Relevant and even prescient commentary on news, politics and the economy.

Tim Duy Explictly Declares Reality is Real

And confirms that his own position: is the same as that of Brad DeLong (et cetera.) and those of us who try paying bills

[T]he [Federal Funds Interest Rate target] debate has shifted in the opposite direction as market participants weigh the possibility of a rate cut. The Fed is probably not there yet, but internally they are probably increasingly regretting the unforced error of their own – last December’s rate hike. [emphasis mine]

Now he just has to come a few steps further to realize that the major U.S. money center banks remain insolvent. But that’s outside of his purview as Watcher to Feds, so we shouldn’t expect to see that in print anytime soon.

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Clarence Thomas confirms his belief that the only constitutional right we leave up to federal, state and local prosecutors is the right to keep and bear arms. And that that right is the only one, more generally, that we treat so cavalierly. [His words. Seriously.]

The Supreme Court said Monday that people convicted of domestic abuse can be prevented from owning a gun, in a case that prompted the first questions from Justice Clarence Thomas in 10 years.

In a 6-to-2 decision, the court said Congress had intended to keep firearms out of the hands of domestic abusers.

The question for the court was whether the gun ban applies to those convicted under state law of misdemeanor domestic abuse and specifically whether assault convictions for “reckless” conduct could trigger the prohibition. …

The case decided on Monday was brought by two men, including Stephen Voisine, who was separately being prosecuted for killing a bald eagle. He had a previous conviction for a misdemeanor assault of a woman with whom he had a relationship, and federal prosecutors said that meant he should be banned from owning firearms.

The court rejected that argument, finding Monday that “a person who assaults another recklessly uses force no less than one who carries out that same action knowingly or intentionally,” according to the majority opinion by Justice Elena Kagan. She was joined by Chief Justice John G. Roberts Jr. and Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Stephen G. Breyer and Samuel A. Alito Jr.

To accept the interpretation of the petitioners, the majority said, would risk striking down similar laws in 34 states and the District and allowing “domestic abusers of all mental states to evade” the firearms ban. …

In his dissent Monday, Thomas said the firearms ban should apply only to “intentional acts designed to cause harm” — not to those based on “mere recklessness,” which do not necessarily involve the use of physical force.

“The majority fails to explain why mere recklessness in creating force — as opposed to recklessness in causing harm with intentional force — is sufficient,” he wrote.

Thomas was joined in part in his dissent by Justice Sonia Sotomayor.

Separately, he also objected to the imposition of a lifetime firearms ban based on a misdemeanor assault conviction because of its implications for a person’s Second Amendment rights.

“This decision leaves the right to keep and bear arms up to the discretion of federal, state and local prosecutors,” Thomas wrote. “We treat no other constitutional right so cavalierly.”

Supreme Court: Domestic abusers can be banned from owning firearms, Ann E. Marimow, Washington Post, today

Actually, what Thomas meant by that last sentence is that we treat no other constitutional right so cavalierly that Thomas and his Federalist Society colleagues care about.  Ones that don’t concern gun ownership, or the unfettered freedom to buy elected officials, or to adopt a local or state, or the federal, government as your Christian pulpit.

Y’know; the constitutional rights that matter.  The ones that garner pro bono defense at the Court by some rightwing legal think tank whose name on a certiorari petition means the petition will actually be read by a justice or two, or three, or four.

And the ones whose certiorari petitioner can foot the $1,000 hourly billing fee totaling well into the six figures, to have the name of one of the tiny handful of Washington, D.C.-based Supreme Court “regulars’” name and law firm on the petition cover—the only other way to obtain actual review of your petition by an actual justice if you’re not represented in that petition by a non-government attorney (i.e., a state attorney general).  The petitioners who after paying those attorneys’ fees still have sufficient discretionary income to pay the $8,000 cost for the printing of the certiorari petition as per the extremely weird printing requirements that only three printing companies in the country can do.

Okay, well since the “regulars” get steep discounts at those printing companies, their clients will need considerably less than that full-freight price.  Which must be nice.

In any event, precious few others need apply.  Although nearly 10,000 others a year do.

Thomas’s veritable stock-in-trade is declaring something as fact that is clearly and facially false, often bizarre, sometimes downright comical.  He did that recently in what, happily, was, like this one, a dissent.  Thomas claims this time around that the only constitutional right we leave up to federal, state and local prosecutors is the right to keep and bear arms.  And that that right is the only one, more generally, that we treat so cavalierly.

Well, maybe.  Then again, it could be that that is just the only one Thomas knows of, since the Court itself has aggressively blocked federal-court review of violations of most constitutional rights involving state and local prosecutors, state courts, and state criminal statutes in the name of state-courts’ rights to violate individuals’ constitutional rights, and since gun-ownership rights are pretty much the only rights that are at issue solely in non-white-collar-crime appeals.  And therefore the only criminal-law-related constitutional rights raised in certiorari petitions that he reads.

Which of course explains this one justice’s belief that the only constitutional right we leave up to federal, state and local prosecutors is the right to keep and bear arms.  And that that right is the only one, more generally, that we treat so cavalierly.

There are many thousands of Americans who could disabuse him of that belief.  Some of them have even filed certiorari petitions.

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Nice graph to show why inflation is low

Watching the videos of Anwar Shaikh, He presented an idea relating inflation to the net profit rate.

Net profit rate = Corporate profit rate – effective Fed rate

His view is that inflation will occur when the profit rate is squeezed by the base Fed rate. When net profit rate is low or even negative, inflation tends to occur because low net profit rates hinder investment and economic growth, and an attempt to stimulate the economy would show up as inflation of prices instead of an increase in GDP. He used this reasoning to explain the stagflation of the 70′s.

So I went to FRED and made a quick graph… (link to data) (Annual data from 1958 to 2015)

net prof inf

The pattern is clear. When net profit rates are high, inflation must be low. In 2015, the annual data showed a high net profit rate of 8% with a low core inflation rate of 1.8%. When net profit rate reached -10% in the 1970s, inflation went high.

Let’s put the current core inflation rate into the trendline equation to estimate how the current net profit rate might be changing.

Core inflation = 2.2% = 3.534*e(-11.16*x)

Estimated net profit rate = x =   4.2%

So the net profit rate may have dropped from 8% to 5% in the last year. The rise in core inflation may be showing that net profit rates are falling. That would not be a good sign, because lower net profit rates slow down growth and investment which leads to an economic contraction.

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The Brilliance of Anwar Shaikh

Anwar-Interview

Recently I found the work of Anwar Shaikh. His views on economics are the most insightful and thorough I have ever seen.  He is questioning and re-formulating economic theories through history. He is arriving at conclusions that are more realistic and integrative.

He should lead the way to how economics should be taught in the future. His free-thinking path is somewhat similar to that of Samuel Bowles and Joseph Stiglitz, but I think Shaikh goes beyond them to greater understanding of macroeconomics.

Here is a playlist from youtube for his 30-video lecture series. Each video is about 1.5 hours long. So there is a lot of brilliant material to go through.

link to playlist for Anwar Shaikh lectures

Here is an interview with INET that gives just small taste of his views. The video lectures present so much more.

link to INET interview

Here is a link to get his 2016 book, Capitalism: Competition, Conflict & Crises

Why do I like his work?

  • He says profit drives the business cycle.
  • He says firms set prices.
  • He does not believe in monopoly power, but rather the dynamics of capital intensity. Brilliant.
  • He understands the labor struggle.
  • He has great knowledge of economists through history and their work.
  • He has seeks to explain Keynes’ Effective Demand with his theory of Real Competition and aggregate profitability. He is on the right path. Effective Demand is the area of my research. So I study his work to gain insights into my own work.
  • He presents a view of firms trying to survive by either cutting prices or cutting capacity utilization depending on ease of entry/exit from an industry.
  • And so much more…

I highly recommend the work Anwar Shaikh.

His lecture #8 might be a good place to start.

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TransCanada Files NAFTA Suit Demanding More Than $15 Billion for Keystone XL Rejection

From Ecowatch:

On June 24, foreign oil company TransCanada filed a lawsuit against the U.S. under NAFTA, the North American Free Trade Agreement, arguing that the U.S. rejection of the Keystone XL pipeline violated NAFTA’s broad rights for foreign investors by thwarting the company’s “expectations.” As compensation, TransCanada is demanding more than $15 billion from U.S. taxpayers.

TransCanada’s case will be heard in a private tribunal of three lawyers who are not accountable to any domestic legal system, thanks to NAFTA’s “investor-state” system, which is also included in the proposed Trans-Pacific Partnership (TPP). The controversial TPP would empower thousands of additional corporations, including major polluters, to follow TransCanada’s example and use this private tribunal system to challenge U.S. climate and environmental policies.

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I really don’t understand what …

all the fuss about Brexit is about, given that now more people will visit Turnberry, Scotland to golf.

Or maybe not.

Although that push to repeal Dodd-Frank may save us all from another economic crisis!

____

Okay, seriously, I think that contrary to the immediate CW, Brexit will actually hurt Trump, not help him. This is a guy who thought he’d benefit financially from a crashing pound because it didn’t occur to him that if financial chaos or even just a recession occurs that spreads beyond Britain, it won’t be much help for his luxury golf resort that the pound’s exchange rate has sunk. Who in his or her right mind would think this is the guy to handle economic crises, or anything else other than, maybe, a beauty pageant?

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FLEXIT

“If, as a result of Brexit, the economy crashes it will not vindicate the economists, it will simply illustrate once more their failure.” – Ann Pettifor

You can see immigrants. You can’t see NAIRU or flexible labor market policies. Most people wouldn’t know a NAIRU from a Nehru jacket and have probably never heard of flexible labor market policies.

There is a simple logic behind the “growth through austerity” policies beloved by Cameron and Osborne: “wages are too damn high.” But there is also a more technical-sounding  obfuscation. This more convoluted explanation is that there is a long-run, “natural” rate of unemployment that is unaffected by aggregate demand, therefore fiscal stimulus will result in inflation. Thus the only non-inflationary way to reduce unemployment is to fine tune this hypothetical natural rate by removing labor market rigidities.

Sounds plausible? What it means in practice is “wages are too damn high.” In the 19th century, this superstition was known as the wages-fund doctrine. Also known as this magazine of untruth.

Another euphemism for these “flexible labor market policies” (i.e., “wages are too damn high.”) is “structural reforms.” In a press release from the  Center for Economic and Policy Research, Mark Weisbrot pointed out the connection between Brexit and these so-called structural reforms:

“While the movement in the UK to leave the EU had right-wing, anti-immigrant and xenophobic leaders, in most of Europe that is not the driving force of the massive loss of confidence in European institutions. The driving force in most of the European Union is the profound and unnecessary economic failure of Europe, and especially the Eurozone, since the world financial crisis and recession.

“It has cost European citizens millions of jobs, trillions of dollars in lost income, and is sacrificing a generation of youth at the altar of fiscal consolidation and ‘structural reforms.’ It has delivered an overall unemployment rate in Europe that is twice the level of the United States; more than seven years of depression in Greece; more than 20 percent unemployment in Spain, and long-term stagnation in Italy. In recent weeks French workers have been fighting against ‘structural reforms’ that seek to undermine employment protections and the ability of organized labor to bargain collectively.”

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More Lies

After almost 8 years the Party of NO and me too, the Republican Party through Mr. Paul Ryan has announced its sketchy version of a national healthcare plan. There is nothing unusual (maybe I should not say this, as distortion and out-right telling lies is unusual) or earth shattering being offered in Mr. Ryan’s plan. For sure, Mr. Ryan’s plan lacks many of the things the PPACA offers today. I do not want to get tied up examining the detail right now so I will move on to something else I wish to point out

Riding on the back of Mr. Ryan’s plan is a complaint, a complaint the PPACA leaves many people without coverage due to its design. As read in Mr. Ryan’s plan;

“as a result of Obamacare’s poor design and incentives, many Americans — who do not have an offer of health insurance through their employer— have fallen into a coverage gap between their state’s Medicaid eligibility and the eligibility criteria for the Obamacare subsidies.”

This statement in Mr. Ryan’s Plan is a blatant lie perpetuated by Mr. Ryan and the Republicans. 19 states did not expand Medicaid to cover their citizens up to 138% FPL. These states were allowed to do so by a SCOTUS ruling supported by Mr. Ryan and Republican. Furthermore, Republicans in their efforts to block anything done by Barack Obama made it clear they would not allow the PPACA to be expanded to cover those citizens who fell into this gap.

Maybe people are immune to the lies coming out of Congress and subsequently do not comment on such an outrageous lie fostered by Mr. Ryan. They are quick to complain about the PPACA and slow to call out Republicans for their lies about the PPACA, which is far better than what is offered by the Party of No.

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