## Tuesday, May 31, 2011

### gosplan survivor attacks

"No it is not great stuff, it is nonsense. For one thing, he said we have been socialist since the New Deal. You know that isn't true. Our economy is capitalist with some socialist programs.
When people take the risks and make the sacrifices needed to start a business, they deserve some reward if it becomes successful. People will not make those efforts if the "people" are going to grab what they created.
Open source software is not an example of socialism. Anyone who contributes to an open source project is trying to build a reputation. It is not pure altruism, unless they are rich and don't need to make a living.
Shared capitalism is a stupid idea that only the sheltered brain of an academic could dream up. It is obviously as much in conflict with reality as Marxism.
Employees cannot own the business that hired them. If you want to own a business, you raise capital and take risks.
If people want to get together and form a cooperative business, they have every right. But they will not have the 40 hour weeks and reliable paycheck of an employee.

-----------------
paine replies

socialization of production
look it up
break up of the isolated units of social production
to get a toy insight into this on going
unintentional de facto acro optimization process
"People will not make those efforts if the "people" are going to grab what they created"
who necessarily sez that's socialization
perhaps we just change the social means
and source
" innovative incentive "
red up on tournments and prize systems

luvguv said in reply to paine...
paine, it would be nice if you could get in touch with reality. "Primary producers???" You mean the workers, who do what their bosses tell them? Why are they primary, and not the people who invented and developed the products, who found a market for the products, who figured out how to mass produce them?
Are you kidding yourself or what

------------------
paine said in reply to luvguv...

you write like the typical gosplan survivor
cast iron reactionary forged under
soviet kamp frankenstein conditions
there is more in heaven and earth
then just what undigested post 89
conventional wisdom has wrought up in your brain horatio-ski
-------------
we formulators of a gosplan II
might surprise you
...............

the labor
of those keen socially precious spirits
that
"invented and developed the products,
found a market for the products,
and figured out how to mass produce them"

is hardly optimized by present private capital firms these become in our present institutionalized
way of social production
merely the sunk costs of some for profit out fit
looking to trap rents as long as possible
to compensate these sunk costs
you can't envision a better system then that
why well tuned neo classicals'
brain blood oughta boil at all this
miss allocation at the margin ..no ??

## Monday, May 30, 2011

### a new institute of conjuncture

all  just so rational narratives no data torturing

### the man !!!!!

" capitalists may decide to consume and to invest more in a given period than in the preceding one, but they cannot decide to earn more
: investment and consumption decisions  determine profits, and not vice versa"

$\textstyle P=C_P+I \,\$

then again

$\textstyle P+B=k \cdot (W+M) \,\$

### i've read in fact the apian hive at any time is 3/4's idle

and yet manny writes in fabula dicta :
the  bulk of the human hive can be vexed  by want
to higher mobilization :

"The economic well-being of the nation depends on the presence of a large number of men who are content to labor hard all day long. Because men are naturally lazy they will not work unless forced by necessity to do so. The education of the poor threatens to rob the nation of their productivity... "

but there   more truth  pay attention to0 this  ..let's call it manny's  lemma :

"Every hour those poor people spend at their books is so much time lost to society. Going to school in comparison to working is idleness."

### tennyson locksley hall

For I dipt into the future, far as human eye could see,
Saw the Vision of the world, and all the wonder that would be;

Saw the heavens fill with commerce, argosies of magic sails,
Pilots of the purple twilight dropping down with costly bales;

Heard the heavens fill with shouting, and there rain'd a ghastly dew
From the nations' airy navies grappling in the central blue;

Far along the world-wide whisper of the south-wind rushing warm,
With the standards of the peoples plunging thro' the thunder-storm;

Till the war-drum throbb'd no longer, and the battle-flags were furl'd
In the Parliament of man, the Federation of the world.

There the common sense of most shall hold a fretful realm in awe,
And the kindly earth shall slumber, lapt in universal law.

60 years on ...

Gone the cry of 'Forward, Forward,' lost within a growing gloom;
Lost, or only heard in silence from the silence of a tomb.

Half the marvels of my morning, triumphs over time and space,
Staled by frequence, shrunk by usage into commonest commonplace!

'Forward' rang the voices then, and of the many mine was one.
Let us hush this cry of 'Forward' till ten thousand years have gone.

## Sunday, May 29, 2011

### paradigm ecoc con at work

menzie chinn does it right..... with numbers
http://www.econbrowser.com/archives/2011/05/economic_underp.html

the blow up of gop congo agit-pap
is just detailed and linkified enough
to turn  Cap-Hill size moose turds
into breeze removeable  100 angstrom diameter
dust particles

Mr Chinn  has gotta be
the hardest working
accuracy obsessed
wonkonomics guy
now operating
a white hat con shop on the blogosphere

### graphs

note domestic production
call it annualized 1.8 billion barrels
do the calc
$50 per b rise ...adds$90 billion
in wind fall  profits to domestic producers
-- assuming that long interval of similar production
at lower prices indicates marginal cost prices
on these wells are  prolly  still around 50 bucks per b --

second graph :

paul k
correctly notes :

we could go to 4% core inflation for tten years
ie revisit the reagan bright new morning in amerika rates
whilst
considerably shrinking the real debt of all of us
from mr and mrs little me
to uncle  hizzseff

## Sunday, May 22, 2011

### try harder ??

Source: Bureau of Economic Analysis.

## Friday, May 20, 2011

### at bottom

at contraction's end  at touch down  09
we employed the same number of folks in the manusec
as  in ..........................1941

http://www.bls.gov/opub/mlr/2011/04/art5full.pdf

### oh ya

the better ratio is manu gap top manu sector
say uncle's manu-sec is  20% of NVA
at -2% gdp
its running  10% below balance now

10% more manu jobs ???  at 12 mill now  maybe what  ???

peanuts

manusec contracted  by 15% in jobs after  the credit crunch
the dropping  dollars manged  to more or less stabilize the manu job force
for about  4 years b4 the crunch
then plop
my guess the  implicit " 2 % target gap"
will put manusec in job stag mode for the time being

### how many jobs in a persistent 2% manubalance gap

the decade range   almost as good as 1.5 to  as bad as  4 plus

but suggesting we could keep it close to two even if we zoomed up to full employment corporate style
ie 4-5% UE

that is the seeewwwious poser's question for pk et al

### manubalance

estimate US full employment balance
so much for pure absorption rate adjustments etween north h and south h

break balances into regions
north vv south
and more finely

east asia
south asia

europe east west

latin america sub s africa arab world etc

trends may not be uniform once the regional forex adjustments are targeted

## Thursday, May 19, 2011

### pk sez lookin up uncle's manubalance wise

percentage of GDP:
The weaker dollar really has made a

## Wednesday, May 18, 2011

### job age to non job age population

looks like a dance with some
symmetry  / a-symmetry intervals
but not enough good a-symmetry

a  dance  without an embrace

:

## "The repo market

As deposits moved out of commercial banks, investment banks and money market funds increasingly provided close substitutes for the services commercial banks provide. Like the banks they replaced, they accepted cash in return for promises to repay with interest, leaving the option of when and how much to withdraw up to the lender. The exact form of the contracts involved came in enormous variety. In order to support these activities, financial institutions created new securities and new arrangements for trading them, arrangements that enabled them collectively to clear ever larger trading volumes with smaller and smaller holdings of actual cash. In August of 2008, the entire banking system held about $50 billion in actual cash reserves while clearing trades of$2,996 trillion per day.2 Yet every one of these trades involved an uncontingent promise to pay someone hard cash whenever he asked for it. If ever a system was “runnable,” this was it. Where did the run occur?
...There were two runs on investment banks... The run on Bear Stearns in March ended with its purchase by JPMorgan Chase, and the run on Lehman Brothers in September ended with its bankruptcy. In addition, there was an incipient run on money market mutual funds following the collapse of Lehman, halted only when the Treasury stepped in to provide deposit insurance for those institutions.

Of course,... these events also heightened the fear of contagion for all financial institutions, altering their willingness to engage in various transactions. "

"In economic terms a repurchase agreement (repo) is a securitized loan.3 The lender brings cash to the transaction, while the borrower supplies a T-bill or some other security to be used as collateral. The loans are short term, often one day.
Large lenders in the repo market include money market mutual funds and hedge funds. The repo market performs for these large institutions the same function that commercial banks perform for smaller depositors. In effect, it allows them to pool their cash, collectively economizing on their stocks of non-interest-bearing assets. For lenders, the repo market is attractive because the loans are very short term, so it is a way to earn a return—albeit modest—on cash reserves that would otherwise be idle. In normal times, any lender can withdraw cash by declining to roll over earlier loans. Firms that do not want liquidity do not lend in the repo market, since higher returns are available elsewhere."

" Consider a shock that heightens uncertainty about the soundness of financial institutions. Potential lenders will choose to hold more of their cash in reserve, anticipating possible withdrawals by their own clients. As a result, potential borrowers will find it difficult to obtain funds. Actual defaults are rare in this market, but borrowers who hoped to roll over old agreements may have to sell securities on short notice, perhaps at fire sale prices, to obtain cash elsewhere."

The Repo Market and other Monetary Aggregates
January 2008 to January 2009
Jan. 2008 (billions)
Jan. 2009 (billions)
Change
Cash Held Outside of Banks*
$773.9$832.2
+7.5%
Private, Domestic Demand Deposits*
$510.7$658.0
+28.8%
Money Market Mutual Funds*
$3,033.1$3,757.3
+23.9%
Repos held by Primary Dealers**
Total
Overnight & Continuing

$3,699.4$2,543.6

$2,585.9$2,005.6

-30.1%
-21.2%

.

At the beginning of 2008, primary dealers held total funds of $3.70 trillion in the repo market, of which$2.54 trillion was in overnight or continuing agreements. Those figures grew slightly during the first half of 2008. Total funds then fell to $2.59 trillion at the beginning of 2009, a 30 percent decline, while overnight and continuing agreements fell to$2.01 trillion, a 21 percent decline. Both figures showed further declines over the subsequent year as well.

## Lessons from the panic of 2008

We began by asking what theory and evidence tell us about liquidity crises and about policies to avoid them or to mitigate their severity. The arguments above do not provide a complete answer, but they do point to some broad principles.
(a) Bank regulation can reduce the likelihood of liquidity crises, but it cannot eliminate them entirely.
Banks will fail, and these failures will make failure more likely for others. There is language in Dodd-Frank suggesting that the Fed should take responsibility for predicting and precluding crises, but this task seems to us to be an impossible one, at least for the foreseeable future.4
(b) During a liquidity crisis, the Fed should act as a lender of last resort.
In the event of a bank run or a run on the repo market, the Fed can always add liquidity to the system, and there will be occasions—as in 1930 and in the fall of 2008—when it would be irresponsible not to do so.
(c) The Fed should announce its policy for liquidity crises, explaining how and under what circumstances it will come into play.
The events of 2008 illustrate the importance of an announced and well-understood policy. Over the years prior to 2008, investors came to understand that the Fed was operating under an implicit too-big-to-fail policy, in the sense that the depositors/creditors of large banks would be protected. No other policy was ever discussed, and the Fed’s assistance in engineering the orderly exit of Bear Stearns in March 2008 was surely interpreted as evidence that this policy was still in place. The abrupt end of Lehman in September was then all the more shocking.
There is no gain from allowing uncertainty about how the Fed will behave. The beliefs of depositors/lenders are critical in determining the contagion effects of runs that do occur. By announcing a credible policy, the Fed can affect those beliefs, and the Fed needs to use this tool.
(d) Deposit insurance is part of the answer.
When introduced in the Banking Act of 1933, deposit insurance was limited to small deposits, and its role was viewed as consumer protection, not run prevention. Deposit insurance performed this function well during the 2008 crisis: There were no runs on FDIC-insured commercial banks, although many failed or were absorbed by stronger institutions.
Deposit insurance should be retained, although for the reasons described by Kareken and Wallace, the assets held against insured deposits should be carefully regulated.
(e) Deposit insurance has a limited role.
Investment banks, money market funds and the repo market are outside the protection of the insured system, and the liquidity crisis of 2008 involved these other institutions. Could they be brought into the fold, with the relevant portion of their investment portfolio regulated in the same way that commercial banks are?
Higher returns in the uninsured sector will always be attractive for large depositors, and new institutions or arrangements would surely arise, offering liquidity provision on the old, risky terms. Clients will want it, markets will have a strong incentive to provide it and regulators will probably not be able to contain their efforts. Providers will be able to innovate around regulations or move offshore to avoid them. This dilemma leads us to our next point.
(f) The Fed’s lending in a crisis should be targeted toward preserving market liquidity, not particular institutions.
There are two goals here: to have a credible policy for how liquidity will be injected in a crisis and to provide proper incentives for banks during ordinary times. Both goals are met by the Bagehot rule: In a crisis, the central bank should lend on good collateral at a penalty rate. To implement this rule, we need to know how much the Fed should lend and what assets will be regarded as good collateral.
Time consistency requires that no upper bound be placed on crisis lending. The guidelines we have for monetary policy, whether stated in terms of monetary aggregates or interest rates, are directed at long-term objectives and are no help in a liquidity crisis. After the Lehman failure in the fall of 2008, the Fed expanded bank reserves from $40 billion to$800 billion in three months, surely exceeding by far any limit that would have been imposed in August. Even with this decisive response, spending declined sharply over next two quarters.
Because crises occur too rarely for the ex ante formulation of useful quantitative rules, the Fed should have considerable discretion in times of crisis. Nevertheless, because policies should be predictable, the Fed should describe the indicators it will use to decide when lending has reached a sufficient level.
Defining good collateral is more complicated. The quality of collateral is in the eye of the lender, and it can change dramatically from week to week. In this application, though, the lender is the Fed, and it is the responsibility of the Fed to define what it will treat as good collateral. To this end, the Fed should announce an ordering of assets by their quality. The list should be long enough to cover all contingencies, and it would need to be revised from time to time.
In such a regime, banks outside the FDIC would be free to choose their portfolios, with clients, bondholders and equity holders bearing the risk that those choices entail. The lower return on lower-risk assets would be offset, at least in part, by their superior status as collateral in the event of a crisis.
Avoiding liquidity crises altogether is probably more than we can hope for. What we can do is put in place mechanisms to make such crises infrequent and to make their effects manageable

## Monday, May 16, 2011

### us manu flat

Real shipments down  22% from  peak  fourth quarter 07 to  second quarter 09

as of  first quarter 11
15% below  peak

that shows the old trend is not reversed eh ???

no surprise Over the past year, aggregate hours in the private sectorup 2.3%,
aggregate hours in manufacturing up  2.9%.

feel the .6% difference ?????

on the other hand
this is the era of de industrialization and looking back over the ea's cycles  --after the big pop
of the early 80's
ie
the rebound of reagan morning in america

## Saturday, May 14, 2011

### when cash out is not doable

if you gotta stay in an institutions paper
other then fed cash
say cause your talking billions or even tens of millions
why of course is you think demand accounts are uncertain at least liquidity wise

then if you have to to get your value into safe issues
you buy t notes above face value
ie negative rate of nominal return

just saying ....

### why representative firm level thinking is so dangerous a generalization

interfu-idiot randy w
set me off
with his league of magic trick assumptions

“firms under monopolistic competition with increasing marginal costs”
assume increasing marginal costs ??
is this the magic trick here?
what if its almost never the case particularly in a demand squeeze
what if demand constrained firms always face declining or at least level variable costs and thus
your operating at capacity needs to go poof
and this ??
” Holding symmetrical and constant the shape of the distribution of sales conditional on price, adjusting prices downward increases the mass of the profit distribution inside the bankruptcy regime. It is unrealistic to hold the shape of that distribution constant, but even allowing for plausible variation (the distribution of sales narrows around a mean of zero as price increases), at the margin the effect of leverage is to reduce price adjustment, prevent the price from reaching the price an unlevered firm would set.”
strikes me as a very intense tap dance
unpack it dear sir
in particular
“adjusting prices downward increases the mass of the profit distribution inside the bankruptcy regime”
not for sure if sales increase
ie violate ..and why not..your stricture :
“Holding symmetrical and constant the shape of the distribution of sales conditional on price”
and with unit sales flex capacity
we get both q and p movements at the firm level
and alas ambiguity as to firm level revenue change eh ??
first off the line price cut marketers often gain share here …no ??

--------------------
“the effect of leverage is to reduce price adjustment, prevent the price from reaching the price an unlevered firm would set.”

this key insight and by itseelf worth a post
runs aground for equally keen reasons you nicely sight
the competitive advantage of maximal leverage
sunk cost are to be fogotten in operation eh
and fixed costs have this added sunk like dynamic aspect you can’t liquidate em
especial in market contraction conditions
best practice utilize all fixed factors
but the incubus of debt used to buy and build these fixed factors
cripples the marginal pricing option
ie dramatic price cuts
by spoiling the market for other participants
that have other firms in their payment stream that will face dramatic unit sales drops if they don’t respond
the flabalanche of weak participants into payment problems quickly insues

btw
the burden of more and more arbitrary assumptions
build as you thicken your one firm decider scenario towards
market like complexity
btw have you ever run a firm thru these sorts of tempest ??

### why so much job kill and payment default ??

why can't we sublate some of this waste ??

example
the payments grid
the system just needs more insurance eh ??

a payments grid with full insurance mandated
participate or not
uncle makes it an option you can’t refuse by a subsidy thru premium payment participation
ultimately all risk should be held at maximal spread
ie the level of the whole society
ie uncle as reinsurer of all policies
moral hazard ??
what lesser creditor has uncle’s ability and capacity for generosity ???
justice has its maximal chance if uncle is the final creditor
of course this isn’t cor[porate capitalism
so
——————
happy fewest job force
is indeed corporate optimal
the secular increase in the reserve army
is an artifact of social marketeering
corporate style
example
no wage insurance which would solve the wage cut or hour cut alternative
to the job axe
but if corporate operations can extract higher margins with bigger reserve armies …..
take th apparently benign german job time account
despite the recent job kill free swoon in output there
that indeed the system might have contributed to
like the rest of the hartz reforms
this strikes me as fishy if not over the full cycle then secularly
these job time accounts remove the over time premium and back load it as an exit tax paid directly to the exiter
to avoid the exit tax at time of job hack corporates are incentivized to reduce hours or wage rates
usually hours
this seems systemically to pin hours higher and participation lower over the long haul
as does company pay ins toward job attached benefit plans
so long as the company pay ins are not pro rated by hours worked
the over time premium oughta be higher if anything
and jobs oughta pay wages with no benefits
–uncle could scoop this bene stream up
and set up an earned income credit system to provision the stream in part
and of course wage theft thru recorded hours games enters here double force
ahh so much to do so little corporate incentive to do it
we need an october

### euro strain as expansion stuck in wicked unbalance mode

in 05 germany and france contributed 50% of zone growth
now
the big two contribute over 70%

note the horrors of piigdom

## Friday, May 13, 2011

### cyber pricing and the commmmmmmanding heights

automated price algorithms as part of a complete corporate pricing pacification

the seller as price taker has only buying and  output to consider ie how much q at p

if the system is fully interconnected financially
ie full court financialization within the unitary credit/insurance dome of course

## Thursday, May 12, 2011

redline deficit sans oil

black line oil deficit
blue line whole biz

green line II  is the trend on oil-less trade gap

hail the  up crawl

oil over cometh macro  impact wise of course
green trend line I

but are we stablizing the  industrial sector ???

## Wednesday, May 11, 2011

### kalecki

they don't come any better then this

### dani dani oh oh dani

CAMBRIDGE – I have been presenting my new book The Globalization Paradox to different groups of late. By now I am used to all types of comments from the audience. But at a recent book-launch event, the economist assigned to discuss the book surprised me with an unexpected criticism. “Rodrik wants to make the world safe for politicians,” he huffed.
Lest the message be lost, he then illustrated his point by reminding the audience of “the former Japanese minister of agriculture who argued that Japan could not import beef because human intestines are longer in Japan than in other countries.”
The comment drew a few chuckles. Who doesn’t enjoy a joke at the expense of politicians?
But the remark had a more serious purpose and was evidently intended to expose a fundamental flaw in my argument. My discussant found it self-evident that allowing politicians greater room for maneuver was a cockamamie idea – and he assumed that the audience would concur. Remove constraints on what politicians can do, he implied, and all you will get are silly interventions that throttle markets and stall the engine of economic growth.
This criticism reflects a serious misunderstanding of how markets really function. Raised on textbooks that obscure the role of institutions, economists often imagine that markets arise on their own, with no help from purposeful, collective action. Adam Smith may have been right that “the propensity to truck, barter, and exchange” is innate to humans, but a panoply of non-market institutions is needed to realize this propensity.
Consider all that is required. Modern markets need an infrastructure of transport, logistics, and communication, much of it the result of public investments. They need systems of contract enforcement and property-rights protection. They need regulations to ensure that consumers make informed decisions, externalities are internalized, and market power is not abused. They need central banks and fiscal institutions to avert financial panics and moderate business cycles. They need social protections and safety nets to legitimize distributional outcomes.
Well-functioning markets are always embedded within broader mechanisms of collective governance. That is why the world’s wealthier economies, those with the most productive market systems, also have large public sectors.
Once we recognize that markets require rules, we must next ask who writes those rules. Economists who denigrate the value of democracy sometimes talk as if the alternative to democratic governance is decision-making by high-minded Platonic philosopher-kings – ideally economists!
But this scenario is neither relevant nor desirable. For one thing, the lower the political system’s transparency, representativeness, and accountability, the more likely it is that special interests will hijack the rules. Of course, democracies can be captured too. But they are still our best safeguard against arbitrary rule.
Moreover, rule-making is rarely about efficiency alone; it may entail trading off competing social objectives – stability versus innovation, for example – or making distributional choices. These are not tasks that we would want to entrust to economists, who might know the price of a lot of things, but not necessarily their value.
True, the quality of democratic governance can sometimes be augmented by reducing the discretion of elected representatives. Well-functioning democracies often delegate rule-making power to quasi-independent bodies when the issues at hand are technical and do not raise distributional concerns; when log-rolling would otherwise result in sub-optimal outcomes for all; or when policies are subject to myopia, with heavy discounting of future costs.
Independent central banks provide an important illustration of this. It may be up to elected politicians to determine the inflation target, but the means deployed to achieve that target are left to the technocrats at the central bank. Even then, central banks typically remain accountable to politicians and must provide an accounting when they miss the targets.
Similarly, there can be useful instances of democratic delegation to international organizations. Global agreements to cap tariff rates or reduce toxic emissions are indeed valuable. But economists have a tendency to idolize such constraints without sufficiently scrutinizing the politics that produce them.
It is one thing to advocate external restraints that enhance the quality of democratic deliberation – by preventing short-termism or demanding transparency, for example. It is another matter altogether to subvert democracy by privileging particular interests over others.
For instance, we know that the global capital-adequacy requirements produced by the Basel Committee reflect overwhelmingly the influence of large banks. If the regulations were to be written by economists and finance experts, they would be far more stringent. Alternatively, if the rules were left to domestic political processes, there could be more countervailing pressure from opposing stakeholders (even though financial interests are powerful at home, too).
Similarly, despite the rhetoric, many World Trade Organization agreements are the result not of the pursuit of global economic well-being, but the lobbying power of multinationals seeking profit-making opportunities. International rules on patents and copyright reflect the ability of pharmaceutical companies and Hollywood – to take just two examples – to get their way. These rules are widely derided by economists for having imposed inappropriate constraints on developing economies’ ability to access cheap pharmaceuticals or technological opportunities.
So the choice between democratic discretion at home and external restraint is not always a choice between good and bad policies. Even when the domestic political process works poorly, there is no guarantee that global institutions will work any better. Often, the choice is between yielding to domestic rent-seekers or to foreign ones. In the former case, at least the rents stay at home!
Ultimately, the question concerns whom we empower to make the rules that markets require. The unavoidable reality of our global economy is that the principal locus of legitimate democratic accountability still resides within the nation state. So I readily plead guilty to my economist critic’s charge. I do want to make the world safe for democratic politicians. And, frankly, I wonder about those who do not.
---------------------------------

notes :

.
"Of course, democracies can be captured too. But they are still our best safeguard against arbitrary rule."
i love dani
but this is a wooden duck
its up shot
hugo chavez gets tumbled about in the well meaning liberal press
for cutting due process corners
danny ortega gets tossed out because a majority finally has had enough yankee torment
worship of formalisms are the real platonic vices
not dreaming of a guardian class
the best of all possible forms
and of universalist application
open multi party elections

sez who ??
i contend the color revolutions marked an advance only for MNC global penetration
we will see how the arab street benefits
from the recent uprising
not if its hi jacked by compradore interests like say....
the military in egypt

paine said in reply to paine ...
"subvert democracy by privileging particular interests over others."
and how is this prevented
thru more open elections ??
look if you can fool enough of the people enough of the time
the media the school system and the riot police can go the rest

paine said...
"Independent central banks "
oh my god !!!!
dani shame on you

paine said...
"economists have a tendency to idolize such constraints without sufficiently scrutinizing the politics that produce them."
now you're cookin dani !!!!

"Often, the choice is between yielding to domestic rent-seekers or to foreign ones. In the former case, at least the rents stay at home!"
exactly !!!!  err that is till they send their gleens off shore and thru a forex  processor

problem if this piece by the wonderous rodrik
were a carpet it would fall apart its got so many mutually contradictory patches
unless like me dani is a hegelian
that oughta give him pause
but no
dani is a gleeful eclectic like most good progressive econ cons these days
up shot
eat him up only after careful carving out

## Tuesday, May 10, 2011

### forex moves versus price level moves

big difference ???

existing legacy parts of the nominally  fixed forward payments grid

the values of that grid's locally denominated parts
remain uneffected
( at least prior to future knock on  price movements
thru the import export channels )

on the other hand

the value of  foreign denominated parts are of course  immediately   altered

in  a direct product price level move
the  local exchange value  of these obligationns
but if forex remains stable not the foreign obligations value

### stig and the new academic scpeticism

on the 300 th anniversary of david hume's birth
it dawned on me

why the new micronomics of stgilitz et akerlof  spence et al
is in the great hume's  tradition of chastening  anti dogmatics
anti zealotry and anti superstition
and consequent open minded   policy eclecticism

stig's  credit rationing job rationing non clearing market world
where
incalculable  uncertainty are rife and  pareto difficient externalities  pandemic
surely makes a nice anti world to paul samuelson's

sum up
of two generations
encompassable by  just two boys from gary

akerlof tells the story of this great transformation

"At the beginning of the 1960s, standard microeconomic theory was overwhelmingly based upon the perfectly competitive general equilibrium model.

By the 1990s the study of this model was just one branch of economic theory.

Then, standard papers in economic theory were in a very different style from now,
where economic models are tailored to specific markets and specific situations.

In this new style, economic theory is not just the exploration of deviations
from the single model of perfect competition.

Instead, in this new style, the economic model is customized
to describe the salient features of reality that describe the special problem under consideration."

### profits are not the revenue share of a factor

just reminding and underlining

### the bordered sub markets of the world market

a model must not only be corporate agent based but also recognize the barriers to one world price for traded goods and services

optimal tariff theory and optimal price discrimination theory
the state firm inter action is left unmodeled of course
ie
to what extent the state captures gains from cross border trade
etc

## Monday, May 9, 2011

### pov bridge of an MNC

what does the global economy look like from the executive suite of a true multinational corporation

an outfit with plant in many bordered markets
in many currency zones
and shares in many  or most siginifigant  bordered markets
both north and south

### mundell's trilemma

" the Mundellian impossible trinity, aka the trilemma,
can’t simultaneously have free movement of capital, a stable exchange rate,
and independent monetary policy. :"

## Sunday, May 8, 2011

### the real target of macronautics corporate style

wizard  of mass ave
greg mankiw :

"This paper assumes that a central bank commits itself to maintaining an inflation target and then asks what measure of the inflation rate the central bank should use if it wants to maximize economic stability. The paper first formalizes this problem and examines its microeconomic foundations. It then shows how the weight of a sector in the stability price index depends on the sector’s characteristics, including size, cyclical sensitivity, sluggishness of price adjustment, and magnitude of sectoral shocks. When a numerical illustration of the problem is calibrated to U.S. data,

one tentative conclusion is that a central bank that wants to achieve maximum stability of economic activity should use a price index that gives substantial weight to the level of nominal wages
one tentative conclusion is that a central bank that wants to achieve maximum stability of economic activity should use a price index that gives substantial weight to the level of nominal wages
one tentative conclusion is that a central bank that wants to achieve maximum stability of economic activity should use a price index that gives substantial weight to the level of nominal wages
one tentative conclusion is that a central bank that wants to achieve maximum stability of economic activity should use a price index that gives substantial weight to the level of nominal wages
one tentative conclusion is that a central bank that wants to achieve maximum stability of economic activity should use a price index that gives substantial weight to the level of nominal wages
one tentative conclusion is that a central bank that wants to achieve maximum stability of economic activity should use a price index that gives substantial weight to the level of nominal wages

### on the other hand productivity wise

"in 2010 China’s total manufacturing output was US$2 trillion ... overtaking the US’s US$1.95 trillion.
China employed over 100 million manufacturing workers...to the US’s 11.5 million."

and MNCs look in  ??

"China’s manufacturing productivity per worker is one ninth that of the US. The gap in other sectors, for example non-financial services, is bigger.
This creates a ‘win-win’ situation for ... foreign companies that will exist for decades. ....
the majority of China’s companies will not reach the level of productivity of foreign firms for decades, creating huge openings for co-operation as well as competition.
It is this combination of China soon becoming the world’s largest economy, but one in which foreign companies in some sectors can possess comparative advantage for decades, that makes China the world’s most important market."

### MNCs know where the growth center is marketwise

" In 2010 the US economy grew by US$540 billion. China’s increase was US$890 billion
– over 60 percent higher.
Annual dollar expansion of China’s market overtook the US in 2007 "

### could china use its trade surplus ???

China is in the historically unusual position of being an immature
creditor: its own currency, the renminbi, is hardly used at
world—particularly the Asian part of it—is still on a dollar
standard. The dollar is the invoice currency of choice for most
Chinese exports and imports and for open-market, that is,
nongovernment, controlled financial flows. So we have the
anomaly that the world’s largest creditor country cannot use
its own currency to finance foreign investments.
The lag in the international use of the renminbi is partly
because China’s domestic financial markets are not fully
developed. Interest rate restrictions as well as residual capital
controls on foreign exchange flows remain. But a more
fundamental constraint is that the U.S. dollar has the firstmover
advantage of being ensconced as “international
money.” World financial markets shun the use of more than
one or two national currencies for clearing international payments—
with the euro now in second place. But the euro’s
use in payments clearing is still pretty well confined to
Europe’s own backyard (Eastern Europe and former
European colonies). Thus, dollar dominance makes the internationalization
of the renminbi very difficult—although the
People’s Bank of China is trying hard to encourage the renminbi’s
use in international transacting on China’s immediate
borders.
The upshot is that China’s own currency is still not used
much in lending to foreigners. Foreigners won’t borrow from
Chinese banks in renminbi or issue renminbi- denominated
bonds in Shanghai. But, apart from direct investments abroad
by Chinese corporations, private finance for China’s trade
surplus would have to take the form of Chinese banks, insurance
companies, pension funds, and so on, acquiring liquid
foreign exchange assets—largely in dollars. But their domes
tic liabilities—bank deposits, annuity or pension liabilities—
are all denominated in renminbi. Because of this currency
mismatch, the exchange rate risks for China’s private
banks and other financial institutions are simply too great
for them to be international financial intermediaries, that is,
to lend to foreigners on a large scale.
China’s current large trade (saving) surpluses, which
run at about $200 billion to$300 billion per year, would
quickly cumulate to become much greater than the combined
net worth of all of China’s private financial institutions.
Because these private (nonstate) institutions would
refuse to accept the exchange risk (possible dollar depreciation)
of holding dollar assets on a significant scale, the
international intermediation of China’s saving surplus is
left to the central government. The problem is worsened by
American “China bashing” to appreciate the renminbi, the
expectation of which makes foreigners even
more loathe to borrow in renminbi—while stimulating
perverse inflows of hot money to China.
The upshot is that China’s central government
steps in to intermediate and control the
country’s saving surplus in several different
ways.
First, huge liquid official reserves of foreign

### the payments grid is network we could know perfectly

we can keep track of the future payment schedules of every patyee and payer on  one big grid now we have the it for it
and we ought to
the info to go total transparent is there just hook in every corporations books
make it a limited liability status requirement

add on the uncle default  insurance  and ...the tax and pay outs of uncle

ah but uncle needs the commanding heights he needs the unitary credit dome
he needs the charter and choice interface at the origination points he needs ....he needs ...he needs

advanced solutions that require a revolution
count only in virtual space

## Wednesday, May 4, 2011

### using the rate of price level change to regulate debt to output ratios

the sufficient cause for a  national MAP

### spain versus britain

the contrast in fates post credit crunch
shows the "value of a straight jacket like the euro zone"

the lack of a national currency
has cost  pre crisis fiscally virtuous domar ratio improving   SPAIN
what the presence of a national currency
has spared a  pre crisis  domar ratio worsening  UK

### contrast world financial order post WWI and WWII

in a word
bretton woods dollar standard versus  old school gold standard

the history of the two post war decades one into the middle of the 50's prosperity
the other into the great depression

too bad these lessons from contrast aren't hammered home

then idiotic talk about the early roaring 20's versus the early kold war late 40's
would replaced by a sober reverence for the gift of keynes

### trust can be socialized

the inter temporal aspects of most transactions require contracting and contract fulfillment
requires capacity to enforce and  or insure
these are socializations
that render inter gtemporal transactions a necessary uncertainty reducing impersolality increases improvement

### domar ratio and more

state and local public debt
corporate debt
personal debt
intra-financial debt
these are the zones of debt outside the domar ratio of federal debt

one point
the public to private ratio not just on the issuer side but on the holder side as well

obviously state and local debt oughta be publically own in higher ration with federal transfer systems in place to maintain job and out put targets
by a tie in to tax and payment structures
the intra financial sector could be socialized more completely by increasing the public holding share
even as the public share of federal debt can be raised
in education loans mortgages
start up