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

Maybe This Is Not (Technically) A Recession?

Maybe This Is Not (Technically) A Recession?

Here I am using what is the journalistic definition of a “recession,” also used in many nations although not officially in the US, where these things are determined ex post by an NBER committee.  Anyway, that “journalistic” definition is that there be two consecutive quarters of negative GDP growth.  Today in the Washington Post I saw a story on global carbon emissions, which are very closely correlated with GDP, if not perfectly. Anyway, it appears that global carbon emissions hit bottom on April 7 and have been slowly rising since then (not sure about US separately, although US somewhat behind most other nations on the covid curve and so on the economic impact as well). I note that April 7 is one week into the second quarter.

This means it is very likely that at the global level we shall see positive economic growth in the second quarter, basically rising since the end of the first week of the quarter, although due to reporting lags in many countries this will not show up as positive growth in the data until later, possibly by the end of the month. This growth is slow, but it is positive, definitely not a V.

So, assuming this slow growth continues,the world will have seen a massive shock in the first quarter, with most of that in a single month, March, the largest such short term shock in recorded history by far. But it looks that it may have hit bottom quite quickly, then to turn into a slow recovery shortly after the end of the first quarter.  First quarter is certainly going to be negative, but second looks very well like it might be positive, at least at the global level, hence, not technically quite a “recession” according to this journalistic definition.

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“Obamagate!”

“Obamagate!”

I know, I should probably not waste everybody’s time commenting on this nonsense, but the push on it has been massive, with it seeming to influence a lot of people it should not, so I have decided some push back is called for, even if those who should see it do not.   I am partly triggered in this by getting defriended on Facebook yesterday by a generally intelligent libertarian academic economist I know who started massively linking to every crackpot pushing this nonsense, and when I pointed out some serious problems with all of it and declared the whole thing to be “insane,” I was told that my “TDS was showing” and was defriended.  As far as I am concerned, TDS is people who believe lunatic lies by Trump, showing as a result their own derangement.

As part of all this the Trump media push on this is massive. I am not sure it held for the whole Sunday-Saturday week, but  reportedly for at least a substantial portion of last week Fox News was spending more time on this story than on the pandemic, no distraction with this, of course.  And  this was not as in there might be two sides to it, at least not on Hannity where I have kept an eye on it.  He has been for quite some time pushing for investigations of how the Russia investigation started with a demand that people go to jail for it for a long time.  So he has been all u-rah-rah to Trump coming on to Fox News on Thursday morning with his completely off the wall claim that “This is the greatest political scandal in US history,” repeated several times, along with his demand that Senate committees drag lots of people in and that Obama, Biden (of course), Comey, and Brennan should all go to jail for 50 years, although he has not mentioned any actual crimes for which they should go to serve these long sentences that would effectively put them away for life. Both Sens. Grassley and Graham have jumped sort of to attention to promise hearings on all this, although the generally odious Graham did show some streak of sanity by saying he would not call Obama before his committee, perhaps aware that the guy is the most popular political figure in the country, warning “Be careful what you wish for,” although I did not see him ruling out dragging Biden in.

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How Likely Is A Second Wave Of SARS-CoV-2?

How Likely Is A Second Wave Of SARS-CoV-2?

Dr. Anthony Fauci has testified before a Senate committee that he is worried that there may be a serious “Second Wave” of the current SARS-CoV-2 pandemic in the United States.  The basis for this fear is the experience over a century ago with the Spanish flu, still deadlier than the current pandemic.  It came in three full waves, and of those the second was easily substantially larger than the other two.  The lag between the first and second was several months, and as of now no nation that has had its first wave essentially get under control, has not had it under control for as long as that gap. So we are not yet in a position to see if this pandemic can or will imitate that former pandcmic.

Nevertheless, there is some evidence about the possibility of more immediate, less dramatic, second waves in the form of the number of new cases in a nation rising noticeably after having had a major decline from an initial peak.  We have now seen this in a number of nations, in a small number quite dramatically.  What is the current situation regarding this?

On May 11, the site endcoronavirus.org showed graphically the time path of  new cases per day for 99 nations.  This group divides these nations into three groups: “Winning” (32 nations) that have basically gotten their numbers well down, with a few exceptions; “Nearly There” (31 nations) that exhibit a variety of patterns, although nearly all currently below their peak by some; and “Need to Take Action” (36 nations), most of which simply are steadily moving up, although a small group have flattened (includes Moldova, Philippines, Poland, Romania, Sweden, and UK) or are slightly declining from a peak (including Ecuador, Finland, and US).

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What Is the Shape Of This Cycle As A Letter: V, L, W, J, U, Or Maybe A Lazy J or Wiggly W?

What Is the Shape Of This Cycle As A Letter: V, L, W, J, U, Or Maybe A Lazy J or Wiggly W?

For some time now it has become commonplace for people to describe business cycles by how they resemble one letter or another, although obviously this amounts to a lot of hand waving. But it does provide bright images.  Thus Trump and crew seem to believe that the US will experience a V recovery, one that will boom up as rapidly as it fell down, so the sooner we can reopen America the sooner he can get that boomy upturn to guarantee his reelection. Somehow he fails to understand that if he gets it going too soon, the uptrun is more likely to get sideswiped by a serious Second Wave of the coronovirus that would turn the upturn back into a downturn, making it into a W, or if, as I suspect, given that the downturn we have just seen pushing the unemployment rate upo 10% in two months is truly unprecedented so that the upturn will not be all that fast, the outcome will not be a neat W, but a Wiggly W.

Use of letters is recent, but debates on the shapes of macro fluctuations is very old, dating back into the 19th century.  Up until the 1930s, nearly all the discussion focused on “commercial crises” generating sharp downturns that then were asymmetrically followed by slower upturns.  This was still the view in 1913 when Wesley Clair Mitchell of the NBER and Columbia published his Business Cycles, coining that term.  I have been recently over on Econbrowser taken to describing such a pattern as a “Lazy J.”  Think of a J but then tilt it to the right so its upslope gets flatter until it is flatter than the downturn.  I think this is what we are going to see now in the US, although it could turn into a Wiggly W.

In the 1930s, driven by Mitchell associated at the NBER, it became common to use sine curves to describe business cycles, so symmetric, and if one cuts one off at the inflection points going down and up, something that looks like a U.  Over on Econbrowser, Jeffrey Frankel recently posed that the current situation might end up looking like a U, although I doubt it.

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RIP John Horton Conway

RIP John Horton Conway

I am late to issue this RIP as John Horton Conway died on April 11, 2020, having been born in England, Dec. 26, 1937. He died of coovid-19.  I was aware of his death when it happened, but have since become aware of things he did that I did not know about that have pushed me to post this.

Conway was one of the world’s best known mathematicians, most famous for creating the Game of Life a half century ago in 1970, which was publicized by Martin Gardner in Scientific American.  It is what I knew of him mostly about, as the canonical cellular automata model that generated simulation models capable of generating chaotic and unpredictable emergent outcomes within a Turing complete framework, the sort of thing that goofy complexity theorists like me salivate over.  However, it inspired similar models that have been used in nearly every science, and I am quite sure that such models are being used in the current research push to find a vaccine for the disease that did Conway in.  It was an enormous achievement and enormously useful.  He deserves  recognition for this alone.

I never met him or even saw him speak, but by all accounts he was highly extroverted and lively to the point of becoming at least for awhile “the rock star of mathematics.”  Not unrelated with that he invented an enormous array of games, none of which I have ever played, but apparently he would invent them on the spot as he  interacted with people he met.  Of course in some sense the Game of Life is a kind of game, and Conway himself on more than one occasion claimed that doing mathematics is fundamentally a game.

I had known that he did a lot of work in other areas of math, but had not really checked it out in details, but have recently become more aware of just how widely across math his work varied and how important and innovative so much of it was.  I shall not list all these areas and theorems and discoveries as it is a long list that will probably be meaningless to most of you if it is just put out here, but anybody who wants to see a pretty complete version of it, well, his Wikipedia entry provides a pretty thorough one.

Anyway, I shall talk a bit more about a couple of the more out there high level stuff that relates to things that my father and I have long been interested in.  My late father was a friend of the late Abraham Robinson and someone Robinson consulted with at length when he developed non-standard analysis, presented in a book of that title in 1966.  Non-standard analysis allows for the existence of superreal numbers that have infinite values, real numbers larger than any finite real number.  The reciprocals of these numbers are infinitesimals, numbers not equal to zero but smaller than any positive real number.  These are ideas originated by Leibniz when he independently invented calculus, and allowed for viewing derivatives as ratios of such infinitesimals, an essentially more intuitive way of doing calculus.

This extension of real numbers into transfinite and infinitesimal values led to further expansions of what might be numbers, with a further extension being hyperreal numbers that can be constructed out of the superreals.

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A Very Grey Swan

A Very Grey Swan

Keynes and Knight famously simultaneously in 1921 identified the concept of fundamental uncertainty as a situation not understandable by using a probability distribution, an idea popularized by Nassim Taleb just as the 2008 crash happened as a “black swan.”  Taleb defined white swans as situations describable by Gaussian normal distributions.  For situations not full uncertainty or white swans Taleb coined the idea of “grey swans,” situations exhibiting “fat tails” and more generally lots of extreme outcomes, but yet possibly describable by probability distributions allowing more readily extreme outcomes.

I think this is what we are dealing with, although I claim no special expertise here.  Indeed, for me the issue is whether or not this current pandemic actually a black swan of fundamental uncertainty rather than “just” a very grey swan.  The reason it is the latter, despite the highly unusual outcomes on both health and economic outcomes, is that large numbers of experts have been warning for several years that we were facing with high probability a serious pandemic.  The current administration has in fact been officially faced scenarios not all that different from what has happened.  Among those is a largely ignored study in the president’s own Economic Report for last year, where economists at the largely ignored CEA made such a study.  But, heck, who in this administration reads the Economic Report of the President, hahhahah!?

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Donald Trump Goes Absolutely Bonkers Over China

Donald Trump Goes Absolutely Bonkers Over China

(Last Thursday) President Trump erupted with a series of demands and threats against China, focusing on various claims about its role in the current pandemic.  I have here noted some issues with China’s conduct, but Trump makes it completely impossible that there will be any of the much-needed cooperation between the US and China to overcome this virus.  He has gone absolutely bonkers.

He has now threatened to remove China’s sovereign immunity so people can sue it, with a former lawyer of his organization, George Sorial, now of Berman and Associates, cooking up a class action suit against China; a threat to stop paying interest on US bonds held by China, which he probably will not do because it occurs to him that this default on the US national debt might “damage the sacred standing of the dollar” duh; and finally to impose yet more tariffs on China, a threat that promptly sent the stock market plunging after several days of rising, although we know he really likes putting tariffs on China. Probably the first of these would be the least harmful and the most likely he will do, very noisy but not amounting to too much in the end as China will just ignore it.

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 Which Nations Have Most Rapid Rate Of Increase In Deaths Per Million from SARS-Cov-2?

The Wide Open Origin Question Regarding SAR-Cov-2

The Wide Open Origin Question Regarding SAR-Cov-2

More than a century later, we still do not  know the origin of the Spanish flu, with at least three currently scientifically supported origins out there: North America (possibly Kansas), China, and British soldiers in France. This will not be resolved.  I suspect that this may become the outcome of the current debate over the origin of our current pandemic.  While mostly this seems to have become a matter of random infection from animals versus an accident in a lab in Wuhan, upon further study this seems more complicated on all sides of this, with crucial data missing forever.  I fear the outcome of this debate will be no more resolved a century from now than the matter of the Spanish flu is now.

I also note before proceeding further that this discussion has become highly politically charged, with some regular readers here having strong views on this.  I want to be as careful and clear in my further discussion here as possible, withot getting dragged into the hot politics that indeed are adhering to this matter.

Upfront I shall take off from two columns in the Washington Post, 4/24/20, one by David Ignatius and the other, just below it, by Josh Rogin, both on this issue.  Given firewalls and all that, I shall indulge by quoting extensively from both of their columns:

Ignatius’s is titled, “China puts even the truth on lock down.” I follow with selected quotes:

“Top scientists I contacted over the past week were skeptical about theories that are spinning about deliberate Chinese attempts to engineer the toxic virus. But many said it’s possible that a pathogen that was being studied by researchers in Wuhan could have leaked accidentally from two virology labs  there, setting off the chain of infection.”

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Where Are People Dying Most Intensively Now of SARS-Cov-2?

Where Are People Dying Most Intensively Now of SARS-Cov-2?
I am putting this up because I have been hearing seeing people making claims about this that do not agree with what I have just seen at Statista for today, the 50th anniversary of the first Earth Day, for deaths per million according to the pandemic virus. I am not going to comment on the list further, although I am tempted, but the situation is changing so fast.

Belgium
Spain
Italy
France
United Kingdom
Netherlands
Switzerland
Sweden
Ireland
USA

Oh, I suppose I should provide the same list for infections per capita, a less definite number due to testing variations, than the former.  Best I could do was a three day old list from Statista, but here it is:

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