The Traders Crucible

You absolutely need to read the Steve Waldman post – but there are lots of good links

• interfluidity » Great Britain as a case study: which sticky price?

• Twitter / @TheStalwart: Ah, it’s Golden Week in Ja …

• Worthwhile Canadian Initiative: Three arguments for NGDP targeting

• Looks like it’s fuck this shit o’clock. | Workplace Ecard | someecards.com

• Spoonful of Zinc Can Save Countless Developing-World Kids – Bloomberg

• Fascist Salutes Return to Greece as Anti-Immigrants Chase Voters – Bloomberg

• Complaint | Boyd County v MERS – 14 Kentucky Counties Sue Mortgage Electronic Registration Systems | Foreclosure Fraud – Fighting Foreclosure Fraud by Sharing the Knowledge

• Geithner, Clinton Don’t Plan to Cancel China Trip – Bloomberg

• Gallup Daily: U.S. Consumer Spending

  Spending is going up in the face of higher oil prices. 

• The General Theory of Employment, Interest and Money by John Maynard Keynes

• Brad’s Microblog on tumblr

  If you already know all of this, its not enough. If you don’t know it, it seems like too much. 

• ‘The Cabin in the Woods’ Disembowels the Slasher Film – Christopher Orr – Entertainment – The Atlantic

  Joss Wheldon! 

• FT Alphaville » You will buy more Govvies, or else

  Wow, just read this article. It’s not even wrong. "It’s been puzzling me since the start of the financial crisis: why can incontinent governments like, say, the UK’s, borrow almost unlimited amounts at interest rates far below inflation? Stephen King at HSBC has been thinking about this, and has come up with a suitably apocalyptic (he has a reputation to defend, after all) explanation for the silly prices of government debt."

  tags: economics Treasuries government bonds MMR MMT

• Where The Productivity Went – NYTimes.com

• » Actually, Ron Paul Is Secretly Winning A Lot More Delegates Than You Think Alex Jones’ Infowars: There’s a war on for your mind!

• financial_map_sue.png (800×618)

  h/t The MMR Trader

• Wealth Gap in America Caused by Federal Reserve, Not Capitalism

  This is what I keep trying to tell monetarists, but they just don’t believe it. 

• A Gold Standard? | The Big Picture

  "I think I tend to agree more with Irving Fisher, arguably the greatest economist of the last century, who, writing in the late ’30s, after observing the Great Depression and the actions of the Federal Reserve, noted that the best and only way to deal with a credit bubble was to prevent it from happening. Once they develop, there is no easy, painless way back. "  But this is damn stupid:“Good banking is produced not by good laws but by good bankers.”

• Google Reader (1000+)

• “A Trillion Here, A Trillion There…” – Why 90% Of The European Bank Sector’s Market Cap Is Vaporware* | ZeroHedge

• Rufus Blooter: Salon & The Unviewable Web Yep

• Diary of a Republican Hater: Market Monetarism and MMT: Frenemies?

• The First Time Mortgage-Backed Securities Failed – Bloomberg 

Was the great depression partly due to early MBS? And why do we have those pesky security laws anyhow? Why are so many Chicago Buildings built in 28-32?

• The Trust Molecule by Paul J. Zak – WSJ.com

• Thousands Rally In Malaysia For Electoral Changes : NPR

  "I’m here because I’m a Malaysian and I love my country," said information technology manager Burrd Lim. "There’s no election that’s perfect, but I want one that’s fair enough." When the IT managers are saying stuff like this, change will happen.

  tags: revolution malaysia voting

• Against Law, For Order

  The neoconservative and neoliberal worldviews described above can be seen as reactions against the New Deal order. The government as manager of regulatory and service agencies in the New Deal, judged by its ability to provide mass prosperity, becomes an agent of order intent on policing activities and people beyond the realm of market logic. And, crucially, government policy is seen to be legitimate only when it follows the logic of framing problems as analogous to crime and crime control.

  tags: economics justice wrong

• The Fed’s Policy Projections Spell Nothing But Trouble – Business Insider

• It’s a polar bear doing a hand stand in the water…. | The Kid Should See This.

• Felix Salmon Gold Experiment – Business Insider

• Vivus Pill Promising Faster-Than Viagra Erection Approved – Bloomberg

  Finally! (is the pill legal in Japan yet?)

• Innovation Starvation | World Policy Institute

• Noahpinion: Giant Thursday Roundup (4/26/2012)

  "While DSGE models are useful research tools for developing analytical insights, the highly simplified assumptions needed to obtain tractable general equilibrium solutions often undermine their usefulness. As we have seen, the data violate key assumptions made in these models, and the match to institutional realities, at both micro and macro levels, is often very poor." In a bar conversation, I’d just say "DSGE is mostly Bullshit."

• http://www.clevelandfed.org/research/Commentary/1997/1015.pdf

• The $1 Trillion Coin Solution to the Debt Ceiling – CNBC

• Forget Spreadsheet Guy, Here’s How One Woman Meticulously Ranked Bankers As Dates – Business Insider

  But is she hot? All is forgiven if she’s hot, right? 

• What Sex Means for World Peace – By Valerie M. Hudson | Foreign Policy

  H/t The MMR Trader. 

• RALPHONOMICS: It’s official: academic economists are not too interested in reality.

• Not the Treasury view…: On GDP figures today, credibility, and Popperian falsifiability..

• Wicksteed on the Value of Paper Money « Uneasy Money

• The New Voodoo – NYTimes.com

Posted from Diigo. The rest of my favorite links are here.

Many of todays links are from my friend Kris!

• Econbrowser: A ban on oil speculation?

• Digital Currency Ends Recessions

• Greg Mankiw Wrong On The Internet

  Nobody lives there any more – its too crowded. 

• Asymptosis » Encouraging Deadly Financial Viruses

• Buttonwood: Feeling peaky | The Economist

• Noam Scheiber: From Hardball To Hope | The New Republic

  The relative civility came to a clear end this month, however, when Obama turned up at an Associated Press luncheon and proceeded to lacerate the GOP over the handiwork of Representative Paul Ryan, whose budget proposal the House had recently passed.

• Jesse’s Café Américain: A Study On Speculation in the OIl Market For Those Economists Who Have Apparently Not Seen It

• The Center of the Universe » Blog Archive » Fiscal and monetary policy in a liquidity trap

  tags: universe Mosler

• *Land of Promise* — Marginal Revolution

• Brazil Pres: Monetary Easing w/o Fiscal Stimulus ‘Harmful’ | MNI

• Interest rates

  Brazil Cuts rates again. Second time in 6 weeks. 

• The Case For Concerted Action: Post Keynesian Ideas For A Crisis That Conventional Remedies Cannot Resolve

  wow. Thanks Ramanan

• http://web.mit.edu/alo/www/Papers/physics8.pdf

  A nerdy take on risk management, if that’s even possible for something to be nerdier than plain ol’ risk management. 

• Noahpinion: DSGE vs. Weather Forecasting

  XKCD

• Cat Waits At Bus Stop, Rides the Bus Routinely | Care2 Causes

• sweets / Preheat oven to 350; smoosh 1.5 squares of break-apart refrigerated cookie dough into the bottom of each well. Place Reese cup upside down on top of cookie dough (or an Oreo!). Top with prepared box brownie mix, filling 3/4 full. Bake for 18 minu

  Looks pretty yummy. Could be even better with home made cookies and brownies. 

• Austrian village F—ing to vote on name change – Telegraph

  h/t JP

  tags: Humor

Posted from Diigo. The rest of my favorite links are here.

Hi, this is an experiment post for links. I like looking at other peoples links, thought I would try them out here! Of course, this may get migrated to MMR at some point…

Let me know what you think.

• Taylor Rule Founder Warns US Debt Could “Explode” | ZeroHedge : Wow. My goal is MMR takes John Taylor into retirement in three years.
• Do Manufacturers Need Special Treatment? – Economic View – NYTimes.com : More wow. This is a person who doesn’t see the trade deficit is a demand leakage.
• Global Economic Intersection: More must read from GEI
• Another Experiment? – Tim Duy’s Fed Watch : Nobody really knows what will happen when Greece does it’s thing. Ed Harrison is watching closely, I read him to help sort through that morass.
• Greece Wrestles With Needed Spending Cuts – Bloomberg : Why is the private sector part of this negotiation? Hmm..
• Greek private-sector workers reject more pay cuts – The Denver Post
• Fiscal policy will matter | Challenge | Find Articles: This article is full of gold. I am calling this Godley’s Theorem:  ”It is thirty years since Carl Christ, of Johns Hopkins University, had the brilliant insight that should an economy ever reach stationary equilibrium, all stock variables as well as all flow variables would be constant; and that if all stock variables, including government debt, were constant, government receipts would have to equal government payments. It would then follow that if the economy were moving toward stock-flow equilibrium and if taxes were levied as a proportion of income, the GDP of a (closed) economy would always be tracking, perhaps with a long lag, government outlays divided by the average tax rate – the very same concept that we call fiscal stance. Therefore, a necessary condition for the expansion of the economy, at least in the long term, is that the fiscal stance should rise: Government expenditure must rise relative to the average tax rate. If the tax rate were held constant, government expenditure would have to rise absolutely for output to grow; if government expenditure were held constant, the tax rate would have to fall.
• Flying Robotic Swarm of Nano Quadrotors Gets Millions of Views, New Company | Singularity Hub: Beyond Terrifying.
• FT Alphaville » How Germany is paying for the Eurozone crisis anyway: Didn’t I say this about a thousand times in 2010-2011? Germany pays no matter what.
• (Saving…) The silliest set of arguments that have ever been created by serious intellectuals | The Economic Populist : This is for you, Clonal! You’ve probably already seen it…but download the PDF to see just how bad it was for non-financial companies for the last 37 years.

Matt Y talks about how Malinvestement doesn’t always have bad results due to luck.

As we know, Christopher Columbus had problems financing his journey – which created the most powerful empire of the next 200 years –  because he was totally wrong about the size of the earth and everyone knew it but a few rich fools.

“That said, it all made me wonder a bit about the social value of malinvestment. I’m really struck by the fact that Christopher Columbus sailed to the New World on the basis of a mathematical miscalculation about the size of the earth. It’s particularly striking that the conventional wisdom of Columbus’ time essentially had this question right—the earth, most scientists thought at the time, was much too large to make Columbus’ proposed westward sailing voyage a viable way of getting to China. Columbus shopped his idea to various monarchs, most of whom were in possession of accurate geographical analysis and rejected his idea. But Ferdinand and Isabella signed on to the crank’s erroneous ideas about where China was. For their trouble, they wound up in possession of a vast and wealthy empire and Spain became the leading Great Power of the 16th and 17th Century. Not bad for an unintended consequence of misguided idea based on an Italian navigator’s megalomania and calculation errors.”

This I think is one of the more important facets of human life: Luck. In this case, malinvestment turned out to have fantastically positive consequences for Spain. However, Luck isn’t always due to malinvestment.

There is a famous phrase about luck, “opportunity meeting preparation”, and lots of people try to apply this phrase to their lives. I know I do – it’s a good way to live.

But far fewer people think of this on the level of a country. How can we create situations where “good luck” happens? Well, keeping bunch of industries geographically close makes “lucky” things happen.

This is why Silicon Valley draws such bright people to it. It’s entirely possible to show up for work at some cool company and get lucky and become a multi-millionaire.  It happens all the time – I at least one person personally who took this life path and it worked great.

I think about Tesla, how he would just walk around New York City and meet with people who would fund his crazy ideas. Some of those ideas ended up creating our modern electrical society. We created a place where it was really possible for society to get lucky, and we did.

I think about Jobs tramping around Silicon Valley, selling computers, getting cheap parts, having Woz work at his desk on Apple stuff. We created a place where our society can get lucky, and we did.

Matt Y talks puts Malinvestment in the title, but this post is just as much about luck as Malinvestment. This is why it’s useful to build things here.  We could get lucky again.

Check out this screenshot. Traders Crucible shows up #2 when you google  ”Shadow Government Statistics”.

The post is Why Shadow Government Statistics is very, very, very wrong.

It’s hard to fight back against endless lies about how our economy works, but I’ll take this small victory. I get a few clicks every day on that post.