Sgt Hulka Uncut

uncensored opinion and technical information on stuff

Even Paul Krugman misses the point

Jun 11

Posted by Sgt Hulka in Bad Ideas, Economics, Evil Motherfuckers, Good Ideas, International | Comments off

Memo to America, but with lessons for lots of people everywhere. How to kick start your way out of a liquidity trap, by focusing on a root cause. First a definition from Krugman from his very good article on Japan this morning: Liquidity Trap

“But all of this is totally irrelevant to our current situation, where inflation is running below target, the target is too low anyway, and the reason we have mass unemployment is that there just isn’t enough demand, and hence there just aren’t enough jobs, no matter how desperately people search for them.”

But he should finish the point and say why the economy could fail in the manner that it did, and stopped where it did to begin the great recession: the rich took all the fucking money! Or at least they took enough of it already that they caused the liquidity problem that the middle class has right now, which is why that 70% of the economy is not driving the production that keeps all the yanks (and plenty of others) in jobs with ever spiralling wage rises (hopefully based on productivity gains, but that is another story).

See, I’m not a Nobel prize winning economist, or even in the profession by training, but I can still see the whole system of an economy linked together in a synchronistic way. One man’s debt is another man’s credit and all that. Have a good read of Matt Taibbi and Michael Lewis on the con that was perpetrated, and still is going on, but here’s my take on the cause and effect. The rich (banks in particular) tricked the middle class in America into getting in over their head with debt in often a fraudulent manner (I’m look right at you Countrywide) and lot’s of common people did not have enough sense to realise the risk. And the rich took the middle class for their last dollar in debt because remember the context; this is after the slow fall since about 1979 in wage gains by people making a wage. Almost all productivity gains in those decades went to the suppliers of capital to the equation (and not labour or true innovation), and resulted in a significant increase in the concentration of wealth at the top. Look it up, that is published economic fact. So the middle class buying power has been falling for decades, and they supported the demand they were creating artificially with household debt. Then the trigger point and the house of cards all falls in, and even giants like AIG are proven to be fools and criminals (yet strangely enough, none go to jail).

Now the rich will make a show of how fraud was insignificant (or lie, in common language), and how there is just cause for the gains made in the 1%, but that is just maskirovka; the real gains were made in the 1% of the 1% (or 0.1%). And in that club, for every Steve Jobs, I will show you 10 Gina Reinhart’s, greedy opportunists that turned a whopping great big fortune into an immensely whopping great fortune through no real skill or innovation of their own. Parasites that then even turn on their children and deny them their probabilistic right to the spoils that they also did not earn.

But I don’t want to get off on a rant here, and back to my point. With the middle class in (now bad) debt up to their eyeballs, low and falling wages relative to their productivity input, and no one who will loan them any more money for a hand up to get something started even if they were entrepreneurial, where the fuck is aggregate demand going to come from to move the economy along? The 70% ain’t got it, and the 0.1% ain’t spending it. That’s your cause, and your trigger point for the GFC. But it also suggests the solution to get things moving again. Find a way to get some money back into the hands of the people who actually buy the vast amount of goods and services in the economy in the short term (and then we will get to countering over concentration of wealth in the mid term).

Wouldn’t you think that at times like these, when the US government can borrow any vast sum of money it wants without raising interest rates from basically 0%, that it might make a good plan for the government to do major maintenance on its infrastructure? Note here, I am not talking build a lot of pork barrel shit that doesn’t go anywhere, but why not fill some of the pot holes near the CBD of some major cities that you could drive a VW into, or I don’t know, upgrade your electricity transmission network and solve your greenhouse gas problem at the same time. Do some thinking on it, and you will come up with of a number of decent ideas for shovel ready projects to improve productivity, reliability and innovation of US infrastructure.

Otherwise, you can do the alternate plan: go beg those like Gina to buy more jewel encrusted golden backscratchers and hope that form of is demand enough to base a modern economy on.

See, they are not all shit

Apr 3

Posted by Sgt Hulka in Climate Change, Economics, Good Ideas, Science | Comments off

As a follow up to my previous post, I would like to add my thanks to Jim Hansen for his long service as a government employee upon his retirement.

He has a great body of work, has made a lot of sound predictions, and doesn’t shy away from controversy related to his science work. In fact, that is why he is retiring, so that he can work as an activist full time. So congratulations, goodbye and hope to see you soon, Jim.

In reading about his position on carbon pricing through the above link, I note that my opinion (which I developed over years in working in parallel) matches his for the precisely same reasons when it comes to a carbon tax vs. a trading scheme:

“In his 2009 testimony to the House Ways and Means Committee, Hansen laid out his basic critique of cap-and-trade: “(1) unpredictable price volatility, (2) it makes millionaires on Wall Street and other trading floors at public expense, (3) it is an invitation to blackmail by utilities that threaten “blackout coming” to gain increased emission permits, (4) it has overhead costs and complexities, inviting lobbyists and delaying implementation.”

Nice to know that I see things the same way as someone that smart occasionally.

Do what we did, kind of

Mar 14

Posted by Sgt Hulka in Climate Change, Economics, Good Ideas | Comments off

The following is a copy of my submission to the group of Senators and Congressmen working on the design of carbon tax legislation in the USA. I figured they might want to use our experience here in Australia to produce a better one which should get an up or down vote in about 30 years. But hey, if you don’t play, you can hardly complain about the outcome. This input is to answer specific questions they raise on how to design a system.

Dear Congressman Waxman, Senator Whitehouse, Congressman Blumenauer, and Senator Schatz,

None of you are my elected representatives, but I thank you for your invitation to participate in the discussion on the formulation of a carbon tax as the economic instrument to assist in addressing CO2-e emissions in the United States. I chose to provide you some input because I have been working in the space you are now discussing for my entire career as an environmental engineer following the receipt of my degree (BS in Chemical Engineering in 1988 from Montana State University). My experience began with the completion of emissions inventories to address the Toxics Release Inventory (TRI) requirements on industry from 1987 legislation. I have published papers on the function of emissions trading programs, founded a start-up company to produce software for the completion of industrial emissions inventories, and I am currently the Technical Director of and led my current company to become the first engineering consultancy in Australia to be certified as carbon neutral under the National Carbon Offset Standard. We have been carbon neutral since 2008.

I want to provide answers to your specific questions, but prior to that, I want to take a position on a “carbon tax” as opposed to an “emissions trading market” as the economic instrument to achieve the outcome of internalising the cost of emissions of CO2-e. Having studied this issue in detail, and the practicalities of the implementation of these types of regulatory mechanisms, I have come to the following conclusion: An emissions trading system that is implemented using either a “cap and trade” model or a “baseline and credits” model is a more efficient long-term mechanism for driving reductions in CO2-e emissions. However, given the difficulties in educating people about how a trading mechanism works and the greater complexity of trading systems that means they are less transparent, more costly to setup initially and open to potential corruption of them, I believe that a simple, transparent carbon tax along the lines of the model you suggest is a better first step. At some point, conversion over to a more elegant solution involving trading of emissions credits may then be possible once the public is more inherently knowledgeable and accepting of a more complex but efficient solution.

With that as a background, I want to move on to your specific questions.

1. What is the appropriate price per ton for polluters to pay? The draft contains alternative prices of $15, $25 and $35 per ton for discussion purposes.

My guess on the record prior to its implementation in Australia was that the price should be A$23.50. It actually turned out to be A$23 on 1 July 2013, so I was pretty close. But was my number right? Well, here you are going to get a lot of debate based on where I draw the boundaries of my assessment of overall costs, what is and is not a cost, etc. and this is debated widely (and wildly) as in the background provided with your question. But I am going to stick with my original estimate not because I know its right, but because I don’t know that it isn’t. Environmentalists with an axe to grind will try to justify a price that is orders of magnitude higher, and people opposed to the tax (or trading system) at all will complain about whatever price is set, so the price set is not nearly as important as the reasoning for why you set it there. The economists’ work that has gone into your background seems to most closely support a $25 price, and that won’t make anyone happy so it’s probably good. It’s high enough that it provides a real incentive to reductions, but low enough after you cascade it through the economy that it will basically just be noise in the signal of prices of things like electricity.

Wherever you set it, be firm in sticking to it. Our experience here in Australia is that industry groups that were most opposed going to emissions trading (and helped bring down the government at the time) are now bitterly complaining about the carbon tax price when you can buy a ton of CO2-e on the market at about $2.50 at present. The answer to those people should be “tough, pay your tax. And next time I propose a better solution first, you might want to take me up on the deal.”

2. How much should the price per ton increase on an annual basis? The draft contains a range of increases from 2 percent to 8 percent per year for discussion purposes.

Experience would suggest that the price should be close to CPI, but adjusted upward based on how rapidly you want incentives to grow. I would say that a model that uses CPI+0.5% would provide a ramping up of incentive that would be sensitive to economic conditions in the US at the time, but also allow for more rapid take up of existing energy efficiency technologies along side the expansion of renewable energy sources.

3. What are the best ways to return the revenue to the American people? The discussion draft proposes putting the revenue toward the following goals, and solicits comments on how to best accomplish each: (1) mitigating energy costs for consumers, especially low-income consumers; (2) reducing the Federal deficit; (3) protecting jobs of workers at trade-vulnerable, energy intensive industries; (4) reducing the tax liability for individuals and businesses; and (5) investing in other activities to reduce carbon pollution and its effects.

The model here is essential, because you want to make absolutely sure here that you get maximum buy-in from a public that doesn’t want to have to sift through a lot of details to understand it. We know that all costs applied in the form of the tax will be passed on to consumers (primarily of electricity). So what you want to do is make sure that the tax that is collected is redistributed to the people who will get the revenue from it in a clear form, either as a credit on their income taxes, or in a form such as the reduction of payroll taxes that each individual person can see easily and compare; my taxes went down this much to offset my electricity prices that went up that much. This should be very transparent, because I want each and every person to start internalising his or her decisions about energy use in particular. Someone may get back $300 a year from the carbon tax, and only pay $150 in additional energy costs because they practiced easy energy efficiency rules and made purchases with energy efficiency more in mind. Another person may get $300 back, but spend $600 more on energy every year because they choose to drive a massive SUV and don’t even care what their energy use is like. We need to engrain this in the mentality of every person, regardless of his or her economic status; you are free to live your life and use energy as you see fit but you have to pay for your inefficiency.

Do not let the money simply go into general revenue and come out as means tested welfare programs as was done in Australia, because here (already) people have lost the connection between what they get and what they pay, leading many to forget that they actually have control.

The best model I can think of for the US would be to collect $25 a ton for emissions, and return 75% of all money collected directly back to the population on a per capita (or better yet per household) basis. Then use 12.5% for supporting energy efficiency improvements in the national grid and to equip it for more micro generation and renewable input. The final 12.5% should be put into supporting R&D and commercialisation of renewables and energy efficiency technologies. In doing so, make sure that you design the programs such that the market and not government pick the winners and losers, as government has a particularly bad record of picking winners and losers where innovation is concerned.

Finally, don’t address trade exposed energy intensive industries in the context of this tax. I say this for two reasons. First, business will look after itself and we don’t need another federal program of money transfers to industry that will invariably be corrupted or put the government in a position of picking winners and losers. Second, there are existing means of dealing with economic system failures related to trade exposure of industries where costs will go up under a carbon tax. For instance, after the US has a pricing mechanism in place for the internalisation of CO2-e emissions costs and that causes your aluminium costs to go up, you use existing trade mechanisms to make any foreign aluminium producer that wants to sell its aluminium into the US to either pay the tax or be able to demonstrate in a transparent manner that the CO2-e emissions costs are included. Initially they won’t be and they will just have to pay the tax, but eventually they will also get on board with a similar program. And isn’t that the long term goal for the developing as well as developed economies.

4. How should the carbon fee program interact with state programs that address carbon pollution?

Where an entity already participates in a scientifically valid economic instrument to internalise the cost of CO2-e emissions (whether state, federal or international), they should be excluded from paying the tax for emissions from that source, regardless of what they pay to offset their emissions under that program. This is the way that you eventually get to the use of the more elegant instrument (carbon trading) for emissions reduction in place of the crude instrument (the carbon tax). Over time, companies will see that they can reduce their cost of compliance significantly through a trading system, and early adopters are rewarded. For instance, my company offsets its emissions at about A$2.00 a ton as compared to the A$23.00 per ton carbon tax. If we were a mandatory (rather than voluntary) participant in the system, that difference would be a huge incentive for us to do an emissions inventory, identify reductions, and participate in an emissions trading market.

Finally, let me share a bit of my experience as an environmental engineer that will illuminate why I think this issue is so important for the US not only as an existential environmental issue, but also as an economic one. In my experience, I have never seen a more effective piece of legislation at reducing emissions than the TRI requirements of the Superfund Amendments and Reauthorisation Act of 1987, and the act required no emissions reductions at all. What it said is that if you are large enough and you emit certain substances, you have to quantify all of your emissions of a list of toxics and simply inform your neighbours of what they are. This required us (in industry) to look at emissions sources we never examined before as significant, and in doing so, we identified and reduced millions of tons of toxic emissions (along with other associated emissions that were not toxic) because we could do so relatively easily, wanted to do so for our own public relations purposes, and often saved millions of dollars in the process. I personally invented a system for the reduction of VOC emissions from my employer at the time that saved them a few million dollars while I was doing the source testing to quantify the fugitive emissions from a previously unregulated area of their facilities. I wouldn’t have been on that factory roof to stumble across my invention unless the TRI regulations had required me to be up there.

We know that countries that signed up to the Kyoto Protocol can meet 80% of their targets through energy efficiency using technologies that have existed for 50 years. But what incentive do they have to examine their emissions or energy efficiency? A carbon tax will provide the incentive for all major energy users to have a first look at what their emissions actually are, and never in my experience as an environmental engineer have we had a first look at a problem area and not found a majority of the solution easily.

Happy Birthday Paul Krugman

Feb 28

Posted by Sgt Hulka in Economics, Good Ideas, Other Topics | Comments off

His birthday should be recognised as the second most important in Feb after J Willard Gibbs, of course.

If you have been living under a rock and not read his regular an repeated thesis about New Keynesian economic theory, and operation of macroeconomics through the GFC, Great Recession, and current asinine austerity being pursued, do yourself a favour and read his book, or blog.

He makes me wish I had taken economics and not chemical engineering as a degree on a regular basis in the last several years.

They asked, and I said I would, so . . .

Jan 29

Posted by Sgt Hulka in Good Ideas, Other Topics, Politics | Comments off

. . . so I started a State Petition in Montana to challenge Citizens United. And I am supposed to publicise the link on all my portals, so here it is Challenge Citizen’s United Decision

Let’s see if anyone is listening in.

Fantastic food for thought

Jan 10

Posted by Sgt Hulka in Economics, Good Ideas, Other Topics | Comments off

Take the time to read this 27 page summary of the discussion of 4 prominent economists with regard to the appropriate responses to the economic problems to the world economies at present, and what they have learned since the GFC. Three thoughts come to mind following my review of this article:

1. Thanks for the internet. I am grateful each and every day that I have access in nearly real time to the output of really great researchers and thinkers that would be unimaginable. I am still very disappointed that I never had the opportunity to go to UC San Diago, Princeton or someplace like that, but having access to the information coming of of these places through the internet really is almost like being there.

2. I found myself laughing out loud 3 times in the reading. Maybe this shouldn’t be as surprising to me as it is. These are smart people, and the basis of humour is intelligence, and making a point through humour is an effective way to make an argument. But getting a good laugh 3 times in a 27 page summary of the deliberations of a conference on macroeconomics was a pleasant surprise.

3. I think that Valerie Ramey may be on to something truly insightful through her studies. What if the US is being significantly hindered in its ability to come out of the recession caused by the GFC due to aggregate demand loss caused by a combination of the inefficiency of its private health system in conjunction with the behavioural response of people to the shock of the GFC (e.g. spending less, saving more and preparing for things to get worse rather than better). What if they are really willing to take less and be less mobile in their employment decisions due to the fear over loss of health care coverage? Isn’t structural reform of health care in the US (particularly a single payer system) then one of the best things that could be done with respect to stimulus OR efficiency, whether you are a salt water or freshwater economist?

More like a drumbeat

Jan 9

Posted by Sgt Hulka in Climate Change, Science | 2 Comments

Where I had previously talked about the drip, drip drip, snap progression of natural systems, the rate of the evidence is now coming in more like a drumbeat of information that will be seen in hindsight as a truism.

I offer for your consideration the following:

NOAA’s current state of the climate report, establishing 2012 as a record for temperatures and chaos related to entropy; and,

The Australian Bureau Meteorology has been required to add two new colours to its palette to forecast temperatures over Australia. Now, they may have revised yesterday’s map based on the actual (record) temperatures achieved vs. what was forecast, but have a look at the map of temperatures achieved, and rest assured, they will still need the new colours again soon and regularly in the future.

Screen shot 2013-01-09 at 11.48.45 AM

Rational gun control, unless it’s too late

Jan 4

Posted by Sgt Hulka in Good Ideas, Other Topics, Politics | Comments off

So, I think I have the gun control issue partly solved in the USA, if anyone is still listening, but possibly not.

I actually asked my buddy Otto whether or not we need to just admit that these kids in Sandy Hook Elementary just don’t mean that much in the overall scheme of things. Isn’t that right, and shouldn’t we just admit that and move on, unless you are really interested in seeing that this sort of thing gets reduced in the USA? Perhaps the statistics above prove that to be true, but direct discussion with gun advocates suggests otherwise. You see, my buddy Otto is one serious constitution reading libertarian, and he is not interested in giving up any of his guns at all.

And I am with him, to a point. But I see guns in America as another set of dangerous goods that must be managed. We could also have some discussions around just what is required to maintain a “well regulated militia”, how large a magazine, how many of them, and what rate of fire is required, but even if we don’t go there, I have a set of reasonable suggestions that don’t significantly impact on anyone’s 2nd Amendment rights, while making sure that everyone’s rights under the 1st Amendment aren’t jeopardised inadvertently in the move toward an armed camp in the USA. Because I honestly see it that way. I believe that my freedom of movement, association and pursuit of happiness are significantly diminished by having to worry if I am going to get shot trying to enjoy dinner and a movie, go to work, or school.

Through a bit of reading, and further discussions with Otto, I think I have an answer that appeals to the right, left, up and down in politics with a significant enough plurality amongst all that it works: personal responsibility. It’s always a good time in America to have a chat about personal responsibility, as it seems to be the answer to a number of the ills there, and everyone initially says they are all for it. The religious love it, despite the fact that they go all moral on you. The left can come to support it, because it finally gives them a chance to hold someone in power to account. And the right love it, because it has an emotional appeal to their both authoritarian and libertarian sides. The only people who couldn’t support it are the mentally defective, who by definition can’t be held personally responsible, so who gives a shit what they think.

Here’s how gun control works based on personal responsibility. Guns are a dangerous good that (peculiarly) if used as intended or not can cause the death of people, animals and some potentially significant property damage. They are also required to be available in the population to allow for the forming of militias to overthrow a despotic government, should that come to pass. In order for the government to unsure the maintenance of this potential to removal of itself by force, we need to know what the numbers are, and ensure that there is sufficient distribution and numbers that they can be called to use (I assume by the States individually) to overthrow the federal government. So the States really need the information, but what we really want to focus on is personal responsibility, so we need not write much regulation, that way the law can be cost efficiently implemented, and also generate some friendly competition in service providers for the information.

The law will say this: If you want own a gun in the future, you will be required to register it’s storage location with your state police, and commit to storing and maintaining it in a safe and secure manner. You are personally responsible for the safety and security of your firearm to prevent its being used by anyone who cannot be held personally responsible for its use in the killing of any human inadvertently or with malevolent intent, or in the negligent or wilful killing or damage to any property, unless that killing or damage is found to be lawful through a jury trial. That’s it. It’s also pretty much already law in most jurisdictions in the USA, following the implementation of registration.

You are already responsible if your 7 year old child takes your car and runs down a grandmother during a joy ride, or uses your gun to shoot 10-15 sheep on your neighbour’s property for sport. The only reason I want to make sure you register your gun is so that I can hold you responsible in the event you don’t maintain your dangerous good in a fashion that is safe and secure, and you have tons of leeway in defining “safe and secure” in your particular situation, because there is going to be no “prior restraint” in the implementation of my law. No one is going to be around to check, and no standards are going to be published to define “safe and secure” for you. If you make your guns kept for home protection, hunting or whatever safe and secure such that they are never used in a killing by your children through education or sheer intimidation, great. If you use a trigger lock, safe or concealment to secure your guns, cool. Whatever you want to do, you decide. And if a person breaks into your house, steals your .45 from under your pillow and commits a murder later, we aren’t going to hold you civilly or criminally responsible for his criminal acts. But if you are going to raise a sociopath, psychopath or a person who cannot control their anger, and they get ahold of your gun and use it to kill a bunch of people, you will likely have to pay, and potentially be held criminally responsible for gross negligence. So, you might want to consider some disaster insurance if you want to own an assault rifle and a dozen clips of ammo, or even an automatic weapon, which by the way I am pretty much OK with under my new legal regime. Just be fucking responsible.

Unless they refuse to register their guns, the only time the average gun owner is going to have any brush up against the law is forensically in the investigation of homicide, just like they are now, and even identification of the recalcitrants will be through forensic investigation, as there is no need for proactive audit or inspections. 2nd Amendment supporters are often quick to site how rare the cases of a person who cannot be held responsible is responsible for significant killing, so there should be almost imperceptible impact to those people. If you fail to register your guns and they are identified forensically, but not in relation to a killing or significant damage incident, you will be required to register them at that time and face some administrative penalty. In the cases where an unregistered gun is identified in the course of a criminal investigation, it will be forfeited, registered by the police and recycled for some beneficial use or materials.

For those paranoid of registration, let this be some comfort. Any incremental damage done by this perceived encroachment on your 2nd Amendment Rights is far offset by the benefit of the elimination of incidents like Sandy Hook, Aurora, the temple, Virgina Tech and Columbine. Because those incidents all involve damage to the life, liberty and pursuit of happiness of all those involved as victims. And in my world 1 comes before 2, especially if I can prove no significant reduction in 2 through regulation of my well organised militia.

Sure, but what have you done for us lately?

Jan 4

Posted by Sgt Hulka in Economics, International, Other Topics, Politics, Science | Comments off

So, how’d we do in our predictions? And will I be foolish enough to publish a few more?

Well, as predictors go, I’m no Nate Silver. But that would require a devotion to pure math I just ain’t got.

On the other hand, I predict multiple things, so you know, its harder to hold up a record.

Anyway, on to the specifics:

• The carbon tax will end up being a non-issue, or even net positive to the Gillard government with the electorate when it comes into effect on 1 July.

Spot on.

• Kevin Rudd will not successfully challenge Julia Gillard to take over leadership of the Labor Party.

Spot on, and although only three weeks out, I wish I had tried to find a bet on it.

• Europe is already in a recession, and when they finally do the numbers after the fact, it will be a big one. My guess is a drop in GDP in the Euro zone of 3% and a duration of 2 years. Keynesian economic theory will win out in the argument over austerity or stimulus, but the Germans (and others) who want to paint the sovereign debt issues in Europe as a morality tale will realise this way to late, or refuse to admit it at least.

Still in the running, with all the timely stuff spot on, and the Germans are actually still taking that line.

• Greece will default on its sovereign debt after failing to come to an agreement with its lenders and failing to get assistance from the European Central Bank (due to the point above) and will therefore leave the euro and reintroduce its own currency so that it can devalue it in order to address its problem as an alternative to the austerity program being pushed on it (that cannot work in any case).

Nope. Maybe still this year, but it depends on what the Greek government is forced to propose next, and whether protest on the streets and escalation ensues.

• The USA will escape any serious damage from the european sovereign debt crisis and have surprisingly good growth in 2012 of about 2% of GDP.

Well, the final numbers for 2012 aren’t in, but when they are this is going to be spot on or near enough to.

• Barack Obama will be re-elected as President in the USA over Mitt Romney.

Oh, I rock, spot on. This one is particularly satisfying as I did manage to get a bet on this one, and I had the economy predicted right in the first place.

• Synaptor apps will be one of the biggest internet successes of the year in Australia

Dead wrong. Many problems with the market, the market fit, schedule, etc. Still technologically very good, and the next app is nearing release that should have more broad appeal.

OK, so let’s see if I have nay predictions for 2013. I really don’t have any big shocking ones, as it isn’t like 2012, when there seemed to be a lot of important things coming up that could change history.

Well, I shouldn’t say that, as we will likely have a Federal election in August, or soon after. This government will very much want to pick its time, and will need all the luck it can find to overcome the many stumbles and own-goals of 2012, which distracts from a pretty solid policy output. This government, on balance, deserves to be returned at this point, but only just on balance. If they fuck up even one seriously important thing from this point on, then its the Mad Monk for us for sure.

Economically, I think we have to bank on things getting better, albeit slowly. Australia should have at target, or just below GDP growth. Mining investment may be on the wane, but mining income from its investments will be ok to good, depending on how much growth we see in China on a recovering price. But the continuing recovery will not be wild, and I don’t think the Sydney market is going to go through the roof. Or Perth. Maybe New York, late in the year once any Sandy stimulus is finally passed and works its way into that market.

The US is going to go on at or just below target GDP growth, maybe 2-2.5% growth. It will be constrained by links to Europe, and its own dabbling with austerity when the fight over the debt ceiling raise occurs in 2 months. Keep some money in the bank to make some good buys in the market during that time of uncertainty, as there are likely to be anxious sellers of good value based on how bad the noise of that argument gets, despite the fact that we all know how it will come out. The debt ceiling will get raised to cover the money already committed by the US House in legislation and will not default in any actual way on its debt. Virtually nothing will happen to US interest rates even if any of the ratings agencies bother to lower their ratings during the manufactured crisis. I mean, do we take anything these venal idiots seriously anymore anyway? The US stock market will take a hit and be volatile then, but will recover and have a good to very good year. Who knows in the Australian market, and it’s pretty boring anyway.

The ECB will, as quietly as possible, start carrying out its actions in a manner that is consistent with a belief in keynesian economics, and also act as the lender of last resort as required, to keep the euro alive.

It’s going to be another very cool year in science, from NASA to to the Halron Collider, but I have no predictions there.

Start the New Year Off Wrong

Jan 2

Posted by Sgt Hulka in Bad Ideas, Economics, International, Politics | Comments off

. . . with some politics on both sides of the pond.

So the US Senate passed a compromise and now the US House has to vote on it, and the fanatical Republicans (all the usual actors, Bachman, Goh, etc.) don’t like it and are having a spack.

Then fucking don’t vote for it and fer fucks sake get on with it. There isn’t a filibuster in the US House, so unless the speaker is too much of a girl to bring it to a vote, and then hopefully not get re-elected speaker on the 3rd, as could happen with the reduced numbers the Republicans got in the last election. Also remember that that election (for President) was also run on a tax hike for the rich, and a specific one that is a hell of a lot tougher on them than the one in the US Senate bill. The progressives get the tax hike and you get exactly nothing is my starting point. Take it or leave it and we slash defence by 20% and blame it on you for sure. Obama can figure out a way to take care of the poor within its programs, and take more of a fair amount from the rich, in the many welfare programs for companies and the middle class that end up benefitting the rich more anyway.

Now shall we talk about the debt ceiling. I am totally in to reducing the total amount owed by the US government, and also the current account deficit, where it suits given the macro economic conditions. However, if we really want to reduce overall debt, we have to start with defence and health care (not health insurance) and forget about trying to take it all out of the middle class and poor. Look at productivity gains and distribution of those gains over the last 30 years, and you should come to the conclusion that what is proposed is very fair on the rich, and that there is a lot more that we need to do to make sure that workers share from increased productivity they provide.

Here at home in Australia, we have what passes for a scandal these days, with Maclin reportedly saying she could live on the $35 a day new start allowance. Well I got some news for some whingers here too, harden the fuck up. I can and do live on less than $35 a day now, and although Jenni makes allegedly 25x what the new start allowance equates to in a salary, and I have no idea what I am on. But I live on that amount now, and I don’t think that new start is meant to be the full amount to maintain any “lifestyle” whatsoever. Its meant to be the money use use to get around and feed yourself while you look for work. The Labor party needs to look straight down the barrel of the camera on the next dozen occasions and talk about a few things that really matter, and not worry if someone tries to pick at them, from right or left over statements that don’t really mean anything in the overall scheme of things.

Otherwise, show me the data that Australia and the States are fucking over poor people on a regular basis, forcing them to live in inhumane conditions, or not providing them additional support if they have bigger problems like disability or drug dependency. $35 a day to look for a job sounds about right to me at present.