What I’ve been reading, and viewing

by on July 7, 2015 at 1:37 am in Books, Film | Permalink

1. Stephen Witt, How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy.  Most of all, Learned how much hard work and ingenuity was behind the MP3 standard, in any case a good and useful book.

2. P.W. Singer and August Cole, Ghost Fleet: A Novel of the Next World War.  More of a speculative exercise than a traditional novel — what if the Chinese could beat the Americans? — but still a fun read and a book that people are talking about at high levels.

3. Vendela Vida, The Diver’s Clothes Lie Empty: A Novel.  To the point and lots of fun.  A recently divorced woman travels to Morocco and surprises start to happen.  Occupies that intriguing space between “not deep” but also “not superficial.”

4. Elena Ferrante, My Brilliant Friend.  This writer has been called a “female Neapolitan Knausgaard,” arguably a deliberate oxymoron.  It took me my second read through to “get it,” which I suppose means I am not the natural target audience.  But I am very glad I gave it that second read, and this is in fact the female Neapolitan Knausgaard, in four volumes by the way.

5. Red Army, a film documentary about the hockey team of the Soviet Red Army, its rise and fall.  Chock full of social science, I loved this movie, philosophical too, even though I am not especially interested in hockey.  One of my favorite documentaries.

Skywatchers hoping to see a shooting star may soon be able to order them on demand.

A group of Japanese scientists say they have a shooting-star secret formula — an undisclosed chemical mixture packed into tiny, inch-wide balls that the team hopes to eject from a satellite to create on-demand meteor showers, AFP reports.

A Japanese start-up company called ALE is partnering with researchers at multiple universities to create the artificial meteor showers, which will cost around $8,100 per meteor for buyers. The researchers said the manufactured meteors would be bright enough to be visible even in areas with light pollution, like Tokyo, assuming clear weather.

The story is here, from Sarah Lewin, and for the pointer I thank Michael Komaransky.

From the FT:

He was replaced by Euclid Tsakalotos, an Oxford-educated Marxist who is considered more pragmatic than the hardline Mr Varoufakis.

And this:

Mr Tsipras also persuaded other Greek political leaders, following seven hours of talks, to back a joint statement that Sunday’s rejection of bailout terms was not “a mandate of rupture” with the eurozone.

WWII Panther tank seized from pensioner’s cellar

It was to get the tank out of the cellar, so hard that modern tanks were needed.  Then there is this:

It seems the tank’s presence wasn’t much of a secret locally. Several German media reports mention that residents had seen the man driving it around town about 30 years ago. “He was chugging around in it during the snow catastrophe in 1978,” Mayor Alexander Orth was quoted as saying. But he later added: “I took this to be the eccentricity of an old man, but it looks like there’s more to it than that.”

He had an anti-aircraft gun stored away too.  For the pointer I thank Andrew Farrant.

Monday assorted links

by on July 6, 2015 at 12:12 pm in Uncategorized | Permalink

1. Trolls are no longer welcome in New Zealand.

2. Can a correlation between intelligence and prosociality explain the prevalence of left wing views in academia?  Not my view, but an interesting hypothesis.

3. Feuding ukelele bands battle it out in court.

4. Who owns your face?

5. Big health insurance rate increases are due for 2016.

6. Dune fifty years later.

7. Christopher Balding on Chinese market mania.

From his Facebook page:

So Greece said no to a plan that was no longer on the table. Paul Krugman and Jeffrey Sachs celebrate the decision. They hope to get a debt write-down for Greece. I honestly do not understand their position. To me, the Greek debt is pretty much irrelevant. The country is not paying a single euro in interest on its debt in net terms. It has been running primary deficits ( a shortage of revenues over spending excluding interest payments). Its debt is high but the interest rate is super-low, courtesy of European taxpayers.

If Greece writes down its debts, its banks will be bankrupted. The ECB will not be able to bail them out and the banking freeze will continue, accelerating the economic collapse. I don’t see how the banks can be bailed out in a week and I don’t see how the economy can avoid the catastrophe. Sachs in Project Syndicate says that Greece has the right to remain in the euro. I don’t know what that means in practical terms. The Greeks may be as euphoric with this “victory” as Europeans were in the summer of 1914.

By the way, here is Thomas Piketty on Germany.

One striking feature of the Thursday labor market report was the mix of declining unemployment — now down to 5.3 percent — and continuing sluggish wages, not to mention low rates of price inflation; read Neil Irwin.  Normally we would expect all the demands for those new hires to boost wages more.  What is going on?

I sometimes hear it argued that there is a good news aspect to this development, suggesting that the absence of wage pressures indicates there are many more people to be hired.  I wonder if this argument makes sense.  If we don’t observe a worker willing to take a job for current wages, how is that a cause for optimism about future reservation wages for those same workers?  I would think it implies some slight pessimism about whether those individuals will end up working again.  I’m not sure those workers are going to be worth so much more in the market anytime soon.

Just to jog your memory, the data do not indicate much of a stable Phillips curve.

Alternatively, you might think the employment of those remaining unemployed workers is constrained by demand side forces.  I find that unlikely at this late date in the recovery but even so, this demand side hypothesis also gives no particular reason for optimism, given a very conservative Fed.

Liquidity trap models do not explain why the rate of price inflation continues to be pretty much where the Fed wants it to be, and thus they also do not explain this constellation of market forces.  There is too much labor market recovery going on.

I find the most plausible explanation to be a version of The Great Reset.  A lot of workers have been revalued by the market downwards, but most incumbents are not taking pay cuts in real terms because they have insider power.  New hires, however, are not granted equally favorable terms.  If wages are steady as new hires pick up, this is in fact upward pressure relative to the counterfactual that otherwise those wages would be falling.  Flat wage are indeed what “things heated up” looks like, and it’s a good thing we had that gas price decline to bump real wages up just a bit.

On the whole, that’s not good news either.

And I do mean now.  With the primary surplus gone, this means further cuts in government spending.  Confiscation of bank deposits and banks flat out of cash.  Continuation of capital controls.  Difficulties in consummating international or even domestic transactions.  Problems in paying for fuel, seeds, fertilizer, and medicines.

Austerity now.

Here are some possible Greek plans, but everything remains up in the air.  If nothing else, I give them credit for their stones.  Let’s hope this works out in the longer run, it sure won’t over the course of the next year or two.

Wintergerst says introducing a new currency typically takes at least six months, and sometimes as long as two years. Artists must draw the notes, security experts then add anti-counterfeiting measures such as watermarks and special inks, and bank officials need to plan how much of each denomination is needed and get the money to banks.

“The most challenging thing was to establish efficient distribution and make sure the new currency was available everywhere,” said Boris Raguz, head of the Treasury Directory at Croatia’s central bank, who in 1993 oversaw the introduction of the country’s currency, the kuna, after the breakup of Yugoslavia.

That is from Matthew Campbell and Alex Webb.  Here is a declaration signed by 246 Greek professors — can you guess what it says?

Keep in mind that things can go badly under either a yes or no vote today.  (I am not even sure the referendum result will make such a difference, since it is all in the subsequent deal, or lack thereof, and the terms would be different anyway.)  Yet I do not think a hyperinflation is the likely result.

As things stand, Greece could run out of euros in well under a week.  That is a deflationary pressure.  To be sure, Greek companies are already starting to print up various kinds of scrip.  But those will be media of exchange priced in terms of euros, not new media of account.  The script will to some extent stabilize against deflationary pressures, by preventing a total economic collapse, but they won’t themselves cause hyperinflation.  If one company prints up too much scrip, the value of that brand will fall in terms of euros.  In contrast, a “domestic” medium of account is usually firmly entrenched in a classic hyperinflation.

Greece may eventually move away from the euro as a medium of account, but that likely would happen only once an alternative payment medium — perhaps the new drachma — is relatively stable in value.  Again, there is no expected hyperinflation.  Deposit confiscation will be required long before hyperinflation is an option, do note that is not exactly a reassuring thought.  In fact hyperinflation is too slow and inefficient a way to steal from the citizenry in this setting.

An interesting set of issues revolves around bill prepayment.  If you didn’t know, electronic transfers within the country are still allowed, so everyone is trying to prepay bills rather than receive a haircut on their deposits (see the link above).  Various events could speed up or slow down these pressures, for instance greater stability combined with outside aid could limit deposit confiscation risk and thus lower bank deposit velocity.  Alternatively, greater risk could cut either way.  It could lead to more prepayment and higher velocity, but it also could induce suppliers to take actions to make prepayment harder.  There are some complex options here, though still I don’t see them giving rise to a hyperinflation.  Again, the key point is that even under Grexit scenarios the euro remains a medium of account for a while still, and deflationary deposit confiscation will be needed before hyperinflation could extract enough seigniorage.

As Frances Coppola points out, Grexit is a process not an event and many of the early and indeed intermediate steps already are underway.

One of the most striking aspects of the Greek situation is just how much the Greek government has lost the public relations battle.  They have lost it among the social democracies, and they have lost it most of all with the other small countries in Europe.  They retain some sympathy in the American government, but we are not willing to put any money on the table and basically we want the European Union to clean up the problems for us.

If you look at the progressive economists, Stiglitz, Krugman, Piketty and Sachs all recommend a “no” vote on the referendum.  Though they would not frame it this way, they are advocating a kind of extra austerity for the purposes of a greater long-run good; Greece’s primary surplus vanished some time ago, so signaling a break with Europe will only make matters tougher.  You could call this “properly mood affiliated austerity,” cloaked by strange presumptions about bargaining, namely the view that a “no” vote will induce a more favorable offer.  It seems, with their on the ground understanding, most Greek economists are strongly in the “yes” camp.

The progressives do have some good points and I absolutely favor significant debt relief for Greece.  That said, the Greek government has handled the last few months so badly it really is incumbent on them to show they will do better.  I don’t see many signs in that direction, quite the contrary, and any reasonable democratic government will ask for Greek institutional progress before putting up much more in the way of money.  The entire handling of Greferendum should alert the progressives that they have been egging on the wrong horse; the heroic Hugo Dixon nails it.

I take the progressive “clustering out on a limb” here as a sign that, for better or worse, progressivism as an ideology has reached and indeed gone beyond its high water mark.  The progressives are siding with a corrupt, clientist state, which won’t cut its defense spending down to Nato norms, against some admittedly imperfect social democracies, thereby sustaining the meme of powerful aggressor vs. victim, Arnold Kling telephone.

Interfluidity has an interesting but quite wrong post on how to think about Greece.  International relations simply could not be run on the principles he advocates, most of all in conjunction with democratic nation states.  His weakest point becomes evident when he writes:

Among creditors, a big catchphrase now is “moral hazard”. We cannot be too kind to Greece, we cannot forgive their debt with few string attached, because what kind of precedent would that set? If bad borrowers, other sovereigns, got the idea that they can overborrow without consequence, if Spanish and Portuguese populists perceive perhaps a better deal is on offer, they might demand that. They might continue to borrow and expect forgiveness, and where would it end except for the bankruptcy of the good Europeans who actually produce and save?

The nerve. The fucking nerve. Lenders, having been made nearly whole on their ill-conceived, profit-motivated punts, now fear that if anybody is nice to somebody who doesn’t deserve it, where will it end? I’d resort to that cliché about chutspa, the kid who murders his parents then seeks leniency ‘cuz he’s an orphan. But it’s really too cute for the occasion.

That’s a non-answer, with anger filling in for the required substance as to why Germany and others should allow this.  “Your government is making things much worse.  If you want to borrow so much more from us, you have to play by the rules and also stop spitting in our face and calling us Nazis and terrorists while negotiating” is more relevant — and yes relevant is the right word here — than any point he makes.

A political program has to be something that voters could at least potentially believe, and international negotiations therefore cannot stray too far from common-sense morality, including when it comes to creditor-debtor relations.  That is the point which today’s progressive economists are running away from as fast as is humanly possible.  And for all the Buchanan-esque and public choice points about “rules of the game” this one about common sense morality unfortunately has ended up as the most important.

Look at this way: if you lost a public relations battle to Germany, you are probably doing something very badly wrong.

Saturday assorted links

by on July 4, 2015 at 12:29 pm in Uncategorized | Permalink

1. “Kids are too rebellious, he says. “A disciple is what you want.””  Is La Monte Young the greatest living composer?

2. Pete Sampras writes a letter to his 15-year-old self.

2. How companies really get valued.

4. Does Germany care about Greece more than America cares about Puerto Rico?

5. What would it cost to produce and order all of Wikipedia?

6. How do outsiders evaluate getting an economics PhD?

An Abandoned Space Ship

by on July 4, 2015 at 7:32 am in History, Science | Permalink

Russian urban explorer and photographer Ralph Mirebs discovered an enormous, abandoned hangar in Kazakhstan.

Hangar1

Inside were the remains of the Soviet space shuttle program.

Hangar2

More amazing photos from the source here or from a secondary news piece here.

China facts of the day

by on July 4, 2015 at 4:58 am in Current Affairs, Economics | Permalink

Greece is small, China is large:

The Shanghai Composite has now fallen 12.1 per cent since Monday, its third consecutive week of double-digit losses since hitting a seven-year high on June 12.

The Shanghai index is firmly in bear market territory, down 28.6 per cent since the June peak, while the tech-heavy Shenzhen Composite has fallen 33.2 per cent.

There were also signs on Friday that the stock market turmoil is beginning to reverberate beyond China. The Australian dollar, often traded as a proxy for China growth, is down 1.2 per cent to a six-year low of US$0.7539.

The 21st Century Business Herald, a Chinese daily newspaper, on Friday quoted multiple futures traders as saying they had received phone calls from the China Financial Futures Exchange instructing them not to short the market.

That is from Gabriel Wildau at the FT.  China’s brokerages have pledged over $19 billion to help “stabilize” the market, not usually a good sign.

That said, flights into Greece for July-September seem to be down by up to fifty percent.

Fewer than 4,000 tigers roam across the Asian continent today, compared to about 100,000 a century ago. But researchers are proposing a new way to protect the big cats: redefine them.

The proposal, published this week in Science Advances, argues current taxonomy of the species is flawed, making global conservation efforts unnecessarily difficult.

There are up to nine commonly accepted subspecies of tigers in the world, three of which are extinct. But the scientists’ analysis, conducted over a course of several years, claims there are really only two tiger subspecies: one found on continental Asia and another from the Indonesian islands of Sumatra, Java and Bali.

If the tiger is redefined more broadly, the emphasis can be on saving tigers as a whole, rather than having to treat subpopulations in very particular and sometimes inefficient ways.  Monetary theory enters into this problem as well:

At the heart of the debate is a concept called “taxonomic inflation,” or the massive influx of newly recognized species and subspecies. Some critics blame the trend in part on emerging methods of identifying species through ancestry and not physical traits. Others point to technology that has allowed scientists to distinguish between organisms at the molecular level.

[Nearly 200,000 ‘new’ marine species turn out to be duplicates]

“There are so many species concepts that you could distinguish each population separately,” Wilting said. “Not everything you can distinguish should be its own species.”

That is all from Robert Gebelhoff.