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

US Library of Congress selects Angry Bear to archive

Dan here…the United States Library of Congress will be archiving and collecting material from Angry Bear. The overall digital archiving project began in ernest since 2013.   Abbie Grotke,  Lead Librarian Web Archiving Team, affirmed the process.  Below are excerpts from the letter of request and the Library website.

 

The United States Library of Congress has selected your website for inclusion in the historic collection of Internet materials related to the Economics Blogs Web Archive. We consider your website to be an important part of this collection and the historical record.

The Library of Congress preserves important cultural artifacts and provides enduring access to them. The Library’s traditional functions, acquiring, cataloging, preserving and serving collection materials of historical importance to foster education and scholarship, extend to digital materials, including websites. Our web archives are important because they contribute to the historical record, capturing information that could otherwise be lost. With the growing role of the web as an influential medium, records of historic events could be considered incomplete without materials that were “born digital” and never printed on paper.

The following URL has been selected for archiving:

https://angrybearblog.com/

(Dan here…from the FAQ section)

Why was my web site selected?

The Library maintains a collections policy statement and other internal documents to guide the selection of electronic resources, including web sites. Web sites are selected for archiving by Library Recommending Officers. Sites in the web archive are generally representative samples of web content that document an event or cover a particular theme or subject area for our thematic and event collections.

How often and for how long will you collect my site?

The Library archives sites at various frequencies and for various time periods based on the type of site and the collection it was selected for. Typically the Library crawls web sites once a week, once a month, or quarterly, depending on how frequently the content changes. Some sites are crawled less frequently—just once or twice a year. In some instances, the Library uses RSS feeds to identify rapidly changing content and to crawl multiple times per day.

The Library may crawl your site for a specific period of time or on an ongoing basis. This varies depending on the scope of a particular project. Some archiving activities are related to a time-sensitive event, such as before and immediately after a national election. Other collections we are developing may be ongoing with no specified end date, in order to capture changes in web sites over a longer period of time.

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TDS vs ODS vs BDS

TDS vs ODS vs BDS

This is motivated by running on in the econoblogosphere to Trump supporters who when confronted with hard facts they cannot refute revert to name calling that those stating actual facts are suffering from “Trump Derangement Syndrome” (TDS).  I have recently seen it thrown out “liberally.”  What is going on here?

The beginning of this odd label dates to the George W. Bush era, specifically 2003 when the late Charles Krauthammer, a supporter of W. upset by widespread criticism apparently coined the term “Bush Derangement Syndrome” (BDS). to describe persistent W. critics, apparently especially Barbra Streisand.  As it was, while the term was out there it was not that  frequently used during Bush’s presidency as later, although it was used enough to become established as a legit term.

When Obama came in its obvious successor, Obama Derangement Syndrome (ODS) became a serious phenomenom.  The first version of it was the infamous “birtherism,” led by non  other than Donald J. Trump, now POTUS. This was a total lie, which at an obscure moment in 2016 that got no notice, Trump admitted officially was a lie. But reportedly now his most supremely fave adviser is Lou Dobbs of the CNBC network, who was also long a hard core birtherist.

We were subjected to a later stream of less obviously false accusations against Obama that the ODS crowd accepted without question, even as their factual underpinnings were undermined. So we had a string of supposed scandals that  to this  day anyone living in the Fox News  etc bubble believes without doubt.  So there was there “Fast and Furious,” a complicated matter of US guns being sent across the  Mexican border that later ended up killing US people. This is a complicated matter with arguably some Obama admin input, but ultimately it was a W. Bush program that went sour.

Another hot deal for the ODS crowd, still showing up was the supposedly great IRS scandal that  in the end also turned out to be a big nothing, although this fact has probably had less reporting.  So after the big Tea Party win in 2010 a bunch of their groups showed up at the IRS claiming to be “general welfare” groups but not  “political” groups.  Of course they were all political groups, and it was a low level IRS employee, reportedly a Republican, who initiated the obviously completely appropriate investigation of a bunch of groups claiming tax exempt status for not being political who were blatantly political. In the end they all got their undeserved tax breaks after the ODS gang got going with their false stories that this was all due to Obama plotting.

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Larry Kotlikoff’s Social Security editorial in “The Hill”

by Dale Coberly

KOTLICOFF ON THE HILL

with Social Security

 

Larry Kotlikoff wrote an editorial that appeared May 14 in “The Hill:”  https://thehill.com/opinion/finance/443465-social-security-just-ran-a-9-trillion-deficit-and-nobody-noticed

He cried, “Wolf! Wolf! Social Security ran a 9 Trillion Dollar Deficit last year and nobody noticed!”

He went on to explain this was the increase in the “infinite horizon Present Value of the Unfunded Deficit” from 2017 to 2018.

He neglected to explain that the infinite horizon Present Value of the Taxable Payroll is over ONE THOUSAND TRILLION Dollars. Or that the 9 trillion dollars did not come from Social Security spending any more money, or old people getting more benefits, or taxpayers running out of money. It came from revising the Discount Rate from 2.7% to 2.5%.

The discount rate is a kind of imaginary number at the heart of Present Value calculations. It is a guess about the real interest rate you might have to pay or might expect to get on or from an investment. Change the guess and you change the PV calculated. The PV is a useful concept if you know what you are doing. And insane if you don’t.

A more useful number for evaluating the ACTUARIAL deficit (NOT a debt) in Social Security finances is the percent difference between expected expenses and expected income. That turns out to be about 4%. This deficit starts in about 2030 and remains the same essentially forever. That means an increase in the FICA so-called “payroll tax” (it’s really a savings and insurance plan: you get your money back with interest, more if your luck is bad)… an increase of about 4% starting in about 2030 or so will pay all future needed  benefits essentially forever.
Kotlikoff even says as much, though in a way that neither you nor he noticed.

This is the amount of money you (we) will have to pay whether we have SS or not. It is the amount that will be needed to keep old people from living (dying) in the streets and eating out of garbage cans (this means YOU when you can no longer work). This can come from personal savings, redirecting investment profits, real government taxes (that you don’t get back), or living with your son-in-law. What Social Security does is let you pay for it yourself while you are still working. Protects your money from inflation. Pays interest that keeps up with the standard of living, and insures you against the accidents that all cash is heir to.

And since the worker only sees half of the FICA, he won’t feel the extra 2% deducted from his paycheck… especially as his paycheck will be more than 20% bigger. Moreover, since there is still time to raise the “tax” gradually about one tenth of one percent per year (or less, because as you raise the tax the “deficit” recedes into the future), no sane person will even notice it. One tenth of one percent of a 50k per year salary is one dollar per week.

Kotlikoff offers his own plan: force you to pay 10% of your income to a mutual fund. Then force you to pay real taxes to make up for the difference between what the mutual fund pays you and what you paid in (that’s 0% interest), with no guarantees if you lose your job, become disabled, or die with dependents.

You can find all of this out for yourself by actually reading the Trustees Report, page 200, (NOT the summary) and “doing the math” as opposed to just prating “it’s the math” like the reporters and commentators who have NEVER done the math, or understood it. OR you can run around screaming we are all going to die, and cutting off your own head because Larry Kotlikoff has bad dreams, for which he gets paid.

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Consumer credit: both producer and consumer sides of the ledger show mortgage market OK, increasing stress for other loans

Consumer credit: both producer and consumer sides of the ledger show mortgage market OK, increasing stress for other loans

The New York Fed reported on household debt and credit.

The good news is that there has been no increase in total delinquencies:


This is important because the amount of delinquencies would be expected to increase if we were close to getting into a recession.

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Justice Stevens Shoots At Gun Decision

Justice Stevens Shoots At Gun Decision

Former Supreme Court Justice John Paul Stevens, now 99 years old, has written a book, The Making of a Justice: My First 94 Years. Apparently he considers the  District of Columbia versus Heller decision to be the worst of all those that was made during his time on the Supreme Court, that one on  a 5-4 vote.  That decision upended the interpretations of the Second Amendment that had been in place since the amendment was adopted, with Stevens noting that in fact this longstanding interpretation reflected gun laws from even the colonial era.  That interpretation allowed for gun control legislation for civilians as it was always assumed that the opening phrase about “maintaining a militia” (by state governments) meant that the second phrase about “the right to bear arms shall  not be ingfringed” only applied to those in the military.  The Heller decision undid that, making the right to bear arms disconnected from the business about militias and essentially absolute.

Clearly Stevens feels guilty about what has happened since then, most clearly the epidemic of mass murders with high-powered weapons that were actually banned for civilian use for a decade after 1994, during when such mass murders happened at a lower rate than before or after.  That law was allowed to lapse, when instead the US should have extended it and followed a policy more like what Australia did by buying up outstanding such weapons, which was followed by a dramatic decline in gun-related homicides.   As it is, the US now has a far higher rate of per capita gun ownership than any other nation, more than twice as many as Serbia, the nation with the next highest such rate.

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The Exorbitant Privilege in a World of Low Interest Rates

by Joseph Joyce

The Exorbitant Privilege in a World of Low Interest Rates

The U.S. dollar has long enjoyed what French finance minister Valéry Giscard d’Estaing called an “exorbitant privilege.”  The U.S. can finance its current account deficits and acquisition of foreign assets by issuing Treasury securities that are held by foreign central banks as reserves. The dollar’s share of foreign reserves, while falling, remains over 60%.  But in a world of low interest rates, how exorbitant is this privilege, and is it solely a U.S. phenomenon?

John Plender of the Financial Times has pointed out that U.S. Treasury bonds offer a rate of return that matches or is higher than that of other government bonds with similar risk ratings.  This is true whether we look at nominal returns or real rates of return. The nominal returns reported below are those available on the ten-year government bonds of Germany, Japan, the U.K. and the U.S., while the changes in prices are those reported for their Consumer Price Indexes :

 

Nominal Return Change in Prices Real Return
Germany -0.05% 2.0% -2.05%
Japan -0.06% 0.5% -0.56%
U.K. 1.13% 1.9% -0.77%
U.S. 2.47% 1.9% 0.57%

 

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Who Needs Critical Thinking?

Who Needs Critical Thinking?

Apparently not the US military.

“Critical thinking” has long been a buzz phrase of US higher education.  There was a time when I could not hear a speech by a higher administrative person at my or other higher ed institutions that did not tout critical thinking as a really important goal of higher ed.  We were all supposed to be teaching it all the time.  I got a bit tired of these incessant speeches, but in fact I agreed with that and continue to. I have not heard these speeches for some time, but critical thinking remains officially a goal in widespread statements in writing throughout higher ed.

However this may be changing in a disturbing part of higher ed.  I was at a dinner in Washington last evening.  Attending this was someone who teaches at the National Defense University who reported on what I consider a disturbing development there.  Apparently this commonplace of having critical thinking being a goal of higher ed was in place officially at the NDU. However, after “Mad Dog” Mattis resigned, the Chair of the Joint Chiefs replaced the Commandant of the NDU.  The new Commandant has made a big deal of getting rid of this goal and replacing it with an emphasis on training for “war execution.”

Apparently the push on this from the new Commandant has been so intense that it led to a large pushback from the faculty at the NDU.  Aside from stated dissenting views, apparently 15 members of the NDu faculty have resigned over this in protest (not including my interlocuter, who nevertheless sides with those resigning over this).  So our military is now to be trained just to fight wars, but without doing any thinking about it.

Something making this more important is that there have been large cuts in the budget of the State Department, with a large reduction in diplomatic personnel.  This means that the military increasingly will be performing diplomatic functions.  But rather than being trained for that or any sort of peacemaking or, well, thinking, the military is being pushed towards mindless war fighting.

Barkley Rosser

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We are probably close (~500,000) to “full employment

We are probably close (~500,000) to “full employment”

From time to time over the past few years I have tried to estimate how far we were from “full employment,” by which I meant the average levels of the best year in each of the past two expansions. I also estimated how long it would take to get there given the then-current monthly gains in employment.

For example, two years ago I estimated that we needed to add another 2.5 million people, or 1.5% of the labor force, to the employment rolls in order to be at “full employment.” Last August, I updated the figure to a shortfall of about 0.8%, and estimated that, if employment trends held, we would get to “full employment” in about 9 to 12 months from then, which would be sometime between now and the end of summer.

Given the continuing very good jobs reports, I thought I’d take another look.

First, here is the U6 underemployment rate. This includes, most importantly, involuntary part-time workers. For us to be at full employment, this figure ought to be at its 1999-2000 and 2006-07 levels:

We have already surpassed the latter, and are only about 0.2% away from the former.

 

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Meidner Lives!

Rudolf Meidner, one of the unsung economics heroes of the last century, argued for solidarity wages on several grounds, one of which is that low wages subsidize less efficient firms.*  Bring the bottom up, he said, and you will change the mix of enterprises and boost overall productivity.  It’s just a hypothesis, but here’s a bit of recent evidence from a pair of researchers:

We study the impact of the minimum wage on firm exit in the restaurant industry, exploiting recent changes in the minimum wage at the city level. We find that the impact of the minimum wage depends on whether a restaurant was already close to the margin of exit. Restaurants with lower ratings are closer to the margin of exit on average, and are disproportionately driven out of business by increases to the minimum wage. Our point estimates suggest that a one dollar increase in the minimum wage leads to a 10 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating on Yelp), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale).

*Unsung in English.  What are they singing these days in Sweden?

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