead: Asia looks to Big Three economies

On Friday, Wall Street finished deep in the red, as global growth concerns accelerated selling pressure to push the blue-chip Dow Jones Industrial Average and tech-heavy Nasdaq into correction territory.

The Dow and the S&P 500 ended 3.12 percent and 3.19 percent down respectively, while the Nasdaq Composite lost 3.5 percent. On Friday, the major averages had their biggest trade volume day of the year and posted their worst week in four years.

In the commodity space, U.S. West Texas Intermediate (WTI) and the global benchmark Brent, hit fresh 6-year lows on Mondays, to levels last seen during the peak of the credit crunch of 2008-2009. Copper prices clocked up their seventh consecutive weekly loss on Friday.

Mainland markets in free fall

The rout in China’s benchmark Shanghai Composite index gathered pace early Monday, sinking as much as 8.2 percent to a five-month low of 3,218.5 points, even as authorities allowed pension funds managed by local governments to invest in the stock market for the first time over the weekend. The move could potentially channel hundreds of billions of yuan into the country’s struggling equity market.

Among China’s other indexes, the benchmark CSI300 index – which consists of 300 A-share stocks listed on the Shanghai and Shenzhen stock exchanges – fell 7.9 percent, while the smaller Shenzhen Composite retreated 7.3 percent.

According to Reuters, the tumble on Monday has erased all gains for the year on the benchmark Shanghai bourse, while the CSI300 is down over 6 percent for the year.

In Hong Kong, the Hang Seng index tracked the sluggishness in its mainland peers to fall nearly 4 percent at the start of trade, with heavyweights such as HSBC and China Mobile losing more than 3 percent each.

 

 

You Isolationist Pig!

by coldwarrior ( 176 Comments › )
Filed under Economy, Open thread at August 11th, 2015 - 8:30 am

Rain of Lead got me with the headline:

China Rattles Markets With Yuan Devaluation

Or, China just drove down wages.

Part of the agreement that goes with free trade treaties is that governments don’t do what China just did to their currency. See, when you devalue your currency you export unemployment and import inflation. ‘Beggar Thy Neighbor’ or ‘Competitive Devaluation’ . See, Free Trade deals are based on free floating currencies where you r partners don’t export their unemployment to you.

 

Seriously, I know they quit teaching economics in school so that the rulers can pull the wool over the eyes of the rubes. ‘You aren’t a conservative if you aren’t for free trade!’ goes the mantra. Sadly, a whole lot of economic illiterate ‘conservatives’ buy that nonsense. Ha! Suckers! Your jobs get exported overseas and ya still hold onto that chant: ‘You can’t be a conservative if you aren’t for Free Trade agreements.

Well, sunshine, what we agree to isn’t what Adam Smith was talking about. We sign up for what Adam Smith was talking about, then our trade partners go down the economic nationalism path. This causes jobs to get exported for America.

 

Have you ever noticed that the ‘conservatives’ who are for Free Trade Deals are never in position that can be exported overseas? The talking heads, politicians, and such just love this stuff because it keeps wages low, unemployment up and in their short sightedness prevents real economic growth here in America. How is that conservative to sell out your own economy and countrymen?

So tell me, how is it conservative to be a SUCKER?

 

Goodbye OPEC?

by coldwarrior ( 106 Comments › )
Filed under Economy, Energy, Islamists, Middle East, Open thread at August 6th, 2015 - 4:06 am

It appears that the oil ticks have over-played their hand. Showing the lesson once again, never play poker with cowboys.

 

Please read the entire article, there are many salient points in it that are worth your time.

(FYI: there will be a debate thread for later)

 

Saudi Arabia may go broke before the US oil industry buckles

It is too late for OPEC to stop the shale revolution. The cartel faces the prospect of surging US output whenever oil prices rise

If the oil futures market is correct, Saudi Arabia will start running into trouble within two years. It will be in existential crisis by the end of the decade.

The contract price of US crude oil for delivery in December 2020 is currently $62.05, implying a drastic change in the economic landscape for the Middle East and the petro-rentier states.

The Saudis took a huge gamble last November when they stopped supporting prices and opted instead to flood the market and drive out rivals, boosting their own output to 10.6m barrels a day (b/d) into the teeth of the downturn.

Bank of America says OPEC is now “effectively dissolved”. The cartel might as well shut down its offices in Vienna to save money.

If the aim was to choke the US shale industry, the Saudis have misjudged badly, just as they misjudged the growing shale threat at every stage for eight years. “It is becoming apparent that non-OPEC producers are not as responsive to low oil prices as had been thought, at least in the short-run,” said the Saudi central bank in its latest stability report.

“The main impact has been to cut back on developmental drilling of new oil wells, rather than slowing the flow of oil from existing wells. This requires more patience,” it said.

One Saudi expert was blunter. “The policy hasn’t worked and it will never work,” he said.

By causing the oil price to crash, the Saudis and their Gulf allies have certainly killed off prospects for a raft of high-cost ventures in the Russian Arctic, the Gulf of Mexico, the deep waters of the mid-Atlantic, and the Canadian tar sands.

Consultants Wood Mackenzie say the major oil and gas companies have shelved 46 large projects, deferring $200bn of investments.

The problem for the Saudis is that US shale frackers are not high-cost. They are mostly mid-cost, and as I reported from the CERAWeek energy forum in Houston, experts at IHS think shale companies may be able to shave those costs by 45pc this year – and not only by switching tactically to high-yielding wells.

Advanced pad drilling techniques allow frackers to launch five or ten wells in different directions from the same site. Smart drill-bits with computer chips can seek out cracks in the rock. New dissolvable plugs promise to save $300,000 a well. “We’ve driven down drilling costs by 50pc, and we can see another 30pc ahead,” said John Hess, head of the Hess Corporation.

It was the same story from Scott Sheffield, head of Pioneer Natural Resources. “We have just drilled an 18,000 ft well in 16 days in the Permian Basin. Last year it took 30 days,” he said.

The North American rig-count has dropped to 664 from 1,608 in October but output still rose to a 43-year high of 9.6m b/d June. It has only just begun to roll over. “The freight train of North American tight oil has kept on coming,” said Rex Tillerson, head of Exxon Mobil.

He said the resilience of the sister industry of shale gas should be a cautionary warning to those reading too much into the rig-count. Gas prices have collapsed from $8 to $2.78 since 2009, and the number of gas rigs has dropped 1,200 to 209. Yet output has risen by 30pc over that period.

Until now, shale drillers have been cushioned by hedging contracts. The stress test will come over coming months as these expire. But even if scores of over-leveraged wild-catters go bankrupt as funding dries up, it will not do OPEC any good.

The wells will still be there. The technology and infrastructure will still be there. Stronger companies will mop up on the cheap, taking over the operations. Once oil climbs back to $60 or even $55 – since the threshold keeps falling – they will crank up production almost instantly.

OPEC now faces a permanent headwind. Each rise in price will be capped by a surge in US output. The only constraint is the scale of US reserves that can be extracted at mid-cost, and these may be bigger than originally supposed, not to mention the parallel possibilities in Argentina and Australia, or the possibility for “clean fracking” in China as plasma pulse technology cuts water needs.

Mr Sheffield said the Permian Basin in Texas could alone produce 5-6m b/d in the long-term, more than Saudi Arabia’s giant Ghawar field, the biggest in the world.

Saudi Arabia is effectively beached. It relies on oil for 90pc of its budget revenues. There is no other industry to speak of, a full fifty years after the oil bonanza began.

Citizens pay no tax on income, interest, or stock dividends. Subsidized petrol costs twelve cents a litre at the pump. Electricity is given away for 1.3 cents a kilowatt-hour. Spending on patronage exploded after the Arab Spring as the kingdom sought to smother dissent.

The International Monetary Fund estimates that the budget deficit will reach 20pc of GDP this year, or roughly $140bn. The ‘fiscal break-even price’ is $106.

Far from retrenching, King Salman is spraying money around, giving away $32bn in a coronation bonus for all workers and pensioners.

He has launched a costly war against the Houthis in Yemen and is engaged in a massive military build-up – entirely reliant on imported weapons – that will propel Saudi Arabia to fifth place in the world defence ranking.

The Saudi royal family is leading the Sunni cause against a resurgent Iran, battling for dominance in a bitter struggle between Sunni and Shia across the Middle East. “Right now, the Saudis have only one thing on their mind and that is the Iranians. They have a very serious problem. Iranian proxies are running Yemen, Syria, Iraq, and Lebanon,” said Jim Woolsey, the former head of the US Central Intelligence Agency.

Money began to leak out of Saudi Arabia after the Arab Spring, with net capital outflows reaching 8pc of GDP annually even before the oil price crash. The country has since been burning through its foreign reserves at a vertiginous pace.

The reserves peaked at $737bn in August of 2014. They dropped to $672 in May. At current prices they are falling by at least $12bn a month.

Khalid Alsweilem, a former official at the Saudi central bank and now at Harvard University, said the fiscal deficit must be covered almost dollar for dollar by drawing down reserves.

The Saudi buffer is not particularly large given the country’s fixed exchange system. Kuwait, Qatar, and Abu Dhabi all have three times greater reserves per capita. “We are much more vulnerable. That is why we are the fourth rated sovereign in the Gulf at AA-. We cannot afford to lose our cushion over the next two years,” he said.

Standard & Poor’s lowered its outlook to “negative” in February. “We view Saudi Arabia’s economy as undiversified and vulnerable to a steep and sustained decline in oil prices,” it said.

Mr Alsweilem wrote in a Harvard report that Saudi Arabia would have an extra trillion of assets by now if it had adopted the Norwegian model of a sovereign wealth fund to recyle the money instead of treating it as a piggy bank for the finance ministry. The report has caused storm in Riyadh.

“We were lucky before because the oil price recovered in time. But we can’t count on that again,” he said.

OPEC have left matters too late, though perhaps there is little they could have done to combat the advances of American technology.

In hindsight, it was a strategic error to hold prices so high, for so long, allowing shale frackers – and the solar industry – to come of age. The genie cannot be put back in the bottle.

The Saudis are now trapped. Even if they could do a deal with Russia and orchestrate a cut in output to boost prices – far from clear – they might merely gain a few more years of high income at the cost of bringing forward more shale production later on.

Yet on the current course their reserves may be down to $200bn by the end of 2018. The markets will react long before this, seeing the writing on the wall. Capital flight will accelerate.

The government can slash investment spending for a while – as it did in the mid-1980s – but in the end it must face draconian austerity. It cannot afford to prop up Egypt and maintain an exorbitant political patronage machine across the Sunni world.

Social spending is the glue that holds together a medieval Wahhabi regime at a time of fermenting unrest among the Shia minority of the Eastern Province, pin-prick terrorist attacks from ISIS, and blowback from the invasion of Yemen.

Diplomatic spending is what underpins the Saudi sphere of influence caught in a Middle East version of Europe’s Thirty Year War, and still reeling from the after-shocks of a crushed democratic revolt.

We may yet find that the US oil industry has greater staying power than the rickety political edifice behind OPEC.

Carbon and Politics

by coldwarrior ( 77 Comments › )
Filed under Economy, Environmentalism, Global Warming Hoax, Open thread, Politics, Regulation at August 5th, 2015 - 4:40 am

A quick drive by post:

 

It’s just chock full o’ bad news.  Can/Will the GOP stop this? Do note how politics plays into Obama’s energy plan:

 

President Obama’s Clean Power Plan: All Cost, No Benefit

By Benjamin Zycher

On Monday President Obama announced the final “clean power plan” regulation for greenhouse gas emissions from electric generating plants, the centerpiece of the broader Climate Action Plan being implemented by the Environmental Protection Agency. Amid the many assertions about the looming climate crisis confronting “the planet,” about which more below, one central parameter was conspicuous by its absence. To wit: What effect on future temperatures—that, after all, is the supposed benefit of the rule—would this regulation provide?

Interestingly enough, the president did not tell us. Nor did the EPA provide an estimate of temperature effects so obviously central to the discussion when it published the rule in draft form in June last year. Amazingly, EPA omits this even from its regulatory impact analysis of the final rule: Table 4-1 (“Climate Effects”) informs us that the “global climate impacts” from reduced emissions of carbon dioxide (presumably, all greenhouse gas emissions in CO2 equivalents), of ozone, of particulates, and of other greenhouse gases have not been quantified or monetized. EPA directs interested readers to the administration’s deeply flawed analysis of the “social cost of carbon,” which does not answer this central question; and to its own “integrated science assessments” and to the UN Intergovernmental Panel on Climate Change, without specific references. (Neither the ISAs nor IPCC answers this basic question either.) EPA does note, however, that it “assess[es] these co-benefits qualitatively because we do not have sufficient confidence in available data or methods.” Wow.

It is not as if this question cannot be answered; that is what climate models are for, whatever their massive failings. EPA itself uses the MAGICC/SCENGEN model developed at the National Center for Atmospheric Research. So: Let’s apply that model not just to the clean power plan, but to the broader climate action plan, which envisions a 17 percent reduction in U.S. greenhouse gas emissions below 2005 levels by 2020. The temperature reduction in the year 2100: fifteen one-thousandths of a degree. The effect would be too small even to be measured, let alone to affect sea levels and cyclones and all the rest. If we include the pseudo-agreement between the U.S. and China that was announced last November (even though the Chinese effectively disavowed it almost immediately), we can assume an additional 10 percent reduction by the U.S. by 2025, with no actual reduction by the Chinese. This gets us another one one-hundredth of a degree, for a grand total of twenty-five one-thousandths of a degree. A similar exercise assuming large cuts by the Chinese and by the rest of the industrialized world, costing $600-750 billion per year inflicted disproportionately upon the world’s poor, would reduce global temperatures by about four tenths of a degree by 2100.

And so the reluctance on the part of the president and the EPA to tell us what we are getting in exchange for a large increase in power costs and reliability risks is easy to explain: The answer is embarrassing, so much so that even inserting it into a Friday news dump would not work. That is why the EPA’s analysis of the new rule assumes a deeply dubious array of “co-benefits” in the form of particulate reductions and other impacts that are simply invented out of whole cloth and/or that already are counted as justifications for such other regulatory policies as the proposed ozone rule, the proposed particulate rule, and the utility mercury rule recently invalidated by the Supreme Court. Without such machinations, the clean power plan would collapse as a regulatory framework, because it is all cost and no benefit, even apart from its legal weaknesses now about to be the subject of massive litigation.

The president during his comments did not skimp in terms of his description of the adverse climate impacts awaiting mankind if greenhouse gas emissions are not reduced substantially. As with an estimate of the temperature effects of his policies, he did not offer much actual evidence. Accordingly: The temperature record is ambiguous, as is the correlation of GHG concentrations and the rate of sea-level increases. The Arctic and Antarctic sea ice covers do not differ by a statistically significant amount from the respective 1981-2010 averages. The Arctic ice cover is near the bottom, but within, the relevant range, and the Antarctic ice cover is near the top—and exceeds in some months—the relevant range. Tornado counts and intensities are in a long-term decline. The frequency and accumulated energy of tropical cyclones are near their lowest levels since satellite measurements began in the early 1970s. U.S. wildfires are not correlated with the temperature record or with increases in GHG concentrations. The Palmer Drought Severity Index shows no trend since 1895. Over the last century, flooding in the U.S. has not been correlated with increased GHG concentrations. World per capita food production has increased and undernourishment has decreased, both more-or-less monotonically, since 1993.

It is no accident that the Clean Power Plan would raise energy costs disproportionately in red states, thus reducing their competitive advantages over blue ones? Do not underestimate the power of wealth redistribution as a force driving policymaking in the Beltway. The president repeatedly used the phrase “carbon pollution,” a propaganda term designed to end debate before it begins by assuming the answer to the underlying policy question. Carbon dioxide is not “carbon” and it is not a pollutant, as a minimum atmospheric concentration of it is necessary for life itself. By far the most important GHG in terms of the radiative (warming) properties of the atmosphere is water vapor; does the president believe that it too is a “pollutant”? Presumably he does not, because ocean evaporation is a natural process. Well, so are volcanic eruptions, but no one argues that the massive amounts of particulates and toxins emitted by volcanoes are not pollutants. The climate debate is desperately in need of honesty and seriousness, two conditions characteristic of neither the Beltway nor the climate industry.

Benjamin Zycher is the John G. Searle scholar at the American Enterprise Institute.

GOP Wants More Money From the Middle Class

by coldwarrior ( 117 Comments › )
Filed under Economy, Open thread, taxation at July 29th, 2015 - 7:00 am

Yes, the GOP raising taxes. I have problems with that from both an economics level and from a moral level. First the Moral Level, the GOP should never be for raising taxes, period. But, they just love big government like the Democrats.

“The billions of dollars in lost sales tax is revenue badly needed by cash-strapped state and local governments to pay the salaries of essential workers such as police officers, firefighters, ambulance crews, and schoolteachers,” the NRF states.

Ummm….BULL! Cut spending! Failing that, try to raise taxes on the citizens in the state or local government. GO ahead, put THAT to a vote with your names on it state and local coward politicians.

Now for the economic reason against this tax:

The National Retail Federation (NRF) claims that states could collect an additional $25 billion in sales taxes annually if the legislation is passed, and argues that imposing the tax would help to promote business at traditional stores, create jobs, and provide tax revenue.

On-line purchases are already taxed at the same or higher level than those bought at a brick and mortar store. Here is how that works: A product is purchased by a person in PA from an on-line merchant in, let’s say, KY. (I just got an amazon package from Lexington so I will use that as an example). This retailer has a huge brick and mortar warehouse in KY that pays taxes on wages, energy, telecom/data, property, et cetera. Fine and dandy for KY but what about PA? They want taxes too.

Well, since this package is not part the tractor trailer load going from Walmart-distro to Walmart store, it is handled far more often by more people and creates taxes at a higher level. First, the package and goods are loaded into a box at Amazon, that act is taxed on the existence of the brick and mortar warehouse and workers involved. Then, it is handed off to a FedEx line haul driver in an 18-wheeler (gas/wage/tire/vehicle taxed) who drives it to the Hub in Louisville.

The Hub is enormous and generates a ton of tax revenue for KY/local. There the package is sorted and it goes to Columbus OH Hub where it is taxed en-route by deisel/truck/tire/wage taxes of the line-haul driver and his big rig. The sort Hub in Columbus generates a ton of tax revenue as well.

It then goes to PA, to the mini-hub in Pittsburgh where it is taxed again through wages/energy/ et cetera of the sort workers who place it on a delivery truck in that brick and mortar building. There it raises more tax revenue through gas/wages/vehicle et cetera taxes to get to my door. The delivery driver works and is paid to deliver, he then spends his money and is taxed on that. Without on-line sales his job does not exist. Without on-line sales, that mini-Hub has far fewer employees and PA/local gets far less tax money, so does everyone else down the line. When taxes are raised, the taxed action is penalized and occurs less often.

So, the jobs that the NRF and GOP want are part time retail jobs instead of full time transportation careers. That line-haul guy makes well over 50k a year not counting benefits, The mangers and support staff make pretty good coin too. The package-handlers range from 14-24 an hour and at UPS they get a great benefit package. A couple more clerks at Walmart gets you what in tax revenue?

Again the GOP tries to strangle the middle class. See, the thing is, they can’t send the transport jobs over to China….I suppose they could offer H1B visas to Pakistani taxi drivers to do line haul and package delivery….

Double-digit inflation rate prevails in much of the US – here are the real stats!

by 1389AD ( 111 Comments › )
Filed under Inflation at July 28th, 2015 - 8:54 pm

Writes economics aficionada yenta-fada:

An interesting alternative to the CPI (Consumer Price Index). It measures the costs of 500 essential things that people need, and concludes that there is inflation.

http://www.chapwoodindex.com/

From the site:

The Chapwood Index reflects the true cost-of-living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation.

It exposes why middle-class Americans — salaried workers who are given routine pay hikes and retirees who depend on annual increases in their corporate pension and Social Security payments — can’t maintain their standard of living. Plainly and simply, the Index shows that their income can’t keep up with their expenses, and it explains why they increasingly have to turn to the government for entitlements to bail them out.

It’s because salary and benefit increases are pegged to the Consumer Price Index (CPI), which for more than a century has purported to reflect the fluctuation in prices for a typical “basket of goods” in American cities — but which actually hasn’t done that for more than 30 years.

The middle class has seen its purchasing power decline dramatically in the last three decades, forcing more and more people to seek entitlements when their savings are gone. And as long as pay raises and benefit increases are tied to a false CPI, this trend will continue.

The myth that the CPI represents the increase in our cost of living is why the Chapwood Index was created. What differentiates it from the CPI is simple, but critically important…

Continue reading…

Of course the US government is lying to you. What do you expect?

Trump-a-palooza In Phoenix!

by The Osprey ( 84 Comments › )
Filed under Business, Elections 2016, Free Speech, immigration, Immigration, Media, Patriotism, Politics, Racism, Republican Party, RINOcracy at July 12th, 2015 - 3:39 pm

In the wake of his controversial, some say “RAAAAACIST™” comments decrying illegal immigration, Donald Trump has become a lightening rod in the Republican Party, who has RINOS everywhere scurrying for cover. Nowhere was that more apparent than here in Arizona, where the staunchly conservative Maricopa County Republican Committee, against the wishes of the RINOfied State GOP leadership, invited Trump to speak. The usual suspect RINOs such as John “My Friends” McCain rushed to disavow any connection with Trump, while the popular and controversial Sheriff Joe Arpaio made clear his support for Trump’s opposition to illegal immigration, although he has not endorsed him as a candidate.

I got a text from PHXGirl on Friday that Trump was coming to AZ, and as of noon on Saturday, when he was due to appear in the Phoenix Convention Center at 2:00PM, over 9000 invites had been given out via EventBrite. Due to some personal commitments I got to the convention center late, at around 2:21, but the line of people waiting to get in to hear “The Donald” speak stretched around the south, east and north side of the Phoenix Convention Center North complex.

And of course, the opposition was there as well, on the Southwest corner of the building there was a small knot of Anglo Leftist hipster teenagers and LaRazanistas, including an odd looking hipster chick who was selling “Joe Arpaio Voodoo Dolls”. At that point I was figuring out how to get into the event so I hurriedly transited through the south end of the building to the southeast corner outside patio, and missed the opportunity to snap a pic of hipster chick.

As the line of people moved along the east side of the building, a security guard with a walkie-talkie informed us that the ballroom where Trump was speaking was full, that the fire marshall and decided not to allow any more people in for safety reasons. As we turned the corner to the north side of the building, there were the largest group of the protestors, again a mixed crew of Anglo Leftists and LaRaza types. The protestors were on the North side of Monroe street, making a racket with the typical stale old Lefty “hey hey, ho ho, (fill in the blank here – in this case Trump and Arpaio) has got to go!” chant and blasting noisy freon horns. A police street barricade fence was down the middle on the closed street, and on the south side of Monroe in the shade of the portico of the building were those of us who were still trying to get in to the event and a line of Phoenix PD with riot gear at the ready. The crowd of protestors was small compared to the amount of people wanting to hear Trump, maybe a few hundred at the most but they were noisy and aggressive. Several people from the Trump side tried to engage in polite dialog with them but were shouted down.

The pro-Trump crowd was predominantly White and middle-class looking, but there were at least as many non-Whites mixed in among the pro-Trump crowd as there were protestors, but they were more varied. There were Hispanics, Blacks and Asians among the pro-Trump crowd, while the protestors were exclusively Anglo and Hispanic.

As it became clear to me that I was not going to be able to get into the event, I decided to “Zombie” style, take pics of the “rojos”, as I had not seen this many Leftists out on the streets of Phoenix since the AB1070 protests a few years ago.

This fellow says Trump is a “Tyrannical Racist Unscrupulous Monster Pig!” and a Confederate Flag fan to boot! OMG! And here I thought he was a damnyankee from New York City!

Trump confed

These two vatos locos in the bandanas were screaming obscenities at the pro-Trump crowd…”Trump you can suck my…” well, you get the picture. Curious about the red and blue bandanas…Sureños y Norteños unidad contra “El Donald”?

Vatos 1

Vatos 2

Mexico? It’s about 200 miles south, sweetie.

Mexican flag

Hipsters against Trump!

IMG_1577

Phoenix’s finest keep a watchful eye on los rojos.

IMG_1592

Trump owns Dell Computers now?

IMG_1590

The ginger-haired guy with the glasses in the blue shirt with his back to the camera was trying to dialogue with the protestor blond haired woman in front of him. He was so soft-spoken I could not hear what he was saying, I’m guessing it had something to do with the military since the woman kept shouting that she was Mexican and her son was in the USMC. And your point is? If you are here legally and your son is serving in the Marines, then you are not the problem Trump is talking about!

ginger guy

Trump supporters hoping to get in and Phoenix PD
trump supporters and phx pd

Devo fans for Trump!

devo

Donald Trump: Bringing more cowbell to the GOP!

cowbell

Saturday Lecture Series: “The Formula”

by coldwarrior ( 17 Comments › )
Filed under Academia, Economy, Open thread at July 11th, 2015 - 9:00 am

Good Morning all! Welcome to the Blogmocracy’s Econometrics Lab and Casino. Today we are going to look at “The Formula” . This formula is one of my favorites, it’s boring, stuffy, old-school, and it works.

It was only a matter of time until someone went to “The Formula”

The formula is:  where Dt is the debt to GDP ratio and Bt is the primary budget balance. r is the nominal interest rate and g is the nominal growth rate.

 Get used to this formula. It will be applied here.

 

Greece Will Live or Die by This Formula

What Greece needs is growth

On Greece, do the math, and the math is blindingly simple.

Paul De Grauwe, a giant of fiscal European economics, says that Greece is solvent. His essay and his optimism are founded on The Formula.

 De Grauwe’s essay is a controversial and clear summary of one belief on Greece: Things are not nearly as bad as the creditors make them out to be; with courage and understanding, the haves of Europe can help Greece help itself. All that is needed, as with Iceland and Ireland and Cyprus — three other countries that went through their own debt crises — is top-line growth and, again, courage.

The Formula is timeless and in each and every basic economics text. (It gets less respect because it is a dry-as-dust fiscal equation compared with the steamy romance of monetary math.) In fiscal crises, the best-and-brightest always trot The Formula out. The truth is the dynamic simplicity of The Formula’s core— the (r-g) in the above — always bears repeating.

The relationship is: A nation’s debt-to-GDP ratio is equal to the critical dynamic of its nominal interest rate (the “r” in the above formula) minus its nominal growth rate (the “g”), applied to the previous debt-to-GDP ratio and then all of that compared to the nation’s overall growth rate. Then take that movable feast and subtract the massive weight of its primary budget surplus. It is a deceptive and simple relationship but, in crisis, there is one key moving part. The key moving part, again, is (r-g). The “g” must equal or be higher than the “r” in The Formula. If the nominal interest rate (“r”) is higher than the nominal growth rate (“g”) then the government will face an ever-increasing debt-to-GDP ratio.

De Grauwe emphasizes that the key need for Greece is to see growth.

He is not alone on that, but with great clarity he suggests that far and away the most effective “help” Europe can give Greece is to implement a constructive growth path for Athens.

You can see how Greece’s current growth (“g”) stacks up against that of Portugal, Cyprus, Ireland, and Iceland in the below chart.

Greece’s nominal GDP growth rate cratered in 2011 and is still negative. From the bottom: Portugal displays modest growth and then Cyprus does better. Ireland, in green, has vastly improved while Iceland, in white, is rockin’ the Reykjavik world.

To De Grauwe, the sole path to a better Greece is economic growth, and growth that equals or exceeds the key interest rate.

In all cases of fiscal crisis recovery, this is what must happen. It happened in Iceland and Ireland, it is happening in Cyprus, and it somewhat happened in fragile Portugal. It is not happening in Greece.

Again, the chart just shows the “g” part of The Formula. It goes without saying that “r” must cooperate, too.

Read Paul De Grauwe’s essay. Then reread it. Here is an outstanding treatise on the many important difference equations that lie beneath The Formula.

Discuss at time t-1, t, t+1, t+2 …

Trump Is Right

by coldwarrior ( 11 Comments › )
Filed under Economy, Immigration, Special Report at July 10th, 2015 - 8:55 am

I can’t seem to find anything in error in Trump’s statement below.

All he left out is that the elites in Latin America love to see the poor leave for America, it prevents a revolution and provides dollars coming back into their countries as remittances.

When we control immigration, we pick who gets into America, when we don’t control immigration, other countries decide who gets into America. Wanna play a game with those rules? I get to pick your team.

And do note, because just about everyone else can’t seem to get it, he is making a distinction between legals and illegals. The main stream GOP is after him big now, he just threatened to take away their cheap labor for their buddies in the so called “Chamber of Commerce”, a once capitalist organization. The Democrats are after him because he is threatening to take away the immigration bat that they smack Republicans with.

I wonder what legal immigrants have to say about illegals? I’ll bet I can’t print it here. (I know that Mrs Coldwarrior despises illegal immigration as she had to go through all of the hoops to get here legally and become a productive citizen.)

Trump: I Have Lost a Lot, But I’m Right About Mexico

Image: Trump: I Have Lost a Lot, But I'm Right About Mexico (Reuters/Dominic Reuter)

By Donald J. Trump   |   Monday, 06 Jul 2015 06:09 PM

I don’t see how there is any room for misunderstanding or misinterpretation of the statement I made on June 16th during my Presidential announcement speech.Here is what I said, and yet this statement is deliberately distorted by the media:”When Mexico [meaning the Mexican government] sends its people, they’re not sending their best. They’re not sending you [pointing to the audience]. They’re not sending you [pointing again]. They’re sending people that have lots of problems, and they’re bringing those problems to us. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people! But I speak to border guards and they tell us what we’re getting. And it only makes common sense. They’re sending us not the right people. It’s coming from more than Mexico. It’s coming from all over South and Latin America, and it’s coming probably from the Middle East. But we don’t know. Because we have no protection and we have no competence, we don’t know what’s happening. And it’s got to stop and it’s got to stop fast.”

What can be simpler or more accurately stated? The Mexican Government is forcing their most unwanted people into the United States. They are, in many cases, criminals, drug dealers, rapists, etc.

This was evident just this week when, as an example, a young woman in San Francisco was viciously killed by a 5 time deported Mexican with a long criminal record, who was forced back into the United States because they didn’t want him in Mexico. This is merely one of thousands of similar incidents throughout the United States. In other words, the worst elements in Mexico are being pushed into the United States by the Mexican government.

The largest suppliers of heroin, cocaine and other illicit drugs are Mexican cartels that arrange to have Mexican immigrants trying to cross the borders and smuggle in the drugs. The Border Patrol knows this. Likewise, tremendous infectious disease is pouring across the border.

The United States has become a dumping ground for Mexico and, in fact, for many other parts of the world. On the other hand, many fabulous people come in from Mexico and our country is better for it. But these people are here legally, and are severely hurt by those coming in illegally. I am proud to say that I know many hard working Mexicans — many of them are working for and with me…and, just like our country, my organization is better for it.

The Mexican Government wants an open border as long as it’s a ONE WAY open border into the United States. Not only are they killing us at the border, but they are killing us on trade … and the country of Mexico is making billions of dollars in doing so.

I have great respect for Mexico and love their people and their peoples’ great spirit. The problem is, however, that their leaders are far smarter, more cunning, and better negotiators than ours.

To the citizens of the United States, who I will represent far better than anyone else as President, the Mexican government is not our friend…and why should they be when the relationship is totally one sided in their favor on both illegal immigration and trade. I have pointed this out during my speeches and it is something Mexico doesn’t want me to say. In actuality, it was only after my significant rise in the polls that Univision, previously my friend, went ballistic. I believe that my examples of bad trade deals for the United States was of even more concern to the Mexican government than my talk of border security.

I have lost a lot during this Presidential run defending the people of the United States. I have always heard that it is very hard for a successful person to run for President. Macy’s, NBC, Serta and NASCAR have all taken the weak and very sad position of being politically correct even though they are wrong in terms of what is good for our country. Univision, because 70% of their business comes from Mexico, in my opinion, is being dictated to by the Mexican Government. The last thing Mexico wants is Donald Trump as President in that I will make great trade deals for the United States and will have an impenetrable border — only legally approved people will come through easily.

Interestingly, Univision has just announced they are attempting to go public despite very poor and even negative earnings, which is not a good situation for a successful IPO or high stock price — not to mention that I am currently suing them for breach of contract. Remember, Univision is the one who began this charade in the first place, and they are owned by one of Hillary Clinton’s biggest backers.

After the speech was made, there were numerous compliments and indeed, many rave “reviews”— there was very little criticism. It wasn’t until a week after my announcement that people started to totally distort these very easy to understand words. If there was something stated incorrectly, it would have been brought up immediately and with great enthusiasm.

The issues I have addressed, and continue to address, are vital steps to Make America Great Again!

Additionally, I would be the best jobs President that God ever created.

Let’s get to work!

 

Fun With Satellites

by coldwarrior ( 45 Comments › )
Filed under Economy, Open thread at July 10th, 2015 - 8:49 am

Check this out.

 

Go to the article as it is too large to post here