Saturday assorted links


Crypto fan boys (and girls) get confused when you suggest a parallel to FDIC insurance to cover events like Mt Gox.

"Although how would that work with crypto? What would the guarantee be denominated in? Dollars? Bitcoins? In case it would happen, I guess your initial deposit (in dollars) would be insured, not any capital gain made on crypto."

Crypto isn't a currency to these fools, it is a casino for gambling.

4. Implementing Barry Posen's Grand Strategy of Restraint

#5 Yet, Red China and Japan are good and we should do everything they want.

Yes, that is Brazil's motto: Walk on us like a doormat!

No, it is not. Brazil's motto is "Order and Progress". I was being sarcastic because Americans criticize Red China, but support its totalitarian regime and favor it over Brazil, which is a civilized country.

The Straussian interpretation is that your ostensible sarcasm hid your true belief that Brazil is the world's doormat.

No, it is not! It is not what Straussian means.

China has plans for Australia and New Zealand. Within 20 years they will "take" those countries and move half a billion Chinese to them. They will kill or enslave the citizens of those two countries.

And yet America supports Red China. It is Munich all again!

The Council on Foreign Relations prepared a video on Munich:

3. Housing supply is an extremely important issue but it is not turn housing prices and rents decreasing by over 10%. I assume less housing investors would not build if assets fall by greater 10%.

4. Of course, I tend to agree that Europe to spend more but the US wasting tons of money on the military and war that is really not defending our nation.

Also, Luckily none of the other nations are pulling out of the Iran deal which means Trump and neocon tantrums will have no effect.

The thing is, housing prices in these areas have been increasing faster than inflation for decades. What is the ratcheting effect that makes this iron law that housing can never decline in price? I disagree that builders won't build if prices fall 10%, if more density is also permitted.

Name one person who wants his suburban single family neighborhood turned into apartment housing, even if it meant he got a great public park within an easy walk, as well as places to eat and shop and socialize an easy walk away?

I live in suburban live free or die, Free State NH, on two acre minimum per housing unit part of town, watching conservatives fight a neighbot with five acres, mostly wetland, try to build a free standing inlaw housing unit. I've never seen anti government conservatives use government as a weapons so effectively until the conservatives turned against a powerline called Northern Pass. Note, leftist socialist Vermont has not only approved and built an equivalent powerline in the time anti government conservatives have been fighting North Pass by big government action after another.

The justification for this: housing prices will go down.

Conservatives are string believers in the free lunch economics principle of capital gains entitlement.

The only way capital gains can occur is if government promotes restricted supply of capital, capital being assets, not money. Money was never capital when I grew up - I'm a boomer.

OK, but all of that can be true and my point would still hold.


Do you keep canned comments and copy and paste? Or, each time, do you dream up this nonsense afresh?

"US wasting tons of money on the military and war that is really not defending our nation"

But things have gotten worse as "defense" spending has been cut as share of US GDP.

Oddly, productivity by every measure in "defense" spending has gone down significantly. Not only has product development increasingly failed to develop products as more "free market" buying has been pursued, but the costs of supporting a combat soldier in combat has soared as the "free market private sector" has replaced "bloated inefficient government jobs".

The bargain made between "conservatives" and "progressives" is in exchange for helping working poor people, progressives slashed "defense" spending in the North and West and let conservatives boost spending in the South by mostly crony capitalism, not increasing jobs and labor costs. While the pay to the standing army increased per soldier, the number of soldiers was cut even in the South and almost eliminated in the North, with war supported by long term use of part-time army supported by their private sector work, many in the North.

FDR was absolutely clear that he intended to use government to create jobs in poor areas in 1935, and he set in motion the policy of how "defense" spending would be done through the 60s: to create jobs.

Texas has a tech economy by design of Congress spending on "defense" - its the Johnson Space center in recognition of LBJ's ability to direct "defense" spending to Texas. NASA was "defense" to conservatives, "science, peaceful expansionism" to progressives. Putting NASA control in Texas but not rocket launch was simply creating "defense" jobs in Texas, by moving people from the East and West and forcing housing, schools, etc, be built in Texas for them by paying Texas workers. (West coast private companies are only now building rocket launch sites in Texas.)

Highways were defense spending until the late 60s. Before the 20s, railroads were for defense. Government oversaw both to create jobs where jobs were needed.

It was progressives selling the idea you bought: "US wasting tons of money on the military and war that is really not defending our nation" that has led to the demise of the American Dream, and the election of Trump.

2. There's just so much oxygen in the air, especially at the altitude of today's asset prices.


Next, I expect an economics paper elucidating the correlation between the sunrise and a rooster crowing.

On the Street, gold prices are seen as negatively correlated with stock prices. Last go-around the Dow dropped to (what?) 8,000 in March 2009; while gold ran up to $1,800.

I only know what I read and see on TV. Apparently, most of the stock indices' exaggerated rise is concentrated in six or eight high-fliers. And, among IPO's, 80% were not profitable corporations, largest such concentration since the boom.

3. Unfortunately, a policy of rising asset prices collides with a policy of ample housing supply. What? Shouldn't rising asset prices produce a greater supply of housing? Well, yes, but the greater supply of housing depresses housing prices. There's the dilemma. Housing is the single largest asset for most Americans, and when housing prices rise, Americans feel wealthy and spend; but when housing prices a flat or falling, Americans feel poor and don't spend. If we choose to rely on rising asset prices for economic growth, we can't also have a policy of increasing supply of housing and flat or falling housing prices. Sure, owners of stocks whose prices are rising feel wealthy and spend, but there aren't enough of them. And to be clear, conducting housing policy as if the entire country is Silicon Valley is beyond idiocy.

People in Tokyo Japan seem to have done it, that is allowed sufficient supply growth to push housing prices down.

#4 Its truly remarkable that Merkel would publicly state - in effect complain - that Europe could no longer rely on the US to protect it. Germany further complain about the impossibility of meeting the long agreed NATO 2% defense commitment, accompanied by simultaneous press reports that that only a few of their modest number of planes, ships, and tanks are even operational.

This is not a serious position. They should not be surprised that their input is not weighed very heavily in setting policy in Washington. Or anywhere else for that matter.

It is the Old Europe. Isn't it what the countries that not invaded Iraq were called? By the way, how is Iraq going?

I think the high prices are justified. (1) I don't think constraints on housing supply will be solved. I think owning a house in a closed-access coastal city, guaranteeing access to good employment opportunities and limiting exposure to rising rents is wise, even at the cost of a large mortgage. (2) Technological progress is getting more difficult and should be expected to get more difficult in the future. Growth and hence returns of investment should be expected to decrease (the corollary of high asset prices).

5. Some Five Eye members have been having problems since well before the recent NZ election occurred (no nukes NZ is what, a three and a half decade old event? - though I seem to recall it was the Soviets that were to blame back then), and they are still wondering why such clear evidence is apparently unimportant to the current American administration - 'The FBI reportedly decided to open its investigation into the Trump campaign after George Papadopoulos, a foreign policy adviser for the Trump team, drunkenly admitted to an Australian diplomat the Russians had damaging information on Hillary Clinton, an admission that came weeks before WikiLeaks began publishing its tranche of hacked emails.

Papadopoulos made the revelation in May 2016 to Alexander Downer, the top Australian diplomat in Britain, while he was drinking at the Kensington Wine Rooms in London. Three weeks earlier, a professor with ties to the Russian government told Papadopoulos the Russians had emails that would be damaging to Clinton, according to the New York Times.'

And the fact that Halper just happened to be based in the UK is pure coincidence, of course. 'A British-based US academic approached Donald Trump campaign figures before the 2016 election to investigate suspected Russia links for the FBI, according to American newspapers. '

Some second tier cryptocurrencies have been hacked using the so-called "51% attack". The equivalent of millions of USD were stolen.

2. There probably is a relationship between optimism, where you are in the business cycle, investment in general. It might help create correlation between investment vehicles.

But if we're looking at the history of crypto assets, are we just looking across a fraction of one business cycle?

That is not a very robust dataset in my opinion.

2. "@xeokeri
Replying to @DavidL206
This is the root cause of why I felt I couldn’t afford to live in California anymore, near San Francisco. 90 minute commutes, in each direction. Plus they wanted to increase the monthly rent by $200 to $1000 year over year. No one I know in SF can afford to buy a home there.
12:02 PM · May 25, 2018"

The problem is not supply of housing, but too slow transport.

90% of California has average or cheap housing. However, 90% of California has poor and limited transportation infrastructure. Given transportation infrastructure will be built if taxpayers demand it, housing can be built in rural areas if other infrastructure is presently cheap, like schools, water, sewer, rural roads, markets.

California has the affordable housing available. You just can't get there from work. In a reasonable time.

A century ago, land developers built trolley lines as loss leaders was of LA, so housing and businesses extend well away from the coast, similar to the pattern on the east coast. Once the land was sold, the developers stopped subsidizing the trolley lines so in the 50s and 60s, government replaced them with higher taxes building ever more roads. Then the GOP largely ran California. Then the GOP turned against taxes, so it's been impossible to build any new transportation.

The California high speed rail line was routed inland through low density areas with stations in low population counties. Conservatives argue it should be routed along the current high density I-5 corridor, which will only increase demand for real estate in current high density areas, which will only inflate real estate prices, but not increase the quantity of housing people want: single family houses with yards and easy access to existing jobs.

I have never seen an economist complaining about zoning, etc who starts off with:

"I have been forced by the lack of high density housing in congested areas and crowded high schools to buy the single family house with great suburban school district funded by the high taxes on the high income families in the community. I hate the good services. I hate the good schools. I hate living in a single family home without the disturbances from neighbors having parties, or arguments. I hate working on my yard, or paying my kid or a neighbor kid to teach them about the value of work to work on my yard."

It's always other people economists think need to be forced to live in apartments and condos.

And when it comes to opening up rural land for development, it's always someone else's community that should bear the cost of development, not the economist calling for zoning changes and spending to build lots of new housing and other supporting infrastructure.

Building high speed rail in the inland low population area of California only makes sense if the inland area becomes high density, but high density mostly single family housing with yards to maintain in low water use landscaping.

1. Eastern Germans still worse than their brothers in the West on pretty every metric.

I’m surprised to see MR linking to this remarkably fact-free beat-up on NZ. It looks like bollocks to me.

If there are any facts behind these insinuations it’s not clear whether they matter. Policital parties in any democracy have a variety of ‘influencers’ and funders that have no capacity to dictate sensitive policy decisions.

The absence of a public ‘inquiry’ is not evidence of a lack of interest/concern/vigilance. I’m not a fan of Adern’s economic policies but there is good reason to be confident in the quality of NZ institutions and governance.

2. New results about crypto and the stock market that neither Samir Varma nor I can quite bring ourselves to believe.

Insiders use bitcoin for a quick FX transfers, takes ten minutes vs overnight fro SWIFT. There are no effective regulation against the practice. The stock market, since the crash, has been correlated with the FED and th QE, both arbitrage opportunities for insiders. So Bitcoin is the favorite tool to capture a gain from sone central bank arbitrage moment. If is free money in that the bitcoiner beats the SWIFTer to market every time.

Rumors are circulating in the crypto community that "The Rothschilds" are launching a nefarious cryptocurrency called IMMO. Ethereum founder Vitalik Buterin is not sure though:

I am out of town visiting family, and my copy Jonathan Rauch's book is at home, so I am unable to write a proper reply to his comments. I intend to write a fairly long one, granting some points and maintaining others, but it will have to wait until either late Tuesday or early Wednesday.

If this thread has scrolled off by then, I would hope, please, that Tyler will put my reply up properly.

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