This is a bit of a departure from our regular programming, but we like science and technology here (real technology, not the rent-seeking you see in finance misbranded as “innovation”) and this is impressive. Hat tip Francois T. From TED:
Read more...In a fiat money environment, the first function of the Treasury bonds is to serve as a vehicle to add or subtract reserves in the system to help the Federal Reserve hit a target Fed Funds rate. The second is to give holders of government obligations a return on their investment. After all, bank notes or bank reserves don’t pay much if anything.
Am I missing something?
Read more...I don’t know who is pulling the strings, but any objective look at the so called mortgage settlement negotiations shows that a lot of people are being played for fools. Precisely because Elizabeth Warren is being attacked so forcefully by the Wall Street Journal and other banking industry loyalists, too many of her erstwhile defenders are giving a free pass to the fact that the Administration itself is undermining her, and with her, any attorneys general who sign up for the settlement, assuming it ever sees the light of day.
Recall the Team Obama modus operandi: getting something done, no matter how lame, compromised, or even counterproductive it is, is considered to progress because it presumably can be swaddled in enough propaganda to be made attractive to a presumed to be chump public. Never mind that Obama’s flagging poll ratings and the abysmal mid-term Congressional results, where the Blue Dogs, the Democrats philosophically most aligned with Obama, were mowed down, show that that strategy is becoming less and less effective. Recall in the runup to the mid-terms how many Democratic Congressional candidates were straining to distance themselves from Obama.
The Democratic state attorneys general have even less to gain by playing nice with this Administration. Some are from states that are solidly liberal and/or so hard hit by the mortgage meltdown that being seen to be soft on banks would be political suicide.
Read more...By Scott Fullwiler, Associate Professor of Economics at Wartburg College
The old saying that bad press is better than no press is definitely true in this case. Without the advent of the blogosphere, our work would likely never even be noticed by the likes of Paul Krugman, so the fact that he’s writing about us (here and here) this weekend at least means we’re doing better than that, even if his assessment of us is far less than glowing. At the same time, and particularly given that Krugman is so widely read, it’s imperative to at the very least set the record straight on where MMT and Krugman differ. I should note before I start that others have done very good critiques already that overlap mine in several places (see here, here, here, and here).
Krugman makes three incorrect assumptions about what MMT policy proposals actually are while also demonstrating a lack of understanding of our modern monetary system (as is generally verified by volumes of empirical research on the monetary system by both MMT’ers and non-MMTer’s). These are the following:
Assumption A: The size of the monetary base directly (or indirectly, for that matter) affects inflation if we’re not in a “liquidity trap”
Assumption B: MMT’s preferred fiscal policy approach or strategy—Abba Lerner’s functional finance—is Non-Ricardian
Assumption C: Bond markets alone set interest rates on the national debt of a sovereign currency issuer operating under flexible exchange rates
Assumptions A and C are central to the Neo-Liberal macroeconomic model. Assumption B is a common misconception about MMT and a common perception of Neo-Liberals about the nature and macroeconomic effects of fiscal policy (i.e., Neo-Liberals often believe that activist fiscal policy is Non-Ricardian).
While MMT’ers argue that all three assumptions are false, one does not need to necessarily agree. The point is that to critique MMT on the basis of assumptions that are inconsistent with MMT is to actually not critique MMT at all. It is a straw man.
Read more...There’s a great post up, “Human Complexity: The Strategic Game of ? and ?,” by Richard Bookstaber, former risk manager, author of the book A Demon of Our Own Design and currently an advisor to the Financial Stability Oversight Council. As insightful as it is, Bookstaber does not draw out some obvious implications, perhaps because they might not be well received by his current clients: that the current preferred profit path for the major capital markets firms is inherently destructive.
I suggest you read the post in its entirety. Bookstaber sets out to define what sort of complexity is relevant in financial markets:
Read more...The measurement of complexity in physics, engineering, and computer science falls into one of three camps: The amount of information content, the effect of non-linearity, and the connectedness of components.
Information theory takes the concept of “entropy” as a starting point…
This is not good. From the Washington Post:
Read more...Leaked water sampled from one unit Sunday was 100,000 times more radioactive than normal background levels — though the Tokyo Electric Power Co., which operates the plant, first calculated an even higher, erroneous, figure that it didn’t correct for several hours.
Yves here. This post may strike readers as off topic, but it sits at the locus of several Naked Capitalism topics of interest: the Deepwater Horizon blowout and its aftermath, animals (particularly dolphins, which are more altruistic than people and quite likely as smart), Obama administration duplicity, and reading between the lines of media reports.
By a retired physician who worked several years in the medical communications and pharmaceutical industry who writes as Francois T
From a Reuters story yesterday, “Government tightens lid on dolphin death probe”:
Read more...The U.S. government is keeping a tight lid on its probe into scores of unexplained dolphin deaths along the Gulf Coast, possibly connected to last year’s BP oil spill, causing tension with some independent marine scientists.
Wildlife biologists contracted by the National Marine Fisheries Service to document spikes in dolphin mortality and to collect specimens and tissue samples for the agency were quietly ordered late last month to keep their findings confidential.
t’s becoming increasingly clear that morality applies only to little people, especially the sort that are cannon fodder for our mortgage industrial complex.
The Florida attorney general, Pam Bondi, joined three other Republican attorneys general in arguing against the principal reductions called for in the so-called mortgage settlement on the basis of “moral hazard”. Their argument? That it would reward those who “simply choose not to pay their mortgage”.
Boy, am I naive. The term “strategic default” appeared out of nowhere and had a pre-packaged sound about it.
Read more...By Matteo Cervellati, Piergiuseppe Fortunato, and Uwe Sunde. Cross posted from VoxEU.
The mass movement for democracy that has led to the exile of Ben Ali in Tunisia paved the way to a new awakening and raised many hopes in North Africa and the Middle East. This column reports on recent research on the historical experiences of countries that democratised during the “third wave”, to shed some light on the prospects for the future of the Arab region.
Read more...David Dayen, in a pointed article titled, “The Corruption of the Financial Press: A Look at Housing Wire” documents how that mortgage “news” site has extensive business and financial connections with firms and individuals at the frontlines of dubious mortgage industry practices and has repeatedly gone to bat for its biggest advertiser even in the face of criminal investigations.
Housing Wire’s proprietor, Paul Jackson, made this inquiry fair game in a recent post, “Follow the money: Interpreting U.S. Bank v. Congress” in which he took aim at the Alabama attorneys who tried defending a client against what they contended was a wrongful foreclosure, using the untested strategy we had mentioned on this blog, the so-called New York trust theory. The court rejected the case on narrow grounds (the suit was fighting the ejectment, a stage after the foreclosure; any precedent on ejectment actions will have limited applicability in Alabama and none in other states). But Jackson went further than arguing the issues of the case or the importance of the decision. Based on no evidence, he denigrated the attorneys involved, claiming they must have big money backers (and we separately dispatched his spurious charges):
Read more...The so-called mortgage settlement looks to be coming apart at the seams. That does not mean there will not be a deal of some sort. Remember, a hallmark of the Obama administration is to do things simply to have more “achievements” to discuss. But not only, as has been rumored for some time, are a number of Republican attorneys general saying they will not join in the settlement, so are some Democrats as well.
It’s important to recognize that Democratic withdrawals are a far bigger problem for Obama than the Republicans. Given that a number of AGs signed up at the last minute, and some of the Republicans were not even on board with the concept of a mortgage settlement, defections among the GOP participants can be depicted as partisanship. By contrast, repudiation by Democrats, particularly Democrats that have garnered some attention in the national press by taking mortgage abuses seriously, is much harder for the Administration to explain away. And as David Dayen at Firedoglake reports, if enough AGs defect, the settlement becomes a dead letter:
Read more...
