Thursday assorted links


#5 Now one seees the far-seeing wisdom of President Captain Bolsonaro. He has vouched to block key Chineses investimentos. He sair China can buy from Brazil, not buy Brazil.

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1. Thank you. When I commented recently on Sumner's blog the potential adverse consequences to the overall economy resulting from the falling housing prices, his response was: "Housing prices only matter to the extent they link up with NGDP expectations. And we do not depend on housing. The housing market was strong in 2003 while the economy was weak, and the housing market was weak in 2007 when the economy was strong." Here's what Dean Baker had to say in 2006: "The recovery that began in November of 2001 is likely to come to an end in 2007. The main factor pushing the economy into recession will be weakness in the housing market. ... The result will be a downturn in consumption spending, which together with plunging housing investment, will likely push the economy into recession."

My comment on Sumner's blog and Sumner's response were on November 27. The following day, Powell blinked. [No, not because he reads my comments on blogs, but because he sees the danger to the economy from falling asset prices, especially housing prices.]

Baker's 2006 forecast:

Why do you think house prices are falling?

Fake news being reported in every major newspaper. Apparently Powell reads fake news too.

A general cooling of the housing market should be expected given that home inventories are scarce and construction costs are higher then they used to be; home prices can't continue to rise faster than nominal incomes indefinitely.

For those who don't pay much attention to the housing market, not only have sales plummeted, and prices with them, but loan applications have plummeted too. I have chided Cowen for not posting any blogs on this development, but apparently his readers aren't that interested. Neither were they in 2006 when Baker issued his prescient forecast. As goes the housing market, so goes the economy.

Some day rayward will say something close to correct.

But it is not this day.

1. Does this imply that the housing recovery was also credit-driven?

Of course it was.

I was trying to imply a couple more questions than that, for instance whether current prices should therefore be considered fair market value, or whether an adjustment is implied.

3. Baumol and Kirzner should have gotten the prize. Baumol is now dead and Kirzner is too heterodox so I guess that is not going to happen.

Besides those I guess Neil Wallace should win the prize given his monumental research career.

6. Cool. The important thing is that people keep iterating. Despite deep roots (Dynabook, 1972) computer-mediated education is far from fully understood or formed.

5, Taiwanese concern about Chinese investment is quite hypocritical when you consider that the biggest private employer in China (Foxconn) is owned by Taiwanese. Of course Foxconn benefits China too by bringing jobs and innovation, but the same is true of Chinese outbound investment. Foreign investment should be treated as a sign of confidence in your country, not foreigners buying your country.

No exception clause for an authoritarian communist country which sees the recipient country as its sovereign territory?

Alright chicom.

2. So now (assuming the entity is still extant), the Tinder-for-drugs is sitting on huge volumes of data about drug transactions, prices, drop locations, buying and selling habits, preferences, transaction flow volumes, failure rates, etc.

WWZD? (What would Zuck do?)

Typically dark net market transaction details are worked out over public/private key encryption. I.e. Alice would send the details about the delivery through the platform, but use Bob's publicly posted PGP key.

That way even if the platform is compromised no personal details are leaked.

I wondered about the protection of identities (assuming that isn't compromised), but beyond identities, are the servers capturing any information about the transactions? Even without identities, the type and frequency and location of drug deals must be valuable to someone.

And the authorities, meanwhile, could always of course cross reference the locations to cctv face recognition.

In theory. Unfortunately, in practice, buyers/sellers are remarkably lax about PGP and only a minority of messages will actually be encrypted. This is responsible for the long tail of Silk Road 1 arrests (very gradually tracing people through PMs) and most DNMs do not enforce PGP use and so they too have high percentages of plaintext. RAMP, being so long-lived and trusted and in a jurisdiction where drug users feel especially invulnerable and assumed RAMP had 'roof', probably had users with even more lax OPSEC than usual. (This is more or less how Brian Krebs keeps IDing spammers/hackers: they feel invincible in the former Warsaw Pact, so they are careless.)

They do have access to the other metadata, of course - transactions/prices/buying-selling habits/flow volume/review-feedback. They don't do much with it because it's hard to run a DNM and do anything more complicated. The most sophisticated they get is, for example, buying up Monero before announcing they will start taking Monero.

#1 This is my shocked face.

#2 US drug dealers have done this for a long time using a variation of the "dead drop" method, which is what this is. However, the US version involves several low-paid underlings to retrieve the drugs for the buyer, their awareness of the location made known by the OG only immediately once a sale is affirmed. Can't have them stealing the stash.

#5 I wonder if there is any historical antecedent of an enemy simply buying - in the sense of property rights - the enemy's territory? I don't think situations with Native Americans would count, but the idea of two antagonistic countries with similar ideas of property rights and jurisprudence actually being engaged in such a way that eventually victory was achieved by one simply buying the other, possibly even with their acquiesce. Wikipedia here I come...

1. +1

2. Well, yes. The novel part here is the use of tech to put blue collar people out of work in an industry not generally associated with tech on the fulfillment side.

#5: The immediate example that springs to mind is the Praetorian Guard selling off the Roman Empire. I mean, they weren't technically at war before bidding started, but the noble houses were as close to it as you could get without declaring war throughout most of Rome's history.

I think the issue, though, is the population. If we tried to buy, say, North Korea (assuming they'd sell to us), the government may sell it to us but the people wouldn't accept our rule. Similarly, Russia could try to buy us, but do you think folks would simply say "Ah, guess we're under new management"? You could get away with it in the Middle Ages or before, when the population was mostly slaves (or the equivalent) anyway, but once you have a reasonably free population or one with a sense of national identity simply buying the enemy isn't going to work.

Ah yes. Good one. In the same vein another would be Chinese border lords and governors selling out various Chinese dynasties to barbarians of all sorts. One of these incidents - the most egregious - being the one that effectively created the Qing dynasty. The ancient Tangut kingdom was also being effectively being purchased (military indenture) out of existence by China when it was swiftly destroyed by Genghis Khan.

I'd agree nationality plays a part, but I'm also inclined to believe so does/would time. The frog boiling principle. A strategic plan to weaken and eliminate your enemy with well-thought out land deals over the course of 1 or 2 them real estate "sleeper cells" if you will. Interestingly, English colonists and miners kind of used this against Johannes Kruger in Natal and Orange Free State when they used their property rights, business and mining concessions to press for voting rights, the denial of which provided the English with the justification for the Boer War.

"I'd agree nationality plays a part, but I'm also inclined to believe so does/would time. The frog boiling principle."

I'm not entirely certain about nationality....The issue is, if you try to disrupt the society you're going to have to occupy the territory via military might. If you don't, the culture may not care what the name of the government is. Peasant revolts weren't common in the late Roman Empire, despite the fact that peasants changed hands constantly; a main reason was that their lives were identical regardless of who they paid their taxes to. In contrast, they were quite put out when they were invaded from Asia--their lives WEREN'T the same, and they weren't happy about it.

I don't think that has to do with nationality as much as culture, though....For one thing, what we think of as "nationality" is a modern invention, certainly not a necessary component of politics. In the Middle Ages territories in Europe were bought, sold, and traded constantly, and no one cared, because they were all the same culture.

If it were me, and I were trying to buy out my enemies, I'd do what you're saying: I'd boil the frog. Buy the territory, but introduce changes very, very slowly--slowly enough that while people would say "Back in my day we did X", they could still understand what was going on and feel comfortable with it. But you really need a dynastic mentality for that to work. Definitely not something you can do with a 4-8 year tenure.

Ancient Rome?

Middle Ages?

Israel did this within the last 80 years. Bought land from the Ottomans in present day Israel from absentee landlords. Then evicted the sharecroppers/whatever from the land.

The result is unending (civil?) war and strife. You guys are right about one thing, the population seems to not be cool with it.

Yes but was there antagonism rising to the level of open or nascent warfare beforehand or did this behavior cause the latter? The question was whether or not real estate purchases and property ownership are a valid battle tactic. Taiwan and PRC have been avowed political enemies since 49', technically an argument could be made that they are still at war.

I have two interests in history: the Middle Ages, and anything prior to 10,000 years ago. My examples tend towards those time periods.

Further, can you think of an example of someone buying enemy territory as a battle tactic and it NOT ending badly in the past, say, 500 years? You have a single example; that hardly covers all 4 possibilities here (major change with uprising, major change without uprising, no major change with uprising, no major change without uprising). All of the examples I can think of where folks bought enemy land without a major uprising are Medieval or ancient.

#6: GT still runs an offensive scheme from the 1970's. I'm skeptical they're going to take over online education, with that sideshow of a football team. Show me you can master the forward pass, first, guys!

Genuinely curious here: Is there a correlation between prowess on the football field and quantifiable measures of quality of education?

Yes, but only for purposes of me ragging on a fellow ACC school.

"Genuinely curious here: Is there a correlation between prowess on the football field and quantifiable measures of quality of education?"

Clearly there's a correlation. Bigger schools tend to have better programs and much better teams. How good do you think Community College football teams are? (Yes. there is such thing.)

However, there's probably very little causation.

The correlation is that the big schools use it as a student recruiting tool, and an alumni fundraising tool, and a profit center, and so the bigger schools have the incentive to do it at scale, and they also have the means to make the necessary investment in the program. Successful football programs do have an intangible loyalty dimension as well, but in the end, it simply relates to the level of investment.


I think there's an inverse relationship between the quality of the football program and the quality of the science program. That agricultural college in Palo Alto is the obvious exception that proves this rule.

During the cold fusion craze of 1989, I remember a professor (I want to say Carver Mead, but google's' index of pre-www quotes is scanty) said he'll give cold fusion credence when someone from a university without a good football program confirms the result. No one from a non-football power ever did.

6. GT is an excellent school, is very difficult to get into, and has a very rigorous program. I'm not sure the point of this endeavor. GT is always at or near the top of the list of schools ranked by return on education. It's not for everyone (GT's emphasis is definitely STEM), but for those who want that career path, GT should be high on one's list.

Don't make the mistake of thinking that just because a college is difficult to get in to and it is difficult to graduate that it is an excellent school.

Not just picking on Georgia Tech, but notable colleges are not focused about excellence in teaching. Students are there mostly to boost the reputations of the institution, not the other way around.

#4: "Measurements of the education and health care sectors also are affected by what I term category creep. ... Health care now includes many diagnostic procedures, pharmaceuticals, and medical specialties that did not exist 50 years ago. Even if the cost of every single medical procedure were to decline, spending on health care could increase as new procedures are introduced and existing procedures are modified to make them safer and less uncomfortable."

Essentially, we get extra features in most physical goods included as part of the productivity gains. In education and healthcare, we are paying the full freight since productivity gains are very low.

5. Read the recent series in the NYT on China. Many of the now-wealthy entrepreneurs in China came from . . . Taiwan. The ties that bind China and other countries in Asia (not only Taiwan but also Singapore and other now-advanced Asian countries) works in both directions.

3. Degania Alef - on behalf of the best socialist system ever put into practice, the Kibbutzim. Degania Alef was the first Kibbutz established in 1909. The system supported a nation from agrarian to industrial over seventy years, even pushing into high-tech before giving way to the global system based on individual incentives.

5. Assigning massive social significance to an incumbent party losing ground in midterm-equivalents is a popular idiocy, but it remains idiocy.

Further evidence of the idiocy is that the article's own recounting of Chinese influence uses an example from March 2013, which is before the "astounding Sunflower movement" of 2014 and the 2016 election of the DPP. You can't explain an electoral change between 2016 and 2018 by referencing an environmental condition that applied in 2016 . . . and if you try, you're an idiot.

#4. At minute 29 of the talk the journalist Krugman takes a punch on economic theory saying that it does not apply in the real world. He looks like an heterodox undergrad student saying that kind of stuff. It reminds me of some feminist that complained that my OLG model of fertility choice does not have "women". Krugman is not an economist, he is a left wing journalist that happened to do a PhD in econ in the 70's.

#5 is the ultimate irony: NYT being concerned about establishment (PRC) buying influence in the media in Taiwan. Isn't NYT itself the definition of sellout? (Carlos Slim!)

#6: Haven't megachurches been using a similar approach for a long time where they have the main pastor preach at one location and broadcast to other locations? That seems like it would translate well to lectures for online-offline hybrid education systems.

In #1, I would like to see a regression that includes the boom period and not the bust period. Otherwise, they seem to have found that a negative credit shock caused a housing bust, but I'm not sure they can conclude that a credit boom caused a bubble.

#1...I don't think saying that there's a housing bubble based on home prices going up, for whatever reason or how high, has to be a problem in, and of itself, since I can imagine a scenario where it wouldn't be a problem. Say, a scenario where people could afford it. The home buying needed people to lend money to home buyers, some of which lending was fraudulent and unrealistic. You also needed people to invest in the businesses which lent the money for buying houses, and who did so based upon a crazy system of rating investments. Some of these investors needed implicit guarantees from the government in order to invest, for example, in Fannie and Freddie. As well, forecasting a recession was not a forecast of what actually occurred in September, 2008. It's akin to forecasting windy days ahead and getting a tornado or hurricane.

4. People see what they want to see. What I see is that Cowen is moving away from economics and to politically economy. And it makes sense if Cowen wishes to come out of this era with any self-respect, an era in which economists sell their souls to the highest bidder. Fake news? How about fake economic forecasts.

Heidegger was big on being authentic.

in his way


if you imagine someone who has seen an authentic miracle reading Heidegger

who (Heidegger) never saw a miracle in his life

you can easily see, hear, feel, taste, even have that feeling of repulsion that runs up your spine at the sight of an unexpected snake slithering across the pathway

Let us treat each other with respect! Do not disregard the fact that even people we disagree with often are trying to be honest!

Almost everybody is wrong about almost everything, or not.

It is not economists versus the world

it is this

Heidegger never saw a miracle, and therefore, as a soi-disant philosopher, engaged with what he thought was the world ( a world full of miracles, but he did not know that, he never expressed a thought that would persuasively lead one to believe that he knew that)

all that he thought that he knew about his own authenticity was a fraud

on the other hand, if your college Econ class involved an obligation on your part to read a Paul Samuelson textbook

you should feel gypped

of course, why do I bother, people will say, you "Hijacked a Thread"
when all I wanted to do
was point out

that the world is full of miracles

nobody says that enough

I have seen miracles

so there's that

what we say is important

what I say is important because I have seen miracles

what you say is important because you too have seen miracles

or what you say is important because you have not

it is the same world


wake up

Mark 9:23

true that my young friend

you don't ever have to forget

Our God is a God of miracles


there is faith hope and charity and the greatest of these is charity

be kind to economists, they are beloved by God, just as much as the rest of us

Mark 9:23

Hi Everyone: I think this article is very interesting. What do you think?
The Trump presidency is the apotheosis of the crooked class, a monster made from our mistakes, and he’s making them worse. Under Mr. Trump, the I.R.S. has been starved of resources, audits of big corporations and the wealthy are down, and big banks and corporations have been given more leeway to rip people off with impunity. If we survive this reign of error, we need to learn our lesson and make it right.

Trump has also blocked the IRS targeting conservative groups. These nationalistic and anti-tax groups should be kept under close scrutiny and they certainly should not be allowed to operate tax free!

#5) Don't know about China buying or having bought Taiwan, but do know that Taiwan bought China.

The same moral police officer who earns $24,000 per year and says that he loves the Bill of Rights might be happy to torture if he was paid $100,000 a year.

6: Yep. I've been saying since 2012 or 2013 that the future of education is not online. It's hybrid.

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