Thursday, March 26, 2015

TASS — China may replace US Caterpillar as partner of Russian locomotive manufacturer

The Russian state corporation Uralvagonzavod (UVZ) may start cooperation with China on its project of development and production of locomotives, CEO Oleg Sienko said in an interview to TASS.
Earlier the corporation planned to implement the project jointly with the US-based Caterpillar, however, the cooperation was frozen due to sanctions introduced by the US against UVZ.

"The Chinese [companies] may come instead of Caterpillar, we’re studying this issue. We even have joint framework agreements singed," Sienko said....
China may replace US Caterpillar as partner of Russian locomotive manufacturer

TASS launches news service on Russian economy in English

James Petras — Latin America and the Anglo-American Booby-Left

James Petras goes after Noam Chomsky and the "Anglo-American Booby-Left" for misreading trends in Latin America, which he sees slipping back into neoliberalism.

The Official James Petras website
Latin America and the Anglo-American Booby-Left
James Petras | Bartle Professor (Emeritus) of Sociology at Binghamton University in Binghamton, New York and adjunct professor at Saint Mary's University, Halifax, Nova Scotia

Glenn Greenwald — Court Accepts DOJ’s ‘State Secrets’ Claim to Protect Shadowy Neocons: a New Low

Because national security.

The Intercept
Glenn Greenwald

Tony Cartalucci — US-Saudi Blitz in Yemen: Naked Aggression, Absolute Desperation

Proxy war with Iran in Yemen.

"You can't tell the players without a scorecard." It's getting more and more complicated.

New Eastern Outlook
US-Saudi Blitz in Yemen: Naked Aggression, Absolute Desperation
Tony Cartalucci

The Moscow Times — Ruble Panic Recedes as Russians Start Selling Dollars

Russians sold more foreign currency than they bought in January for the first time in two years, the Central Bank said Wednesday, in a sign that last year's panic over the ruble has subsided.
The Russian currency went into meltdown in December as a months-long devaluation prompted by Western sanctions and oil price falls turned into a rout. Massive demand for dollars and euros among Russians exacerbated the ruble's plunge, which peaked on Dec. 17, when the ruble fell 20 percent against the U.S. dollar within a few hours of trading.

But the rout appears to have run its course for now, with demand for foreign cash falling sharply in January, according to data published by the Central Bank.
The Moscow Times
Ruble Panic Recedes as Russians Start Selling Dollars

Ruble strengthening in excess of that assumed in the 2015 budget would lead to both lower revenue and lower spending, meaning that the net impact on the budget will be neutral, First Deputy Finance Minister Tatyana Nesterenko said.

“The ruble exchange rate and the price of oil [assumed in the budget] are forecasts calculated as the annual average. Right now we are very close to those average annual figures. To speak of the possibility of a shift in the trends assumed in the forecast, then it is important to say that the ruble exchange rate affects revenue and spending,” Nesterenko told journalists on Wednesday when asked about the apparent stabilization of the ruble at a stronger level than that assumed in the budget (61.5 rubles/$1).

Very much budget spending depends on the ruble exchange rate, including external debt servicing and international obligations, she said.

“This could be a balanced effect for revenue and spending. We have fairly large foreign currency liabilities. Accordingly, they will also be recalculated,” Nesterenko said.

“If the trends change, if forecast estimates change, the first thing that will be done is to go to parliament and introduce amendments,” she said.

Johnson's Russia List
Effect of ruble strengthening nearly neutral for Russian budget – Nesterenko

This is pretty inconclusive but the current data is not too bad.
Johnson's Russia List
Russia’s economy in 2015 – more resilient than expected
Mark Adomanis in Philadelphia | Business New Europe

The best recent economic analysis remains Jon Hellevig — Russia Economic New Brief

Podcast: I fixed the broken link with Ellen Brown interview. Works now.

I had a broken link in the Ellen Brown interview podcast that I posted earlier.

You can go to that post and listen now.

Podcast: Interview with Ellen Brown.

Interfax — Moscow: NATO plans deployment of aircraft carrying nuclear weapons near Russian borders

More bad news. Cold War 2 hotting up.
"The strategy emphasizes the U.S. ambition to begin forming a new global economic order. A special role in this order should be played by the Trans-Pacific Partnership and the Transatlantic Trade Investment Partnership, which will help the U.S. get central positions in free trade zones encompassing two-thirds of the world's economy," the document says.
The armed forces are regarded as the foundation of U.S. national security and "military superiority is considered the main factor in U.S. world leadership," the Russian Security Council said.
The document retains the determination "to use military force unilaterally at any spot in the world and preserve military presence abroad," it said.
Russia to take into account threats resulting from new U.S. security strategy

Zero Hedge
Putin Security Council Slams Obama Attempts At "New World Order"

F. William Engdahl — China and Russia Firm Ties With High Speed Rail Link

Deal signed. Eurasian development on.
Russia’s Deputy Prime Minister Arkady Dvorkovich announced at a Krasnoyarsk Economic Forum on February 27 that agreement has been finalized between the two countries on a proposal made by Chinese Prime Minister Li Keqiang during his October 2014 visit to Moscow to construct a 7,000 km and $242 billion high-speed rail corridor going from Beijing across Kazakhstan and Russia to Moscow. The project will include a high-speed Moscow to Kazar in Russia’s Autonomous Tatarstan.

First appeared:
New Eastern Outlook
China and Russia Firm Ties With High Speed Rail Link
F. William Engdahl

Ivan Nechepurenko — Wagner Opera Scandal Reflects Deep Divide in Russian Society

Sign of the times  — liberals and conservatives conflict in Russia over tradition and traditional values.

The Moscow Times

Walter Frick — Welfare Makes America More Entrepreneurial

Research shows that when governments provide citizens with economic security, they embolden them to take more risks.
Opposite the popular view on the right that animals only hunt when they are hungry and the hungrier they are he harder they hunt, so starving the poor will motivate them to get off their duffs right quick.

The Atlantic — Business
Welfare Makes America More Entrepreneurial
Walter Frick
ht Mark them at Economist's View

John Helmer — The Yeltsin Tax Returns To Russian Politics – Wage Arrears Rise, Putin Support Declines

According to the Helmer theory of Russian political economy, first propounded in 2002, people who haven’t been paid spend their time blaming the Kremlin for their pain. When arrears rise, the president’s approval rating falls.....
Dances with Bears
John Helmer

Podcast: My interview with Ellen Brown, author of Web of Debt and Public Bank Solution

Ellen Brown, author of Web of Debt and Public Bank Solution.

John Cochrane — A New Structure for U. S. Federal Debt

A New Structure for U. S. Federal Debt
A new paper by that title, here. 
I propose a new structure for U. S. Federal debt. All debt should be perpetual, paying coupons forever with no principal payment. The debt should be composed of the following:  
  • Fixed-value, floating-rate debt: Short-term debt has a fixed value of $1.00, and pays a floating rate. It is electronically transferable, and sold in arbitrary denominations. Such debt looks to an investor like a money-market fund, or reserves at the Fed.
  • Nominal perpetuities: This debt pays a coupon of $1 per bond, forever.
  • Indexed perpetuities: This debt pays a coupon of $1 times the current consumer price index (CPI).
  • Tax free: Debt should be sold in a version that is free of all income, estate, capital gains, and other taxes. Ideally, all debt should be tax free.
  • Variable coupon: Some if not all long-term debt should allow the government to vary the coupon rate without triggering legal default.
  • Swaps: The Treasury should manage the maturity structure of the debt, and the interest rate and inflation exposure of the Federal budget, by transacting in simple swaps among these securities. 
Of these, I think the first is the most important. Think of it as Treasury Electronic Money, or reserves for all. Why?....
The Grumpy Economist
A New Structure for U. S. Federal Debt
John Cochrane | professor at the University of Chicago Booth School of Business, a Senior Fellow of the Hoover Institution, and an adjunct scholar of the Cato Institute

Coming from the University of Chicago Booth School of Business, a Senior Fellow of the Hoover Institution, and an adjunct scholar of the Cato Institute, one would expect a proposal for tax-free rent to subsidize the financially ailing rentiers.

Ilyana Kuziemko et al — What Do Americans Think Should Be Done About Inequality?

A new online survey of some 10,000 Americans’ reaction to growing income inequal- ity offers novel insight into public perceptions of inequality and what—if anything— should be done about it. The survey first presents some respondents with information about the extent of inequality—for example, by displaying how much more income a respondent would earn if increases in economic growth since 1980 had been more evenly distributed—and then assesses their attitudes toward inequality and policies aimed at ameliorating gaps between rich and poor, compared to other respondents who did not see the information. The survey shows that while respondents who view information about inequality are more likely to believe that inequality is a serious problem, they show no more appetite for many government interventions to reduce inequality— with the notable exceptions of increasing the estate tax and the minimum wage....

Importantly, our results also suggest that this aversion to government intervention is due to a deep level of distrust in government. In a sense, respondents who have learned the role of government in creating the current level of inequality seem to be telling us they do not trust that government is also the entity to address the problem.
This last finding is, to our knowledge, the first direct evidence of the causal effects of trust in government on redistributive policy preferences. Our findings highlight the potential role of mistrust in government in limiting enthusiasm among the general public to certain kinds of government policy programs—such as the Supplemental Nutrition Assistance Program and the Earned Income Tax Credit—designed to help close the wealth and income gap.

Research into the connection between mistrust of government and policy prefer- ences is only just beginning. For instance, economists Paola Sapienza at Northwestern University’s Kellogg School of Management and Luigi Zingales at the University of Chicago’s Booth School of Business find that Americans support higher auto fuel stan- dards over a carbon tax-3and-rebate program because they do not trust the government to in fact rebate the tax. Given that by most measures, Americans trust in government is at record lows, future work on its consequences would be welcome.... 
What Do Americans Think Should Be Done About Inequality?
Ilyana Kuziemko, Michael Norton, Emmanuel Saez, and Stefanie Stantcheva
ht Brad DeLong
Ilyana Kuziemko is an economics professor at Princeton University, Michael Norton is a professor of business administration and marketing at Harvard Business School, Emmanuel Saez is an economics professor at the University of California-Berkeley, and Stefanie Stantcheva is an economist at Harvard University

Canada now imposes cuts in face of 50% off crude oil

Result of management via the NIA framework:  Once (X-M) drops, then they are compelled to reduce G and xfers, so (G-T) remains as low as possible, even though xfers are not in G.  The hit to xfers then results in a drop in C.

Even in what we might term the "social welfare states" like Canada here and those in Europe, that social welfare is still predicated upon high exports that result in NIA numbers that allow for an acceptable (G-T) result.

If the exports go away or are significantly reduced, then we soon see fiscal cuts and resultant social unrest.

Wednesday, March 25, 2015

Jonathan Schlefer — Not even Paul Krugman is a real Keynesian

Wicksell argued that if interest rates rise above some “natural rate,” they weaken investment demand and growth, while if they fall below it, they spur excessive demand and inflation. But markets inherently correct imbalances, restoring optimal equilibrium. 
Keynes disagreed. “The economic system . . . seems capable of remaining in a chronic condition of subnormal activity for a considerable period without any marked tendency either towards recovery or towards complete collapse,” he wrote. “The evidence indicates that full, or even approximately full, employment is of rare and short-lived occurrence.”....
But isn’t Keynes now mainstream? No, say Foley and Taylor. The mainstream still sees economies as inherently moving to an optimal equilibrium, as Wicksell did. It still says demand causes short-run fluctuations, but only supply factors, such as the capital stock and technology, can affect long-run growth. ....
The Boston Globe
Not even Paul Krugman is a real Keynesian
Jonathan Schlefer, researcher at the Harvard Business School
ht Matias Vernengo at Naked Keynesianism

Cameron Murray — Economics: Blah blah blah


Fresh Economic Thinking
Economics: Blah blah blah
Cameron Murray

Graham Phillips — Busting Ukraine Fakes (#1) – How Ukraine’s Media Works (Fakes)

First in a series from an on-the-ground Western journalist reporting on the conflict in eastern Ukraine.

The Truth Speaker
Busting Ukraine Fakes (#1) – How Ukraine’s Media Works (Fakes)
Graham Phillips, British journalist with Russia Today

Alexrpt — The US House of Representatives openly calls for regime change in Moscow

As taken from the US House Resolution:
"Whereas the United States and its allies need a long-term strategy to expose and challenge Vladimir Putin’s corruption and repression at home and his aggression abroad;"
Let that sink in for a second. The United States Congress has put, in writing, their goal to formulate a “long term strategy” to challenge the democratically elected President of Russia, Vladimir Putin.
Like this is something new for the US? I'm surprised that anyone is surprised.

Marco Del Negro, Raiden Hasegawa, and Frank Schorfheide — Choosing the Right Policy in Real Time (Why That’s Not Easy)

Choosing the right model.
In the end, we have shown that policy analysis in the very oversimplified world of DSGE models is a pretty difficult business. Contrary to what it may sometimes appear from listening to talking heads, deciding which policy is best is very rarely a slam dunk.
FRBNY — Liberty Street Economics
Choosing the Right Policy in Real Time (Why That’s Not Easy)
Marco Del Negro, assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group, Raiden Hasegawa, Ph.D. student in statistics at the Wharton School, University of Pennsylvania, and Frank Schorfheide, professor of economics at the University of Pennsylvania

Ellen Brown will be on my podcast tomorrow!

I am excited to have Ellen Brown ( on my podcast tomorrow. I am a big fan. Ellen has been outspoken about the rapacious financial sector and a big  proponent of public banking and banking/finance for the public purpose. Looking forward to speaking with her. Stay tuned for the podcast, which I will post here.

"Someone else could be Russia's president in 2018"--Putin

J.Hawk’s Comment: It does seem likely that Putin will go into retirement in the next few years—at any rate, it’s hard to imagine him as president at the age of 70. Besides, his place in history books is secure, and it’s unlikely that Russian government policies would change much after his departure. He is not the “tyrannical ruler” of Western propaganda but, quite simply, the chief executive of the Russian state. That’s what he was picked to do, and that’s what he did well.
The only question is of succession. It will almost certainly be a member of the “nobility of the sword”, or Russia’s national security apparatus. The business side of the government, the “nobility of the cloth”, has not performed as well, and its representatives (most notably—Medvedev) can’t hold a candle to the popularity of the “chekists.”
So, who’s Russia’s next president? My educated guess is that it will come down to a choice between Sergey Ivanov and Sergey Shoygu. They combine modesty, competence, and the ability to pursue the balanced internal and foreign policy that characterized Russia during Putin’s tenure as President and/or Prime Minister.

Fort Russ
"Someone else could be Russia's president in 2018"--Putin
Translated by J. Hawk

Paul Mason — To Move Beyond Boom and Bust, We Need a New Theory of Capitalism

Terry Jones’s documentary film Boom Bust Boom hits the cinemas this month. Using puppetry and talking heads (including mine), Jones is trying to popularise the work of Minsky, a US economist who died in 1996 but whose name has become for ever associated with the Lehman Brothers crash. Terrified analysts labelled it the “Minsky moment”. 
Minsky’s genius was to show that financially complex capitalism is inherently unstable. Under conditions of stability, firms, banks and households will, over time, move from a position where their income pays off their debt, to one where it can only meet the interest payments on it. Finally, as instability rises, and central banks respond by expanding the supply of money, people end up borrowing just to pay back interest. The price of shares, homes and commodities rockets. Bust becomes inevitable.

This logical and coherent prediction was laughed at until it came true. Mainstream economics had convinced itself that capitalism tends towards equilibrium; and that any shocks must be external. It did so by reducing economic thought to the construction of abstract models, which perfectly describe the system 95% of the time, but break down during critical events....
For me, the most fundamental question in economics still concerns the 2008 crisis. Was this event the last in a series of shocks needed to allow a third technological revolution to take off? Or was it evidence that capitalism’s tendency to adapt and reshape in response to technology has stalled, or is even finished? That is the shadow we have to jump over in economics. Amid a mania for “new economic thinking”, it is what we need to think hardest about.
The Guardian (UK)
To Move Beyond Boom and Bust, We Need a New Theory of Capitalism
Paul Mason | economics editor of Channel 4 News

Simon Wren-Lewis — Why do central banks use New Keynesian models?

Advanced macro for non-economists (no math). Simple explanation of how and why central banks use New Keynesian (DSGE) models and how they differ from RBC models.

Mainly Macro
Why do central banks use New Keynesian models?
Simon Wren-Lewis | Professor of Economics, Oxford University

Why is this significant. Because modern monetarism, based on central banks setting a policy rate, depends on some tool or tools for determining the correct rate to set. According to John Taylor, some rule is required. Therefore, a model in which a key methodological assumption is the real interest rate is needed, and since the policy rate is an adjustment for expected inflation, some tool for determining change in price level is also required.
In the simplest case, this involves setting a nominal rate that achieves, or moves towards, the level of real interest rates that is assumed to occur in the inner RBC model: the natural real rate. 
So even though New Keynesianism is called "Keynesian," it is a form of monetarism since it is chiefly concerned with interest rates and price level rather than effective demand and employment, which are functions of a full employment budget rather than than the a natural rate of interest and natural rate of employment.

In the view of fiscalism, monetary is the wrong approach for several reasons, for example, monetary policy that it is less effective as a policy tool than fiscal policy, and monetarism is ineffective because of it's assumptions. Rather, a policywise government must adjust fiscal policy to accommodate variable non-government saving desire in order to keep the production-distribution-consumption cycle virtuous instead of allowing it to turn vicious.

For example, this is at the heart of Robert Skidelsky's recent post a Project Syndicate on the divergence of economic thought and its effect on policy, to which a link was posted here at MNE yesterday.

There are basically two approaches, monetarist and fiscalist, and two major schools in each. Monetarism is divided into the New Classical and New Keynesian schools, and fiscalism into the Old Keynesian and Post Keynesian schools.

So it's important to understand the basic issues from a policy standpoint to engage in political debate intelligently. Fortunately, it is not necessary to understand the advanced macro background in econometrics since economists have framed the basic issues quite simply.


NBER Working Paper Series
Keynesian, New Keynesian, And New Classical Economics
Bruce Grenwald Joseph E. Stiglitz

This paper examines in how far the DSGE model which is often dubbed the New Keynesian Consensus is compatible with a Post- Keynesian or traditional Keynesian understanding of the economy. It is argued that while at first sight DSGE models seem to include a lot of traditional Keynesian or even Post-Keynesian elements such as endogeneous money or the need for an active central bank, the mechanisms at work are completely incompatible with a traditional or Post-Keynesian understanding of the working of the macroeconomy.

The New Consensus from a Traditional Keynesian and Post-Keynesian Perspective: A worthwhile foundation for research or just a waste of time?
Sebastian Dullien

Robert Waldmann — Diabetes Diagnoses Surge in States Which Expanded Medicaid

Another life-saving and cost-reducing no-brainer. Cutting medical costs and related costs, which are much higher than medical cost to society, involves increasing availability and use of medical care not limiting it or using less. Early care and preventive care costs far less than later and more complicated care. 

In addition, there are three aspects of health care — treatment, prevention, and perfection — in declining order of expense. An ideal society aims at achieving perfect health for its members first and foremost, and then focusing on prevention, and finally treatment as a last resort.

Angry Bear
Diabetes Diagnoses Surge in States Which Expanded Medicaid
Robert Waldmann | Professor of Economics, University of Rome

Tuesday, March 24, 2015

The Deeper Meaning Of Entrepreneurism ... Aggregate-Entrepreurism

(Commentary posted by Roger Erickson)

If a collection of cells (you) can act entrepreneurially, why can't a collection of 330 million citizens act as a team? They can? How? How often WILL they? And why not all of the time, or at least more often than we have been cooperating recently?

How do we get our nation to explore it's aggregate options?

First, recruit an electorate to recognize and explore their BIGGEST options? Please tell me, if you know where to start, and how to do that. Clearly, there are many options. How do we most productively explore those aggregate options?

Now THAT is an interesting topic!

How can a RAIDLY EXPANDING auto-catalytic aggregate continuously reform both its internal-feedback sensing AND external-scouting strategies to constantly re-extract adaptive, aggregate context modeling from its (exponentially expanding? factorially expanding?) "option space?" (More plainly, simply explore its rapidly expanding options.)

Why, that would make us an Entrepreneurial Aggregate! That would be a whole far greater than just the sum of our individual entrepreneurs, "entrepreneurially" sequestering resources back and forth FROM one another! :(

This is truly the "Evolving Aggregate's Task." In fact, it's quite obviously every aggregate's #1 task, by far.

Making aggregate option explorations a snap? Now that would be exciting. Much more so than just trivial tactical tasks.

That's obviously what happens when agile teams explore contexts. It's the most important task facing national aggregates, and probably the most neglected. That's what Context Nomads do, and we are all Context Nomads, all the time, whether we know it or not.

The deeper meaning of entrepreneurism is to occasionally turn away from frictions and sequestering existing resources FROM one another, to the rarely practiced activity of exploring aggregate options for creating not just more resources ... but actually creating a pool of resources another order of magnitude larger than what we could previously access. Total teamwork? What a mundane, but ignored, concept! :(

The simple truth is that we as an aggregate are always capable of creating more wealth than any of us can currently imagine. Yet instead, for spurious reasons, we spend most of our time hoarding what we've already got ... FROM one another, instead of optimally provisioning our most valuable asset, our aggregate teammates! That is embarrassingly dumb, and the opposite of being entrepreneurs.

How much of available aggregate information do we need, in order to perceive emerging, aggregate context? Not as much as we initially imagine. It's clearly a matter of data-sampling methods and context-modeling methods and option-exploration methods. Surely that's not to hard to practice, aka, between wars, not just during world wars?

A method to simplify pictures makes chemistry calculations a snap

We actually have mathematicians patenting algorithms for extracting data images from complex data sets.

Why patent? Exactly so we can constrain the adoption rate of the application of the advanced method just invented, for narrow vs aggregate gain. And thereby slow our aggregate adaptive rate? Do tell! When is too much of one method (patent protection) too much to bother with as an aggregate? When it's time to adjust, can we DISCERN when to make aggregate adjustments fast enough to keep from harming our aggregate selves? Do we have ways to even sense that, soon enough to matter? Or only long after the damage has been done?

And why slow the population penetration of new inventions at all? Do we really know what we are doing? Is too soon ever too soon?

Since those two tolerance limits change, how do we stay safely between them, and pursue that moving target?

Our application of our emerging knowledge parsing methodology is too timid.

Our emerging methods are too useful to be limited ONLY to compartively trivial applications such as medical imaging or molecular modeling.

What about modeling our own cultural context, and our our aggregate adaptive rate?

Really? What if we tried being an effective NATION? What would motivate us to try that? I mean, something other than another war?

No one person can supply adequate answers, but we can start asking more challenging questions of one another.

Russia Direct — Why Cold War-style military exercises of Russia and NATO are heating up

Relax. Training and checking preparedness after a period of reduced tension now that tension is rising. 

Don't read too much into it — yet. But it is putting focus back on the military and is certain to result in increased military expenditure and likely the introduction of more advanced systems.

How The US Government and US military Became Murder, Inc. — Paul Craig Roberts reviews Andrew Cockburn's "Kill Chain"

Andrew Cockburn has written a must-read book. The title is Kill Chain: The Rise Of The High-Tech Assassins. The title could just as well be: How the US Government and US Military Became Murder, Inc.
How The US Government and US military Became Murder, Inc
Paul Craig Roberts reviews Andrew Cockburn' Kill Chain

Pema Levy — Meet Ted Cruz's Karl Rove: "He Leaves a Path of Destruction"

As you probably noticed, the 2016 presidential race "officially" began on Monday with the announcement of Ted Cruz. Is Jeff Roe the new Lee Atwater and Karl Rove? 
As Cruz's 2016 rivals will soon find out, Jeff Roe is infamous for his "ruthless" tactics.
Looks like US politics is headed further into the gutter.

What is interesting, though, is that there are two candidates with Latin ties. Cruz's father is Cuban, and Jeb Bush's wife is Mexican. It will be interesting to see how the GOP base handles that given the level of bias if not bigotry that has been exhibited.

Mother Jones
Meet Ted Cruz's Karl Rove: "He Leaves a Path of Destruction"
Pema Levy

William Hogeland — Ted Cruz and Patrick Henry

Ted Cruz misrepresents Patrick Henry. For US history buffs and those interested in American History and contemporary US politics.

Ted Cruz and Patrick Henry
William Hogeland