Friday, February 23, 2018

Q&A - 23/2


Previous model on employment / debt  was good; but what about inflation

What about inflation..

Here is the extended model with price levels / inflation. This one demonstrates the "the great moderation" followed by ka-boom. Here is the money shot,

Deflation right there. mmmmm hhmmmm - snap.

Tuesday, February 20, 2018



Yeltsin was deeply unpopular at that time in Russia, polling no more than 8% and widely blamed for the rise of the gangster oligarchs, the collapse of infrastructure and the looting of Russia’s once state-owned natural resources. The Communists were resurgent, taking a lot of new seats in the elections to the Duma in the winter of ’95-6. The Communist presidential candidate, Gennadi Zyuganov, was poised to ride this wave. If left to their own devices, Time says, the Russians could easily have voted a Red back into the Kremlin.

Obviously this could not be permitted to happen.

What Time means by “reform” is the vastly illegal and ethically barbarous looting of the Russian state and its people that was then being systematically perpetrated by the US, its financial institutions and its own gangster capitalists. A Communist, or even a moderate nationalist, could be a disaster for this lucrative open conduit of virtually free raw materials and knock-down block shares in oil and gas production (and that’s not even getting into the questions of PNAC and the neocon drive to see Russia perennially divided and weakened, if not actually partitioned).


Here is Biden boasting about interfering in Ukraine's legal system.

Sunday, February 18, 2018

Q&A - 18/2


Why is the anti-immigrant German party AFD named that way?

Because of Merkel Probably

The flippant answer would be "well, because the name nationalsozialistisch was taken" (for golf, it is "because shit was taken"). But seriously, I think the reason is Merkel keeps using the word "alternativlos" when describing why she chose a certain approach, meaning "alternative-less", which ties in with TINA talked about earlier. That kind of answer truly drives people up the wall, some anyway, so naming this party as alternative for germany (alternative fur deutschland) was probably an F-- you towards the Chancellor.

This is another side effect to TINA governments - US take heed - when you say this is the alternativeless center for any set of solutions and there can be no other, well, then the next question is what's the need for other parties? It can push people to radicalize on even secondary issues - such as in US over environmental and gun control. The TINA politics might jell with the top 20%, the white-collar professionals, but it is not always optimal from all angles, and it certainly is not without alternative. TINA ppl can also be severely beaten at elections if someone crafts an opposition, sometimes being thumb-in-your-eye obnoxiously opposite of these people are. Then there is bunch of drama. See US.


Nixon, a Republican, who created the EPA in 1970. In the following years, he also signed off on the Clean Water Act and the Clean Air Act with broad bipartisan support, cementing a legacy as one of America's greenest presidents. [..]

Public pressure was immense. The environment was one of the top issues people voted on and politicians felt it. The Clean Air Act was passed in the Senate by a vote of 73-0. Not a single lawmaker — Republican or Democrat — voted against it.

In those days, Ruckelshaus says, people viewed the environment and public health as one and the same.

Gone Are Those Days

Here is an issue first spearheaded by a Republican, but it was "weaponized" by the corporate Democrats, and now it belongs to one column never to be seen or heard from again.


Can an economic crisis happen again?

It is only natural

I was able to replicate the results from the Keen model (see notebook). It is a nonlinear dynamic model - a collection of simple equations which together can demonstrate highly nonlinear behaviour. In such systems there are fixed points, some can be seen as desirable stable situations. For some reasonable parameters, on such fixed point is employment level at 96%, wage share of GDP at 83% and private debt percentage at 7% (if one parameter v representing efficiency is higher debt can go up more). If the system is sufficiently away from there parameters, all quickly degenerates - shooting towards another fixed point, no employment, infinite debt. This is hell. Right now US wage share (which means salaries, for middle class) is at around 44%, employment is at 81%, private debt share is at 200%. 

If the underpinnings of the model is correct, and it looks that way, the conclusion is a lot of economies are artificially held away from crisis with great effort, the natural course is, with the given debt, inequality, is for everything to go to shit. Keen has some ideas to fix these, QE for people for example, direct payments to everyone that will first go to paying off debt.

K. has additional models for Ponzi financing, and inflation. This paper has a good overview.

Tuesday, February 6, 2018


Related Octave Code (based on this link).

Keen also has a UI tool that allows him to model nonlinear dynamics (video, kickstarter project). 

Monday, February 5, 2018



[GRoKo = Große Koalition (Grand Coalition)] By governing in a national coalition with center-right Christian Democrats for eight of the last 12 years, Social Democrats have often had to compromise against the interests of their traditional working-class base. Tainted — some would say corrupted — by power, they have become both less pure and less effective as a progressive movement in German politics. [..] In the eyes of many voters, the SPD has become just another centrist establishment party. And if that is the case, why not just vote for the real thing, i.e., Merkel’s CDU?

The SPD is now being forced to consider what role, if any, it is going to play in the next German government. The answer it settles on could determine the fate of the party — and the future of Europe’s broader social democratic movement.

Another Grand Coalition Would Be A Disaster For The SPD

Damaged by his ballot-box defeat in September, Schulz immediately announced his intention to have the SPD spend the next four years on the Bundestag’s opposition benches. [..But now c]aught between the call of national duty and the need to revamp their waning electoral support, Schulz and his colleagues are now faced with three choices: (1) to join another grand coalition with Merkel’s Christian Democrats; (2) to support a minority government led by Merkel and her more conservative partners in Bavaria’s Christian Social Union; or (3) to face the German voters once again in early elections.

Alas, it is not hard to guess what those options will bring. Another grand coalition will be fatal for the SPD, because it would deprive the party of its distinctive identity in the eyes of the voters. If it cooperates with the center-right CDU to craft policy for another four years, the SPD should be expected to hemorrhage votes both to the democratic socialist Left Party — to which it lost half a million votes last September — and to AfD, waving its anti-immigrant and welfare chauvinist banners, to which it also lost half a million votes. The other social democratic parties that have gone down this route — like the Dutch Labor Party — have suffered mightily as a consequence: Votes for the Dutch Labor Party fell from 2.3 million in 2012 to just under 600,000 in 2017 as voters shifted to the left-liberal D66, the Greens, and a party whose major platform is to support animal welfare rights. Matteo Renzi’s Democratic Party in Italy is worried about suffering a similar splintering of its support base next spring if it chooses to link up with Silvio Berlusconi’s Forza Italia.

[..] This means the only option remaining is to support a minority government.

Germans shudder at the thought that a minority government will mark a return to the instability of the Weimar era of the 1920s, when extremist parties pulled away support from the political center, eventually resulting in the rise of Hitler and the Nazis. Elites in Berlin also worry that it will imperil Germany’s leadership in Europe at a crucial time, as discussions are on the agenda on how to restructure European institutions after the United Kingdom’s departure, and with an eye on preventing another economic and financial crisis like the one that dominated much of the past decade. The SPD should take one for the team, they argue, both to show that Germans can be responsible to the electorate and to make sure that Europe continues to hew to German preferences. The opposite is more likely.

If the SPD stays out of the government, then we are less likely to see early elections before they are ready to face the electorate. In the meantime, the SPD would have the opportunity to push its agenda selectively both in the Bundestag and before the media. It may not have a seat at the table either in the various ministries or at the Council of the European Union, but it would have substantial agenda-setting powers nonetheless.

If the SPD is in the government, then its support can be taken for granted. But if the SPD is on the outside, Merkel will have to ask for its support, and it will be able to announce the conditions for their participation. Merkel will also have to accept the blame for working with other voting blocks like the AfD in promoting her agenda when the SPD is not persuaded. In other words, the balance of power will shift. The SPD will be able to take credit for success while leaving the Christian Democrats to take the blame for failure.

A Minority Government Is Not Unstable

The German Basic Law is in many ways an institutional reaction to the political instability of the 1920s Weimar Republic. As a result, the constitutional provisions to shore up the chancellor and her government are very strong. The chancellor is the only one who can face a confidence vote. The rest of the government is appointed by the chancellor. Hence, the only challenge is for the chancellor to be elected. That can take place by a simple majority of the Bundestag in the first of two rounds of voting — one initiated by the president of the republic and, if that fails, the other initiated by the Bundestag itself. If no candidate in either of those first two rounds wins the support of the majority of members of parliament, then the voting moves to a third round, where the candidate with the most votes wins.

In the current situation, Angela Merkel would almost certainly win more votes than any other candidate. The only questions in that case are the following: (1) Would Steinmeier, who used to serve as her foreign minister, agree to appoint her as chancellor of a minority government? (2) If so, would Merkel, who has expressed major reservations against leading such a government, actually agree to serve? From this perspective, it is no mystery why both Steinmeier and Merkel are eager for a renewal of the current grand coalition government. They do not want to be responsible for a leap in the dark, and both would much rather see Schulz fall on his own sword and accept a grand coalition government.

Neither Steinmeier nor Merkel is eager for early elections. The most recent polls do not show an increase in support for the AfD, but that is no guarantee that the outcome will be any better than it is at the moment in terms of forming a stable coalition. In other words, the instability and impasse that could result from a quick return to the polls would be on them. The burden would fall particularly hard on Merkel’s allies in Bavaria’s Christian Social Union. They are already in the throes of a succession struggle, and they have to go to the polls for regional elections in Bavaria in less than a year’s time. Another round of national elections only increases the risks that the party will lose further ground to the AfD on its right. That is why the Christian Social Union is tacking from the more centrist Horst Seehofer to the more right-wing Markus Söder. The SPD has no business forming a coalition with the Christian Democrats in such circumstances. Luckily for them, they do not need to do so.

If Merkel agrees to become chancellor again (and Steinmeier agrees to appoint her), then she and her Christian Democrats will own the German government. They will not be able to guarantee a majority in favor of legislation without the support of other parties. It will be a weak government in the policy sense. But they will not be constantly threatened with a vote of no confidence. The only way to throw them out of office is to find another candidate for chancellor who can win a majority in the Bundestag. Merkel could of course lose a no confidence vote and then request to dissolve the Bundestag. In turn, the president would have to agree to that request. But, in that case, it would again be Steinmeier and Merkel who would be responsible for any instability, since they would control the decision-making process. If they wanted to avoid inflicting that instability on the German people, they would just have to make a deal with the SPD. The bottom line is that a minority government is only as unstable as the chancellor and the president would like it to be. The SPD should make them own that responsibility, and they would be better for it as a result.

A Social Democratic Policy Agenda Is Possible In A Minority Government

Of course an uncooperative SPD would make it an easy scapegoat for both Steinmeier as president and Merkel as chancellor. That is why it would be important for the SPD to announce a progressive agenda up front, both domestically and with respect to the European Union. This is where the SPD gets to set the agenda. In many ways, it can do so more easily from outside a coalition than from working inside the ministries. The goal should be to chart the broad direction of policy rather than to invest too much effort and attention on the implementation. This time around — and in contrast to what happened in the last two grand coalition governments — the SPD can take credit for the successes and leave the Christian Democrats to explain the policy failures.

Germany is one of those rare countries with a bit of a budget surplus. The SPD could insist its support in the Bundestag for a Merkel-led minority Cabinet depends on much of that surplus to either go to public investment in infrastructure or targeted tax cuts for the working classes. [..]

Wednesday, January 31, 2018

Q&A - 31/1


I blame the Republicans for the polarization in US politics, do you?


I blame the Corporate Democrats - because they offer so little alternative by means of policy, they have to create extra friction around hot-button issues, gun legislation, abortion, etc. and that creates its mirror image, its opposite. Republicans are not the instigators, they are merely following suit.

Let's remember Clinton: after his win 1992 what was his first major crisis? It wasn't the economy, another country, a war, education, or energy. His first crisis was, wait for it ... gays in the military. It all started with Clinton sort of "slipping" during a conversation with reporters, then all hell broke loose and everyone back then thought Clinton was "jumped" by the press, because a story with Clinton and sex was too hard to resist.

That's not what happened: the problem was (is) Dems have nothing to define themselves with, so you "slip", and others are wired to "catch" you because they know where the drama is at. Or guns - Clinton regularly shared a story with him coming to punches with an NRA guy. Yeah fine, we want gun control, but beat the shit out of them? No.

Al Gore, after his defeat on 2000, immediately jumps on climate change, books, the movie.. It's great, it's a big issue, but you have to see the desperation these people have to define themselves with something, anything that are, sadly, miles away from people's daily lives. Climate change is of course real, and dangerous - but it is the perfect "behind the scenes" thing that handled exclusively by government. Isn't those issues what these frakkers are there for? To take the long view so regular people don't have to?

But no. Because they can't talk about criminal reform, they have to talk about abortion, gun control, climate, with such disproportionate energy that other side needs to match, so we get useless polarization.

Don't get me started on Obama and his "they cling to their religion and their guns" thing.

We don't see Bernie jumping up and down on the "hot button" issues because 1) he doesn't have to, there is, like, important stuff and 2) electorally it's actually stupid to bang on that.

That's not to say that Corporate Democrats can never win elections - they do, sometimes Time for Change dynamics is so strong (the other guy has to go), even a sock puppet will win it. 2008, or even 1992 Dems had a major advantage. But we can see overall the wins are lopsided, out of the last 6 Presidents, 4 were Republicans. Reagan gets his VP in there, but your VP or SecState does not make it.


What are other side effects of lack of substantial policy?

Governance by Cool

That's where the Holywood selfies, lip-biting, trying to channel Robert Redford (and failing -badly-) comes from.

Reybrouck, Against Elections

The argument for technocracy builds to an important degree on the ‘post-political’ thinking of the 1990s. In that era of the Third Way in politics, of the Neue Mitte and la cohabitation, there was a belief that ideological differences were a thing of the past. After decades of conflict, left and right suddenly walked arm in arm. The solutions were there, people said, they only had to be implemented and it was simply a matter of ‘good governance’. Ideological struggle gave way to the TINA (‘there is no alternative’) principle, and the foundations for a technocratisation of politics had been laid.

The most striking recent examples of such a turn towards technocracy are to be found in countries like Greece and Italy, where in recent years unelected leaders have been allowed to head government teams. Loukas Papadimos was in power from 11 November 2011 to 17 May 2012, Mario Monti from 16 November 2011 to 21 December 2012. Their financial and economic expertise (one as a banker, the other as an economics professor) were seen as trump cards when the crisis was at its worst.

But technocracy comes about in countless other less visible places. In recent years a huge amount of power has moved from national parliaments to transnational institutions such as the European Central Bank, the European Commission, the World Bank and the IMF. Because these are not democratically elected, they represent a far-reaching technocratisation of decision-making: bankers, economists and monetary analysts have got their hands on the levers of power.

This is not just about foreign organisations. Every modern nation state has given itself a technocratic slant by removing competences from the democratic arena and depositing them elsewhere. The power of central banks and constitutional courts, for example, has grown markedly. It seems governments have thought it sensible to take crucial tasks such as monetary supervision and constitutional reform out of the clutches of party politics and the electoral calculus that goes with it.

Is this a bad thing? There is no doubt that a technocratic government can achieve great results, the Chinese economic miracle being the best example, while a leader like Mario Monti was a far better manager of public affairs than Silvio Berlusconi could ever be. But efficiency does not automatically generate legitimacy and faith in the technocrat melts away as soon as spending cuts are implemented. In the presidential elections of February 2013, Monti won only 10% of the vote. China has its own ways of suppressing dissatisfaction with government-by-regents.


TINA is unsustainable. In US it creates false polarization. In Europe it suffocates the left, as it did in Germany. The SPD is slowly being erased from history.


What are hot topics in Bitcoin world?

The Lightning Network

Good stuff. I was confident performance issues in crypto would be addressed, and they were. 

Monday, January 29, 2018

Q&A - 23/2

Question Previous model on employment / debt  was good; but what about inflation What about inflation.. Here is the extended model ...