u.s. politics: abortive cure for labor pains

[all swedes are racist]

wildcat strike in west virginia; teachers across the state return to picket lines 

https://itsgoingdown.org/wildcat-roars-west-virginia-teachers-stay-strike/

[Fragile Bird]

I watched THAT WOMAN, the spokesperson for the NRA, talking to Anderson Cooper, and it's quite apparent they are not worried at all about the things Trump said about guns. "He's just listening to both sides".

I watched those wonderful students from Florida, and all I could think of was "my sweet summer child", wait until you hit reality. And then we had that jaw-dropping televised meeting. But now we are back to reality.

I hope they don't become incredibly disillusioned and depressed. And say, fuck voting.

ETA: I was reading comments on Breitbart, and there were a lot of angry people, but there were also a lot of people saying "Chill out, he's just sucking in the Democrats and then he's going to shit on them". I guess they were right.

[Fragile Bird]

11 hours ago, Maithanet said:

And the Dow drops 500 points immediately after Trump announces the new tariffs.  It's almost as if people don't think trade wars are good for business.

I have been watching numerous commentators basically taking the position the correction is over (though most have talked about volatility ahead), something that has just astonished me. For one thing, it would be the shortest correction in history. For another, it ignores the fact that the drop in the market violated important support levels for the Dow and the S&P, and drops below important support levels always indicates more drops in the market. I really don't think market volatility is at an end.

This trade war over steel and aluminum is stupid, just plain stupid. Canada buys more steel from the US than any other country. And the US is going to put 25% tariffs on Canadian steel and aluminum? Wait until you see the tariffs we're going to put on US goods. As has been pointed out by numerous commentators, you need nickel to produce steel, and the US only has one nickel mine. What a stupid move!

And NAFTA talks have not gone particularly well. Reports say the US trade rep is extremely aggressive and obnoxious. If NAFTA talks fail, expect to see the Dow drop 1,500 to 2,000 points that day. The North American market has become incredibly integrated over the 25 years of NAFTA. Blowing that deal up will be placing dynamite under all kinds of businesses. Canadians are going to suffer, Americans are going to syffer, Meicans are going to suffer. And don't think people are going to be forgiving.

[Fragile Bird]

7 hours ago, The Anti-Targ said:

I'm not sure what to make of that. He was one of the blind laissez-fairies who were totally shocked! when the GFC hit and was all like "No one saw that coming! I thought by not having control we had everything under control."

Is he actually paying attention now and clearly seeing bad times ahead, or is he just making shit up?

Lol, Trump has already put huge tariffs on Canadian wood, to please the owners of one bankrupt sawmill. The US needs Canadian wood to build houses. As I have said before, the US is 4% of the world's population and consumes 25% of the world's goods. Add 25% tariffs on steel now. And if NAFTA isn't signed, I can't even imagine how many tariffs will go up on a wide range of goods. Add rising interest rates, and you will get higher inflation. In the meantime, it is already apparent that US corporations are spending their tax windfalls on share buy-backs and executive bonuses, not increasing wages for workers. After the tax act was passed, the WH kept bragging about the companies that were paying bonuses to workers as a result of the tax reduction. One time bonuses, not increased wages. Wages in the US over the last 30 years have simply not kept up with inflation. You have a perfect scenario for stagflation.

[OldGimletEye]

On 3/1/2018 at 10:26 AM, Fragile Bird said:

On a more serious note, CNBC is interviewing former Fed Chairman Alan Greenspan.

He is warning stagflation is on the way.

The thing is guys like Ayn Rand’s old economics instructor have been screaming about inflation being around the corner since about 2010. And I’m not buying it. Of course, back then, the source of their conservative errors was failing to understand or ignoring that the demand for money is interest rate sensitive and when interest become very low bonds and cash become almost or perfectly substitutable and that's the reason the FED could increase the monetary base by about 5 times without rampant inflation occurring. Perhaps if they had read Krugman’s old 1998 liquidity trap paper they would have had one iota of a  clue to what was going on.

And here we are now presently and I see little evidence of inflation becoming rampant soon. The PCE is still under 2% and I haven’t much evidence that inflation expectation have become unanchored. Nor do I think the Powell Fed will allow it to happen. Maybe it will happen if Trump is successful in berating and bullying Powell to keep rates low, like Nixon did with Arthur Burns. But I’m not convinced that it will.

I have nothing but disdain and  contempt for Trump and the Republican Party and think their policies, both economic and noneconomic are bad and silly. But, I fee like, jumping on the inflation is just around the corner bandwagon because I happen not to like the guy in office or the party in power would be liberal rampant inflation is just around the corner concern trolling.

Fact is that liberals like myself have been ranting for years about conservative inflationista fear mongering when that was hardly an issue in a liquidity trap situation. And I’m not inclined to change my mind about rampant inflation being just around the corner until I see evidence that it will occur. And right now, I’m not really seeing it.

[OldGimletEye]

The orders for capital goods fell. It takes time to install new capital equipment.

Of course that doesn’t stop the high “libertarian” overlords from sellin’ bullshit.

More on your libertarian overlords being snake oil salesman:

https://www.nytimes.com/2018/02/27/opinion/bonuses-and-bogosity.html

Quote

On Feb. 19 Walmart, America’s largest employer, announced broad-based pay hikes. In fact, it announced that it would be raising wages for half a million workers. The Trump tax cut is working!

Oh, wait. That announcement was three years ago – it came on Feb. 19, 2015. And as far as I can tell, nobody gave the Obama administration credit for the move.

Why did Walmart raise wages? Partly because the labor market was tightening: unemployment had fallen more than 40 percent from its peak in 2009 (a decline for which the Obama administration’s stimulus and other policies actually do deserve some credit.) This tightening labor market meant that Walmart was having trouble attracting workers.

.......................................................................................................................

Perhaps takin' a beat down once an awhile is worth it, if you can hang on long enough to wear your opponent's ass out.

https://www.motherjones.com/kevin-drum/2018/03/obamacare-just-keeps-getting-more-popular/

Quote

New Kaiser tracking poll results are out today, and Obamacare favorability took yet another jump upward. Overall, Obamacare is continuing its steady march toward widespread acceptance:

..................................................................

Some interesting stuff about the state of macro modeling.

https://academic.oup.com/oxrep/article/34/1-2/1/4781821

Quote

In this paper we review the Rebuilding Macroeconomic Theory Project, in which we asked a number of leading macroeconomists to describe how the benchmark New Keynesian model might be rebuilt, in the wake of the 2008 crisis. The need to change macroeconomic theory is similar to the situation in the 1930s, at the time of the Great Depression, and in the 1970s, when inflationary pressures were unsustainable. Four main changes to the core model are recommended: to emphasize financial frictions, to place a limit on the operation of rational expectations, to include heterogeneous agents, and to devise more appropriate microfoundations. Achieving these objectives requires changes to all of the behavioural equations in the model governing consumption, investment, and price setting, and also the insertion of a wedge between the interest rate set by policy-makers and that facing consumers and investors. In our view, the result will not be a paradigm shift, but an evolution towards a more pluralist discipline.

1. Its sensible to believe that people arrange their affairs by what they think will happen tomorrow. But the rational expectations approach is too strong and not very realistic. It’s probably better than nothing, as expectations matter, but I think learning approaches to expectations would be more realistic and make more sense. People aren’t stupid. They obviously learn. But, they aren’t the super rational computers that RE suggest. Also people are probably more myopic than what RE suggest.

2. We need better and more explicit models of price/quantity adjustment. Prices don’t “clear” markets as Walrasian GE suggest. That’s nonsense. The “Calvo Fairy” in New Keynesian DGSE models I guess is better than nothing, certainly better than Robert Lucas RBC nonsense, but it doesn’t get to the core of why prices take awhile to adjust or how exactly. My guess is largely lack of perfect information. Do firms really know where the demand curve intersects their supply curve. Probably not. In fact, they probably don’t know exactly the shape of their own supply curve. I’m not a management accountant by training, but from what I know, determining the price of goods can be a bit arbitrary, so they probably don’t even know exactly where their own supply curve lies. What I’m saying conservative sorts of people it takes time for a system to reach a new equilibrium state and it doesn’t happen overnight and how this happens needs more explicit attention.

3. More than representative agent. We need more than the rich Republican white guy representative agent. But more seriously, in micro, even in advanced micro textbooks, aggregation issues are hand waved. Take the market for corn. You learn in basic consumer theory, that a single agent’s Marshallian Demand function for corn looks something like:

x(p(c),p(o),y) where p(c) is the price of corn, p(o) is the price of other stuff, y is income.

And then you learn you can sum these individual demand curves to get a market demand curve looking something X(p(c),p(o),Y) where Y is total income. But the technical conditions in which only total income matters and distributional don’t are rather restrictive and don’t get enough attention even in advanced micro textbooks. And then of course some people aren’t the rich Republican white guy. They are liquidity or credit constrained. Their income affects their savings/investment decisions more than the interest does.

4. Better modelling of banking, finance, savings/investment decisions. Obviously, banking and finance can be a source of instability. But also the old story of Robinson Caruso saves a coconut today means he is investing the production of future coconuts tomorrow doesn’t really apply in an economy where there is array of financial assets in order to save. To make this simple: If I decide to save a dollar today that doesn’t mean that dollar gets magically invested into one more dollar of capital by some corporation. Some corporation doesn’t say “well golly that must mean OGE is wanting to pay a higher price for future goods, so lets invest!”  This essentially is what chapter 14 in the GT is all about.

5. DSGE shouldn’t be the only way to model.

Quote

Here is why. Keynes was, at that stage, still a prisoner of his training in Cambridge as an expositor of Marshallian economics. The Marshallian model analysed three markets—the labour market, the goods market, and the money market—and did so separately, one market at a time.

To someone trained in the Marshallian tradition the problem of unemployment seems simple: it is caused by trade unions and other institutions keeping the wage above the market clearing level. At that wage the supply of labour exceeds the demand for labour. If wages are cut the supply of labour will fall, as some workers will no longer want a job at the lower wage.

Just a comment here

Now conservative sorts of people, it’s well known that Keynes was a student of Marshall. And while it maybe true that Keynes dropped some Marshallian economics in writing the GT, he very much retained the Marshallian method.

Both Keynes and Marshall had the mathematical chops to understand what Walras doing. But evidently they didn’t think much of it. And rightly so. Under Walras, prices clear in logical time, rather than historical time and that is nonsense.

Marshall and Keynes were both accomplished mathematicians. Yet both were extremely hesitant to try to mathemitize all their ideas, likely feeling they didn’t have the tools to completely describe their ideas. One advantage we have today though is that with computer power being relatively cheap we can simulate shit and don’t have to worry as much about finding analytical solutions to every problem.

[OldGimletEye]

Yes the most prolific and accomplished practitioners of "identity politics" is the Republican Party.

https://www.vox.com/policy-and-politics/2018/3/1/17066702/identity-politics-trump-gop-conservatives

Quote

Political scientists have found data to support an idea that became a truism of the 2016 elections: Conservatives and Republicans have embraced so-called “identity politics” just as much as the liberals they chide for it.

 

Quote

And Republicans were even more likely than Democrats to identify with their chosen political party on the basis of their own identities.

 

[Larry of the Lawn]

1 minute ago, OldGimletEye said:

Yes the most prolific and accomplished practitioners of "identity politics" is the Republican Party.

https://www.vox.com/policy-and-politics/2018/3/1/17066702/identity-politics-trump-gop-conservatives

 

 

Not surprised at all.  Like many other GOP criticisms of Dems and the Left, it's just another piece of blatant hypocrisy.

[OldGimletEye]

23 hours ago, larrytheimp said:

Not surprised at all.  Like many other GOP criticisms of Dems and the Left, it's just another piece of blatant hypocrisy.

At this time, I think we should call it conservative identity politics concern trolling.

[Mindwalker]

16 hours ago, Paladin of Ice said:

(...)

So, do you want your buildings, stainless steel products, and military vehicles made with steel more likely likely to break down, rust, and corrode, or do you want to not only significantly raise the price you pay for any steel products but also be directly at the mercy of countries with a resource advantage and an ax to grind? Or would you rather just play nice as per trade rules?

So, anyone who knows how this constitutes a benefit to the US given the facts laid out above, feel free to explain it to me.

Easy. Will these structures made from lesser quality steel break down before 2020 or after? Because if it's the latter, who (inside the administration) cares? Plus, I'm sure there's always someone else you can blame it on, e.g. bad work from 'illegal' workers...

[Fez]

Interesting long-form profile in Politico about Richard Ojeda, a Democratic state senator in West Virginia who's running for congress. Basically, he's an extreme throwback pro-labor populist who is all-in on the teachers' strike, and has polling showing him beating either Republican in the race (primary is in May) among Republican voters and having a blowout among all voters. In a district Trump won 73-27.

Seems like he's tapping into the same anger that got Trump elected, but coming at it from the left; somewhat like Sanders actually, though moreso. He even voted for Trump in 2016, though he regrets it.

Quote

 

In the red Jeep on the way back to Logan, I asked Ojeda about his vote for Trump, a fact that in another state could be seen as disqualifying for a Democrat.

“I voted for him because it was about family and friends,” he said. “Nobody else was saying anything. Hillary Clinton was coming here blowing smoke up everybody’s ass. Hell, I wanted Bernie Sanders”—and he wasn’t the only one, obviously, as Sanders beat Clinton in the primaries in all 55 counties—“but once Bernie Sanders was screwed over by Hillary Clinton, by the way, you had no other option.”

He regrets his vote for Trump.

“Sure do,” he said.

Because?

“Because he hasn’t done shit,” he said. “It’s been a friggin’ circus for a solid year.” Nothing’s changed. So many people in southern West Virginia are still poor and need jobs. The opioid epidemic rages unabated. “All he’s done,” Ojeda said, “is shown that he’s taking care of the daggone people he’s supposed to be getting rid of.”

 

I don't know if he really can win, and if he represents a change for the Democratic party that could occur in many places (or if this is unique to West Virginia due to its still-recent history of being overwhelming Democratic from the labor movement); but it is interesting.

[Mr. Chatywin et al.]

15 hours ago, Mexal said:

So the people in the school safety meeting convinced Trump to announce the tariffs? The point is the CEOs were against the tariffs and he was agreeing. Then he went away and came back and did the opposite. At least that's what I thought happened.

OK one of us is wrong, but I’m not sure who. I was under the impression that the CEOs he was meeting with were pushing for the tariffs.

 

[Mr. Chatywin et al.]

13 hours ago, Pony Queen Jace said:

Beautiful, isn't it? I feel like Batman watching Morgan Freeman freak out at the sonar phone setup in The Dark Knight.

Your problem is I stole the Jacemobile!

[Maithanet]

7 hours ago, Fragile Bird said:

And NAFTA talks have not gone particularly well. Reports say the US trade rep is extremely aggressive and obnoxious. If NAFTA talks fail, expect to see the Dow drop 1,500 to 2,000 points that day. The North American market has become incredibly integrated over the 25 years of NAFTA. Blowing that deal up will be placing dynamite under all kinds of businesses. Canadians are going to suffer, Americans are going to syffer, Meicans are going to suffer. And don't think people are going to be forgiving.

I am still of the opinion that the NAFTA talks are just posturing, and nothing is actually going to change.  Trump knows that if the economy tanks (or even just falters a bit), his support will be down at least another 5 points, and killing NAFTA would do that.  This looks like one of his "talk about doing something, then let if quietly fade away" issues. 

[TheKitttenGuard]

To avoid a real fight with the NRA the President decided to start an International Trade War.

 

This does have me very divided for policy is well establish in U.S history. As absurd it is, the Free Trade advocated is historical allign with The South (Agrarian) and Trump is definitely a Nothern (Industrial) policy. I do think this is bad for we are just in a different world and this is just a policy based on wanting a past that no longer exist.

 

[Fragile Bird]

1 hour ago, OldGimletEye said:

<snip>

 

Years ago I thought the world would gradually re-adjust itself back towards the norm, but I abandoned that thought as I watched how deeply governments mired themselves in debt. But we have had a bull market in bonds for more than 30 years, and all bull markets come to an end eventually. Greenspan spoke about the unwinding of the bond bull being the important factor in stagflation. [Interesting side note - spellcheck does not recognize the word, I bet that changes!] People are going to get burned on bonds.

I do not believe there is going to be a rapid rise in interest rates, not like the craziness that happened in inflation-fighting days. But history has shown us that interest rate moves, up or down, always take us by surprise even when they are expected. And, more importantly, consumer debt in many countries has become enormous, people having been sucked in by low interest rates. Incremental interest rate increases will be felt. The housing sector has already been hit pretty hard in Canada, for example, as a combination of tiny interest rate increases plus the government tightening the rules on mortgage borrowing has hit buyers.

I have had a bad feeling in the pit of my stomach as I have watched the marked increase in television commercials extolling the use of your house as a bank machine. How soon we forget!

[DanteGabriel]

19 minutes ago, TheKitttenGuard said:

To avoid a real fight with the NRA the President decided to start an International Trade War.

 

This does have me very divided for policy is well establish in U.S history. As absurd it is, the Free Trade advocated is historical allign with The South (Agrarian) and Trump is definitely a Nothern (Industrial) policy. I do think this is bad for we are just in a different world and this is just a policy based on wanting a past that no longer exist.

 

"Wanting a past that no longer exists" is basically the Republican platform. Though you could correct it to say they want a past that never existed, except in their fervid, gullible imaginations.

[Ormond]

1 hour ago, Fez said:

Interesting long-form profile in Politico about Richard Ojeda, a Democratic state senator in West Virginia who's running for congress. Basically, he's an extreme throwback pro-labor populist who is all-in on the teachers' strike, and has polling showing him beating either Republican in the race (primary is in May) among Republican voters and having a blowout among all voters. In a district Trump won 73-27.

Seems like he's tapping into the same anger that got Trump elected, but coming at it from the left; somewhat like Sanders actually, though moreso. He even voted for Trump in 2016, though he regrets it.

I don't know if he really can win, and if he represents a change for the Democratic party that could occur in many places (or if this is unique to West Virginia due to its still-recent history of being overwhelming Democratic from the labor movement); but it is interesting.

Yes, Mr. Ojeda certainly is interesting, and I would prefer his winning the seat to it still being held by the Republicans.

But I do worry that his policy positions, based on angry reaction, will end up being just as irrational as Trump's in the long run.

[Ormond]

33 minutes ago, Maithanet said:

I am still of the opinion that the NAFTA talks are just posturing, and nothing is actually going to change.  Trump knows that if the economy tanks (or even just falters a bit), his support will be down at least another 5 points, and killing NAFTA would do that.  This looks like one of his "talk about doing something, then let if quietly fade away" issues. 

I would agree with the first part of your second sentence, but I am not at all sure that Trump knows that killing NAFTA would tank the economy. His narcissism combined with that pesky Dunning-Kruger effect may just lead him to dismiss arguments about that. 

[Fragile Bird]

I see both the NYT and the WSJ are tempering their stories on the steel and aluminum tariffs with the words ‘if implemented’. The announcement has come without any actual action plan being in place. I am not as sanguine, I think they will be imposed. But the stories also spoke of the strength in the US economy and the expectation that the economy will absorb the tariffs without difficulty or much impact. What other countries will do in retaliation is another story.

As I type this Jason Miller is on CNN saying ‘it’s important to send a message to China that we are not messing around’. And, ‘there will always be people who disagree with the president, but get used to it, there’s another 7 years of this’.

I see Trump tweeted this morning that trade wars are good, they’re easy to win.