Saturday, November 22, 2014

HOT Peter Schiff Responds to Attack from Paul Krugman

What a Ukrainian Financial Meltdown Might Look Like

Anders ├ůslund is a senior fellow at the Peterson Institute and an adjunct professor at Georgetown University. He is out with an important analysis of how a Ukrainian financial meltdown might occur:
On top of all its other problems, Ukraine is at risk of a financial meltdown. A question remains, however: What form would it take?

Interesting Research Using Twitter; The Unemployed Get Up Late And Can't Spell

Tim Worstall reports:
This isn’t perhaps the most interesting pair of results that have come from research into the patterns on Twitter and of tweets. But they are two of the interesting markers that the research has found. What was done was to look at a subset of all tweets made in Spain over a time period and then map that over unemployment rates and geolocation information. What was being looked for was any pattern that matched: is there any difference in the general pattern of tweets from low unemployment areas and high?
What was found that there was and those findings included the two in the headline.
Tweeting started (or rather peaked) later in the day in areas of high unemployment rather than low. And the spelling of tweets was worse in areas with high unemployment.
The abstract of the paper is here
To be sure, as any Austrian school economist would tell you, there may be many reasons for these empirical results, but still interesting anecdotal facts.

Ron Paul on Obamacare and the “Stupid” People

Ron Paul in his weekly podcast with Charles Goyette  tells us that “lying in government goes on constantly.” But the Obamacare lies are minor compared to government lying us into war.

Listen HERE.

Special thanks to Charles Goyette for the mention, of my post: On ObamaRamaCare: Paul Krugman Gets Something Right,  at aprox. 10:45 of the podcast,

European Parliament Call for the Breakup of Google

The European parliament is poised to call for a break-up of Google, reports FT.

A draft motion seen by the FT says that “unbundling [of] search engines from other commercial services” should be considered as a potential solution to Google’s dominance. It has the backing of the parliament’s two main political blocs, the European People’s Party and the Socialists.

According to FT, German center-right and center-left politicians are the dominant force in the legislature and German corporate champions, from media groups to telecoms, are among the most vocal of Google’s critics.

The European parliament has no formal power to split up companies, but has increasing influence on the commission, which initiates all EU legislation. The commission has been investigating concerns over Google’s dominance of online search for five year.

Positively bizarre, I can't think of one service that Google provides that isn't available by many other firms.

To the degree Google has a large share of any market, it is only because their products are better than others. The ability to switch providers in the main areas that Google operates, from email to search to adsense, is almost instantaneous.

Google declined to comment to FT. However, executives at the company are understood to be furious at the political nature of the motion and only became aware of the document in the past couple of days, after an MEP contacted Google for advice on its meaning

The draft resolution’s final text will be agreed early next week, ahead of a vote, which is expected on Thursday.

Is There Really Much Difference Between The Two Political Parties?

John C. Goodman writes:

If you listened to the candidates on TV during the last election, you would think the fate of western civilization hung in the balance when voters chose between Democratic and Republican candidates for office. Yet when you look at actual governing decisions, the difference between the two major political parties is far from obvious.

This is most evident at the state and local level, where columnistJosh Barro observes that it’s not clear Republicans are any more pro-market than Democrats when it comes to business regulation. For example:
  • Despite more than a decade of solid Republican rule, Florida is one of just three states requiring a license to practice interior design.
  • If you live in Florida you also need a license to braid other people’s hair, or auction their property, or run a ballroom dance studio.
  • Laws restricting the sale of coffins to licensed funeral directors, which impose large markups on their customers, have existed mostly in strongly Republican states in the South; the one remaining state with such restrictions is Republican dominated Oklahoma.
In August, the Republican National Committee urged supporters to sign a petition in support of Uber, which is “cutting into the taxi unions’ profits.” But at the local level, Republican office holders are as bad as or worse than Democrats. The R Street Institute has released a report grading 50 cities across the United States on the regulation of car services — ranging from taxis to limos to transportation network companies like Uber and Lyft. It discovered no clear partisan trend. Among the findings: 

  • The eight cities receiving failing grades include ones in blue areas (Philadelphia and Portland, Ore.) and red ones (Omaha, Phoenix and San Antonio).
  • Democratic California is one of just two states to have enacted a comprehensive, statewide regulatory framework that is friendly to an open taxi/limo market; the other is Colorado, also run by Democrats.

Company Unveils RocketSkates

Acton, a Southern California company, has developed electronically-powered skates, with no pushing required.

The RocketSkates strap onto your feet and go about 12 miles per hour.

The New Real Estate Bubble: A 275-Square-Foot Microflat in Hong Kong Sold for $722,000

A 434-square-foot show apartment in Le Riviera, overlooking Hong Kong's Victoria Harbor.

Inside a 275-square-foot Hong Kong apartment. The selling price: $722,000.

Since a low point of Hong Kong’s property market in 2003, average house prices have increased by more than 300 percent, according to data from the Centa-City Index, which is compiled by the real estate agency Centaline and the City University of Hong Kong.

(via NYT)

EPJ Week In Review - Week Ending 11/21/14

Below you'll find everything that has been published on EPJ for the week ended Friday November 21, 2014. The hottest posts for each day are highlighted in red.

Friday 11/21/14
Thursday 11/20/14
Wednesday 11/19/14
Tuesday 11/18/14
Monday 11/17/14
Sunday 11/16/14
Saturday 11/15/14

Friday, November 21, 2014

Top Obama Adviser on Economy: ‘People Don’t Feel As Good About it as They Should’

File under: This is how propaganda works.

Senior White House adviser Dan Pfeiffer blames poor economic sentiment on Ebola, Islamic State, GOP and wage stagnation. There is no mention of roller-coaster Federal Reserve monetary manipulations.

Price Inflation Since 2008 (Explain this Paul "I am concerned about deflation" Krugman)

Thanksgiving Travel Forecast at 7-Year High

With gasoline prices at a five-year low, AAA Travel predicts that 46.3 million Americans will travel more than 50 miles to celebrate the holiday, the highest number of travelers since 2007 and a 4.2% increase from a year ago. Most of those travelers (41.3 million) will be driving.

AAA expects 3.55 million Americans to fly to a holiday destination this year, the largest number since 2007. Airfares are about 1% higher this year, while mid-range hotel rates are up 8% and car rentals are up 10%.

AAA estimates that Americans will spend an average of $573 this holiday weekend. Slightly more than 31% of that figure will go to pay for fuel while 22% will pay for food and drink, and shopping will account for 20%.

LEAKED: Internal Uber Deck Reveals Staggering Revenue And Growth Metrics

Uber is a four-year-old mobile ride service company that could soon generate $10 billion of revenue per year, according to a source familiar with the numbers, reports Business Insider.

BI obtained an internal Uber presentation that's nearly 60 pages long last week that was produced in early 2014. In it, there's city-by-city data in terms of revenue, active drivers, average fares, active users, trips per week, and more.

Most of the data spans only one month, December 2013. Even though the numbers are dated, there's a lot to learn from it.

For example, San Francisco generated nearly $18 million of revenue that month. (Uber's revenue is the total amount it collects from riders, most of which Uber then pays to drivers.) A year of revenue at that monthly rate would make San Francisco alone a $212 million business annually for Uber. And that's just one market. That calculation also assumes no growth, and Uber has expanded to 230 cities since then.

BI Notes:
In December 2013, Uber generated about $11.7 million in Washington, D.C. (a ~$141 million annual run rate). It generated $26 million in New York City, or an annual run rate of $312 million. In Chicago, Uber generated $12.7 million for a run rate of $152.4 million. In San Francisco, Uber generated $17.7 million, a run rate of $212.4 million. Los Angeles generated somewhere between the revenue of New York and San Francisco. 
An annual run rate based on the December 2013 data for Uber's top five markets (NYC, D.C., San Francisco, Chicago, and Los Angeles) would generate about $1 billion a year.
The company's year-over-year growth rate from New Year's Eve 2012 to New Year's Eve 2013 was  369%.

Cost of Thanksgiving Dinner Climbs

 The American Farm Bureau Federation’s 29th annual informal price survey of classic items found on the Thanksgiving Day dinner table indicates the average cost of this year’s feast for 10 is $49.41, a 37-cent increase from last year’s average of $49.04.

The AFBF survey shopping list includes turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a relish tray of carrots and celery, pumpkin pie with whipped cream, and beverages of coffee and milk, all in quantities sufficient to serve a family of 10.

Foods showing the largest increases this year were sweet potatoes, dairy products and pumpkin pie mix. Sweet potatoes came in at $3.56 for three pounds. A half pint of whipping cream was $2.00; one gallon of whole milk, $3.76; and a 30-ounce can of pumpkin pie mix, $3.12. A one-pound relish tray of carrots and celery ($.82) and one pound of green peas ($1.55) also increased in price. A combined group of miscellaneous items, including coffee and ingredients necessary to prepare the meal (butter, evaporated milk, onions, eggs, sugar and flour) rose to $3.48.

The turkey, itself, will cost roughly the same as last year despite an increase at the wholesale levels., as grocers use turkeys as loss leaders,

Here's how the overall turkey dinner has climbed in price since 1986.


St Louis Fed Puts Out Video Attack On Gold Standard

David Andolfatto, a vice president and economist with the St. Louis Fed, has put out a series of videos on the gold standard. In the clip below, he attacks the gold standard as a means of exchange and argues that fiat paper money is a better system.

In this brief two minute and 16 second video, the series of distortions is quite remarkable.

First the statement is made that under the Federal Reserve System, price instability has been eliminated. This is simply absurd. The price level has increased by 2298.3% since the start if the Federal Reserve.

What one dollar bought you in 1913, would now cost $23.98.

[T]he executive director of the U.S. Congressional Gold Commission has explained the absurdity of the St. Louis Fed claim:
[T[he great virtue of the gold standard was that it assured long-term price stability. Compare the aforementioned average annual inflation rate of 0.1 percent between 1880 and 1914 with the average of 4.1 percent between 1946 and 2003
Andolfatto then goes on to create a scenario where under a "gold standard" there would not be enough gold for those wanting to redeem thier paper into gold. But the problem here is not the gold standard per se, it is a central bank printing more receipts for gold then actual gold that is held by the CB.

The easy solution to this problem, which Andolfatto does not discuss, is either a return to gold as currency (as opposed to a gold standard) or a gold standard where the central bank does not print receipts (currency) beyond the amount that is actually backed up by gold in its vaults.

Further, Andolfatto does not discuss the business cycle implications of central bank money printing. He, incorrectly, implies that it has something to do with the gold standard. when it is in fact the result of any type of central bank money printing.

For more on these topics see:

The Fed Flunks: My Speech at the New York Federal Reserve Bank by Robert Wenzel


Austrian School Business Cycle Theory by Murray Rothbard

The Truth About FATCA and Its Impact on US Citizens Abroad

By Christian Reeves

Foreign Account Tax Compliance Act is finally here and you can be sure that the impact of FATCA will be severe. This brief article considers the impact of FATCA on Americans living, working, or investing overseas.

FATCA is founded in a U.S. tax code that attacks small business and lavishes tax holidays on the wealthy (tax inversions, for example). It came about because America is the only large economy which taxes its citizens on their worldwide income. We are the only country that forces our citizens abroad, including those who are residents of another country, to

How a Limo Ride With Paul Krugman Changed the Course of Abenomics

Japan lucked out if the only advice they received from Krugman was not to raise the sales tax--as sound advice as you can give.

Toru Fujioka and Simon Kennedy inform:
When Japanese economist Etsuro Honda heard that Paul Krugman was planning a visit to Tokyo, he saw an opportunity to seize the advantage in Japan’s sales-tax debate.

With a December deadline approaching, Prime Minister Shinzo Abe was considering whether to go ahead with a 2015 boost to the consumption levy. Evidence was mounting that the world’s third-largest economy was struggling to shake off the blow from raising the rate in April, which had triggered Japan’s deepest quarterly contraction since the global credit crisis.

Honda, 59, an academic who’s known Abe, 60, for three decades and serves as an economic adviser to the prime minister, had opposed the April move and was telling him to delay the next one. Enter Krugman, the Nobel laureate who had been writing columns on why a postponement was needed.

“That nailed Abe’s decision -- Krugman was Krugman, he was so powerful,” Honda said in an interview yesterday in the prime minister’s residence, where he has an office. “I call it a historic meeting.”

It was in a limousine ride from the Imperial Hotel -- the property near the emperor’s palace that in a previous construction was designed by Frank Lloyd Wright -- that Honda told Krugman, 61, what was at stake for the meeting. The economist, who’s now heading to the City University of New York from Princeton University, had the chance to help convince the prime minister that he had to put off the 2015 increase...

“I knew Krugman would be great but I didn’t think he’d come to Japan just for one meeting,” said Honda. “Then I heard by chance that he’d be here, and there was no way I was going to waste that chance.”

Honda succeeded in organizing a 20-minute meeting between the prime minister and the U.S. economist. It went about double the allotted time.

With a handful of aides and secretaries present at the reception room on the fifth floor of Abe’s residence in the Nagatacho district southwest of the Imperial Palace, Krugman began by praising Abenomics, describing how much he respected the program to revive Japan after 15 years of deflation, Honda said.

The only problem was the sales tax, Krugman said, according to Honda. Honda, Hamada and another aide, Eiichi Hasegawa, kept quiet. Honda says that by the end of the meeting, he was convinced Abe would decide on postponement.

Hamada, who had advised Abe on his pick for Bank of Japan governor, said that “Abe listened to Krugman’s view very carefully.” Hamada said in an interview Nov. 18 that “he probably helped the prime minister make up his mind.”

Abe himself highlighted his discussion with Krugman when speaking on the national public television broadcaster NHK three days ago.

Escaping Deflation

“He said we should be cautious this time in raising the sales tax and if we weren’t it would break the back of the economy,” Abe said. “He said if that happened, we wouldn’t escape deflation, it would be uncertain whether we could revive the economy and repair the nation’s finances. I think that’s the case.”

As for the current plan to boost the sales tax in 2017, Krugman says: “I understand that at some point they are going to need more revenue. I would prefer a conditional delay -- ’we will raise it after inflation is at 2 percent or something.’ I understand that’s not likely.”

Murray Rothbard as Academic Role Model

Obama's Immigration Plan, Cui Bono?

President Obama's new immigration plan will allow up to four million undocumented immigrants who have lived in the United States for at least five years to apply for a program that protects them from deportation and allows those with no criminal record to work legally in the country.

According to NYT, the program will deny them government health benefits and those under the program are also unlikely to receive public benefits like food stamps, Medicaid coverage or other need-based federal programs.

So my question becomes, who in the political elite benefit by this Obama move?

One seeming beneficiary will be the Democratic Party who will likely find more support from the Hispanic community, but even here it is questionable how much of a plus this will be for Democrats (SEE: The Democrats’ Immigration Problem).  Another crowd, though, that will surely benefit is a key ally of the Democrats, the union crowd.

With these four million immigrants now working legally in the US, they are a prime target for union recruitment. Particularly given that Obama's program has a particular emphasis on legal status in areas where there is a hotbed of union recruitment activity, hotel workers, fast food workers and construction workers.

From government controlled healthcare to minimum wage laws, and perhaps now to immigration laws, it is unions that are lurking in the background.