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

From: ASPCA To: Me

From: ASPCA Today at 10:41 AM

To: me

We’re so close to our goal.
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Dear Beverly,Earlier this week we sent an email about a last-minute tax deduction, and the response we received was more than we ever could have hoped for: Thousands of animal-lovers all around the country donated to help abused, abandoned and neglected animals.

Because the email was so successful, we wanted to make sure you saw it, too. We are now just 741 donors away from meeting our 2014 goal. We are so, so close, and hope you can help.
If you help us meet our goal by midnight tonight, not only will you receive that last-minute tax deduction—you’ll make a lasting impact on animals in need and help us start the New Year off right. With your help, we can save more lives than ever before in 2015. Please make a gift today.

Sent: Monday, December 29
To: Animal-Lover
Subject: Hurry! It’s Not Too Late!
Receive a Last-Minute Tax Break
It’s Not Too Late to Make a
Difference in 2014!
While this year is racing to a close, it’s not too late to make a difference for animals in 2014. If you make a gift to the ASPCA today, you’ll receive a last-minute tax deduction. Your gift will help us provide critical attention to homeless and neglected animals nationwide.
We can’t thank you enough for helping us save lives.
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This email was sent to:
This email was sent by: ASPCA
424 East 92nd Street New York, NY 10128 United States


Other major national and international organizations’ websites are: Humane Society International; World Animal Protection (formerly WSPCA); PAWS; and Rescue Me.

Yes, it’s very late for this.  Still ….

Happy New Year, all.


ADDENDUM: Please also see this. 12/31 at 4:35 p.m.

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Marginal producers of oil?

Yves Smith adds her thoughts on possibilities of the market price decline for oil:

When the Saudis announced their intention not to support oil prices when they were sliding towards $90 and plunged quickly through that level, we deemed the move to be a masterstroke. It served to damage both economic and political enemies. On the economic front, the casualties would include renewables, Canadian tar sands, and the US shale gas industry. On the geopolitical front, the casualties would include Iran, Syria, Russia…. and the US.

The Saudi “pump, baby, pump” strategy is tantamount to OPEC abandoning its cartel role. From Anatole Kaletsky in Reuters:

The U.S. shale revolution is perhaps the strongest argument for a return to competitive pricing instead of the OPEC-dominated monopoly regimes of 1974-85 and 2005-14. Although shale oil is relatively costly, production can be turned on and off much more easily – and cheaply – than from conventional oilfields. This means that shale prospectors should now be the “swing producers” in global oil markets instead of the Saudis. In a truly competitive market, the Saudis and other low-cost producers would always be pumping at maximum output, while shale shuts off when demand is weak and ramps up when demand is strong. This competitive logic suggests that marginal costs of U.S. shale oil, generally estimated at $40 to $50, should in the future be a ceiling for global oil prices, not a floor.

The Saudi determination to hold its position and force adjustment onto higher-cost producers makes this Kaletsky scenario seem more likely than it did when he wrote it.

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Dean Baker on part time employment

Lifted from comments:

Dean Baker adds a comment on Spencer England’s post on Part time employment statistics being (Spencer writes…”John R. Graham is a beautiful example of a little knowledge being a dangerous thing. The researchers at the right wing think tanks scour the economic releases for anything that they can spin to sell their point of view. But for the most part they do not really understand what they are writing”), and points to a piece of his own:

You really do have to distinguish between voluntary and involuntary part-time. In fact, voluntary part-time has risen in the last year, most likely because young parents don’t have to work full-time to get health care insurance [The Affordable Care Act: A Family-Friendly Policy ] Back where I took my economics, this was considered a good thing — people have the opportunity to spend time with their kids.

Involuntary part-time employment has been falling throughout the recovery. Anyhow, it is crucial to distinguish between the two. There is no economic reason to be upset about people voluntarily opting to work part-time.

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Variables for an Effective Demand Limit to the Business Cycle

Noah Smith states that there is no “cycle” to the business cycle. (link) My response on twitter was, “…there can be definable limits without a cycle.”

Can we define the limit of a business cycle?

I have a model that describes what a limit to the business cycle might look like in terms of a TFUR (total factor utilization rate). (link)  The TFUR is a measure of utilizing both labor and capital…

TFUR = capacity utilization*(1 – unemployment rate)

The model and its equation are…

limit model 3

Production = PT
Effective Demand Consumption line, EDCL = PT(aT/L)(1 -(1 – 1/a)(T/L))

P = Productive capacity of the economy
(PT = real GDP ouput)
L = Limit function upon T. (80% in graph) (This variable will be developed below)
a = coefficient to cross lines at L.

In the graph, the blue line is production. As utilization of labor and capital increase, production increases. The orange line represents the effective demand function to determine the consumption limit upon a business cycle. The point where the maximum of the effective-demand consumption line crosses the production line gives the natural limit of output. If production goes beyond the crossing point of the maximum, effective demand goes lower than production, which inhibits production. Production then returns to the stable equilibrium at the maximum of effective demand.

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On Williamson on Waldmann

Stephen Williamson wrote a critique of this post which critique was praised by David Andolfato and Noah Smith.

Williamson critiques the Keynesianism defined as

So, as I learned from Dick Lipsey in 1975, and my cat learned last fall, Keynesian Cross is

(1) C = A + cY,

(2) Y = C + I + G,

where C is consumption, Y is output, I is investment, and G is government expenditures, with 0 < c < 1 and A > 0. Y and C are endogenous, and A, I, and G are exogenous.

This is not Keynesianism as presented in “The General Theory of Employment, Interest and Money” nor is it Keynesianism as practiced just before the rational expectations revolution.

Williamson notes that, unlike GDP consumption was not correlated with G during the recovery.

Importantly, Williamson and I agree that simple raw correlations tell us almost nothing especially when there are very few data points. As always, I stress that, to me, the interesting thing is the difference between statistical calculations however simple and crude (people agree on what they are if not what they mean) and impressions based on reading newspapers where people perceive very different supposed facts.

My reply.

Three things. First the phrase “Keynesian multiplier effects” really needs an agreed definition. Economists including Fama, Cochrane and Lucas assert that the multiplier must be zero. But as soon as data is consulted the Keynesian claim becomes that it is greater than one. 1>0.

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Krugman, 1980 And All That

Dan here…Paul Krugman New York Times Dec. 24 notes Robert’s thinking on current story lines by some economists in macromedia.  Other posts by Robert on the subject can be found here, herehere, and here.  Krugman writes:

 Robert Waldmann is shocked, shocked, to find conservative economists not doing their homework:

Even now, I am shocked that economists didn’t bother to look up the data on FRED before making nonsensical claims of fact.

But this is typical; it applies to issues across the board. The same people know that growth has been much faster since financial deregulation and the Reagan tax cuts, except that it hasn’t; they know that Reagan was the only president to oversee the creation of millions of jobs, because there never was a Clinton boom; they know that there has been unprecedented growth in government spending under Obama, when the reality is the opposite. At this point you shouldn’t be surprised.

Still, why this failure to do even the simplest homework? In general, people on the right seem to do economic history (and probably history in general) using the principle of 1066 And All That: “history is what you remember”, often what you sort of think you remember. They hear everyone around them saying stuff, repeat it, and that becomes what everyone knows; the idea of checking the facts themselves never seems to arise…

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Magical Thinking and the Paranoid Style

Guest Post by Mark Jamison, a retired Postmaster in North Carolina.

The Rightwing echo chamber has gone nuts at the comments of Jonathon Gruber, comments that were, at the least insensitive and more than a little cynical. Gruber’s assertions that the American public was not very bright and had to be tricked into accepting Obamacare were not very respectful but they did and do reflect what many elites think of the general public.

On the Left we wonder “What’s the matter with Kansas?” and bemoan the fact that so many folks seem to vote against their own economic interests, if they even bother to vote. The Right however has no greater respect for the intellect of the American public. On the contrary, the Right with its highly tuned sensitivity towards the prevailing American religion of MarketThink, sees the ignorance of the populace as a business opportunity; as H.L. Mencken observed, “No one ever went broke underestimating the intelligence of the American public.”

My inbox was recently graced with an e-mail that informed that a number of recent lotto winners were terrified, “because they’re starting to draw a lot of unwanted attention from state lotto office.” The e-mail went on to tell me of a surefire system that “guaranteed” winning lottery numbers. Yikes!

Glen Beck is first and foremost a shill who uses overheated rhetoric and fear mongering to send his audience to gold dealers and get rich quick investment schemes. Now he is using his “brand” to sell expensive hipster clothing.

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The Oil Choke Collar: 2015 may be the acid test
The Oil Choke Collar: 2015 may be the acid test

by New Deal democrat

It’s nice to be proven right.  Even more, it’s nice to be proven right, for the right reason.

Back in 2011, I described what I called the “Oil choke collar,” writing:

For the second time in two years, Oil’s choke hold on the economy is asserting itself. Acceleration in recovery causes acceleration of demand, and acceleration of Oil prices – which causes the economy to stall. That choke hold won’t go on forever, though. There are three forces that will combine to bring it to an end: alternate fuels, conservation, and exploration.

[T]he Oil choke hold on the economy will not last forever. I claim no clairvoyance, but a good guess is that by 2013 or 2014, the combination of alternative fuels and technology, conservation, and exploration will relieve the current situation

(emphasis added)

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Pensions, Social Security

Holiday present for you

 via Congress and the Cromnibus.

Tucked into the massive spending bill Congress passed this weekend was legislation that reversed 40 years of federal law protecting retirees’ pensions.  The change will allow benefit cuts for up to 10 million workers, many of them part of a shrinking middle-class workforce in businesses such as construction and trucking. There wasn’t a single Congressional hearing on the plan before it was slipped into the spending bill, outraging senior’s advocates…including NCPSSM. “Allowing plans to break the fundamental ERISA promise – that pensions paid to retirees and their surviving spouses will not be reduced – represents an extreme response to a problem that can be addressed through other means by strengthening the funding of the Pension Benefit Guaranty Corporation. Additionally, the National Committee is deeply concerned that this provision could set a dangerous precedent for other defined benefit programs, such as single employer plans, public sector plans and Social Security …

Coberly here….When I saw this mentioned in the news, it was described as Congress addressing the “retirement crisis.”   Yep.  Take away their pensions.  No crisis.

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