"The Lord of Light wants his enemies burned. The Drowned God wants them drowned. Why are all the gods such vicious cunts? Where's the God of Tits and Wine?"

- Tyrion Lannister

"The common people pray for rain, healthy children, and a summer that never ends. It is no matter to them if the high lords play their game of thrones, so long as they are left in peace. They never are."

- Jorah Mormont

"These bad people are what I'm good at. Out talking them. Out thinking them."

- Tyrion Lannister

"What happened? I think fundamentals were trumped by mechanics and, to a lesser extent, by demographics."

- Michael Barone

"If you want to know what God thinks of money, just look at the people he gave it to."
- Dorothy Parker

Wednesday, October 01, 2014

AIG bailout

The A.I.G. Trial Is A Comedy by John Cassidy
Rather than hauling those three musketeers into Judge Thomas Wheeler’s court, which his lawyers will do next week, Greenberg should be taking them out to dinner. The only mystery about the lawsuit is why Wheeler allowed it to proceed this far. In 2012, Judge Paul Engelmayer, a federal judge in New York, tossed out a similar case, noting that A.I.G.’s board had voluntarily agreed to the terms of the September, 2008, bailout, seeing it as the only option to avoid bankruptcy. For whatever reason, Wheeler, whom George W. Bush appointed to the bench in 2005, decided that the case raises sufficient legal issues to proceed. 
Perhaps he is taking seriously Boies’s contention that the bailout violated the Fifth Amendment, which prevents the federal government from seizing private property without proper compensation. But, of course, this wasn’t a seizure—it was a bailout. Or perhaps Wheeler wants to explore whether the Fed overreached the lending authorities that Section 13.3 of the 1932 Federal Reserve Act grants it. There’s no doubt that this statute was drawn up vaguely, but that was deliberate. During the Great Depression, as in September, 2008, the Fed faced a potential cataclysm, and it needed some freedom to maneuver, which Congress granted it.

Person of Interest

AV Club reviews Person Of Interest: “Nautilus”

Tuesday, September 30, 2014

Bill Gross

Over at Equitable Growth: Why Was Bill Gross so Certain Interest Rates Were on the Rise Back in February 2011?: Tuesday Focus for September 30, 2014 by DeLong

The Pimco Perplex by Krugman
It’s fairly clear that the events of 2011 are a large part of the story of Bill Gross’s abrupt departure from Pimco; as Neil Irwin says,

A disastrous bet he made against United States Treasury bonds in 2011 led to three years of underperformance and billions in withdrawals.
And Joshua Brown has some choice quotes:

Gross compounded the move by being extremely vocal about his rationale – he went so far as to call Treasury bonds a “robbery” of investors given their ultra-low interest rates and the potential for inflation. He talked about the need for investors to “exorcise” US bonds from their portfolios, as though the asset class itself was demonic. He called investors in Treasury bonds “frogs being cooked alive in a pot.” 
But why was Gross betting so heavily against Treasuries? Brad DeLong tries to rationalize Gross’s behavior in terms of a coherent story about an impending U.S. recovery, which would lift us out of the liquidity trap. But Gross wasn’t saying anything like that. Instead, he was claiming that the Fed’s asset purchases — QE2 — were holding rates down, and warned that the impending spike in rates when QE2 ended would derail recovery. 
So why did he believe all that? It all comes down, I’d argue, to liquidity trap denial. 
Since 2008 the basic logic of the economic situation has been that the private sector is trying to run a huge surplus, and the public sector isn’t willing to run a corresponding deficit. The result is an economy awash in desired savings with nowhere to go. This in turn means that budget deficits aren’t competing with private borrowing, and therefore need not drive up interest rates. This isn’t hindsight; it’s what I and others have been saying since the very beginning
But a lot of people — politicians, of course, but also a lot of people in finance — have just refused to accept this account. They have clung to the view that budget deficits must lead to higher interest rates. You might think the failure of higher rates to materialize, year after year, would cause them to reassess — indeed, would have caused them to reassess years ago. 
Instead, however, many of them made excuses. Above all, the big excuse was that rates would have gone higher if only the Fed weren’t buying up the stuff. So QE2 acquired a much bigger role in their thinking than it deserved, leading to confident predictions of soaring rates as soon as it ended. And Gross put his money — and more importantly, his investors’ money — where his mouth was. 
And he was wrong. QE2 ended, and nothing happened to rates. 
You can see why I found Gillian Tett’s apologia for Gross — that he was blindsided by central bank intervention — frustrating. For one thing, that’s accepting a model that has failed with flying colors; but beyond that, Gross’s really bad call was almost exactly the opposite, his claim that rates would soar when the Fed’s intervention ended. 
As I’ve said, Gross of all people shouldn’t have fallen into this trap, since his own chief economist understood liquidity trap logic better than almost anyone. But finance people seem weirdly determined to believe in a macro canon whose hold on their perceptions appears to be completely unbreakable, no matter how much money it causes them to lose.

Monday, September 29, 2014

inequality and demand

Inequality and demand by Steve Randy Waldman

JFK and Masters of Sex

Masters Of Sex: “The Revolution Will Not Be Televised”

They show part of JFK's 1961 inaugaration speech and he goes on about how prosperity doesn't depend on the generosity of the state but come from God. It didn't start with Ronnie Raygun. Reminded me about the hopefulness about Obama and how it's been a disappointment. SNL's new News Update segment ended with a joke about a street named after Obama and how parents would warn their kids not to travel north of that street.

SNL skit

SNL "Bad Boys" skit with Chris Pratt, Kyle Mooney, and Beck Bennett

Sunday, September 28, 2014

the rich are ruthless

Unmentioned Myth About Billionaires: They Know Anything About Public Policy by Dean Baker
The Washington Post treated us to "five myths about billionaires" this morning. Incredibly, they missed the most obvious one: that billionaires know anything special about what is good for the country and the world. 
Most billionaires (at least those who didn't inherit the money) are probably smart and hard-working, but so are millions of other people. What most distinguishes someone like Bill Gates from the hundreds of thousands of other software entrepreneurs is luck and sharp elbows. Suppose IBM had refused to allow Gates to keep control of the Dos operating system? Gates might still be very rich, but certainly not the richest man in the world. Alternatively, if the government still enforced anti-trust laws Microsoft might have faced serious penalties for engaging in textbook anti-competitive practices to get and keep a near monopoly in operating systems, Gates also would not have the fortune he has today. 
Anyhow, there is no reason to think that Gates' luck and ruthlessness make him particularly competent to pass judgement on world poverty, education, or any of the other issues for which he is now viewed as an authority. The same applies to the other billionaire policy types cited in the piece. While these people obviously have the money to ensure that their views carry force in the world, there is no more reason to think that these billionaires' judgements on public policy carry particular value than the judgements of people who win the lottery.

Saturday, September 27, 2014

the cliff

"Re: "Last week, Fisher argued that a so-far unpublished (i.e. secret) paper by his staff showed that “declines in the unemployment rate below 6.1 percent exert significantly higher wage pressures than if the rate is above 6.1 percent.” 
First we had the 90% cliff and now we have the 6.1% cliff. OMG! Where are the grad students when we need them?"

Dorothy Parker quote

Dorothy Parker in the 1956 Paris Review:
At the moment, however, I like to think of Maurice Baring’s remark: “If you would know what the Lord God thinks of money, you have only to look at those to whom he gives it.” I realize that’s not much help when the wolf comes scratching at the door, but it’s a comfort.
Man and the Gospel (1865) by Thomas Guthrie "and you may know how little God thinks of money by observing on what bad and contemptible characters he often bestows it." 
“We may see the small Value God has for Riches, by the People he gives them to.” -- Alexander Pope (1727).
 And via MaxSpeak:
“In Capital in the Twenty-First Century, French economist Thomas Piketty documents how wealth is becoming concentrated in ever fewer hands. 
This might not be a problem, were it not that capital is increasingly owned by shitheads.” 
Harry Hutton

Charles Evans

Weekend Reading: Charles Evans: Patience Is a Virtue When Normalizing Monetary Policy by DeLong

Steampunk - The Knick

AV Club reviews The Knick: “Get The Rope”

Friday, September 26, 2014


The entirely predictable recession by Simon Wren-Lewis

How did America's austerity beginning in 2011 compare? How did QE compenstate?

Nicholas Nickleby

Nicholas Nickleby

With Charlie Hunnam who's in Sons of Anarchy and was in Pacific Rim. And Jamie Bell who is in TURN. And Jim Broadbent, Christopher Plummer, Romola Garai, Anne Hathaway, Nathan Lane and Alan Cumming.

Jupiter Ascending

the rich's hypocritical attitude

Cartoon: Unemployment isn't a bug -- it's a feature by Reuben Bolling

Thursday, September 25, 2014

Legends and Hitchens

Legends is a show on TNT starring Sean Bean as an undercover FBI agent. It also has Tina Majorino who was in Veronica Mars and other shows. In the latest episode Bean's cover is as a journalist who is exactly like Hitchens: "contrarian, a drinker, etc." except for one thing: he isn't very prolific. He goes undercover to get close to a woman who resembles Ayaan Hirsi Ali, who is suspected of possibly being involved in an upcoming hit on a Saudi prince, haha.

Wednesday, September 24, 2014

Person of Interest

Why X-Files fans owe it to themselves to check out Person of Interest by Todd VanDerWerff

Lake Michigan

Heaven is a switchboard that you want to fight
She would even miss you if you taught her sight
Power politician leaning to the right
Baby's got a trust fund
That she'll want to go off like that
Get off of my stack
Leave a little window
Get off of my stack

Charles Evans

Patience Is a Virtue When Normalizing Monetary Policy by Charles Evans


video of Heidi Moore, Tyler Cowen, Bob Solow, Russ Roberts and DeLong on Piketty

focus groups

Liza Featherstone on Focus Groups by JW Mason

household income

Median Household Income Began to Stagnate in 1980, not 2000 by Dean Baker
Thomas Edsall has a good discussion of the shift of income from labor to capital in the years since 2000. His piece puts the blame largely on the way the United States has structured global trade to put downward pressure on the wages of ordinary workers. 
While Edsall's discussion of the period since 2000 is largely on target (it does miss the impact of macroeconomic fluctuations and the fact that we have been well below full employment for most of this period), it errs in telling readers: 
"Until 1999, median household income (as distinct from wealth) rose in tandem with national economic growth. That year, household income abruptly stopped keeping pace with economic growth and has fallen steadily behind then." 
While median household income did keep pace with economic growth from 1993 to 1999, it actually lagged far behind in the years from 1978 to 1993. Over this period real per capital income rose by 30.0 percent, while median household income barely changed. This divergence of median income from growth was associated with an upward redistribution of wage income, with high end earners (e.g. Wall Street types, CEOs, and doctors) gaining at the expense of most workers. 
In this period, most college graduates (@ 25 percent of the workforce at the time) were among the winners. By contrast, in the period since 2000 only workers at the very top of the income distribution and owners of capital have been winners.
America Out of Whack by Thomas Edsall
I asked Shawn Fremstad, a senior fellow at the Center for American Progress, a pro-Democratic think tank, to address current income and wealth disparities, and he wrote back by email:
“a big-picture solution involves higher marginal income tax rates for the top 1 percent and some sort of wealth tax on the top of the top, combined with stronger labor market institutions (minimum wage, unions, paid leave/sick days/vacations, etc.).”
We need wage inflation and full employment via demand management (fiscal, monetary, trade/currency) policy.


Obama's biggest economic policy mistake

Blame Obama for bad monetary policy, not Republicans

Tuesday, September 23, 2014

Sarah Silverman

AV Club interview: Sarah Silverman talks boobs, and answers our 11 questions
SS: I did this interview for various reasons. One: I’m a fan of The A.V. Club. That’s always who I look up to look at television reviews. Two: I have a love-hate withThe A.V. Club because they broke my heart many times reviewing my show. And three: I’ve got a record coming out! Come on! The We Are Miracles album comes out September 22. September 23 worldwide.

Monday, September 22, 2014


Piketty's Fence by Jeffrey Frankel

Thomas Piketty has power that heterodox economists never had by Ingrid Robeyns

Piketty and the Money View: A Reply to MisterMR by JW Mason
To own a piece of land means you have certain legal rights with respect to other people — to exclude them from the use of that land, to receive some equivalent from them if you do permit use of the land, to transfer those rights to someone else — and that no one else has those rights with respect to you. However, that’s only the first step. Next, we have to recognize that what constitutes “use” of piece of an asset is not a physical fact, but a social one. (As in the old story, the baker can exclude others from eating his rolls, but not from enjoying the smell of them.) So it would be more accurate to say that ownership of a piece of property is simply a form of social authority — a bundle of rights over other people. Indeed, if we want to relate the world of money flows to broader social reality, the most fundamental fact is probably this: The person who receives a money payment labeled “profit” gives orders, and the people who receive money payments labeled “wages” have to follow them. To say you own a piece of property is simply to say there is a set of commands that, if you issue them, other people are compelled to obey. Those rights are metonymously referred to by a label which bears a picture of some tangible good, just like the insignia on an officer’s uniform bear a picture of a leaf or a bird.

austerity vs. monetary policy

The Love Affair Conservatives Should Be Having by David Beckworth


Economic security and “the great disturbing factors of life” by Max Sawicky

Why Not Just Mail Out Checks? by JW Mason