Wednesday assorted links


5. I invoke Betteridge's Law of headlines here.

Agreed, but at some point Betteridge won't apply anymore.

Headline: Is Betteridge's Law Obsolete?

Or is it not?

LOL, no I meant that at some point Betteridge won't apply to the specific headline "Is another Great Recession just around the corner?" anymore because the answer will eventually be 'yes'.

But will it?

In the long run there is always a corner.

The stock market isn't the economy, of course, but the technican in me says we're near the top, soon to be followed by a contraction. We've had a long run of progressively higher prices, but a technician would see the recent violent swings as indication of an impending reversal. I've been anticipating a contraction for quite some time as the market kept setting new highs. It's starting. Slow at first, then very very fast. Of course, it will be a buying opportunity, but calling a bottom is really tough compared to calling a top. My mistake has always been calling it too early, even when I was trying to be careful to avoid that mistake.

Is Betteridge's Law of Headlines Ever Valid?

Who first discovered Betteridge’s Law of Headlines?

Who's buried in Grant's Tomb?

What makes you think I haven't, big boy?

Nobody; you bury people graves, not tombs.

Does this sentence refer to itself?

5. Sumner's contribution to economics is that the economy needs (monetary) stimulus the most just when it appears (to "experts"" not named Sumner) the economy needs it the least. At least that's my interpretation. Of course, my hobby horse is that stability and growth can't be built on an edifice of rising asset prices. That economists actually believe they can is a something Hanson should study.

^^^ Lawyer doing monetary economics.

Nope, just giving credit to Sumner for being the contrarian. I appreciate that most investors resent anything that (or anyone who) might moderate rising asset prices. Of course, the consensus among economists is that you don't use contractionary monetary policy to prevent (or burst) bubbles, so I'd say investors are safe from lawyers like me.

He is a blackguard. It is a shame he was never hanged.

Death didn't stop Oliver Cromwell from being hung

*hanged, dammit

Good times.

I am not an economist or a lawyer. I'm retired.

That being said form my armchair readings, I learned that since the Grant administration (1873 panic) at least, it was observed that asset prices are symptoms not causes. We've enjoyed (well not savers) near-zero interest rates for nearly a decade and during that time, to keep low long-term rates, The Fed pumped into the system (what?) $3 trillion in reserves. The causes are extensive periods of low interest rates/easy money and concomitant over-supplies of money fueling speculative, get-rich-quick schemes causing booms and busts. The lessons are there and history is consistently repeated. In 1873 it was railroads. In 1929 it was stocks. In 2008 it was . . . all the same.

MR hasn't proscribed me, yet.

"MR hasn’t proscribed me, yet."

And yet, I have been banned for opposing communism. It seems unfair.

No, seriously. I'm happily amazed I'm permitted to comment.

And I am sadly unsurprised that I am not. As an old song goes, "it is not the way life is, it is the way things are".

"The Fed pumped into the system (what?) $3 trillion in reserves."

I think this is wrong. The first thing that happened in late 2008 was that regular human beings slammed trillions of dollars into cash, which is what human beings do when it looks like the walls are crumbling.

Basically, the Fed tapped into this risk-averse pool, crediting banks with 0.25% interest on excess reserves (which has continued as 0.25% above the FFR as the Fed has raised rates) to raise the money to implement QE. The money was all in the system all along, which is why we didn't get inflation.

The Panic of 1873 was preceded and at least partially caused by the Great Epizootic of 1872 when virtually every horse in the US and Canada came down with equine influenza. US business virtually came to a halt.

6. I spend considerable time driving on I-75 and I-95. It's brutal, mostly because of all the trucks. Some states require trucks to stay in the right lane (or right lanes if there are more than two lanes), but not Florida, where truckers seem to intentionally line up side by side in every lane, blocking traffic. Several years ago a trucker's re-tread tire broke loose and smashed into the front of my car and the front window, causing thousands in damages (and scaring the daylights out of me). Of course, the trucker kept on trucking. What I don't understand is that if driving a truck is so terrible, why are there so damn many trucks (and truckers driving them) on the highway, far more today than just ten years ago. Truckers remind me of driving seniors who leave chaos in their wake and are either oblivious of it all or overjoyed for the revenge.

For those who don't know, President Carter deregulated trucking (in the sense of having to prove need in order to get a license). The linked article credits Carter, but complains about the safety regulations that remain. Could all those truck on the highway mean there are too many trucks, so that many of them are now empty on return trips when previously they were full of cargo on both legs? Just asking. Of course, if regulation were up to me, I'd prohibit re-tread tires. And I'd definitely prohibit the piggy-back trucks that have become a common sight (one cab pulling two trailers). I have nothing against truckers, but it's dangerous out there.

I think the mere fact that someone is trying to obtain the license would prove that there's a need, no? We all think there's too many trucks on the road when we are driving, but we all want our goods to come in two days as well. Inland river and railroad transportation are good for transporting commodities in bulk, but they obviously don't have the flexibility that a truck does. That is why some 90% of all goods transported end up in a truck at some point. The linked article provides another reason why you might see more trucks on the road, that the hours of service rules lead to truckers driving when everyone else is.

Trucking utilization is as high as its ever been now, not sure where the evidence is that so many of them are empty. Also, wouldn't limiting trucks to one trailer work against your goal of having fewer trucks?

Two or three times a year, we drive from NY to Indiana and Louisiana and return. Trucks in middle and left lanes are dangerous, annoying and stressful to us older drivers.

In July 2017, my day was brightened when grandma was pulled over for doing 85 mph in a 70 mph zone. The poor PO was at a loss. He could have locked her up. Sounded good to me.

No, the complained about regulations are the new ones associated with micromanaging hours of service, not what prevailed most of the time since deregulation.

The trucker losing tread may have simply not noticed rather than being a jerk. Hard to tell one tire out of 18 is bad.

The evidence truck driving is a nasty job is it has very high turnover. Working at an Amazon DC also apparently sucks but there are always new suckers out there to give it a go.

There were actually a lot more trucks that returned empty ("deadheading") in the old days, because you or your company didn't have the requisite approval from the ICC. Getting rid of that, allowing flexibility to take pretty much anything anywhere, was a major justification for deregulation.

6. Unfortunately, the trucking hours of service rules are here to stay. The rules are bad for all of the reasons stated in the article. HOS rules also result in drivers hurrying more to meet their deadlines, which is obviously not desirable from a safety standpoint. The truckers know how best to set their own schedules, and both the individual truckers and their employers have every incentive to drive safely.

However, getting rid of them is too scary of an idea that the trucking companies don't seem to have the political will to push, due to perceptions about putting $ over lives, etc. And as the article stated, the big players in the industry might actually benefit from them. Instead, trucking companies are up in arms against the ELD rules. (This strategy might be working in some states, as SD, MO, TN, and ID have moved to halt ELD enforcement.) Of course, complaints about the ELDs themselves are just an admission that the truckers are fudging their hours - ELDs are mostly trivial to implement .The devices cost a couple hundred bucks on a truck worth ~$140,000 (new) or ~$40,000 (used).

In the long run, this will likely lead to a lot of consolidation in the industry, which is currently very fragmented. Mom and pop operators are able to compete by driving when they want and fudging their hours, which the ELD mandate is looking to prevent. All truckers will eventually comply with the rules, as the major carriers are already familiar with and have adjusted to the ELD climate.

In the interim, however, ELD enforcement will take less of a toll. Smaller operators will just ignore the rules, rather than go out of business. There will be a ton of data coming into the FMCSA, which they likely won't have the ability to sort through. So hopefully, ELDs won't have too big of an impact on an already tight freight market in the midst of a driver shortage. It is also interesting to think about how much expected automation of truck driving is contributing to the shortage now - there is plenty of buzz in the industry about their inevitable disruption.

in 2020, the fashion in rap will be Victorian sailor outfits and licking huge lollipops with fent in them. artists will be named like AVGVSTVSGL00P. people will still think pants sagging is a thing

"COWEN: The Minneapolis Institute of Art will be spending $750,000 to measure whether looking at art boosts empathy. What’s your prediction?

HANSON: [laughs] They probably found the right people to give them the answer they wanted, which is yes."

It must be sad being so cynical. And looking like the elephant man.

I'm very cynical of people who think more about whether a prediction is cynical or not instead of whether it is correct or not.

Evidently is right. It is badmouthing people... What does it signal?

Seems reasonable to spend $750,000 on a study when you're contemplating spending $1 billion on a single painting.

I thought we all agreed here da Vinci was overrated as a painter. I see Basquiat is also mentioned but I guess some of his early stuff isn't completely dreadful. I'm going to get my "Art $1,000,000,000" hat off of the shelf (stored right next to my Dow 36,000" cap) in preparation.

But he’s obviously correct, isn’t he?

5. I helped someone study for a real estate exam recently, and maybe that data was a little bit old, but what it said was: prices were back in urban areas, but not out in the boonies. If that is true, it seems less of a signal of irrational exuberance. The economy is good and people with good jobs are possibly over paying for homes, but that wasn't the 2005 craziness. What we had before the Great Recession was great development at far distance, where there were fewer jobs, or were 50 mile commutes. Is that happening today?

To my eye, a bit less so than the national numbers might indicate.

The current price looks a bit like an extrapolation of the 1980-1990 data.

Fine. But the question is why that sort of consideration was not included in the analyses of the previous recession.

There's also a significant increase in number of Americans since 2005, and especially those of homebuying age (millenials).

A 10% increase over 10 years, fwiw. This came up in the other thread, and I was surprised that people thought the population had grown suddenly. Pretty slow and steady, again by my eye.

I see the economic cycle as far more important.

Rural home prices were inflated in part due to a surge of buyouts in the '90s. That's one of the biggest differences.

My sense is that the 2005 boom was built on the tail end of baby boomers wanting big houses in exurban places. That purchasing demographic ended and we have a new one. Younger people seeking a house near or in a city. Not every city of course.

I also think the rising rental market is a part of this. So do you say that it makes the market look more or less rational? More or less frothy?

I don't think "worst places" fit the rational growth or second home pattern.

But anyway, my argument is that until they do "come back" it probably isn't a national real estate bubble, again.

I don't understand what you mean by "worst places."

Wow, Volokh is either a profound dope, or he thinks everyone on SCOTUS is.

His argument: Because the government can tax you and spend it in ways you don't approve of, unions are free to take money from anyone they claim to be helping! Nice.

The examples cited seem pretty thin, at least in the short section I read. Compulsory auto insurance: Yes, but you get to choose your insurer, who is probably not dedicated to electing Democrats, and you can choose how much insurance you want and how much to pay for it. Mandatory continuing education for medical workers: Again, you get to choose your school or clinician, the purpose of which is principally to educate medical workers. Taxpayer funded speech: Well, the government spends trillions of dollars on people and organizations who say a lot of things. But in the case of government employee workers, this is in addition to their funding of such speech as taxpayers, and again it is to an organization specifically dedicated in its political operation to the election of Democrats. Wherever you are in government, you have no choice but to pay dues to a specific organization. These differences are ignored by the brief.

3. The world really needs writers trained by Malcolm Gladwell to write more Malcolm Gladwell books. On second thought, maybe not.

one of the big jobs for people used to be sailing around the world and beating the shit out of rare birds until they went extinct as your hobby

Who else know igon values?

Who else knows igon values?

3. Is Gladwell so different from Brian Wansink? The two should teach the course jointly.

Data mining is really not the same thing as writing pop-science.

Is "ten thousand hours" better than the pizza studies?


By all accounts, Gladwell thinks it is true. At worst, he's wrong. Wansink was knowingly claiming statistical noise as truth.

I think you make a good point here. The problem isn't Wansink, it is the academic and research institutions that elevate his research.

There would be a violation of free speech (and association) if the government conditioned employment on donations to political parties (or particular candidates). Making it a pass through by sending the money through a predictable third party organization shouldn't immunize the scheme.

Re the reading list:
What kind of economist would invite John Maynard Keynes to a dinner party but not Milton Friedman?

2,6: Has regulation destroyed the life of Edmonton's previous goat manager?

Goat Boss, dangit.

Surprised there's no link about the South African land confiscations. The markets don't seem to be reacting much, so if you accept the EMH, should you think the land confiscations will be economically successful? For those that have not died of laughter, the other possibility is that they won't be carried out and that the market figured this out. These discussions usually occur after the fact, when hindsight is 20/20, so I'll ask now, what factors would make you assume in advance that the land confiscations will not be carried out?

"The markets don’t seem to be reacting much, so if you accept the EMH, should you think the land confiscations will be economically successful?"
I doubt it will impact anyone who matters.


Response to #5?

5. Is another Great Recession just around the corner? Well, is it?,

That chart says we bounce around low growth for sometime. Then maybe we do the 1980 version, have a small whopper.

But we are all watching pot, so it is not determined. If observers know how to wobble than we can navigate, it depends on who is looking.

Is another Great Recession just around the corner? Well, is it?

I betting the next Recession is going to be the return of a Fed induced recessions as opposed to an asset financial type crash.

1) Job markets are tight and labor supply is not increasing enough. We are returning to the 1950s economy with labor supply being the main constraint.
2) With the Trump tax cut, we are on the road to returning to government debt crowding out private investment. (In the post Obama years the government debt dropped enough before could happen.)
3) Short rates are increasing a lot the last 12 months and the drop of 2012 - 2015 commodity prices is reversing.
4) Mortgage debt on single family homes is not exponentially growing like 2004 - 2007. I would watch the Q4 2017 & Q1 2018 Mortgage debt amounts if grows . (January 2018 housing sales are down.)

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