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27 April 2014

Today we again ask for reader feedback on important aspects of the FM website. Tell us how to do this better. Everything is open to fix. Excerpt for one thing. We’ll continue to annoy both Left and Right, looking for a path to reform America. It’s bad for business in our increasingly tribal society, but such is life.

Listening
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Questions

  1. Daily long posts, or more short posts?
  2. Promo our successful predictions, or just more on?
  3. Add your comments

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(1)  Daily long posts, or more short posts

The FM website does long-form analysis of issues on the cutting edge of the known. They’re usually 1,000 to 2,000 words long (vs typical posts on the web of 200 -400 words). With copious citations (usually links).  Complexes of posts, each a chapter closely examining a sliver of the geopolitical world (from an American perspective). Extensively cross-indexed.

The other side of the operation is the @FabiusMaximus01 twitter feed. Pointers to articles about the themes covered here, often with brief comments on them (1,135 followers).

Short and long. Is this the best way to do this?  Most importantly, should we do more and shorter articles — or stick with the one-per-day long-form articles. Other questions appear below the fold.
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(2)  Second question: do we promote past predictions enough?

Read more…

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Why the Left loses: we see their vision of a new America

26 April 2014

Summary: Left and right are engaged in a never-ending struggle not just for control of America’s politics, but for its soul. Since 1980 the Right has been winning, slowly rolling back the essential aspects of the New Deal. Today we have another chapter explaining why the Left loses. Their weakness is self-inflicted. Let’s hope they find it within themselves to change; we need at least one sane wing of the political spectrum.

Yellow Submarine

The Left takes us to their vision of a new world

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Rape Happens Here“, Simon van Zuylen-Wood, Philadelphia Magazine, 24 April 2014 — Opening

For 150 years, leafy, progressive Swarthmore College tried to resolve student conflicts in the best Quaker tradition — peacefully and constructively. Then came 91 complaints of sexual misconduct. In a single year.

Read it in full; you’ll find astonishing stories on every page. It’s a story of crazy by both students and administrators (and I wonder about the writer as well). Dumb (often inexplicable) behavior by all, including apparent amnesia about the existence of police, intense “claims of victimization” by all sides, elevation of personal feelings over facts, use of campus disciplinary machinery to punish heterodox ideology, and confused thinking (e.g., what is rape, beyond feeling “scared, powerless, and traumatized”?).

It’s another story of modern America’s inability to handle a problem adequately managed by the other developed nations. We’re exceptional!

More about this article:

  1. Read the comments, many from students at Swarthmore.
  2. Note that one-third of 91 complaints of misconduct (from harassment to rape) in 2013 concerned incidents from previous years. So the number of complaints of 2013 incidents were roughly equivalent to 7% of Swarthmore’s women students (Swarthmore has 1,600 students, 51% women).
  3. See the statement in the next section by Swarthmore’s police chief about rape reports and convictions (the author didn’t quote either the campus or local police).

Read more…

Students, cheerleaders, & lawyers all exploited as they scramble for the few opportunities in New America

25 April 2014

Summary: One astonishing aspect of the structural changes reshaping America is how fiercely we work to avoid seeing them. Such as the transformation of employment. Breaking unions was the first and essential step. Now comes the larger changes: shifting jobs from full time with benefits and job security into temporary, insecure, part-time, no-benefits — at lower wages.

Here we see four snapshots of this structural change in the power relationships of employers and workers — as people become increasingly desperate for opportunities. We close our eyes to these changes, since seeing the 1% build a New America on the ruins of the old would upset the even tenor of our lives.

Buffalo Jills

Buffalo Jills at Ralph Wilson Stadium on 9 August 2012. Photo by Rick Stewart/Getty Images

“To get the man’s soul and give nothing in return -– that is what really gladdens Satan’s heart.”
— C. S. Lewis, The Screwtape Letters (1942)

Contents

  1. Cheerleaders mistreated for profit
  2. Internships: opportunities for the affluent
  3. Entry level positions for lawyers
  4. For More Information

(1)  Cheerleaders mistreated for profit

Cheerleaders for professional sports teams pay much of their own expenses, work long hours, and earn a pittance — all in the service of fabulously profitable sports businesses.

The Cheerleaders Rise Up: NFL cheerleaders are putting down their pom-poms and demanding a better deal“, Amanda Hess, Slate, 23 April 2014 — Excerpt:

In 2014, the cheerleaders revolted.

This January, rookie NFL cheerleader Lacy T. kicked things off when she filed a class action lawsuit against the Oakland Raiders, alleging that the team fails to pay its Raiderettes minimum wage, withholds their pay until the end of the season, imposes illegal fines for minor infractions (like gaining 5 pounds), and forces cheerleaders to pay their own business expenses (everything from false eyelashes to monthly salon visits).

Within a month, Cincinnati Bengals cheerleader Alexa Brenneman had filed a similar suit against her team, claiming that the Ben-Gals are paid just $2.85 an hour for their work on the sidelines.

And Tuesday, five former Buffalo Bills cheerleaders filed suit against their own team, alleging that the Buffalo Jills were required to perform unpaid work for the team for about 20 hours a week. Unpaid activities included: submitting to a weekly “jiggle test” (where cheer coaches “scrutinized the women’s stomach, arms, legs, hips, and butt while she does jumping jacks”); parading around casinos in bikinis “for the gratification of the predominantly male crowd”; and offering themselves up as prizes at a golf tournament, where they were required to sit on men’s laps on the golf carts, submerge themselves in a dunk tank, and perform backflips for tips (which they did not receive). The Buffalo Jills cheerleaders take home just $105 to $1,800 for an entire season on the job.

Read more…

Status report on the US economy: stand by for the boom!

24 April 2014

Summary:  It’s time for another look at the US economy. Economists have lots of enthusiasm. Lots of bad news, blamed on the severe winter that hit much (but not all) of America. Has the data warmed up? Is it Springtime in America?

Springtime In America

Content

  1. Stand by for the boom!
  2. About housing, a driver of the recovery
  3. The Architecture Billings Index
  4. Chicago Fed’s National Activity Index
  5. World trade volume
  6. For More Information

(1)  Stand by for the boom!

Every year since the crash economists forecast decent growth next year (2% – 2.5%) and ~3% growth in 3 years. But late last year economists varied the script: they forecast 3.1% growth in 2015 and 2016 — but also strong growth next year. They forecast that the US economy would accelerate to escape velocity. They cheered for the “Red, White, and Boom”.  See the Fed’s Survey of Professional Forecasters, 14 February 2014:

Groundhog

Looks wonderful out there!

  1. 2014: Q12.0%
  2. 2014: Q23.0%
  3. 2014: Q32.8%
  4. 2014: Q42.7%
  5. 2013:1.9%
  6. 2014:2.8%
  7. 2015:3.1%
  8. 2016:3.1%

It’s April. How’s that 2014 boom running? Although estimates for Q1 have fallen from 2.5% in December to 2% now, but hope remains for faster growth in the rest of the year. Previously we looked at the strong automobile sales, fueled by easy credit to increasingly sub-prime households. This looks to run for a while longer. Here we examine some other economic indicators.

The economy is complex beyond understanding. These are just snips, clues to the future.

(2) About housing, a driver of the recovery

The housing sector is expected to be another driver of the recovery. So far the omens look bad, but economists and housing experts remain confident. They’ll remain so until prices rollover, which they eventually will if these trends continue.

The weakness of housing activity has lasted since summer, and its broad geographically. This shows that it does not result from bad weather alone. Let’s review the ugly numbers.

(a) Purchase mortgage applications for week ending April 18: -18% YoY NSA, continuing their year-long decline.

Read more…

Worst case scenarios versus fat tails: a discussion about climate change

23 April 2014

Summary: Threat assessment requires understanding not just of worst case scenarios, but their odds of occurrence. Yesterday’s post looked at the math: A guide into the weird numbers that run our world, describing both financial bubbles & climate change — power laws, Black Swans, and Dragon Kings. If the worst case scenarios come true, we’ll all become too familiar with these terms. Today Professor Judith Curry discusses how can determine the likelihood of one of these scenarios happening. It’s one of the great questions in the public policy debate about climate change.

Fat Tails

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Contents

  1. Worst case scenarios vs fat tails
  2. About Judith Curry
  3. Important things to know about climate change
  4. For More Information
  5. Other worst-case scenarios

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Worst case scenarios versus fat tails

by Judith Curry, at her website Climate Etc
18 April 2014
Posted here under her Creative Commons license

.If we omit discussion of tail risk, are we really telling the whole truth? 

(a)  Kerry Emanuel

This post is motivated by an essay by Kerry Emanuel published at the Climate Change National Forum, entitled Tail Risk vs. Alarmism, which is in part motivated by my previous post AAAS: What we know. Excerpts:

In assessing the event risk component of climate change, we have, I would argue, a strong professional obligation to estimate and portray the entire probability distribution to the best of our ability. This means talking not just about the most probable middle of the distribution, but also the lower probability high-end risk tail, because the outcome function is very high there.

Do we not have a professional obligation to talk about the whole probability distribution, given the tough consequences at the tail of the distribution? I think we do, in spite of the fact that we open ourselves to the accusation of alarmism and thereby risk reducing our credibility. A case could be made that we should keep quiet about tail risk and preserve our credibility as a hedge against the possibility that someday the ability to speak with credibility will be absolutely critical to avoid disaster.

(b)  Uncertainty monster simplification

In my paper Climate Science and the Uncertainty Monster, I described 5 ways of coping with the monster. Monster Simplification is particularly relevant here:  Monster simplifiers attempt to transform the monster by subjectively quantifying or simplifying the assessment of uncertainty.

The uncertainty monster paper distinguished between statistical uncertainty and scenario uncertainty:

Read more…

A guide into the weird numbers that run our world, describing both financial bubbles & climate change

22 April 2014

Summary: Two of our greatest challenges in the 21st century are climate change and management of economic crises. They’re similar in that their mathematics are unlike that of the normal life — the routine world of averages, variances, and bell-curve distributions. These phenomena take us deep into the mysteries of science. Before we can predict the future on the basis of the changes we’ve made to our physical and social environments, we must understand the range of changes in the past (extreme weather, financial bubbles, depressions)  — events which will reoccur, eventually, even if the world were to (somehow) remain unchanged. In a sense we must prepare for the past before we prepare for the new futures.

Rather than grapple with these complex matters, our political manipulators seek to paint simple pictures of the world. Oversimplified portraits drawn in fear and greed that make us easy to lead — which give us the illusion of knowledge, feeding our ignorance, blinding us to the wonders of our strange world.

Today we look at two articles describing math essential to understand both financial bubbles and weather. These allow us to understand something about our past so that we can prepare for the future: extreme events dominate history, and will largely frame the future. More about this tomorrow.

Chaoic System

A strange attractor plotting the behavior of a chaotic system. By Nicolas Despez, Wikimedia

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“History doesn’t always repeat itself. Sometimes it just screams, ‘Why don’t you listen to me?’ and lets fly with a big stick.”
— John W. Campbell Jr., Analog Science Fiction/Fact Magazine (1965)

“We don’t even plan for the past.”
— Steven Mosher, comment posted to “UK floods in context” at Climate Etc

(A)  Simple definitions of important concepts

(1)  Complex systems: systems with a large number of mutually interacting parts, often open to their environment, which self-organize their internal structure and their dynamics with novel and sometimes surprising macroscopic “emergent” properties. Climate and finance are complex systems.

(2)  Power law distribution: a specific family of statistical distribution appearing as a straight line in a log-log plot. Power laws often have no well-defined mean or variance. Many aspects of nature and society display power-law relationships.

(3)  Black Swan events: Rare, high-impact, and difficult-to-predict events that live in the tails of the probability distribution, beyond the average of history (as in science and finance). Such events are non-computable using standard scientific methods.

(4)  Dragon-kings:  events even beyond the fat tails of the probability distribution. Their extreme outcomes dominate historical results.

For explanations of these things we turn to two articles by Didier Sornette, Prof of Entrepreneurial Risks at Swiss Federal Institute of Technology Zurich (Wikipedia bio).

(B)  The rare but ugly extreme results from complex systems

Probability Distributions in Complex Systems“, Encyclopedia of Complexity and Systems Science (2009) — Excerpt:

A central property of a complex system is the possible occurrence of coherent large-scale collective behaviors with a very rich structure, resulting from the repeated non-linear interactions among its constituents: the whole turns out to be much more than the sum of its parts. Most complex systems around us exhibit rare and sudden transitions, that occur over time intervals that are short compared to the characteristic time scales of their posterior evolution.

Such extreme events express more than anything else the underlying “forces” usually hidden by almost perfect balance and thus provide the potential for a better scientific understanding of complex systems.

These crises have fundamental societal impacts and range from large natural catastrophes such as earthquakes, volcanic eruptions, hurricanes and tornadoes, landslides, avalanches, lightning strikes, catastrophic events of environmental degradation, to the failure of engineering structures, crashes in the stock market, social unrest leading to large-scale strikes and upheaval, economic draw-downs on national and global scales, regional power blackouts, traffic gridlock, diseases and epidemics, etc.

There is a growing recognition that progress in most of these disciplines, in many of the pressing issues for our future welfare as well as for the management of our everyday life, will need such a systemic complex system and multidisciplinary approach.

Read more…

The Ukraine anti-semitic flyer: a case study in propaganda

21 April 2014

Summary: The war in the Ukraine is, like many wars during the past few centuries, fought for the moral high ground as much as the physical terrain. Like many conflicts since WW2, it’s fought largely in the shadows by covert agencies of the participants and the great powers. Governments fall by mysterious means, dramatic actions make headlines, statesman make bold statements. But nothing is what it seems. The vignette of the anti-semitic flyer demonstrates these things in miniature, reminding us that journalists paint only the surface of events. We need analysis to see what lies beneath.

Ukraine anti-Semitic leaflet

Ukraine anti-Semitic leaflet

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Contents

  1. The story breaks: evil in Ukraine
  2. Too good to question: US officials embrace the story
  3. The truth slowly emerges
  4. For More Information

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(1)  The story breaks

Donetsk leaflet: Jews must register or face deportation“, Ynet News, 16 April 2014 — Excerpt:

A leaflet distributed in Donetsk, Ukraine calling for all Jews over 16 years old to register as Jews marred the Jewish community’s Passover festivities Monday (Passover eve), replacing them with feelings of concern. The leaflet demanded the city’s Jews supply a detailed list of all the property they own, or else have their citizenship revoked, face deportion and see their assets confiscated.

Donetsk, a Ukraine province with 4.3 million people – 10% of Ukraine’s population – and 17,000 Jews, is home to much of the country’s heavy industry, and is thus the biggest prize of the eastern regions where pro-Russian separatists have captured government buildings in the past week.

The leaflet, signed by Chairman of Donetsk’s temporary government Denis Pushilin, was distrbiuted to Jews near the Donetsk synagogue and later in other areas of the city where pro-Russians activists have declared Donetsk as an independent “people’s republic”, defying an ultimatum from Kiev to surrender.

The leaflet was written in Russian and had Russia’s national symbol on it, as well as the Donetsk People’s Republic insignia.

“Dear Ukraine citizens of Jewish nationality,” the flyer began, “due to the fact that the leaders of the Jewish community of Ukraine supported Bendery Junta,” a reference to Stepan Bandera, the leader of the Ukrainian nationalist movement which fought for Ukrainian independence at the end of World War II, “and oppose the pro-Slavic People’s Republic of Donetsk, (the interim government) has decided that all citizens of Jewish descent, over 16 years of age and residing within the republic’s territory are required to report to the Commissioner for Nationalities in the Donetsk Regional Administration building and register.”

The leaflet detailed what type of documents the Jewish citizens would need to supply: “ID and passport are required to register your Jewish religion, religious documents of family members, as well as documents establishing the rights to all real estate property that belongs to you, including vehicles.”

If the message was not made clear enough, the leaflet further stipulated the consequences that would come to those who failed to abide by the new demands: “Evasion of registration will result in citizenship revoke and you will be forced outside the country with a confiscation of property.”

To add insult to injury, the leaflet demanded the Jews pay a registration fee of $50.

(2)  Too good to question: America embraces the story

Although too absurd to believe, the usual suspects ran with the story.  Propaganda moves the American mind, sign of a weak people.

Drudge: Ukraine Jews

Ben Rhodes about Ukraine

(c) Secretary of State John Kerry enthusiastically believes, as he explains at a press conference, 17 April 2014 — Reminding us to believe nothing the government says:

Read more…

Watch corporations strip-mine their future (and ours)

18 April 2014

Summary: Al Qaeda (Bin Laden’s organization, if it still exists in meaningful form) is a threat to America. A greater threat are our CEO’s, some of whom who have discovered discovered a formula to vast personal wealth: leverage the company up (borrow), use those funds to buy back stock (boosting earnings per share), cut capital expenditures (capex) to boost short-term profits, pay most of the profits in dividends — all of which disguises massive payouts to senior managers (via salary, benefits, pensions, golden parachutes, grants of stock and stock options, etc). They’re strip-mining away America’s future. Slowly people begin to fit these pieces together. Today we help you to do so.

Executive Pay

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Contents

  1. An example of how it’s done
  2. Cutting capex: short-selling the future
  3. For More Information

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(1)  An example of how it’s done

List most stories about corporate finance, it’s complex. These articles clearly explain the game using IBM as an example (just one of many), but have to be read. The excepts are just teasers.

(a) Stockholders Got Plundered In IBM’s Hocus-Pocus Machine“, Wolf Richter, Testosterone Pit, 17 October 2013 — Opening:

I’m not picking on IBM. I’m almost sure they have some decent products. So they had a crummy quarter – the sixth quarter in a row of sales declines. And their hardware sales in China have collapsed since Snowden’s revelations about the NSA and its collaboration with American tech companies. But in one area, IBM excels: its hocus-pocus machine.

IBM isn’t alone in its excellence and isn’t even at the top of the heap in that respect. There are many corporations like IBM, mastodons that successfully pull a bag over investors’ heads, aided and abetted by Wall Street with its “analysts,” and by the Fed, to hide the stockholder plunder taking place behind a billowing smokescreen of verbiage.

(b) Big Blue: Stock Buyback Machine On Steroids“, David Stockman, at his website Contra Corner, 17 April 2014 — Opening:

The Fed’s financial repression policies destroy price discovery and honest capital markets. In the process these deformations turn financial markets into casinos and corporate executives into prevaricating gamblers. To be specific, most CEOs of the Fortune 500 are no longer running commercial businesses; they are in the stock-rigging game, harvesting a mother lode of stock option winnings as the go along.

Those munificently rising stock prices and options cash-outs owe much to the Fed’s campaign to suppress interest rates and fuel stock market based ”wealth effects”, but the CEOs are doing their part, too. They have become full-time financial engineers who use the Fed’s flood of liquidity, cheap debt and soaring stock prices to perform a giant strip-mining operation on their own companies. That is, through endless stock buybacks and M&A maneuvers they create the appearance of “growth” while actually liquidating the balance sheet equity and future asset base on which legitimate earnings growth depends.

Read more…

Should we listen to amateurs’ analysis of climate science?

16 April 2014

Summary: What is the role of amateurs’ analysis in the climate science debate? They’re increasingly dominating the debate, even declaring the work of scientists as invalid or flawed. Are they valuable voices, or chaff — reducing this vital debate to cacophony?

Experts

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Contents

  1. Are amateurs needed?
  2. Their role in the public debate
  3. Why should laypeople listen to amateurs’ analysis of climate science?
  4. For More Information

(1)  Are amateurs needed?

Often difficult to spot — they often speak like experts, sometimes like a Pope of Science — amateurs have become an increasingly loud voice in the public discussions of climate science.  They can help experts — climate scientists and meteorologists  — in many ways, such as data collection and analysis, synthesis of new ideas. But what about the role of amateurs in the public debate about science, especially in issues with major public policy implications?

Do we need more people giving us analysis of climate change? Speaking as long-time reporter on climate change (over 200 posts), I cannot follow the output of experts written for laypeople (like myself) from…

  1. the many climate-related agencies, including the IPCC and BEST;
  2. articles for laypeople in the major peer-reviewed journals;
  3. articles in the lay-science news media (e.g., New Scientist, Scientific America);
  4. blogs by climate scientists (e.g., RealClimate, Climate Etc);
  5. publications by meteorologists (e.g., the Browning newsletter)
  6. statements by scientists’ professional organizations (e.g., American Physical Society)

Much of this is high quality, clear and easy to understand. Do we need a legion of amateurs to provide more? I see to much to track, let alone read. It’s a deluge. We need a Noah, not more water.

(2)  Their role in the public debate

Given the vast body of material by scientists written for the public about climate change, why do both sides in the climate debate increasingly rely on amateurs? Worse, the voices of amateurs increasingly drown out that of scientists. They not only give their own data, analysis, and theories — but often declare the work of actual scientists to be flawed or invalid, or even declare the scientists themselves to be illegitimate in their own field. See the posts documenting the Left’s abandonment of the IPCC for more extreme views (often without strong science foundations). The Right has their counterparts, some even denying the fact of past anthropogenic warming.

Read more…

We live in an age of ignorance, but can decide to fix this – today

15 April 2014

Summary:  One of the great themes of the FM website is our clouded vision, the American people’s inability to clearly see the world and our susceptibility to propaganda. It’s central to almost all of our large problems. It’s one of the most important issues of our time, for I doubt that reform remains impossible for a people so confused and gullible. Today we have an incisive essay about this by Charles Simic, a poet and keen observer of our society.

Girl looks into a mirror

If only we had a mirror in which to see ourselves, and the nature of our folly

Matthew 7:5: “… first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye.”

Contents

  1. The Age of Ignorance
  2. My comment on Simic’s essay
  3. About the author
  4. For More Information

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Age of Ignorance

by Charles Simic, Blog of the New York Review of Books
20 March 2012
Posted with their generous permission.

Widespread ignorance bordering on idiocy is our new national goal. It’s no use pretending otherwise and telling us, as Thomas Friedman did in the Times a few days ago, that educated people are the nation’s most valuable resources. Sure, they are, but do we still want them? It doesn’t look to me as if we do. The ideal citizen of a politically corrupt state, such as the one we now have, is a gullible dolt unable to tell truth from bullshit.

An educated, well-informed population, the kind that a functioning democracy requires, would be difficult to lie to, and could not be led by the nose by the various vested interests running amok in this country. Most of our politicians and their political advisers and lobbyists would find themselves unemployed, and so would the gasbags who pass themselves off as our opinion makers. Luckily for them, nothing so catastrophic, even though perfectly well-deserved and widely-welcome, has a remote chance of occurring any time soon. For starters, there’s more money to be made from the ignorant than the enlightened, and deceiving Americans is one of the few growing home industries we still have in this country. A truly educated populace would be bad, both for politicians and for business.

It took years of indifference and stupidity to make us as ignorant as we are today. Anyone who has taught college over the last forty years, as I have, can tell you how much less students coming out of high school know every year. At first it was shocking, but it no longer surprises any college instructor that the nice and eager young people enrolled in your classes have no ability to grasp most of the material being taught.

Read more…

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