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

About That Optimism Thing …

Watching the Democrats’ smoothly staged, potently scripted convention last week, voters could easily think that Hillary Clinton has this election in the bag.

The critiques of Donald Trump made devastatingly clear that he’s a preposterous, dangerous candidate for the presidency. The case for Clinton was compelling, and almost every party leader who mattered showed up to make it.

That included President Obama, who answered Trump’s shockingly gloomy vision of America with a stirring assurance that we have every reason to feel good. Clinton forcefully amplified that assessment. She peddled uplift, not anxiety.

But in 2016, is that the smarter sell? Are prettier words the better pitch?

They made for a more emotional, inspiring convention, so much so that many conservatives loudly grieved the way in which Democrats had appropriated the rousing patriotism and can­do American spirit that Republicans once owned. But Trump has surrendered optimism to Clinton at precisely the moment when it’s a degraded commodity, out of sync with the national mood. That’s surely why he let go of it so readily.

Clinton has many advantages in this race. I wouldn’t bet against her. I expect a significant bounce for her in post­-convention polls; an Ipsos/Reuters survey that was released on Friday, reflecting interviews spread out over the Democrats’ four days in Philadelphia, showed her five points ahead of Trump nationally among likely voters.

But she nonetheless faces possible troubles, and the potential mismatch of her message and the moment is a biggie. She has to exploit the opportunity of Trump’s excessive bleakness without coming across as the least bit complacent. That’s no easy feat but it’s a necessary one. The numbers don’t lie.

The Trouble for Hillary, Frank Bruni, NYT, today

For a few weeks last winter, into the spring, I kept getting ads on my computer screen from the Clinton campaign asking that we “Tell Trump that America’s already great.”  I don’t think I ever failed to groan or roll my eyes at that ad.  It was vintage Clinton campaign—a campaign that struck me as never failing to go for the most obvious cliché or, worse, clichéd misinformation about Bernie Sanders’ policy proposals and statements.

They—certainly including Clinton herself—came off as campaign software algorithms.  True to form.

It would have been fine to specify things about America that are great.  Michelle Obama did that beautifully in her convention speech when she said she wakes up every morning in a home built by slaves, and followed that sentence or preceded it, if I recall, with a statement that America is great.

Her point being that a source of America’s greatness is ability to change in critically important and progressive ways.

And certainly Clinton makes the point, repeatedly, that America’s greatness is so largely because of its ethnic and racial mix, so much of it the result of immigration.

But Clinton undermines her chance to win the election when she just grabs the obvious slogan or generic retort rather than identifying specific areas in which we’re no longer so great: the near-complete end to the long era of social mobility; the downward mobility of many people; the near-complete end to the long era of shared economic gains, and the consequent spiraling, gaping inequality of wealth and of income; and the conversion of the political system from a largely democratic one to an entirely plutocratic one.

The policies in the party’s platform address these.  I wish Clinton had mentioned those problems and then said, simply, that the party’s platform and additional ideas from her campaign and from Dems in Congress—Warren, Sanders, Sherrod Brown, Dick Durbin, Jeff Merkley, although she wouldn’t have had to name them—address these and do show the way toward further greatness.

Only just a week ago it appeared that Clinton’s decision to agree to a party platform incorporating so many of Bernie Sanders’ ideas, entirely or in part, was mainly lip service.  Her campaign was sending clear signals of this, telling reporters that she was more interested in courting moderate Republicans than Sanders supporters, and suggesting that consequently triangulation would be more prevalent than progressiveness.

Her selection of Tim Kaine as her running mate signaled this, or seemed to anyway, and probably did all the way back 10 days ago.  And clearly the courting of moderate Republicans was Bill Clinton’s desired direction; he himself is effectively one these days, after all.  And his convention speech, to the extent that it suggested a policy direction, seemed to me to suggest that one.

But to the surprise of, I think, most political journalists and most progressives she appears instead to have flipped the script.  It’s the view now of several high-profile commentators that Clinton at the last moment decided break from her norm and do the opposite of what she was expected to do because it’s what she always does: She offered lip service to the triangulators and a seemingly sincere promise to progressives that on much of domestic policy she’s now, genuinely, with them.

I think they may be right.

What if Clinton suddenly had an epiphany and realized three key things?  One is that it is not just the Sanders supporters who almost all will vote for her no matter what because the alternative is appalling; it also is moderate Republicans who are likely to do so, almost irrespective of her policy positions.  Another is that this is so of the big pro-corporate, pro-Wall Street donors, the ones who lean Democratic and usually donate to Dems, and the ones who are moderate corporate Republicans.

The third one is that most of the Sanders-induced platform planks aren’t actually radical, and are likely to spur a new wave social mobility, reduction of poverty, and a profoundly needed narrowing of wealth and income gaps.  Making America great again, in other words.

And the planks are popular.

What Clinton may suddenly have realized, even if her husband has not, is that the Trump nomination accomplishes something no one thought possible: It effectively repeals Citizens United, if only for this one presidential election cycle. Clinton had assumed that she could take for granted progressives’ votes, because as a practical matter progressives have nowhere else to go.  But since the regular moderate Democratic mega-donors, and moderate Republican ones too, similarly have nowhere else to go—the rabbit hole isn’t an inviting possibility—Clinton need not actually promise them anything, really, at all.

She may or may not feel liberated.  But I’m sort of guessing that once this sinks in fully, she’ll feel not only liberated but elated.  This is, after all, the strangest of election cycles.  And that would be a very welcome bit of strangeness.

Bruni’s column goes on to illustrate, quite evocatively, the conflicting signals of Clinton’s campaign.  His point, which he makes in spades, is that that itself needs to stop, because it’s self-defeating.  But he comes down, clearly, on the side of warning against a campaign of continuity-with-a-bit-of-incrementalism.

Campaigning as a true progressive and really meaning it and putting her heart into it would mean cutting the political umbilical cord from her husband and so many of the Clintons’ tight circle.  But the political and, here’s betting, the emotional reward to her would more than compensate for the loss of those crutches.  She could truly become her own person, if that truly is who she now is.  And oddly enough, she, and we, would have Donald Trump, of all people, to thank.

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“Character Defining Moment” for Trump: Golf Tournament in Mexico

The PGA moved a golf tournament from one of Trump’s courses to Mexico City. Trump was upset. Trump said, “If I become your president, this stuff is all gonna stop.”

It is clear in his immediate reaction to the decision that he plans to use the power of the presidency for his own personal business interests. In Trump’s own words from the video below, “Not good.”

And to say that the golfers should have kidnapping insurance is something that a bully would say to create conflict. He puts down the opposition to create conflict on his terms. Then he works to win the conflict. That is how a bully works.

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Trump Train Tweets

As far as I can tell the Trump train tweet is authentic (and authentic click bait).

Checking his time line I found this more recent tweet


FRED begs to differ


The tweet might show Trump cherry picking (and cheating on “through”). After Bush and the Republicans (with assistance from Democrats including Bill Clinton) left the economy in ruins, it took a long time to recover (largely due to Republican imposed austerity). But the US economy has gotten through the spell of extraordinarily high long term unemployment. Actually, now that I think of it, it seems more likely that Trump tweeted about the ratio of long term unemployment to total unemployment and not the long term unemployment rate — an appalling but possibly sincere conceptual error

By Trump standards, the long term unemployment lie is unusually close to the truth. By I think it is important to avoid lie habituation.

The train tweet is after the jump. Click bait is OK, but I’m trying to pretend to be serious.

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Okay, folks, here’s the deal.  Specifically, this happened this morning:

A federal appeals court on Friday struck down North Carolina’s requirement that voters show identification before casting ballots and reinstated an additional week of early voting.

The decision by a three-judge panel of the U.S. Court of Appeals for the 4th Circuit was an overwhelming victory for the Justice Department and civil rights groups that argued the voting law was designed to dampen the growing political clout of African American voters, who participated in record numbers in elections in 2008 and 2012.

“We can only conclude that the North Carolina General Assembly enacted the challenged provisions of the law with discriminatory intent,” Judge Diana Gribbon Motz wrote for the panel.

The challenge to North Carolina’s law is one of several cases throughout the country seeking to eliminate strict voting rules in place for the first time in the November presidential contest.

Opponents of the law, led by the state NAACP, asked the three-judge panel to reverse a lower-court ruling that upheld the voting rules.

In 2013, North Carolina lawmakers overhauled election law soon after the Supreme Court got rid of a requirement that certain states with a history of discrimination receive approval before changing voting rules. Legislators eliminated same-day voter registration, rolled back of a week of early voting and put an end to out-of-precinct voting.

During oral arguments, Judges James A. Wynn Jr. and Henry F. Floyd remarked on the timing of the changes and on comments from a state senator who said lawmakers were no longer restrained by the “legal headache” of the Voting Rights Act.

The timing “looks pretty bad to me,” Floyd said, prompting murmurs of agreement from the courtroom packed with opponents of the law, some of whom traveled from North Carolina to the Richmond-based appeals court.

The same three-judge panel — Motz, Wynn and Floyd — had earlier ordered the state to keep same-day voter registration and out-of-precinct voting in effect as the case made its way through the courts.

Appeals court strikes down North Carolina’s voter-ID law, Ann E. Marimow, Washington Post, 12:34 p.m. today

Now understand this: The Fourth Circuit Court of Appeals went in the last seven years from an extreme rightwing court to a really good one.

So if you’re a progressive, whatever else you want to claim, do not—I mean it; I do not—claim it’s a good idea to sit out this election, or vote for Trump, in order to teach those Democrats a lesson. (Bernie Sanders and his supporters did that–taught the Democrats a lesson–actually.  And those of us who will vote for Clinton still are.  At least those of us who blog.)

If you don’t actually understand what the lower federal courts do, and you trust me at all, then trust me on this.  This matters.

It matters, folks.  It matters.

(I’d say, “Believe me.”  But, well … that line’s already copyrighted for this election cycle.  The copyright expires on November 9, 2016, I believe.)

And, yes, I predicted this would happen, because I know about the Fourth Circuit.  And I know this will stick, because I remember that Antonin Scalia died a few months ago, and John Roberts hasn’t yet figured out how to resurrect him.

I wish I had a football to spike.  I don’t, but maybe I’ll buy one today for the occasion.

But seriously, this is no game.  I implore you not to treat it as one.  It’s not football.  And it’s not, um, Russian Roulette.

Unless you make it that.


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A Case for a 3% Inflation Target

There have been calls for a 4% inflation target. But a 3% target would work better. Let me show you why.

I will use this chart that plots net profit rate with core inflation… (quarterly data since 1958!!!)

Net profit rate = Corporate profit rate – nominal interest rate

inf corp8

The plot has hugged and slid along two resistance lines since 1958. Below there is resistance to fall into deflation at the 0% inflation line. To the left is a resistance line for a 0% profit rate over the real cost of money.

Let me explain how that real cost of money boundary is calculated.

  • First… corporate profit rate – nominal interest cost gives net profit rate.
  • Second… When inflation is equal and opposite to the net profit rate, the real profit rate is 0%.

Here is an example…

  • Net profit rate = 5% corporate profit rate – 3% nominal interest rate = 2%

So the profit rate is 2% over the nominal cost of money. But then we make core inflation -2% to take away that net profit rate.

  • Core inflation = -1 * 2% net profit rate = -2%
  • Zero real profit rate = 2% net profit rate + -2% core inflation = 0%

So basically the line with a -1 slope that crosses through the origin of the x and y axes, gives the line where the real profit rate goes to zero %.

ok… back to the graph…

Opposing Forces in the Graph

How might we explain the steadfast movement of the data points along the two resistance lines.

Well, we know that there is a resistance to fall into deflation, and there is resistance by corporations to have negative real profit rates.

How can we view the forces at play?

inf corp6

There are forces to increase profits which try to push the data points away from a 0% real profit rate.

There are forces which counteract the forces to increase profits, namely, labor power, perfect competition and price inertia.

inf corp7

These counterbalancing forces work against the forces by corporations to increase profits for themselves.

So for 58 years, the pattern has been solid!!! The data points moved within a definable range.

Could the data points break out into a new pattern farther away from the resistance lines? I do not think so… It has never happened in 58 years of data. The forces are pushed into a balance in the range defined by the red zone in the graphs.

A 4% Inflation Target?

So what if the Fed tried to have a 4% inflation target, like Paul Krugman advises? The zone of a 4% inflation target would probably be like this…

inf corp9

As the green zone sits at a net profit rate of 0%, we could logically conclude that the nominal cost of money would equal any corporate profit rate as a general rule. So if corporate profit rates get back up to 9% in the next recovery, we would assume a nominal interest cost over 7% so that the forces are balanced at a 4% inflation target.

There would never be a nominal interest rate of 7% if inflation was 4%. It is not going to happen. So then we assume a nominal interest rate of 2% to 4%, which would imply an upper limit on the corporate profit rate in a range of 2% to 4%. So corporate profit rates would have to come down a lot in the next business cycle.

Corporations are going to fight tooth and nail against the 4% inflation target.

What about a 2% inflation target?

inf corp11

Actually a 2% inflation target feeds right into the hands of corporations. They can have high profit rates above 9% and the forces still be balanced along the 0% core inflation line. The Fed helps them by keeping nominal rates near 0% due to the stubborn low levels of inflation which correspond to high net profit rates. Also, higher profit rates lead to lower labor share and lower effective demand.

The forces from corporations to push net profits as far right as possible have succeeded greatly in the last two business cycles. But they have succeeded too well, and the economy is sick because of it. A 2% inflation target has created an environment for this between the forces described above.

A 3% Inflation Target?

inf corp10

A 3% inflation target would be met with  nominal rates from 1% to 3%, which would imply corporate profit rates in a range of 3% to 5%. This is a healthier balance than what we have now. And healthier than a 4% inflation target which implies a monetary policy tending to seem too tight.

It seems more reasonable to have a 3% inflation target. Very high corp. profit rates would be avoided. Lower profit rates would imply higher labor share, which would increase the Effective Demand on the business cycle. Then there would be higher utilization of labor and capital.

The main idea is that a 3% inflation target would better avoid the part of the zone that slides rightward holding inflation rates at stubbornly low levels.  Then the Fed thinks they have to keep nominal rates low to try and raise inflation. But the inflation rate is basically just stuck low in a balance between the forces described above.

A 3% inflation target would lift us out of that low level inflation zone and give us moderate nominal rates. Corporate profit rates would be healthier for the economy as a whole.


So it is a good idea to raise the inflation target. The graphs above suggest that a 2% inflation target is too low, a 4% inflation target is too high, and a 3% inflation target would be more balanced.

The big question is… How do we get out of this rut of low inflation levels? I think the Fed has to raise nominal rates to start bringing down net profit rates, so that corporations feel the need to counteract with the force of inflation (y-axis) to support their profit rates.

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The Clinton campaign has been strangely remiss in not publicizing the Trump campaign’s aggressive screening of journalists at Trump’s events—especially its denial of press credentials to several news media organizations, including the Washington Post and Politico.

But this report by Paul Farhi, the Washington Post’s media reporter, this morning, titled “Post reporter barred, patted down by police, at rally for Trump running mate,” but published in the Post’s Style section for whatever reason, is out of early 1930s Europe:

Donald Trump’s campaign has denied press credentials to a number of disfavored media organizations, including The Washington Post, but on Wednesday, the campaign of his running mate, Indiana Gov. Mike Pence, went even further.

At Pence’s first public event since he was introduced as the Republican vice-presidential candidate two weeks ago, a Post reporter was barred from entering the venue after security staffers summoned local police to pat him down in a search for his cellphone.

Pence’s campaign expressed embarrassment and regret about the episode, which an official blamed on overzealous campaign volunteers.

Post reporter Jose A. DelReal sought to cover Pence’s rally at theWaukesha County Exposition Center outside Milwaukee, but he was turned down for a credential beforehand by volunteers at a press check-in table.

DelReal then tried to enter via the general-admission line, as Post reporters have done without incident since Trump last month banned the newspaper from his events. He was stopped there by a private security official who told him he couldn’t enter the building with his laptop and cellphone. When DelReal asked whether others attending the rally could enter with their cellphones, he said the unidentified official replied, “Not if they work for The Washington Post.”

Donald Trump’s running mate has been in public office since 2000, mostly in Congress, and is a favorite among social conservatives.

After placing his computer and phone in his car, DelReal returned to the line and was detained again by security personnel, who summoned two county sheriff’s deputies. The officers patted down DelReal’s legs and torso, seeking his phone, the reporter said.

When the officers — whom DelReal identified as Deputy John Lappley and Capt. Michelle Larsuel — verified that he wasn’t carrying a phone, the reporter asked to be admitted. The security person declined. “He said, ‘I don’t want you here. You have to go,’ ” DelReal said.

The security person wouldn’t give his name when DelReal asked him to identify himself. He also denied DelReal’s request to speak to a campaign press representative as he escorted the journalist out.

Officials of the Waukesha County Sheriff’s Department were unavailable for comment Wednesday night.

Trump has banned nearly a dozen news organizations whose coverage has displeased him, but reporters have generally been able to cover his events by going through general admission lines.

The incident involving DelReal marks another in a series of run-ins between the news media and the campaign.

In June, Politico reporter Ben Schreckinger was ejected from a Trump event in San Jose by a campaign staffer and a private security guard after he tried to cover the rally without the campaign’s permission. In February, a photojournalist from Time magazine, Christopher Morris,was roughed up by a Secret Service agent as journalists rushed to cover a protest at one of his rallies. And Trump’s former campaign manager, Corey Lewandowski, yanked and bruised the arm of a reporter for Breitbart News, Michelle Fields, when she tried to question Trump after a speech in March.

DelReal’s experience on Wednesday elicited a rebuke from Post Executive Editor Martin Baron.

“First, press credentials for The Washington Post were revoked by Donald Trump,” he said. “Now, law enforcement officers, in collusion with private security officials, subjected a reporter to bullying treatment that no ordinary citizen has to endure. All of this took place in a public facility no less. The harassment of an independent press isn’t coming to an end. It’s getting worse.”

Officials from the Pence campaign initially said they were unaware of the Waukesha incident when asked for comment Wednesday night. But after a cursory investigation, one official, who declined to speak on the record, said that no members of the campaign’s staff were involved. He said volunteers went too far.

“It sounds like they misinterpreted what they were supposed to be doing,” the official said. “This is not our policy.”

In a statement, Pence press secretary Marc Lotter said, “Our events are open to everyone, and we are looking into the alleged incident.”

“It sounds like they misinterpreted what they were supposed to be doing,” the official said? “This is not our policy?”

Some of them were doing what they were supposed to be doing—the volunteers at the press check-in table, for example.  Others surely knew that they were doing something they weren’t supposed to be doing, because they are public law enforcement officials, yet they did it anyway.

And then there is that middle category—the private security people—whose interpretation of what they were supposed to be doing wasn’t mere happenstance.

I don’t know who other than Clinton and her daughter will be speaking tonight in the primetime hours.  But I sure hope this night, with so many millions of people watching, will tell the public about this.  Even maybe someone who isn’t scheduled to speak tonight, and who could just take the stage to do that and only that.

My preference would be Bernie Sanders.  Or Elizabeth Warren.  But really, almost anyone could do it effectively.  It would take only about five minutes—and could be profoundly informative to so many people who don’t know about this.

Not to put too fine a point on this, but Bernie would be particularly effective, given his father’s family’s losses in the Holocaust.  And Elizabeth Warren would be because she could note, with some authority notwithstanding that although a former Harvard law professor she did not teach constitutional law, that what we undoubtedly are looking at if Trump is elected is a series of profound constitutional crises.

This is stunningly important stuff, folks.


UPDATE: Can’t decide whether this is equally important, but it isn’t stunning.  In the least.

Then again, New Jersey isn’t all that far from Virginia.  And they both have to worry about hurricanes during the hurricane season!

Okay, I won’t make you click that link.  Trump said on Twitter last night that Tim Kaine was a lousy governor of New Jersey.  I presume Trump’s complaint is that Kaine didn’t show up much for work there.

Added 7/28 at 11:24 a.m.

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Debt collection news

Via Dealbook:


There will be some respite for people being hounded for debt as federal regulators are preparing to significantly strengthen the rules that govern debt collection for the first time in nearly 40 years.

Under proposed regulations, debt collection companies will have to provide fuller documentation of the debt they are trying to collect. They must also make it clear how a consumer can dispute the debt and observe state statutes of limitations that bar them from legally pursuing older debts…

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Google Trends and the Presidential Election

by Mike Kimel

Google Trends and the Presidential Election

I’m sure somebody has done this before, but I don’t remember seeing it. I used Google Trends to see how searches for the Democrat and Republican nominee for President stacked up in the first ten months of 2004, 2008, 2012, and 2016 (YTD). I’d go back earlier but that’s as far as Google goes.

Figure 1 - John Kerry v. George W. BushFigure 1

Figure 2 - Barack Obama v. John McCainFigure 2


Figure 3 - Barack Obama v. Mitt Romney
Figure 3


Figure 4 - Hilary Clinton v. Donald Trump(1)Figure 4

Your thoughts?

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