(Dan here….lifted from comments, lightly edited for readability)

by Dale Coberly

I’ll offer my own answer to the question. (of Morality in Capitalism post here)

“Capitalism” offers itself as the answer to morality. always in some version of the Ayn Randian “life is time and time is money so taxes are not only theft, they are murder.”

The truth is there is no conflict between capitalism and morality any more than there is a conflict between capitalism and gravity, or capitalism and the second law of thermodynamics.

Taxes and regulations are a normal and necessary part of life. capital can adjust itself to those costs just as they adjust to gravity and entropy (“dead weight losses”?)

I think we need capitalists. they have a talent that managed sanely tends to make life a little more interesting for us if not always better. where i disagree with “capitalism” is where it insists that capitalists should make the rules. this is about equivalent to a farmer letting his prize bull make the rules.

…

The people who wrote in the linked article appear to assume there were no laws broken by the banks that led to the 2008 crash.

They are wrong. the banks funded and rewarded the criminals making the bad loans the CDO’s were based on. and it was the criminality of the loans that led ultimately to the big crash

The problem for us is that the criminal loan industry has been with us for decades if not centuries, and very little enforcement has been brought against it.

So “there were no laws against it” merely points at the fact that criminals write the laws, or decide how to enforce them.

I modestly suggest that those who don’t think business should have an ethical responsibility to its customers or the public are themselves immoral in their personal lives, not merely fulfilling their obligation to their shareholders to pursue maximum profit.

The ethics of Friedman et al lead to terrible human suffering in spite of the lie that “maximum profits” leads ultimately to “progress” or, i suppose, the greatest good for the greatest number.

we could do with more philosophers (and economists) who understand the human costs of their logical systems.

and that includes the communists.

(Dan here…re posted from March 7, Angry Bear)

by run 75441

There are no loud guns shots in the middle of the night. No screams for help or sounds of cars speeding away. No police sirens or flashing lights. It is pretty quiet when someone ODs on Opioids unless someone finds them before it is too late.

As I wrote earlier; “From 2006 to 2015, pharmaceutical companies spent $880 million in lobbyingstate and federal legislatures and contributing to campaigns to prevent laws restricting Opioid prescriptions. Opioid manufacturer lobbying expenditures has outstripped those such as STOPPNow advocating for greater controls on Opioids and prescriptions by 200 times at the state level.”

In comparison, only the NRA and its gun lobbying efforts in legislatures displays a similar capability to oppose and defeat any and all laws for bullet-spewing-weapons laws the same as the Opioid industry efforts to block legislation. Legislators pay attention when either industry or lobby calls on them.

Any particular article advocating greater regulation of Opioids or reporting of Opioid dangers on medical blogs such as Medscape, centers such as Public Integrity, news agencies such as Associated Press are met with a resistance (if they still have a comments section) the same as what is found on sites when they advocate for greater “gun control.” The evidence is overwhelming that there is an opioid epidemic in the nation resulting from usage and is similar to the epidemic of injury and deaths resulting from guns. Quietly, the industry and their lobbyists work the legislatures to stymie any effort to control opioids.

Latest Findings by the CDC

Today, Medscape reported:

Emergency department (ED) visits for suspected opioid overdoses rose by 30% throughout the U.S. in a year, according to the CDC.

“All five regions of the U.S. saw significant increases during this time period,” said Anne Schuchat, MD, acting CDC director, in a CDC tele-briefing Tuesday.

If you come back later to Medscape article, you will see the comments section flooded with what appears to be an organized opposition to what supported facts MedScape presents and consequently any and all suggested Opioid control. Many of the posters appear to be the same ones time and time again. It is pretty apparent the pharma industry is attuned to any medical backed article going up advocating for Opioid control.

The analysis backing the increase in Opioid ER visits can be found in a new CDC Vital Signs report. The basis of its findings are from ~91 million ED visits in 52 jurisdictions in 45 states from July 2016 to September 2017. The data is reported in the CDC’s National Syndromic Surveillance Program (NSSP) Biosense Platform. The 142,557 visits to the ER reported as suspected opioid overdose cases equate to a 29.7% increase from the previous 1-year period.

I almost always agree with Kevin Drum who is, among other things, a brilliant economist even thoug (or largely because) he didn’t study economics much in college.

But I don’t entirely agree with his one minute explanation of the importance of the yield curve for macroeconomic forecasting.

the ever-fascinating yield curve, which tracks the difference between long-term and short-term treasury bond yields. Normally the long-term yield is higher to compensate investors for the risk of the economy eventually going sour. But what if you think things are about to get sour really soon? Then you’ll bid down the price of short-term bonds, which increases their yield, and pretty soon long-term yield is less than the short-term yield. The yield curve has “inverted,” which suggests that investors are nervous about a recession hitting.

My comment

I think the yield curve story isn’t that simple really. First it always used to be an indicator of monetary policy. The Fed controls short term interest rates. When it chooses contractionary monetary policy (to fight inflation) it sets high short term rates. The long term rates don’t move up as much, because investors are sure the fed will relent after inflation falls. This was always the normal pattern.

Back in the good old days (before 1999) an inverted yield curve occured if and only if the Fed was cracking down to fight inflation. Notice the 90s. The yield curve was very close to flat during the whole late 90s boom. What was happening was the Fed was pressing gently on the brake worried about inflation & the magic of the internet (or foolish dot com mania) kept the economy booming. The alarmingly exuberance caused the fed to raise rates in 2000 (not at all trying to prevent Gore from being elected nooo Greenspan would never do such a thing). And the bubble burst.

Notice also the S&L recession happened without a dramatic yield curve inverstion. There were these two really smart time series econometricians Stock and Watson who had a model which “predicted” recessions really well. In 1990, it never said a recession was coming. Their explanation was that it detected inflation fighting recessions — that from wwII until 1990 recessions occured when the Fed decided to cause a recession to fight inflation (the also very smart Romer and Romer noted that recessions occured after statements like “we have to cause a recession to fight inflation” appeared in the Fed open market committee minutes).

I’d say a steep yield curve shows a fed desperately trying to pump up the economy and, therefore, pushing short term rates far below normal (long term rates being equal to the short term rate investors think is normal plus a small term premium cause they know they don’t know what is normal).

So the graph shows desperate efforts to stimulate when Republicans are in the White House or Bernanke or Yellen is chair (not that Saint Alan Greenspan was partisan or anything). The flattening just shows that the FOMC is no longer stimulating as hard as it can by keeping the short term rate at 0.25%.

Also the long term rate which investors now guess is normal is very low. That is called secular stagnation not incipient recession. Looking at short and long rates separately helps. Both are very low now. In 2000 both were high as the Fed was fighting the boom (a tiny bit too hard but it lead to a tiny miniscule recession). 2008 was a strange strange time when both short and long term interest rates were almost zero and yet demand was low. Then zero was not low enough. Now the FOMC thinks zero interest is a bit too low.

So I don’t agree with your story.
In general economic downturns cause low interest rates both directly and through active monetary policy. The yield curve slopes up because investors fear the Fed might decide to fight inflation, not because they fear a recession will just happen and it will drive up interest rates. The causation is high interest rates cause recessions not the other way.

In 1990 and 2008, I’d say the issue in 1990 and (much more so) in 2008 was people expected long lasting trouble, so persistenly low short term interest rates, so long term rates were low too. In 2000 and all recessions post WWII and pre presidents Bush the yield curve inverted because short term interest rates were high because the Fed was pressing on the brake.

(Dan here…From Esquire comes this note from the Boston Globe):

We begin with good news up here in the Commonwealth (God save it!), where Attorney General Maura Healey, who does not punch down, has opened hostilities against the pharmaceutical companies that have raked in the profits from the opioid crisis. From The Boston Globe:

She asserts that the privately held company and 16 of its key directors and executives actively obfuscated the truth about opioid use, downplaying the perils of addiction and overdoses with the aim of getting more people to take them at higher doses for longer periods of time in order to boost the business’s bottom line. “Purdue Pharma created the epidemic and profited from it through a web of illegal deceit,” the lawsuit alleges. While several other state attorneys general have taken similar legal action against Purdue, Healey’s action Tuesday opens a new front in the battle against the scourge of overdoses in Massachusetts. And the suit, filed in Suffolk Superior Court, hints the state could be seeking damages to the tune of billions of dollars.

“We found that Purdue misled doctors, patients, and the public about the real risks of their dangerous opioids, including OxyContin,” Healey said at a news conference, standing next to officials including Governor Charlie Baker as well as families who have lost loved ones to overdoses. “Their strategy was simple: The more drugs they sold, the more money they made — and the more people died,” Healey said. An investigation by Healey’s office found that since 2009, 671 people who filled prescriptions for Purdue opioids in Massachusetts subsequently died of an opioid-related overdose, the legal complaint says.

by Peter Turchin

What Is the Role of Morality in a Capitalist Economy?  published at Evonomics is worth a visit…it is academic but can offer material for discussion, involving several economists.  I am not going to try to summarize.

The ACLU’s Ría Tabacco Mar reviewed a recent SCOTUS decision in the NYT. South Dakota is being allowed to murder a man rather than commit him to a life time of hell in a natural life sentence . Charles Rhines was convicted of murdering a man while robbing a Dunkin Donut store he used to work at and was fired from a couple of weeks earlier.

The jury in deciding Charles Rhines fate in deliberation sent questions to the judge asking;

Would Rhines have a cellmate? Would he be allowed to “create a group of followers or admirers”? Would he be allowed to “have conjugal visits”? They apologized if any of the questions were “inappropriate,” but indicated that they were important to their decision-making.

The judge declined to answer, telling the jurors everything they needed to know was already in the jury instructions they’d received.

Eight hours of deliberation later and the jury sentenced Charles Rhines to death. It was not until 2016, when the newly appointed federal capital defenders found the jury note and restarted the appeals process and they interviewed the jurors learning what can be described as a preconceived bias of the jury towards Charles Rhines because he was gay.

One juror said Rhines was gay “and thought that he should not be able to spend his life with men in prison.” A second recalled another juror making a comment “sentencing Rhines to life in prison would be sending him where he wants to go.” A third said “there was lots of discussion of homosexuality” in the jury room. Another juror said, “There was a lot of expressed disgust. This is a farming community. There were a lot of folks who were like, Ew, I can’t believe that.” All of which is not pertinent to the sentencing. The jury sentenced Charles Rhines to death because he was gay and not because he murdered someone.

To provide for the integrity of the jury and what they discuss in deliberation in the jury room; there is what is known as the no-impeachment rule. It says testimony from jurors during jury deliberations may not be used to impeach a verdict during an appeal. In this case as one of Charles Rhines attorney’s Shawn Nolan argues, “the juror misconduct violated constitutional protections — so the rule should not apply.” The rule was overturned once before when considering racial prejudice in Peña-Rodriguez v. Colorado;

Miguel Angel Peña-Rodriguez was convicted of unlawful sexual conduct and harassment, two jurors came forward to tell his lawyer that another juror had made racially charged statements about Peña-Rodriguez and an alibi witness, commenting about the likelihood that Peña-Rodriguez was guilty and the witness was not credible because both were Hispanic. Peña-Rodriguez sought a new trial based on the jury misconduct, but the courts said no because of the no-impeachment rule. The U.S. Supreme Court disagreed. “A constitutional rule that racial bias in the justice system must be addressed — including, in some instances, after the verdict has been entered — is necessary to prevent a systemic loss of confidence in jury verdicts, a confidence that is a central premise of the Sixth Amendment trial right,” the court wrote. As such, the court concluded that “where a juror makes a clear statement that indicates he or she relied on racial stereotypes or animus to convict a criminal defendant, the Sixth Amendment requires that the no-impeachment rule give way” so that the court can consider whether the misconduct tainted the promise of a fair trial.

The Law is meant to punish “people for what they do and not who they are.”

Jurors Thought a Man Would Enjoy Prison, So They Sentenced Him to Death Jordan Smith, The Intercept, June 13, 2018

A Jury May Have Sentenced a Man to Death Because of What He Is And the Justices Don’t Care. Ría Tabacco Mar, NYT, Jume 19, 2018

author; run75441 @ Angry Bear Blog

Gimme shelter update: housing purchase affordability

Let’s update one measure of housing prices: comparing of the purchasing power of buyers vs. the price a typical house.  There are at least 3 indexes.

First, here is the N.A.R.’s “Housing affordability index,” updated through May. This compares their estimate of median household income vs. the median price of an existing home:

Note that the data isn’t seasonally adjusted, so there is an annual cycle. Even so, it is clear that affordability is at its lowest in 10 years. But on the other hand, the index is nowhere near its lows of 2005 or 2006.

Second, the private firm ATTOM Data Solutions publishes an index comparing annualized wages to median house prices:

In my original post, I didn’t say much about the overt racist expression in Gomper and the A. F. of L.’s  advocacy for Chinese exclusion. I guess that is because I read the stuff voluminously a couple of decades ago and it by now it just seemed to me it was common knowledge. Of course it isn’t. I was astonished and appalled when I first read it. Not so much at the vileness as at the obsessive repetition of that vileness. The pamphlet, Some Reasons for Chinese Exclusion gives a representative sampling. In the introduction, the authors assure the reader that they “are not inspired by a scintilla of prejudice of any kind…”

Not a scintilla.

Further comments about the state of the housing market

Here are some additional salient comments about the housing market right now.

1. Existing home sales are completely stagnant

Not only did existing home sales fall for the month, not only are they down slightly YoY, but they are now less than 2% higher than where they were 3 years ago:

In May 2015, houses sold at a 5.35 million annualized rate. In today’s repot they were reported as selling at a 5.43 million annualized rate.

This, of course, is at complete variance to the very positive trend of new home sales over the last three years.

2. Not only sales, but inventories of new vs. existing houses have completely diverged