K. K. Law writes: 

Tony Bobulinski held presser claiming Joe Biden knew about Hunter's business deals


Penny Brown writes: 

Why didn't this come out sooner?  Wouldn't it have been more effective to drop the bombshell before so many votes were turned in?

Or was it purposively held back to last minute so there were be no time to refute?

Stefan Jovanovich writes: 

The answer is that the smart Republicans in AZ, FL, PA and elsewhere learned from 2018.  They know that you have to let the Democrats vote first so that they can't figure out how many "extra" votes they will need to find on Election Day to overtake the Republicans' "lead".  When the Republicans are behind, there is no way for the Democrats to make that calculation.  Remember, kids, that successful voter fraud is a two-step trade: first, you need the Registrations, then you need the ballots.  Even in Philadelphia you can't these days vote more people than you already have on the voter rolls.  (Oh, for the good old days.)



The 538 national polling average 12 days before Election Day.
2020: Biden+9.8
2016: Clinton+6.0
2012: Romney+1.2



Big Al writes: 

https://fivethirtyeight.com/features/money-and-elections-a-complicated-love-story/ Money is certainly strongly associated with political success. But, “I think where you have to change your thinking is that money causes winning,” said Richard Lau, professor of political science at Rutgers. “I think it’s more that winning attracts money.”

Stefan Jovanovich  writes: 

Did I miss the memo?  Has there been an edict that particular facts are to be subsumed into coy academic attempts at irony?

There is one professor book that created the standard for electoral analysis and predictions: *The American Voter* by Angus Campbell, Philip Converse, Warren Miller, and Donald Stokes.  They produced a detailed analysis of the 1952 and 1956 Presidential elections using what is still a wonderfully subtle methodology.  Michael S. Lewis-Beck, Helmut Norpoth, William G. Jacoby and Herbert F. Weisberg took that work, applied the extraordinary advances in computing and computation since 1958 and revisited that work.  *The American Voter Revisited* does the 2000 and 2004 elections. 1952 and 1956 elections. Professor Lau thinks he has invented a superior methodology; his proof is hat his model correctly predicted how 3 out of 4 voters in a mock election made the same choice that they would have made "under conditions of perfect information". Meanwhile, Professor Norpoth continues to stick his neck out and make a prediction every 4 years based on his primary turnout model.  (For those who don't know it, he picks Trump.)

You can do better, Big Al.

Duncan Coker  writes: 

Since you brought up the 1952 and 1956 for those who don't remember Adlai Stephenson was the Democratic candidate against Eisenhower.  It marked the start of televised and advertised campaigns.  It also launched the start of a company called Simulmatics.  They were the first to apply data and simulation to campaigns and politics, granted they were using punch card tech.  Parsing data into groups like "white non-college educated, rural voter" or "women suburbanites" they were the first to use. Kennedy hired them in earnest to help him get elected.  They did not predict elections so much as the issues that might turn elections and which side was best.  For Kennedy they recommended expanding civil right issues, not hiding from being Catholic and more debates.  They were not wrong but perhaps Kennedy would have done all thee things anyway.  Today take the same process, but multiply the computing

speed by 1 million x.  All in a very good book called If Then by Jill Lepore.



Four years ago these were the numbers:
NBC Clinton +14
ABC Clinton +12
CBS Clinton + 11
AP Clinton +13
Monmouth Clinton +12
Atlantic Clinton +12
USA Today Clinton +10
CNBC Clinton +10



Fact of the Week

October 1, 2020 | Leave a Comment

George Zachar writes: 

The Manhattan Project guys were all (Jewish) immigrants too. Richard Feynman was a native New Yorker, who grew up in the Rockaways.

Stefan Jovanovich  writes: 

Apologies for not including Feynman; my explanation is that he was a "junior" scientist.  The complete list of scientists and engineers who worked on the thing runs into the thousands.

Dendi Suhubdy writes: 

I’m worried that the Chinese government would win this artificial intelligence cold war to be honest. There are a lot of people who just devote their lives in China to annotate labels and also to code deep learning code in C++.

In Montreal there are probably 400 of us max. And I haven’t seen a precision guided missile using deep learning and simuated reinforcement learning whatsoever. You can simulate multiple times in a simulator that a missile can hit a target, given enough time and computational resources. You then transfer the learning e.g weights from that to the real missile and calibrate.

That would help the missile be guided by literally only a 180 wide angle camera even if it looses GPS capabilities.

The US isn’t innovating rapid enough. Never seen that in a SBIR announcement.



Final Prediction

September 28, 2020 | Leave a Comment

Stefan Jovanovich writes: 

On election day Trump will be behind in every battleground state by a margin of at least 4 points.  The public polling numbers will look even worse than they did in 2016.  The current raw poll data - ignore RCP et. al. - shows Trump with a 40% chance of winning - which is what he had at this time in 2016.

I am betting against those odds and predicting that Trump will win, based on two assumptions about "events": 

(1) on Saturday he will choose Barbara Lagoa as his nominee and the Democrats will do a Kavanaugh melt-down that lock down Florida and gain Trump 2-4 points in Nevada, Arizona, New Mexico and Colorado.  It may even save Cory Gardner.  If he chooses Amy (Opus Dei) Barrett, he loses.

(2) the 3rd quarter GDP and economic numbers will be a blow-out that will ease the minds of the people who still resent Trump for allowing himself to be conned into betraying the people who earn a living outside of the corporate, government and non-profit moat - the land that I now think of as Oregano world..

Daniel grossman writes: 

Thanks Stefan.

I agree, Trump will win.  Although the Dems will put a tremendous final effort into PA and the Midwest swing states, so it will be touch and go.

Lagoa is the smart political choice.  Harder to attack a Wise Latina.

Zubin Al Genubi  writes: 

Stefan, Now that he chose Barrett do you and all you other Trump supporters on this list think he will lose?  And do you continue to think this is bearish?



Sidney academia did.

He died 2 years ago.



Armed Rebellion

September 14, 2020 | Leave a Comment

Russ Herrold writes: 

Our professor and others have had a point when they said the

> purpose of the 2nd Amendment was to support militias.* cough * ehh?   If there was a point it would be anti-historical

The federal and state gov'ts did not need an enabling amendment to do something which they could (and did) already do as a matter of simple statutory law (anticipating 14th amdt

incorporation)) The purpose of the Amendments (thought unnecessary, by and large, by Madison) was to _fence off_ from first the Fed'l,and later through incorporation, the states, certain actions,explicitly, for which underlying power were not explicitly granted anyway Simple farmers did not really trust an approach of statutory construction, of 'expresio unius, exclusios alterius', in Latin-ifying the concept.  The simple farmers said:  When you mean something, sate it directly, rather than relying on lawyer's word games US v. Miller's Progressive mindset at the US Supreme Court was clearly 'bad law' from the onset, but 'stare decisis' is tough to overcome.  It took Heller v. DC, and MacDonald v. Chicago to chip at that bad foundation

What they left out was the fact that owning a firearm was as much of a natural right as speech and property ownership.   The purpose of the 2nd Amendment was to remind Congress that, since militias were voluntary, men would have to be self-trained. This may be some modernist attribution of purpose, but again, this is anti-historical.The idea of Americans as individually spontaneously rebellious in the name of liberty is historical blinking.  Genuine rebellion in the U.S. has always been a matter of organized use of long guns and artillery barrels, not random murderous gestures with handguns. 

Not sure that it was not tried, albeit ineffectively.  The Whiskey Rebellion showed the futility of opposing set positions as an approach; the murder of veterans during the 'Thirty's Bonus March and encampment made it clear that set positions were a disaster.  The weaker or 'civilian' side are left with 4GW Readily reloadible handguns are a relatively recent innovation, really only coming into their in the post-Black Power, cartridge based era (Yes, yes, I understand that the .45 Long Colt started life as a B. P. cartridge, and was really stabilized in the M. 1911 with modern protellants)

The blood in the streets that the Rothschilds saw are an indicator will only have  come to the U.S. when Antifa or its opponents start using volley fire, ummm no, no 'volley fire' in the future.  Rather: 4GW tactics,really starting in the run-out of of Lexington and Concord,and continuing development thereafter on an ongoing basis. 

see:  With Fire and Sword: The Battle of Bunker Hill and the  Beginning of the American Revolution  Nelson, James L., Thomas Dunne Books Combine that with the emergence and development of formal sniper doctrine … see the Finns almost mechanical approach, and and the more dispairite reply of the Soviets in WW II …showed that MOUT operations on an opponent who is able to 'melt away' into a surrounding population Followup reading as to what US Civil War II may well look.like:

. The Dirty War, Martin Dillon — the IRA vs the brits

. Fry The Brain: The Art of Urban Sniping and its Role in Modern Guerrilla Warfare (n/a Book 1), John West  — from an analytic point of view of the sniper … from the TX Bell Tower shooter, a startling and 'eyes wide open're-examination of the LBJ assassination, and on to current Middle East theatre ** recommended **

. Red Sniper on the Eastern Front: The Memoirs of Joseph Pilyushin, by Joseph Pilyushin  (biographical notes)

. Sniper on the Eastern Front: The Memoirs of Sepp Allerberger,Knights Cross, by Albrecht Wacker (and from the German side — mnore formal, less effective)

. Jack Hinson's One-Man War, A Civil War Sniper McKenney, Tom, Brand (US Civil war …. somewhat light-weight)

.  Marine Sniper: 93 Confirmed Kills, by Charles Henderson (Carlos Hathcock, Viet Nam era) 

Stefan Jovanovich writes: 

I never quarrel with RPH but a few clarifications.  The essay was about what the people at the time called "The War of the Rebellion" - what is now known as the Civil War, not the War of the Revolution.  That remains the only time U. S. Government authority has been successfully challenged, even temporarily,  by people taking up arms.  Volley fire was the standard tactic of both Southern and Northern armies throughout the Civil War because the limitations of muskets remained what they always were.  The awfulness of what happened to Pickett's men was caused by its use by the Union defenders who used the tactic first with cannon and then with canister and long guns at 300 yards.  Even in ambush the Revolutionary Army regulars were taught to use concentrated fire which was the French doctrine that Washington knew firsthand from its having been used so effectively in the annihilation of Braddock's army.  

The performance of the militia in the Revolutionary War was so notoriously bad that it was used as a tactic by the Americans, who would place the militia as the first line with the instructions that they could fire one volley and then skedaddle through the ranks of the regular army behind them.  This worked to perfection at Guilford Courthouse where the Brits ran and charged on horseback into a murderous concentration of fire because they thought they had broken the Americans and did not need to pause and fire their own volley.

The Second Amendment was adopted at the end of 1791 as a sop to the wounded pride of the state militias that had proven once again to be useless.   


The U.S. would keep its regular army of volunteers AND the militias would be allowed to pretend that they were still the backbone of the American fighting spirit; and the obvious fact of life - people would keep and bear their own arms - would continue as before.



I am late (again) on delivering an historical essay on Panic/Depression of 1837-1842 to an electronic publisher so what better way to prevaricate than offer further political handicapping and personal confession.  First, the confession.  I have been utterly wrong in thinking that election prediction samples had to weight the survey data by Party ID.  That only corrupts the data and obscures the actual information.  If you weight voter file data by race, gender, education, income and age, your sample automatically and accurately calculates what the partisan split will be.
The grumps have become a persistent minority in samples.  The most reliable likely voter sample I have found on the question of "Who Do You Expect to Win?" shows Trump - 45%, Biden - 41% and 14% - "Undecided/Will Not Say".  1 out of 7 people who can be expected to vote do not want to offer an opinion about who they think will win - not who they want to win or who their neighbor wants to win but simply, who will win a 2-person race.  
These grumps are the loyalists to the newest political party - the voice of "unfavorable" opinion.  They don't like anyone - ever; and their opinion is entirely like Fred Silverman's  (who died this year - I put the link to his wikipedia entry at the bottom) brilliant analysis of programming - the winner is the show that sucks less.
The issues - and events - decide what the criterion will be for sucking.  Two months ago, it was Covid-19; and former Vice-President Biden received almost all the "unfavorables" votes.  Last month the issue was the economy; and Trump still sucked more but not quite so much.  This month the issue is "law and order"; and Biden is in trouble.  
The race is turning into a repeat of 2012.  You have an incumbent President with average "approval" ratings who is wildly popular with his base and hated by all the partisans of the opposing party.  Among black  and white liberal likely voters President Obama had near unanimous approval; and his voters turned out.  Trump gets 90% of his "base" of conservative/Republican/Republican-leaning voters.  Like Obama in 2012 Trump has all the money he needs and he has a thoroughly professional campaign organization that has had 4 years to prepare for getting out his vote.  (The black male turnout in 2012 is a record that will probably never be broken; mothers and grandmothers literally dragged their sons and grandsons to the polls to vote to re-elect their race's first President.)  For the people Mrs. Clinton named deplorables, this is one more time to make all those superior college and graduate school-educated voters reach for their hankies.  Those deplorables have made the educated Republicans wonder if they should join the rest of the credentialed and become Democrats, and some have; but their numbers have been replaced by middle-aged and older black men and Hispanic men and women who have no fear of people of their same age who wear MAGA hats.   What is proving decisive is the Democrats' loss of less than graduate-level educated suburban women; the promise of BLM rioters to bring violence to their neighborhoods has been devastating to Democrats' otherwise very good chances of picking up these voters.  It has certainly not helped with these women, most of whom work and have children, for Biden to mumble about keeping kids out of school and continuing the shut-down.  For every formerly respectable Republican family living in "good" half-acre plus zoned neighborhoods who hnow has a Black Lives Matter sign in their front yard, the Democrats have lost two middle-income less than full college households.  The exception has been government employment.  If the people in the household are school teachers/civil servants - i.e. the people still getting paid for not working, BLM is just another word for worker equality and social justice.  The problem for the Democrats is that too many of these people live and get paid in states whose electoral college votes the Trump campaign wrote off from the first day he was inaugurated.
Prediction:  Trump - 319 EV, Biden - 219 EV
Trump wins popular vote by 1-2 million votes.
One or both of two possible events could defeat those likely results:
1.  By October 15 the media succeeds in convincing Americans that there has been a "second wave" of Covid-19 deaths and the country faces a lethal pandemic that Trump has failed to deal with
2.  Trump's arrogance comes through in the debates and allows Joe Biden to be seen as a sympathetic person of adequate capacity to become President  - translation: "He is much less of an asshole"
If I am right, Trump will win the popular vote because balloting by mail will be much less feared/predicted.  Thanks to the shutdowns of colleges and universities, the student vote is likely to drop by 1 million.  A great deal of Hillary Clinton's popular vote victory came from literally running up the score in New York, Illinois and California; in those states, among women, Clinton had enormous popular enthusiasm.  Biden shows no comparable excitement this time; his margin of victory will be significantly less.



Mostly F’s

September 3, 2020 | Leave a Comment

Thanks for the comments and ideas on REITs.  I bought a basket of 10 today
under the premise that stocks down by 50% with good free cashflow, with the
ability to borrow far below lease yields, should come back. Areas like
healthcare, storage and re-purposing seem sustainable.  Amusingly the discount
broker I have been using for decades added a new rating system using classroom
grades - which I did not know about until after the purchases.  Of ten buys I
made, they graded me almost entirely with F's with a few C's.



Experts Never Fail

September 3, 2020 | Leave a Comment

Dr. Zacek writes: 

The population density in Sweden is 25 per Km2 (64 people per mi2).

New York has the highest population density of any major city in the United States, with over 27,000 people per square mile.Just saying.   

Stefan Jovanovich writes: 

That is why they need absolute authority.

Peter Grieve writes: 

Stockholm was doing fairly well, last time I heard. Also just sayin'.



End of Days

August 28, 2020 | Leave a Comment

In polling it really is.  The data continues to be unprecedented.  2020 is the first time since Gallup started doing samples that a political party has had ZERO improvement in the popularity of its candidate for President after its national convention.
Since the DNC:  The number in the brackets is the change in Biden's lead from the previous poll by the same pollster.
Ipsos Biden +7 (-1)
Hill/HarrisX +9 (+1)
Econ/YouGov +9 (-1)
Rasmussen +1 (-3)
Yahoo/YouGov +11 (0)
CNBC/Change +8 (+2)
Morning Consult +10 (+2)
CBS/YouGov +10 (0)

The sum of all 8 polls = 0.  If you remove the outliers in terms of the amount of the change (Rasmussen, CNBC, Morning Consult), the remaining 5 have a MINUS 1 reading.  



American Odds

August 24, 2020 | Leave a Comment

Alex Castaldo writes: 

On this web site https://www.oddsshark.com/politics/2020-usa-presidential-odds-futures the American Odds for Biden to win are quoted as -135 and for Trump +115

For those not familiar with America Odds here is how you convert AO to a probability

if AO < 0:

   prob = |AO| / ( |AO| + 100)


  prob = 100 / (AO + 100)

So the probability for Biden is 135/235 = 0.574

and for Trump 100/215 = 0.465  

Richard Owen writes: 

What is the origin of the AO format? It was deemed more accessible to punters to speak in terms of $100 units? Is the negative sign subconsciously in front of the favourite to dissuade people from betting the favourite? Old school bookrunners tended to be overweight the favourite winning, but now tend to be hedged?

Stefan Jovanovich writes: 

I hate to disagree with Jeff about anything regarding gambling, but he is ignoring what he knows about hedging.  The amount of money actually bet online on  American politics is - at most - a tiny fraction of what is wagered on sports.  The success of DraftKings alone confirms this.


The line on Predict-It and other politics wagering sites can be moved with a bet that will have zero effect on any of the dozen parlays that are offered for the next Liverpool match.  Since the actual wagering does not need to be balanced by the bookies, they can set whatever line will attract the most attention and give them the most publicity and general  traffic.   Political odds are used the way Sam Walton used the stacks of peanut brittle when he started with his J. C. Penney stores.  He put them on the sidewalk or just inside the entrance and the people walking/driving down Main Street have to take a look.  

Biden and his odds are the peanut brittle.  Odds favoring Trump would have the opposite emotional effect.




2015: Khaled al-Asaad, Palmyra archaeologist

Posted: 20 Aug 2020 05:23 AM PDT

Syrian archaeologist Khaled al-Asaad was beheaded by the Islamic State on this date in 2015 for refusing them the ancient artifacts of his native Palmyra.

Eighty-three years old — Palmyra was still a French colony at the time of this birth — Al-Asaad was involved in excavations around that city throughout his adult life. He became the custodian of the archaeological site in 1963 and held the post for 40 years.

When the Salafist militant army rolled up on his oasis city that spring.* he helped to evacuate the town’s museum and Daesh put him to torture to extract the whereabouts of the priceless cultural treasures he’d concealed from them. He made himself a hero to Syria and antiquarians alike by denying his captors any satisfaction save his death — which was accomplished by a public beheading.

At least one other scholar, Qassem Abdullah Yehya, the Deputy Director of DGAM Laboratories, was also killed by ISIS/ISIL for protecting the dig site.

after Khaled al-Asaad

bonepole bonepole since you died
there’s been dying everywhere
do you see it slivered where you are
between a crown and a tongue     the question still
more god or less     I am all tangled
in the smoke you left     the swampy herbs
the paper crows     horror leans in and brings
its own light     this life so often inadequately
lit     your skin peels away     your bones soften
your rich unbecoming     a kind of apology

when you were alive your cheekbones
dropped shadows across your jaw     I saw a picture
I want to dive into that darkness     smell
the rosewater     the sand     irreplaceable
jewel how much of the map did you leave
unfinished     there were so many spiders
your mouth a moonless system
of caves filling with dust
the dust thickened to tar
your mouth opened and tar spilled out



Michael Brush writes: 

So the market got wind of this early and sold off near the close ahead of the announcement?

Futures down post announcement. 

Adam Friedman writes: 

Futures are actually up a little— I think market was nervous it was going to be Susan Rice.Kamala has friends on wall st

Stefan Jovanovich writes: 

The reason I don't trade is that I never, ever understand how "Wall Street" thinks when it comes to political events.  How could the choice of Ms. Harris be anything but a disaster for the Biden campaign?  Trump now has no worries about producing videos that criticize Joe Biden; his campaign can just run the clips from the campaign of Harris accusing Biden of being a racist, sexist…Then they can pull the videos of her being "touch on crime" in California with punitive sentencing for black people.  She comes from a state that the Democrats cannot possibly lose; at least Kaine won Virginia for Clinton.  In the polls that his campaign took before the primary contest with Mrs. Clinton,  Barack formerly known as Barry discovered that one of his serious weaknesses was among African-Americans, many of whom questioned whether or not he was truly "black".  What the campaign discovered was that those questions all went away as soon as voters were presented with images of his wife and children.  Someone who was considered a possible liability for the campaign became the essential partner; that is part of the explanation for how Michelle Obama became "the most admired woman in the world''.   Kamala Harris may be thought of as a "black" candidate by white people; there is going to be considerable doubt about whether black people will apply that label to a woman who is the child of a "mixed" marriage and is married to a "white" man who has adult white children from a previous marriage. 

Let's have a vote from the trading floor; who takes the over on Michelle Obama's being willing to risk her untouchable popularity by publicly embracing Kamala Harris and doing campaign commercials?

Michael Brush writes: 

If anything about the current political environment makes sense, you probably have mental issues

Stefan Jovanovich writes: 

So, MB, is that a vote for the over?



This is, in so many ways, an extraordinary Presidential race.  I have gone through every past election and tried to find an analog, and I cannot.  The 1832, 1864, 1972 races were all re-election campaigns by incumbents who were broadly hated, but none had the opponent's primary attraction in August being that he was not the President.  1864 comes closest with people wondering what McClellan had to offer besides not being Lincoln.  



Stefan Jovanovich writes: 

Although mechanistic studies support the potential effect of hand hygiene or face masks, evidence from 14 randomized controlled trials of these measures did not support a substantial effect on transmission of laboratory-confirmed influenza. We similarly found limited evidence on the effectiveness of improved hygiene and environmental cleaning. We identified several major knowledge gaps requiring further research, most fundamentally an improved characterization of the modes of person-to-person transmission.


Jeffrey Hirsch   writes: 

Wow! So then what was responsible for flattening the curves or slowing the spread? Nothing? Time?

Stefan Jovanovich writes: 

JH: The answers that the mask and shield-wearing medico who earns here daily bread by examining and diagnosing people at non-social distances offers are these: (1) no one knows exactly how viral infections "spread", (2) no one knows how or why they grow and then decline among populations, (3) people with poor health suffer more than people with good health, but, as with lung cancer and heart disease (to take the 2 most common examples), some people escape the likely consequences of their bad profiles and others who should be fine sicken and die, (4) exchanging the air and scrubbing it with filters AND requiring both patients and medical personnel, including office workers, offers the best odds of reducing general risks of infection because it increases the oxygen levels and reduces the "carbon" levels and that, in almost all situations, helps us human air-handling machines.  But the masks need to be changed almost as frequently as surgical gloves to be effective; wearing the same mask for hours at a stretch has zero likelihood of restricting any kind of airborne infection and is guaranteed to have the same kinds of adverse consequences that people get from not changing their water filters within the time limits of their functional capacities.  

What she and her Dad think was and is monumentally stupid is to have shut down and continued to reduce  access to doctors and medical treatment in the name of keeping emergency rooms free. That is what we have decided to call General Staff thinking of the first order - the same kind that discouraged the development of automatic weapons for soldiers on the grounds that they would "waste" the ammunition.

Henry Gifford writes: 

Part 4, about “exchanging” the air and scrubbing it with filters and increasing Oxygen levels and decreasing “Carbon” levels sounds flawed to me.

Most modern commercial buildings in North America, including office buildings and hospitals, typically have systems that gather air from many rooms and put it into a common tube (“duct”) from where it goes through a filter and then a fan and then something to heat or cool the air, and maybe mix in a small % of outdoor air, then return it to all the rooms the air was removed from. Described another way, any airborne viruses in one room will be distributed to all the rooms served by that system, with a small % sent outdoors. Just how many people get sick this way is something that is politically incorrect to discuss or research in the buildings or building design industries, as these systems are the most expensive and profitable to design and install.

Even the fanciest filters have only a small chance of trapping something as small as a virus. People’s respiratory systems expel viruses coated with some water and other materials, in droplets of widely varying sizes, some of which fancier filters can catch, many of which even the best filters will unlikely catch. And retrofitting the fancy filters requires greatly increasing the size of the fan and the motor and the wires that supply electricity to the fan, which almost never happens. A normal air filter is there mainly to keep the equipment free from clogging by relatively large dust particles.

As for adding Oxygen and removing “Carbon,” (Carbon Dioxide exhaled by people), normal leaks in a building provide sufficient Oxygen replacement and Carbon Dioxide removal. Actual ventilation is beneficial for other reasons, but is not necessary for adding Oxygen or (generally) removing Carbon Dioxide. Submarines in WW2 had zero ventilation when submerged, yet running out of Oxygen was never a problem – poisoning with Carbon Dioxide was a problem long before Oxygen deprivation. Absorbent chemicals were used to absorb Carbon Dioxide. Some research in modern buildings has advocated higher ventilation rates as a result of supposedly finding correlation between higher Carbon Dioxide levels (>1,000 PPM) and lower worker performance, but I haven’t heard any talk about adverse health implications at Carbon Dioxide levels found in buildings.

Systems do exist that provide 100% outdoor air to buildings of any type and size, but these systems use very little energy and save space and are quieter, but are inexpensive and simple to design and install and maintain, thus they are not very popular. Even with all the talk about ventilation now, nobody seems to distinguish between “exchanging” used air or new outdoor air – not even a part of the conversation so far.



NGO Vote

August 13, 2020 | Leave a Comment

It is still way too early to make an educated guess about the Presidential election.  It is not too early to examine what each side should be doing to win.
If I got 2016 right, I absolutely blew it on 2018 because I failed to see how completely the Democrats had succeeded in permanently winning the NGO vote.  That is my label for all the people in the United States who do not believe in profit and loss.  That is NOT to say that they do not believe in money and personal wealth; what they think is irrelevant is whether or not government actions require any kind of cost-benefit analysis.
Bernie Sanders' extraordinary success should have been seen for what it was - a commitment to socialist accounting, not Marxist ideology.  As much as "conservatives" had no trouble with the waste and stupidity of our Southeast Asian war, the NGO vote has no trouble with the Black Lives Matter/Antifa violence.  It is not happening in their direct lives, and it is minor violence in favor of what they believe in. 
What bewilders me about the choice of Kamala Harris is that she is absolutely the worst possible choice for engaging the NGO vote.   



Hernan Avella writes: 

A Fearful Asymmetry: Covid-19 and America’s Information Deficit with China

David Moser

July 11, 2020

Volume 18 | Issue 14 | Number 5

Article ID 5422

Abstract: There is a longstanding and fundamental asymmetry in level of mutual understanding between the US and China. Chinese citizens are avid consumers of American media and cultural products, whereas most Americans are woefully unfamiliar with even the basics of Chinese history and culture. This asymmetry has resulted in a situation where the US is in danger of misinterpreting or misunderstanding Chinese motivations in bilateral relations, particularly in times of crisis. This paper recounts how the Covid-19 epidemic of 2020 exacerbated existing tensions between the US and China, and how these escalations in state-to-state conflict were ilarge part due to America’s information deficit with the PRC.



Jeffery Rollert writes: 

The article reminded me of old Cold War articles. Clear local perspective, and cold lanuguage discussing hot topics.  I found the premise to be thoughtful and well explained, but it seemed clouded by reaching to far from it.

K. K. Law writes: 

The author completely missed a very major point and that is likely the result of him also only having very superficial understanding of China and CCP. The author fails to account for the key role of CCP's propaganda machine which controls what the Chinese can read and see and also controls what kind of information and mid-information is allowed to be sent to the West.  The CCP has perfected its machine to control the minds and behaviors of Chinese inside the country since 1945.

Stefan Jovanovich replies: 

1948 would be a better date.  Until the KMT outlawed ownership of gold and imposed price controls - which ruined all remaining exchange value for the currency, the Maoist insurgency had no guarantee of winning.  As usual, the "conservatives" in American politics picked the wrong villain.  The communists in the State Department had little effect on the outcome; the sensible bipartisan financial experts are the people who "lost" China.



The one (ex)lawyer I trust and I have to deal with the last survivor among our parents.  That will require driving through Kentucky in a car with North Carolina license plates and all that entails.  It will be a while before anything further in inflicted on you all.  Until later.

A Dooley Wilson remember this for you political junkies: Michael Dukakis led George H. W. Bush by 17 points in late July 1988. Bush I won by 8 percent with over 400 electoral votes.



An attractive woman feints and asks Grant who rescued her to lure Grant into a compromising position. Where have we seen that.

Jeff Watson writes: 

Or when Clews described an attempt to get President Grant out of the way so Jay Gould et al could corner the gold market without Grant selling government gold. It didn't work.

Stefan Jovanovich adds: 

Grant's first financial act as President in 1869 was to sign the Public Credit Act of 1869. His first choice for Treasurer had been Alexander Stewart, but Senator Sumner had blocked his nomination and offered his fellow abolitionist, George Boutwell, instead. Grant never wasted time fighting a losing battle so he accepted Boutwell. From the start Grant knew Boutwell would be too much of a financial Puritan. Boutwell accepted the Public Credit Act and shared Grant's understanding that the Congress and the United States Treasury had to return to the Constitutional pledge that the only U.S. money was gold and (for lesser denominations) silver coin. Grant was unshakeable in his determination that the Federal government would never again default on paying its obligations in international money. His own calculation was that the Treasury's deliberate default in the first year of the civil war had increased the total cost, through inflation and increased borrowing, by least a third.

What Grant could not get Boutwell to accept was the simple fact that the country was never going to return to its pre-war balance sheet. The abolitionist dream that the national debt could be largely wiped out if not totally eliminated through confiscation of Southern property was, in Grant's mind, illegal (the Confederate soldiers had been pardoned), immoral (the Constitution did not give Congress the authority to take people's property without compensation) and just plan stupid (it would destroy America's credit and property market for a generation). Boutwell and Sumner should accept the fact that the country now had a debt that would never be paid off. Hamilton's wish had finally been granted. The national debt would be there, in size, forever; and it would be the safe asset that speculators and investors, including foreign holders of dollars, would hold while they waited. In 1869 the interest alone on the Federal debt was TWICE the entire Federal budget in 1861: $130,694,000 vs. $66,547,000. In that period the debt itself has grown from $90,582,000 to $2,545,111,000. The debt could be reduced over time; but it would never again be calculated in millions as opposed to billions.

Black Friday is a big deal in the history books because Garfield and Congress had extensive hearings and the story of "the corner" fit everyone's favorite narrative: politicians were corrupt, the market was manipulated, Grant was a fool, etc. The numbers tell a different story. Jay Gould's bet, at its highest, was $60 million. For the 3 fiscal years since 1866 when the debt peaked at $2,755,764, the average net redemption of debt by the U.S. Treasury was $70 million annually - roughly $6 million a month. Through August 1869 Boutwell had bought in $50 million - the pace of regular redemption. The idea that bribing Grant to withhold $4 million in redemption in September was somehow the key to the corner is laughable. The key to the corner was the belief that Boutwell, Grant's sister's husband and others in the Grant administration could be bought. Boutwell could, in fact, be bought - by his fellow Massachusetts citizen, the King of Shovels, Oakes Ames. (Ames is a fascinating figure who deserves attention.)  Of course, the real story - the one that we will not know - is what were the positions and trades of the serious players on Wall Street during that week. The story Crews and others tell is the one Henry Adams wrote up in 1870; it is still the fundamental narrative that will become "history". That is, to my mind, the biggest laugh of all.



I would be right there with Ralph…

The economic numbers are horrible, beyond belief. I'd rather look at Freddy Kruger than Look at them.

My guess/bet is what matters is what flipped the numbers and can they be flipped back?

This is all about the virus. It caused the numbers, it can change the numbers. So, I don't focus on the numbers. My focus is on history pf virus growth and decline…that is my weak spot….if I misread that I will be wrong.

I don't know of a single economic number that forecasts the end of a recession before it is over. Not a one. I do know that stocks have ALWAYS put in their lows and rallied a certain % before the recession is over. In short, stocks are the best harbinger of the end of the recession

On top of that I got my Panic Bottom buys signal as on Cramer, YouTube etc.

This time is like all times…I still wake up at night.. worried, wondering how wrong I can be with a big position on. I know I have had more disappointing trades than Jenny Craig customers.

The answer to me, if it is to all fall out of bed, is in the performance of the daily advance decline line. That is my main focus….

Happy trails to all

PS I have the perfect hedge here, long myself and an investor in RV fund so, "what me worry?"

Stefan Jovanovich writes: 

It might help to see this episode in American history as the analog to 1941/2. The GDP and employment numbers don't show the comparison because the figures for WE 2 make the assumption that all those pieces of utterly useless machinery and all those wages paid to war plant workers and the 13 million in the armed forces were somehow productive in the sense of adding to people's accumulations of personal wealth. They were not, except for the cash savings from the wages. The post-war boom came from the fact that Americans needed to rebuild their personal physical assets. No one had bought a new car or appliance or even a set of tires in 4 years. Given the marginal tax rates and price increases hidden by price controls and rationing, the Fed's interest rates were equal to and at times lower than they are now. As for job dislocations, what faces our society is on a lesser scale than what happened during mobilization and immobilization. What this historical comparison says about future common stock prices I have no idea, but the premise that this period is unprecedented deserves to be set aside. 



Another anniversary in history of American public violence: April 19th, Baltimore Riot of 1861



On the first tranche we were down 28.71% before the market opened this morning. We chose the companies using the test we used to apply to buying private businesses: (1) the enterprise has no debt other than receivables/inventory bank loans, (2) it pays a dividend to its investors (in our evaluation the yield is completely but the fact of a payouts is valuable as a measure of management/owners' acceptance that shareholders are entitled to at least a small share of the tax advantages - something the Oregano never has had the grace to acknowledge), (3) the solvency ratios - Z-score, dividend/$, debt/$, current and quick ratios - guarantee 6 months' survival with no income, (4) the M-score says they keep straight books. We add the Fama fact of life - companies with smaller market caps do better over time, if they are solvent enough to survive, because they are swallowed up by the bigger fish. After today's additional buying too soon, our total loss was reduced to 25%; and we are down to our last 90% in cash. As a bond equivalent, the portfolio is now paying 3.61% on market, 2.71% on cost.



Interesting to watch the limit offer size of epm at 255550 now at 6800… when it starts reducing?

Stefan Jovanovich writes: 

Based on the current futures, our family office should be have a YTD loss of 1.6% when markets open tomorrow.. On the equities - all small caps - that we bought with our first 5% bet of our capital, we will be down a third. So, of course, the logical thing to do is bet another 5%. These speculations are all public companies that might as well be privately owned. None of them is over $5B in market cap; and several are less than $100M. If they had any size, they might be considered "value" companies; the worst of them has a Z-Score higher than 3.30 and a Quick Ratio of 2. At the open tomorrow the portfolio's yield will probably be over 3% (it is 2.86% right now). None of those financial ratios will stand up to the collapse of the but I the current Mellon episode; but they are an indication that the businesses can survive and have enough cash that, if they are smart enough to cut their dividends by as much as half, they can begin looking around for assets to buy. That is what our private company is doing. On the same day we bought our first 5% batch of public common stocks, we suspended all distributions in our private company. If you work there, you continue to be paid; if you are a "capitalist", your income has gone to zero, just like the interest rates on "safe" Hamiltonian IOUs. We presume that, if our income is going to be nil either way, our capital is better wasted on companies that make and do things (none has anything to do with finance). Next week we will begin making calls to competitors to see who wants to liquidate part of their inventory. We know we will be buying too soon because we have never ever made a profit on any investment with a duration of less than several years; and we always lose money before we make any. But, precisely because we can't do what LW and so many of you all do, we have to apply with the careful monotony of the floor man whose job is to playing the nickel slot machine by the main aisle - the one that is set to pay 3 points above even. (Do they still have those? It has been 22 years since I saw the inside of a casino). In the next month or two we will feed in another batch of coins. By 1931 we should be fully-invested.



Since, from the virus' point of view, the purpose of infection is to find a host who will get sick and not die, that would be COVID-19's ideal path. would be to do what the "common flu" does. But, its effects may be much worse precisely because of its interaction with the effects of the already known "common flu" viral competitors.

Dylan Distasio writes: 

A small bone to pick…the virus has no point of view. While infecting as many hosts as possible without killing them BEFORE maximum contagion occurs is the optimal way for viral genes to spread, there is not an immediate evolutionary pressure to do so with new strains or entirely new pathogens especially those with a high degree of mutability. Early bubonic plague and smallpox in the Americas death rates are good examples. Until resistance spreads throughout the target population over multiple generations, virulence can be quite severe despite it not being optimal from the "virus' point of view."

I think that we are incredibly lucky that there is heavy negative skew in the fatality rate distribution curve and that the blended rate is so low.

Stefan Jovanovich writes: 

Great point, DD. I checked with the MD and she said my mistake was to believe that the virus is going for longevity when, as you note, its survival chances are just as good by going for market share.



The 2009 flu infected between 1 and 2 out of every 10 people - .7 to 1.4 billion out of a global population of slightly less than 7 billion. This was more people than the number infected by the Spanish flu. The difference was in the fatality rate. Wikipedia's article says there were between 150K and 575K deaths. Our family know-it-alls who actually studied science and have degrees and get paid for their opinions think the current pandemic has the same transmission rate as the Swine flu, which was much faster than either SARS or Ebola.

They think the fatality figures for the U.S. will be much worse than those in Asia because the government will not be able to compel testing. The data from S. Korea looks good precisely because everyone is being tested. Here the examinations will and should focus on the vulnerable elderly. The range of fatality estimates for the swine flu is nearly 2 times what the estimated infection numbers were. That is because the correlation between deaths and the particular flu were subject to the same variations in the thoroughness of testing. 150,000 to 575,000 people died - a "rate" between .01 and .04 of 1%.



Allen Gillespie comments on this post from Feb 7th:

Having covered the gaming sector and written posthumously on the death of DARPA's Policy Analysis Market - I could not let this post pass without a more detailed consideration, for a few reasons: First, market structure matters in the predictive accuracy of a market. I also think the death of these projects has resulted in a mentality of more data, is better, so we are going to suck it all in regardless of personal liberties even if we cannot accurately analyze it. I personally think a better study of cross correlation analysis would lead to better and more timely insights without the violations to personal privacy we now experience - that is what I proposed to DARPA but they didn't seem interested.. After this latest Corona Virus - our biology will now be collected as well and full tracking will probably be mandatory. Gotta love Big Brother you know. In addition, certain projects have been pushed into private enterprises then the data repurchased data to get around restrictive laws.

1. Spot markets reflect a market's current discounting of future cashflow for stocks, however, a futures market would reflect the spot market at that future point in time. As a result, they both have predicative abilities but they are focused on different periods of time. This is why many do not understand how to use yield curve data, for example, because it reflects varies leads and lags. Spot data, because it is a discounting mechanism, also reflects futures events - anyone have an idea of the best sector in the 2016 election year or the 2008 election year - what about 200? I will give you a hint, what is good for government is bad for business and what is good for West Virginia may not fly in California both identified, and the low in defense spending dates back a few years. This year, China, biology, guns, HSA, student loan, and work and staying at home related names seem to be the themes - just be aware of the weather cycles. Informational warfare is a different game - as there are lots of potential cross-currents and beneficiaries this year - its the Strike You Know - how do you clear a street of protesters? Who says rates should be zero and we should not have sent manufacturing overseas? Who went on strike? What was the policy on Iran's nuclear program and what was the Stuxnet virus? What is the lab safety record in China? Does containing an outbreak lead to more money and nationalization of the healthcare systems? Many competing vested interests here.

2. Political markets are unique given that markets are designed to balance money to the real odds, but in political markets - every man can independently influence the final outcome through actions outside the market. In short, political markets are more likely to be imbalanced by the Palindrome's reflexive function - as a bettor is not only a bettor but potentially a participant with a single vote - different rule set than the markets. Therefore, the number of bets on a side may be more predictive than the money on a side provided each market participate can vote. This was the problem with the PAM and why after 9/11 certain rules were created - if one has inside knowledge - well then certain activities become self-financing. The insurance claims on the World Trade Center are an interesting financial case.

Victor Niederhoffer writes:

What evidence is there that future markets predict actual future events better than spot prices. This will be relevant now that polls give dems almost an even chance while betting markets are highly in favor of Rep. One expects a deluge of articles from newspapers showing that polls in recent years are just as good as betting markets.

Stefan Jovanovich writes:

The betting markets that are serious because they accept sized wagers–those of the bookies in Britain–are options. That is why you can get a quote on a bet that is clearly going to expire out-of-the-money.

If you use linear polling, the spot and futures prices converge nicely the nearer you get to an election.

"Linear polling" is what I call regular sampling over time of an unchanged initial sample–what the LA Times and the private Trump polls did in 2016. The USC Dornsife poll is my current favorite, and they are–not a surprise!–predicting Trump's re-election.

Peter Ringel writes: 

Whatever threatens the old information monopoly will be attacked.



This is the term of art pollsters use to explain why their numbers on political partisanship start to drift away from the "mainstream". Gallup is offering it as an explanation for the fact that their surveys find "the percentage of Americans identifying as Republicans (32% in the past two surveys, up from 28% in the prior two surveys), along with a decline in the percentage identifying as independents (41%, down from 43%) and Democrats (27%, down from 28%)." Should this 1 in 7 increase in the number of self-declared Trump loyalists be enough to defeat "Mike's" money and Senator Sanders' loyal following? The London bookies seem to think so. https://www.us-bookies.com/election/ I think they are looking at the other data Gallup offers for free. Here is the link to their longitudinal survey of Presidential approval going back to Harry Truman. https://news.gallup.com/interactives/185273/r.aspx Incumbent Presidents lose, resign from office or have their party lose badly in the next contest when their approval rate falls below 30. Truman, Nixon, Carter, Bush 1 and Bush 2 all pegged that mark. Trump's rating has fallen as low as 36, but it is now at 49%. In his first term Reagan's rating hit a low of 37% but by early 1984 he was the same place Trump is now.



  An Unsettling New Theory: There Is No Swing Voter

Rachel Bitecofer's radical new theory predicted the midterms spot-on. So who's going to win 2020?

Bitecofer's theory, when you boil it down, is that modern American elections are rarely shaped by voters changing their minds, but rather by shifts in who decides to vote in the first place. To her critics, she's an extreme apostle of the old saw that "turnout explains everything," taking a long victory lap after getting lucky one time. She sees things slightly differently: That the last few elections show that American politics really has changed, and other experts have been slow to process what it means.

Stefan Jovanovich writes: 

Only half of them. Bitecofer has no respect for the notion that people's partisan loyalties shift because of their changed views of their interests. She thinks there is a permanent division between leftist Geulphs and tightest Ghibbelines, and elections are entirely a function of which side sends more soldiers to the battlefield. She is convinced that the Children's Climate Crusade will triumph because they will show up to protest Trump's love of carbon. She could be right. But the evidence is against her. The Democrats won the House in 2018 because the power of incumbency was nil, and the Democrat candidates were the new faces. They lost in the Senate for the same reason. Even the new Democrat faces were old ones in terms of media exposure. Candidates do matter. So do interests. I am increasingly confident the Trump Republicans will run the table because the Trump brand is now JFK liberalism with debt doesn't matter Galbraith economics. There is nothing in Trump's labor policy that George Meany could object to, and the "fiscal conservatives" are all gone. It is guns and butter, preserve Social Security and Medicare and bring the troops home. Against that you have what - abortion rights and gun control and debt forgiveness for graduate students? Really?

anonymous writes: 

Oh, but it's much more than abortion rights and gun control and debt forgiveness for graduate students! Bernie promises to double union membership in his first term, switch to 100% renewable energy, impose national rent control, guarantee everyone a job, provide free high-speed internet for all, give prisoners the right to vote, rebuild Puerto Rico, turn the post office into a bank, and so much more.



"Hindsight Folks, Hindsight – Compare the Vindman, Ciaramella, Misko, McCord and Atkinson Network To Pelosi's Rule Changes…"

Greg Van Kipnis writes: 

And, that story is what lay behind the censored Sen. Rand Paul question. If the question had been made public in the Senate chamber it might have resulted in wider press attention of how the Ukraingate trap was manufactured and how a small group has been working for years to find something they could ensnare the Trump administration with. To me the real big question is the scenario laid out in the article is true and will there ever be an investigation of it?



Their sampling of 1,000 Likely Voters taken a week ago shows a slight edge to the Big Orange. 46% think the President will be re-elected; 33% think he will lose to the Democrat and 12% think he will be convicted by the Senate. 9% are unsure. The sample weights a Democrat preponderance 38% to 32% Republican with the remaining 30% as independent. PredictIt shows the same: 52 cents for the Republican candidate to win; 51 cents for the Democrat.

The London Bookies have a very different view.

From Oddschecker:

Donald Trump -110

Joe Biden +500

Bernie Sanders +750

Pete Buttigieg +2000

Elizabeth Warren +2000

Michael Bloomberg +2000

Hillary Clinton +5000

Andrew Yang +5000



 Teddy Roosevelt did not win re-election in 1904 because he was a Rough Rider in the Spanish-American War. That war's political popularity had faded as the details of the Americans' actual fighting emerged. The woefulness of the Army's weapons and its rifle, in particular, had become a technical scandal. The Krag-Jorgensen's weak cartridge and stupid locking system had been an outright embarrassment compared to the Spaniard's 1893 Mauser rifle, with its higher muzzle velocity, greater accuracy, and ability to be modified for clip-loading.

What won it for Roosevelt was John Hay's rabble-rousing cable to the American consul-general in Tangier, Morocco: "We want Perdicaris alive or Raisuli dead. We desire least possible complications with Morocco or other Powers." Joe Cannon, the Speaker of the House, read the first sentence of the cable to the Republican National Convention, which was grudgingly accepting Roosevelt as its nominee. The convention went wild and "fighting Teddy" became the image for the campaign. The facts of the matter were, as always, rather different than what appeared in "the news".



Stefan Jovanovich writes:

Dec. 18, 1899

1893, 1896, 1890, 1884, 1907, 1819 and 1873. Yet, at the time, the WSJ described the first two weeks of trading in December 1899 as "the most disastrous stock decline in the history of the New York Stock Exchange."

Russ Herrold writes:

The last pre 'Roaring Twenties' cited, 1907 would have been the bank panic quelled by J P Morgan. The quote offered from him was: The markets, they will vary.

Well, of course. This 1899 sour mood arose from heavy casualties in battles against Islamist rebels in the Philippines

"The combination of the M1911 pistol and the .45 ACP round were designed in reaction to U.S. experiences against the Moro tribesmen, fanatical (and sometimes drugged) Moslem insurgents in the southern Philippines in a 14-year rebellion immediately following the ten-week Spanish-American War."

'The .45 autoloading pistol was designed in 1904 by one of our most prolific firearms geniuses, the brilliant John Moses Browning, to be used in his newly designed Colt semi-automatic pistol.' Its predecessor, used in the 1899 rebellion, was a .38 cal, (revolver) chambered in 'Long Colt', a round originally designed during the transition from black powder to 'smokeless' nitrocellulose propellants

At the time, no general deployment pistol stopped a charging Moro like the .45 ACP. Bayonets and rifles also helped, but there had not yet been the cutover from earlier black powder designs to the Mauser inspired 1903 Springfield (which Springfield required an early engineering recall of 100 pct of fielded units, to case harden the receiver to tolerate the much greater pressure of the .30-06 cartridge)

– Russ herrold



 My main Christmas reading this year was Why We Lost, published in late 2014 by retired Lt. Gen. Daniel Bolger. Examining the ROI of US government spending has become a weird passion project of mine. What better place to start than the Afghan/Iraq campaigns, which have cost the US somewhere between $2.5 trillion (Pentagon) and $6.5 trillion (dedicated antiwar interest groups) over the past 17 years, all to turn Iraq into a restive Iranian satrapy?

I picked this book for several very specific reasons. One, Bolger is a prolific author with no apparent career agenda (he retired in 2013), political ambitions, or axes to grind–a combination that's unheard of within this subgenre. Two, it would've been written for publication before ISIS had really put itself on the map (late 2014/early 2015), which recast the Iraq debate into a finger-pointing exercise at the expense of dispassionate analysis. And three, the book's mere title takes the intra-military debate over What Went Wrong to a place most men in uniform won't go.

The book is very readable, and gives the feel of being the middle of dozens of episodic life-or-death firefights, each of which illustrated a larger success or shortcoming of the American strategy. For me, this vivid episodic detail bolstered the author's authority, but grew repetitive after a while.

In his strategic analysis, Bolger is much more nuanced than the title suggests, comes to some interesting conclusions, and, along the way, highlights some very surprising facts. I was astounded to learn, for example, that "the US military did not torture anyone" at Abu Ghraib. (Bolger doesn't hesitate to highlight other episodes of US torture, intentional killing of civilians, etc.) US troops did photograph some prisoners in compromising positions, strip some of them naked, have some dogs bark at them, and intimidate them. In the most infamous case, a prisoner was put on a box with fake electrodes attached to his fingers, and was told they were real and he'd be electrocuted if he stepped off the box, but the electrodes were fake and nothing actually happened to that prisoner. All of these things would fit semiawkwardly into the US military's prescribed environmental manipulation for interrogating suspects without physically harming them or placing them under such duress that they'd say anything escape the situation. According to Bolger, the worst that could be said about what actually happened at Abu Ghraib was that some of these intimidation/degradation incidents weren't related to any specific interrogation.

Bolger also refuses to point fingers at the easy scapegoats. President Bush gets measured credit until the 2006 Iraq Surge, when every general who'd fought in the Iraq theater had told Bush to a) cut American losses and get out, or b) even if the US was to stay, in many respects the larger US footprint was becoming as much of a long term liability as much as it may be a short term asset. Bolger was ahead of his time in assessing the Surge to be both an impressive tactical success and a major strategic blunder. He's more critical still of Obama's subsequent "Afghanistan surge," which recycled the same mediocre Iraqi formula into a theater where it was even less effective, had no justifiable long-term value once bin Laden had been killed (May 2011), and was badly hamstrung by idiotically restrictive revisions to rules of engagement which, up to that point, had been generally OK.

Stan McChrystal's handling of the Afghan theater gets particularly terrible reviews: ridiculously restrictive rules of engagement; McChrystal holding himself/the Coalition hostage to a treacherously ungrateful Afghan president (Karzai) who never would've existed without American backup; and a blatant protection racket in which the US was getting extorted by every side of the Afghan conflict, worst of all by Karzai.

On the issue of Iraqi war rationales (terrorists vs. WMD), Bolger writes as if the military never took WMD seriously: everyone knew that Saddam had no real, functioning nuclear program, and while chem/bio weapons play well in Hollywood doomsday scenarios, in reality, they require circumstances far too specific and consistent (in terms of humidity, wind direction, extremely stable delivery or storage en route, etc.) to be really effective outside of massive artillery barrages of chemical weapons. In terms of capable terrorist organizations, on the other hand, Bolger repeatedly notes that Iraq hosted a genuine vipers' nest of capable, well-equipped Sunni terrorist groups which the Americans had largely liquidated by 2005.

With the benefit of hindsight, Bolger writes, the US had completed 99 percent of its job in the war on terror, at a fraction of the original cost, by 2004 (or even 2003, after the Taliban had been kicked out of major Afghan population centers). Al-Qaeda itself had been completely destroyed aside from bin Laden himself and a few couriers. Many separate groups did claim allegiance to al-Qaeda and attempt to imitate it, but they weren't operationally coordinated. Over time, the Coalition footprint became its own casus belli against the US. The Americans were always occupiers, regardless of how much money they threw around for victim compensation or reconstruction. This was compounded, in Bolger's view, by chronic Sunni Arab double-dealing (always shaking America's hand while stabbing it in the back) and Afghan cultural treachery, in the sense that honesty basically has no place in Afghan culture.

It's difficult for me to take some of this criticism seriously. Was the US supposed to call it quits in Afghanistan in 2003 without killing bin Laden or al-Zawahiri? Would al-Qaeda proper have remained infirm had the US stopped hunting him down? No way. At the same time, if not surging in Iraq in 2006, and getting out of Afghanistan in 2011, were strategically such obvious calls, where was the military criticism of Obama's Afghanistan strategy? Enlisted personnel couldn't make the criticism, but retired personnel could (and in the case of the Iraq surge, loudly did).

Anyway, I'd strongly recommend the book for students of contemporary US military history.

Stefan Jovanovich writes: 

If one looks at American deployments for what they are - largely bloodless training exercises, then Winning and Losing has to be evaluated by what the wargaming produced. In the first Gulf War, the U.S. military capabilities were larger in scale but no greater in technology or ability to engage at the sharp end than the French or British. The victory in Kuwait was greeted almost with relief - see, the Americans can actually win something. Now? The distance between the actual warfighting abilities of the U.S. and the rest of the world is now a chasm. The only comparison that fits is Nelson's Navy. The French, Spanish and Danish navies were still capable of challenging the British in the Caribbean and Baltic in 1780 and even 1790. By 1810 the British Navy was the largest physical and financial enterprise on the planet by a factor of 10.

I am not saying this is a good thing; I am saying this is what happened. The U.S. can win the war in Afghanistan tomorrow, as the President has said; we would just have to turn the place into Carthage. That we don't says nothing more about "victory" than the fact that the British Navy chose not to destroy every American ship on the Atlantic in 1813 because there was still the little matter of Napoleon's continental empire to deal with. Britain spent the next half century enjoying the financial dominance that its Navy had won. The dollar is the world currency now in large part because the Americans have that same military monopoly that Nelson and the Admiralty had created. 



 Observe good faith and justice towards all nations; cultivate peace and harmony with all. Religion and morality enjoin this conduct; and can it be, that good policy does not equally enjoin it? It will be worthy of a free, enlightened, and at no distant period a great nation, to give to mankind the magnanimous and too novel example of a people always guided by an exalted justice and benevolence. Who can doubt that in the course of time and things, the fruits of such a plan would richly repay any temporary advantages, which might be lost by a steady adherence to it? Can it be that Providence has not connected the permanent felicity of a nation with its virtue? The experiment, at least, is recommended by every sentiment which ennobles human nature. Alas! Is it rendered impossible by its vices?

In the execution of such a plan, nothing is more essential than that permanent, inveterate antipathies against particular nations, and passionate attachments for others, should be excluded; and that, in place of them, just and amicable feelings towards all should be cultivated. The nation which indulges towards another an habitual hatred, or an habitual fondness, is in some degree a slave. It is a slave to its animosity or to its affection, either of which is sufficient to lead it astray from its duty and its interest. Antipathy in one nation against another disposes each more readily to offer insult and injury, to lay hold of slight causes of umbrage, and to be haughty and intractable when accidental or trifling occasions of dispute occur. Hence, frequent collisions, obstinate, envenomed, and bloody contests. The nation, prompted by ill-will and resentment, sometimes impels to war the government, contrary to the best calculations of policy. The government sometimes participates in the national propensity, and adopts through passion what reason would reject; at other times, it makes the animosity of the nation subservient to projects of hostility instigated by pride, ambition, and other sinister and pernicious motives. The peace often, sometimes perhaps the liberty, of nations has been the victim.

So likewise, a passionate attachment of one nation for another produces a variety of evils. Sympathy for the favorite nation, facilitating the illusion of an imaginary common interest in cases where no real common interest exists, and infusing into one the enmities of the other, betrays the former into a participation in the quarrels and wars of the latter, without adequate inducement or justification. It leads also to concessions to the favorite nation of privileges denied to others, which is apt doubly to injure the nation making the concessions, by unnecessarily parting with what ought to have been retained, and by exciting jealousy, ill-will, and a disposition to retaliate, in the parties from whom equal privileges are withheld. And it gives to ambitious, corrupted, or deluged citizens (who devote themselves to the favorite nation), facility to betray or sacrifice the interests of their own country, without odium, sometimes even with popularity; gilding with the appearances of a virtuous sense of obligation, a commendable deference for public opinion, or a laudable zeal for public good, the base or foolish compliances of ambition, corruption, or infatuation.

As avenues to foreign influence in innumerable ways such attachments are particularly alarming to the truly enlightened and independent patriot. How many opportunities do they afford to tamper with domestic factions, to practice the arts of seduction, to mislead public opinion, to influence or awe the public councils! Such an attachment of a small or weak, towards a great and powerful nation, dooms the former to be the satellite of the latter.

Against the insidious wiles of foreign influences (I conjure you to believe me, fellow-citizens), the jealousy of a free people ought to be constantly awake, since history and experience prove that foreign influence is one of the most baneful foes of republican government. But that jealousy, to be useful, must be impartial; else it becomes the instrument of the very influence to be avoided, instead of a defence against it. Excessive partiality for one foreign nation, and excessive dislike of another, cause those whom they actuate to see danger only on one side, and serve to veil and even second the arts of influence on the other. Real patriots who may resist the intrigues of the favorite, are liable to become suspected and odious; while its tools and dupes usurp the applause and confidence of the people, to surrender their interests.

The great rule of conduct for us, in regard to foreign nations, is, in extending our commercial relations, to have with them as little political connection as possible. So far as we have already formed engagements, let them be fulfilled with perfect good faith. Here let us stop.

Europe has a primary interests, which to us have none, or a very remote relation. Hence she must be engaged in frequent controversies, the causes of which are essentially foreign to our concerns. Hence, therefore, it must be unwise in us to implicate ourselves, by artificial ties, in the ordinary vicissitudes of her politics or the ordinary combinations and collisions of her friendships or enmities.

Our detached and distant situation invites and enables us to pursue a different course. If we remain one people, under an efficient government, the period is not far off when we may defy material injury from external annoyance; when we may take such as attitude as will cause the neutrality, we may at any time resolve upon, to be scrupulously respected; when belligerent nations, under the impossibility of making acquisitions upon us, will not lightly hazard the giving us provocation; when we may choose peace or war, as our interest, guided by justice, shall counsel.

Why forego the advantages of so peculiar a situation? Why quit our own to stand upon foreign ground? Why, by interweaving our destiny with that of any part of Europe, entangle our peace and prosperity in the toils of European ambition, rivalship, interest, humor, or caprice?

It is our true policy to steer clear of permanent alliances with any portion of the foreign world; so far, I mean, as we are now at liberty to do it; for let me not be understood as capable of patronizing infidelity to existing engagements. I hold the maxim no less applicable to public than to private affairs, that honesty is always the best policy. I repeat it, therefore, let those engagements be observed in their genuine sense. But, in my opinion, it is unnecessary and would be unwise to extend them.

Taking care always to keep ourselves, by suitable establishments, on a respectable defensive posture, we may safely trust to temporary alliances for extraordinary emergencies.

Harmony, liberal intercourse with all nations, are recommended by policy, humanity, and interest. But even our commercial policy should hold an equal and impartial hand; neither seeking nor granting exclusive favors or preferences; consulting the natural course of things; diffusing and diversifying by gentle means the streams of commerce, but forcing nothing; establishing with powers so disposed, in order to give trade a stable course, to define the rights of our merchants, and to enable the government to support them, conventional rules of intercourse, the best that present circumstances and mutual opinion will permit, but temporary, and liable to be from time to time abandoned or varied, as experience and circumstances dictate; constantly keeping in view, that it is folly in one nation to look for disinterested favors from another; that it must pay with a portion of its independence for whatever it may accept under that character; that, by such acceptance, it may place itself in the condition of having given equivalents for nominal favors; and yet of being reproached with ingratitude for not giving more. There can be no greater error than to expect or calculate upon real favors from nation to nation. It is an illusion, which experience must cure, which a just pride ought to discard.

George Washington's Farewell Address, 1796



The only successful American military tradition - the one established by Generals Washington and Grant - is very straightforward: the U.S. should have a volunteer force that can move faster, with more force than any other military in the world and that force should only be committed under a formal declaration of war by Congress that identifies the specific enemy and seeks unconditional surrender. Any other policy/strategy/call it whatever buzzword you choose is and always has been folly.

When Eisenhower gave his warning about the military-industrial complex, he was not arguing against absolute American superiority. On the contrary, his forebodings were that strategic plans for defense were being set aside in favor of pork barrel procurement for "limited" warfare - troop deployments and weapons programs designed to match the needs of Congressional districts for Keynesian spending on activity for the sake of activity and "engagement". Those would, he feared, have the U.S. promising to help the world because, if you had the Green Berets, you would have to find places to send them. He knew, from direct experience, that counter-insurgency would always be a dismal failure. The U.S. had been, by his count, 0 for 3: in the Southern Philippines, in Haiti and in Honduras. Had he lived another half century, he would have seen us strike out again: in the Central Highlands, Iraq (excluding the initial conventional success) and now Afghanistan.

Grant had the same shrewd understanding of what was necessary in war and what the political pitfalls were. His Frontier policy remains our only successful counter-insurgency precisely because Americans stopped trying to win hearts and minds. As President Grant allowed the Army to fight without allowing either the Quakers, the land-grabbers or Sheridan to have their wishes come true. Grant succeeded in disappointing them all and in keeping the broad citizenry from forcing Congress into a policy of annihilating "the savages", even after Custer's defeat. The Sioux were defeated but neither they nor the Blackfeet nor any of the other Plains tribes suffered the absolute genocide that the Mariposa, Monache and Snake had a decade earlier. The Army did so well that, within a decade, they had to add gardening to their duties; they become directly responsible for our first national Park - Yellowstone.

Thanks largely to Grant the United States has the enviable record of having its populations of native Indians and former slaves become full citizens without their having to deny or abandon their heritage; that has happened in no other "civilized" (sic) country - not Brazil, not Mexico, not Australia, not New Zealand, not Canada. Yet, somehow, the very accomplishment that no other country in the world has managed to achieve within its own borders is one we modern Americans think we can successfully export to countries that have neither our faith nor our tolerance. As our 3rd great President/General put it: "There can be no greater error than to expect or calculate upon real favors from nation to nation. It is an illusion, which experience must cure, which a just pride ought to discard."

Peter Saint-Andre writes: 

Stefan, would you mind expanding on your point about native Americans and African slaves not needing to abandon their heritage, as such people did in Brazil, Mexico, Australia, New Zealand, and Canada? An argument for this position seems important in the light of the 1491 and 1619 crowds.



Firehouse Strategies has released a new poll for Michigan, Wisconsin and Pennsylvania. They are more than good news if you are a MAGA fan and very, very bad news if you are loyal to the party of the Great Society. Firehouse is a Republican-leaning consulting firm so their data deserves to be viewed with even more than the usual scepticism. On the other hand, they are far more forthcoming about their methodology than most of the "non-partisan" polls that get most of the media attention.



I can understand why Austrian school economists love sociological explanations for the origins of money. If, as von Mises presumes, capitalism is the a priori wiring of our species (like a kind of Chomskian embedded grammar), then money had to evolve out of the rational need for a medium of exchange. The difficulty is that there is absolutely no historical evidence for the notion that "money emerges as a consequence of economic actors being better off using a medium of exchange than engaging in direct barter"; and there is a great deal of evidence for the fact that money develops as the unit of account for the people with edge weapons who collect bribes aka taxes from people who do not have them.

People in authority needed money to buy things that they could not extort and to bribe the supporters who might otherwise become rivals. The negotiations between authority and the people who could not be wholly intimidated, who had some degree of personal freedom, were the beginnings of trade and money. The promises to pay and to obey made by the parties were the beginnings of credit.

The struggles ever since have been about the quality and quantity of money and credit and the limits, if any, on the monopoly authority has over the question of what will be the unit of account for taxes.



 It took the Yankees–the Yankees!!!–until the 1920s to get a stadium that could hold more than 12,000 people.

…to get their own stadium, yes. In the decade before Ruth's house was built, they were tenants across the Harlem River, in the ~34,000 seat Polo Grounds.

Stefan Jovanovich writes: 

PG II and III's highest attendance were 14.4 and 16K, including standing around the outfield. The increase to 39K came after the fire and new construction which finished in 1917 and was part of the failed attempt to keep the Yankees as tenants.

George Zachar writes:

I erred in relying on Wikipedia. Shoulda known bettuh.

Stefan Jovanovich writes: 

To us bleacher amateurs it looked like a tie, GZ.

"1924 World Series : Washington Senators over New York Giants (4-3)".



 The graph on the link below shows that gasoline sales in the U.S. may already have reached an inflection point.

U.S. Gasoline Sales

Automobiles have about a 12-year average life. The graph below projects that almost all car sales in 2030 will be electric. Therefore, in 2030 the rate of decline in gasoline consumption should be about 8% per year. Some of my liberal arts friends might calculate that in the twenty years from 2030 to 2050 the total decline would be 160 percent.

Projected electric vehicle sales

By the time 2050 rolls around, there might not be enough carbon dioxide in the atmosphere to continue to stave off the start of the ice age, which was predicted to start in 1970.

Automobile companies that rely on the ability to design and manufacture internal combustion engines will face considerable hardship. Petroleum extraction enterprises and countries will need to be the low-cost producer in order to avoid rapid enfeeblement.

Stefan Jovanovich writes:

No one has seriously suggested that distillates can be replaced as the primary fuel for the engines for airplanes, ships, helicopters, farm and construction equipment, large tonnage trucks and railroads. Even the small motors used in chainsaws have had a hard time going electric; Stihl's latest model is a fuel-injected engine, not the battery-powered one they introduced several years ago. The wonderful success of electric motor devices is purchased by their not having to endure the nastiness of the world outside nightly indoor storage and recharging. Their usefulness is unquestionable; their ability to do everything that distillate-powered engines can do is a hope, not a near likelihood.

My favorite Listista enjoys reminding me that I took the pair trade of long coal, short BitCoin back when both Commodities we're priced under $100. (No, I didn't actually do the trade, but if my investing had matched my opinions, that would have been the bet.)So, all churlishness from me about the new energy world needs to be discounted to close to infinity. But, these numbers come from a churl whose calculations Martin Armstrong has chosen to publish this morning.

Current annual gasoline energy consumption by Canadian and American cars converted to electricity, using 30 miles per day as average driving distance and 70 kWh/mile as average electrical car "mileage" rating

Canada 4 Trillion kWh
U.S. 190 Trillion kWh
Present annual electricity generation
Canada .7 Trillion kWh
U.S. 17 Trillion kWh

George DeVaux writes: 

Hi Stefan,

I am always delighted to exchange thoughts with you and always with a smile on my face.

I guess the conclusion from your presentation is that the very large number makes the prospect a near impossibility.

So let me try to develop the cost of a "gallon of electric."

On gasoline, a car might get 25 miles on a gallon that costs $2.50. Searching for electric car "mileage", I get 25 to 30 KWh per 100 miles. For 25 miles, this works out to about 7 KWh (Decimal point error in your calculation?). At retail of $0.12 per KWh, the "gallon of electric" costs $0.84. I think that Carder would agree that the manufacturing cost for electric is about $0.03 per KWh. Clearly, there is more than enough margin to pay for the construction of the necessary capacity.

I will leave it to Carder to calculate how many acres of Palm Springs, California will be covered and how many windmills will shroud Martha's Vineyard, Nantucket and Block Island (NIMBY factor). I will also leave it to Carder to monitor the time-of-day consumption of electric in California to determine the impact of vehicle charging on required generation capacity additions.

We can also have a discussion about fission power (various versions) and fusion power (various versions).

One of my conclusions about the electric car phenomenon imposing an inflection point on petroleum usage - At some point in the future, the usage of electricity by electric cars will increase the need for (and the profitability of) the manufacture of carbon free electricity (solar, wind, nuclear). Retrofitting older facilities for improved operation may be a very profitable investment. 



"Repo-Acalypse Now….":

At least in theory, big-systemic banks with unlimited access to FED liquidity have absolutely no requirement to maintain any cash balances at all (While still complying with the Basel requirements). Because of the instantly available FED liquidity these behemoths are insulated from "runs" and in fact, although they would vehemently deny it publicly, look forward to these liquidity crunches as an opportunity to expand market share, absorbing their smaller "non-systemic" rivals and picking up distressed assets at bargain prices. Because of this implicit bail-out guarantee, they are able to invest their "free capital" in any dog-shit, boondoggle, deals they choose as long as they generate significant fees, which is exactly what they've done. Conversely, "non-systemic banks", without direct FED/liquidity access and "free capital" are forced to maintain higher cash balances, have no/little access to these global-fee-generating-boondoggles, starving them of albeit fleeting/fake earnings.

Amar Somal comments and introduces himself: 

Hi All,

Just to start, I thought the article was excellent and really enjoyed the ideas put forward.

My name is Amar, I'm a student (Geophysics with a love of stats–frequentist & bayesian) in the UK (born & raised) and new to the list. Trying my best to learn about markets and understand what drives them–finding it to be a very enjoyable intellectual challenge. Very much enjoy being part of the thread and hope to contribute in a meaningful way over time.



 One of the litmus tests of liberals is that they think that all individual differences are caused by nurture. They have to believe that all success is due to environment and circumstance and all people would be equal if they had the same environment. But the facts are similar to the influence of the market on individual stocks. About 50% of the variance in individual stocks is due to the market. The equation r(o) = a + b ( m(i) is more in its explanatory power to intel (i) = a + b (giq) where giq is general IQ. The studies of Galton, Burt, and Jensen clearly demonstrate this. Identical twins raised apart have the same difference in their scores as the same person tested twice. The more culture free the test, the greater the genetic component. A good review of this is in Jensen's books and papers and Herrenstein.

Here's an update of Burt and Galton's studies.

Stefan Jovanovich writes: 

Then there is baseball. Yogi Berra, who knew a bit about the game, always said that his older brothers Mike and Tony were much better athletes than he ever was. But, he was lucky enough to come later and have them teach him this American game.



 The chronic need of economic doom topics…

New time series on FRED from the Atlanta FED. (New on FRED. The project is not new.) It is derived via keywords from US/ world newspapers. Methodology. Home. I find the uniformity over long phases fascinating. The Jerry Seinfeld joke come to mind: Isn't it surprising, that newspapers never run out of pages or have blank ones. Whatever happened fits perfectly the space available.

Stefan Jovanovich writes: 

PR's usual cleverness and my coach potato contemplations of this year's World Championship in track and field (this was a glorious year) have me thinking that the steeplechase is a better metaphor for the markets than rock climbing. The worries are repeating hurdles more than they are walls.



 The graph on the link below shows that gasoline sales in the U.S. may already have reached an inflection point.

U.S. Gasoline Sales

Automobiles have about a 12-year average life. The graph below projects that almost all car sales in 2030 will be electric. Therefore, in 2030 the rate of decline in gasoline consumption should be about 8% per year. Some of my liberal arts friends might calculate that in the twenty years from 2030 to 2050 the total decline would be 160 percent.

Projected electric vehicle sales

By the time 2050 rolls around, there might not be enough carbon dioxide in the atmosphere to continue to stave off the start of the ice age, which was predicted to start in 1970.

Automobile companies that rely on the ability to design and manufacture internal combustion engines will face considerable hardship. Petroleum extraction enterprises and countries will need to be the low-cost producer in order to avoid rapid enfeeblement.

Stefan Jovanovich writes: 

No one has seriously suggested that distillates can be replaced as the primary fuel for the engines for airplanes, ships, helicopters, farm and construction equipment, large tonnage trucks and railroads. Even the small motors used in chainsaws have had a hard time going electric; Stihl's latest model is a fuel-injected engine, not the battery-powered one they introduced several years ago.

The wonderful success of electric motor devices is purchased by their not having to endure the nastiness of the world outside nightly indoor storage and recharging. Their usefulness is unquestionable; their ability to do everything that distillate-powered engines can do is a hope, not a near likelihood.

My favorite Listista enjoys reminding me that I took the pair trade of long coal, short BitCoin back when both Commodities we're priced under $100. (No, I didn't actually do the trade, but if my investing had matched my opinions, that would have been the bet.)So, all churlishness from me about the new energy world needs to be discounted to close to infinity. But, these numbers come from a churl whose calculations Martin Armstrong has chosen to publish this morning.

Current annual gasoline energy consumption by Canadian and American cars converted to electricity, using 30 miles per day as average driving distance and 70 kWh/mile as average electrical car "mileage" rating

Canada 4 Trillion kWh
U.S. 190 Trillion kWh
Present annual electricity generation
Canada .7 Trillion kWh
U.S. 17 Trillion kWh



 "Baseball is Going Back to the Dead-Ball Era"

This trend brings one back to the useful idiot Paul Volker, the great scholar and lover of baseball Larry Ritter, and Kora Reddy's excellent study, and our own work proving that doc Greenspan was no doc.

Stefan Jovanovich writes: 

Jared Diamond knows as much about baseball as he does about "steel". The spirit of Larry Ritter–Bless Him–has to be laughing.

James Goldcamp writes: 

I still recall fondly reading a worn copy of The Glory of Their Times as a young boy in the car on the way to my cousins in eastern Ohio. The old timer stories were mesmerizing. A copy of a more recent edition of that book still sits buried somewhere on an end table in my living room. It was probably the first non-fiction book I ever read.

I recently finished reading The MVP Machine which centers on the tech wave of player development which has swept over baseball (down to the "Hit Traxx" at my son's 11 year old team's training facility and the now banned for patent infringement Zepp sensor at the end of my son's bat). This wave has finally fully swept up on my shore as the hero of the aforementioned book Trevor Bauer is the centerpiece of my hometown team's starting rotation and the founder of Driveline baseball has been hired to run pitching.

One hopes the wave of technology adopted by baseball ends better than the hordes of hedge fund-ists and investors who found system trading or smart beta just before the long extended bull run in stocks.

anonymous writes: 

Our daughter is an ambidextrous natural athlete who was accurately described, by the mother of a teammate on the 4×50 12 Under Relays as a "mound of muscle". By age 12, she was able to practice driving our "field car" by sitting in the passenger seat and steering with her left hand. We made her play basketball, run track and swim competitively because otherwise there was no living with her; to this day, if she does not have a 45-minute workout every morning, her excess of physical energy and the impatience that it brings with it is downright scary. For a few months earlier this year, we thought we had seen nature come to our rescue. Her now 9-month old son has the same internal combustion engine. His nickname, Whumpa, was acquired before birth; and, while other infants seem able to be awake without needing to do calisthenics, Whumpa has only two speeds: Full Throttle and Full Stop. For a while it looked like Walter was actually wearing his mother down. But that was only a phase. The two of them now happily go off to exercise together.

I mention this to give you all the background to my only disappointment as a father. It was the day, when she was 6, that, after playing catch with me with a tennis ball, using first the left and then the right hand, she announced, "this is no fun; let's go running." Like John Kruk I am not and never have been an athlete, I love baseball and I have always hated running.

Congratulations to JG on having a baseball player and an athlete and embracing the technology that is making modern baseball such a marvel. 

James Goldcamp writes: 

Anonymous, the last part (the Kruk quote with which I'm familiar and use sometimes) resonates with me. I'm one of the coaches on my son's team. At various tryouts for our teams I'm notorious for wanting to get past the timed running from home to 1st, 1st to third, etc. that is typically part of an evaluation and "just see them hit live pitching". I was pleasantly surprised while watching a Ted Williams biography hear recounted a story where some players or coaches were discussing the intricacies of a pickle or some such situation, apparently Williams was claimed to have said, when asked to ponder this, something like "#@#! it , let's go hit". Bill Beane was also purported to have said (as recounted in Moneyball) that we usually no player is too fat for us to draft, though we made an exception for Prince Fielder, and we were wrong.



Ray Fair came up with a prediction model for Presidential elections in 2002 using macroeconomic modeling. Here is the PDF of his book.

Since then Fair has regularly updated his model and offered comments. Here is his most recent one –from last November.

Moody's has taken Fair's model and refined it by incorporating regional economic data. They claim that this allows them to make state-by-state predictions (Fair's model, as you can see from the links, only calculates a national raw vote total.) They are also trying to incorporate turnout statistics in their model.

President Trump is the most unpopular incumbent President since Harry Truman, if you take the average of the approve/disapprove polling data for all the President's terms in office since Franklin Roosevelt's inauguration in 1933. Both men poll well below 45% - the mediocre level at which Nixon, Ford, Carter and Obama were ranked. What is different about Trump is that his approval has been extraordinarily robust. The variance from the mean has never been more than +/- 10%. So, Trump's "low" 40% Approval is a very different number than other Presidents' bad ratings have been. Those 40% can be expected to actually turn out and vote. the question Moody's raises is whether the Democrats can hope to see the wonderful turnout that they had in 2018 in the House elections. If they can, then the Democrat could win in a close election by reversing the results in PA, MI and WI.

That seems to me a near impossibility. I failed to appreciate in 2018 how much it helped the Democrats to have House candidates who could campaign on one issue - F*!K TRUMP. There was absolute party unity at the District level and a "cause" that excited the party loyalists. There is no way the Democrats can produce that same unanimity for a national campaign. The Sanders, Biden, Warren and No Chance Candidate loyalists are not going to be able to form a "unity" campaign any more than Labour, Lib-Dems and Scottish Nationalists have been able to form a working majority in Parliament.



The biggest regrets people usually have are from the fights they sought, the fights they took that they didn't have to, not from not having engaged the fights they didn't take.

Stefan Jovanovich writes: 

RV's thoughts are a wonderful catalyst, as always. "Regret" is THE question. Grant deeply regretted the Mexican War to the end of his life but he never once regretted the Civil War. He thought the arguments for secession were utterly mad and the United States could not continue to maintain its laws and government while accepting legal inequality and outright servitude based on the phantasm of "race"; but no one was in control of the follies that led to that War Between the States. People were entirely in control of whether of not the United States had a war with Mexico; and their choice was a product of pure greed and stupidity.

I don't think Grant, were he alive today, would have any regrets for the United States finally ending its confused attempts to station garrisons around the World the way the British once established coaling stations.

(Note: that is how how Hong Kong began, as a refueling stop for ships headed for Shanghai. For Admiral Dewey to defeat the Spanish Navy at Manila Bay, he first had to stop at Mirs Bay to take on coal and then wait for the U.S.S. Baltimore to bring the needed ordnance. For Teddy the Roosevelt, the true believer in American Empire, this was a humiliation to be overcome as soon as possible.) 



We now have the first useful data for the 2020 Election probabilities. As you all probably know, my definition of "useful data" is polling that is limited to the jurisdictions in which the actual election is going to be held - i.e. states and individual districts for the House of Representatives. I also have this quirky notion that the pollsters ought to disclose what their sample was, in terms of size, party affiliation and probability of voting (adults, registered or likely voter). Meredith College has just released their October poll for North Carolina.

They pass the test for "useful data"; indeed, they go well beyond it. They are careful enough to note that they have not weighted their sample based on the likely partisan make-up of the actual electorate next November. So, their results are simply a raw collection of opinion using dual mode sampling - i.e. telephone versus internet interviewing. They report that "the average age of the internet respondents was 41, while the average age of the telephone respondents was 53. Otherwise, the differences in gender, party affiliation, and other factors was negligible."

The partisan break-down of the respondents is Republican - 33%, Democrat - 32.1%, Independent - 30.4%, with the remainder "Something Else". They favor an "Impeachment Inquiry" - 48.8% Yes, 41% - No, 6.2% - Don't Know; but they also choose Trump over any named Democrat:

rump - 38.4%, Biden- 34.6%, Someone Else/Don't Know - 26.8%
Trump - 39.1%, Warren- 33%, Someone Else/Don't Know - 27.5%
Trump - 38.8%, Sanders - 32.5%, Someone Else/Don't Know - 28.6%  
Trump - 39.1%, Harris - 28.4%, Someone Else/Don't Know - 32.4%
Trump - 39%, Buttigieg - 27%, Someone Else/Don't Know - 33.9%
Trump even manages to beat a "name randomly chosen out of the phone book" but by the smallest margin of all.
Trump - 42.7%, Random Name - 40.1%, Don't Know - 33.9% 

anonymous writes: 

Anecdotal, but telling imo. I go to a county fair in North East PA in August every year since the kids were little. Last year, there were lots of Maga hats, Trump T-shirts and Trump/Pence 2016 stickers on trucks in the parking area. This year, there were none. Granted it's not far from Scranton, but it's not in Scranton.



 We are all waiting for the Chinese Army to display their superiority by imitating the Soviets' occupation of Prague. Prague's occupation occurred on August 20, 1968 and helped Richard Nixon defeat Hubert Humphrey in the Presidential election. Sending tanks into Hong Kong will undoubtedly help Donald Trump win a second term. There are very few direct parallels between the two events. Czechoslovakia was a nation-state with its own language and government; Hong Kong is neither. But, the events of 1968 are worth remembering for what they say about the presumptions of Proletariat Dictators who have large armies.

Kim Zussman writes: 

Which means they will wait for Ms Warren



 Some of us continue to waste our time on bulletin boards about baseball and military history. This question and the answers are directed to those "groups":

Q: How many people does it take to change a light bulb in a group?

1 to change the light bulb and to post that the light bulb has been changed.

14 to share similar experiences of changing light bulbs and how the light bulb could have been changed differently.

7 to caution about the dangers of changing light bulbs.

17 purists who use candles and are offended by light bulb discussions.

6 to argue over whether it's 'lightbulb' or 'light bulb'.

Another 6 to condemn those 6 as stupid.

22 to tell THOSE 6 to stop being jackasses.

2 industry professionals to inform the group that the proper term is 'lamp'.

15 know-it-alls who claim they were in the industry, and that 'light bulb' is perfectly correct.

249 to post meme's and gifs (several are of someone eating popcorn with the words added, "I'm just here for the comments.")

19 to post that this page is not about light bulbs and to please take this discussion to a light bulb page.

11 to defend the posting to this page saying that we all use light bulbs and therefore the posts are relevant here.

12 to post F.

8 to ask what F means.

16 to post 'Following' but there's 3 dots at the top right that means you don't have to.

3 to say "can't share"

2 to reply "can't share from a closed group"

36 People to post pics of their own light bulbs.

15 People to post "I can't see S$%^!" and use their own light bulbs.

6 to report the post or PM an admin because someone said "f÷×$"

4 to say "Didn't we go through this already a short time ago?".

13 to say "Do a search on light bulbs before posting questions about light bulbs".

1 to bring politics into the discussion by adding that (insert politician of choice) isn't the brightest bulb. This usually takes place within the first three comments.

50 more to get into personal attacks over their political views.

5 admins to ban the light bulb posters who took it all too seriously.

1 late arrival to comment on the original post 6 months later and start it all over again.

Larry Williams writes: 

How many divorced men does it take to change a light bulb?

No one knows. They never get the house.



Ryan Saavedra, who writes for the Daily Wire, has posted his calculations for the causes of mortality in an "average" American day.

Abortion: 2,408

Heart disease: 1,773

Cancer: 1,641

Medical error: 685

Accidents: 401

Stroke: 401

Alzheimer's: 332

Diabetes: 228

Flu: 150

Suicide: 128

Opioids: 115

Drunk driving: 28

Underage drinking: 11

Teen texting-and-driving: 8

All Rifles: 1

I have verified the last statistic using the FBI's report for 2017.

Here are the links Mr. Saavedra posted for his other data:


Heart disease / cancer / accidents / stroke / alzheimers / flu / suicide

Medical error


Drunk driving 

Underage drinking

teen texting-while-driving



 These are the words Yamashita dictated to his Buddhist priest immediately before he was hanged.

Due to my carelessness and personal crassness, I committed an inexcusable blunder as the commander of the entire [14th Area] Army and consequently caused the deaths of your precious sons and dearest husbands. I am really sorry and cannot find appropriate words for sincere apologies as I am really confused because of my excruciating agony. As the commander of your beloved men, I am soon to receive the death penalty, having been judged by rigorous but impartial law. It is a strange coincidence that the execution is to be carried out on the birthday of the first U.S. president, George Washington.

I do not know how to express my apology, but the time has come to atone for my guilt with my death. However, I do not think that all the crimes for which I am responsible can easily be liquidated simply by my death. Various indelible stains that I left on the history of mankind cannot be offset by the mechanical termination of my life.

For a person like me who constantly faced death, to die is not at all difficult. Of course I should have committed suicide when I surrendered, as ordered by the emperor in accordance with the Japanese code of the samurai. In fact, I once decided to do so when I attended the surrender ceremonies at Kiangan and Baguio, at which General Percival, whom I had defeated [in Singapore], was also present. What prevented me from committing such an egocentric act was the presence of my soldiers, who did not yet know that the war was over at that time. By refusing to take my own life, I was able to set my men free from meaningless deaths, as those stationed around Kiangan were ready to commit suicide. I really felt pain from the shame of remaining alive, in violation of the samurai's code of "dying at the appropriate time in an appropriate place." I therefore can imagine how much more difficult it is for people like you to remain alive and re-build Japan rather than being executed as a war criminal. If I were not a war criminal, I would still have chosen a difficult path, bearing shame to stay alive and atone for my sins until natural death comes, no matter how you all might despise me.

Sun Tzu said 'The art of war is of vital importance to the State. It is a matter of life and death, a road either to safety or to ruin. Hence it is a subject of inquiry which can on no account be neglected.' From these words, we learn that our military forces were lethal weapons and their very existence was a crime. I tried my best to prevent the war. I am really ashamed of having been unable to do so because of my weakness. You may think that I am a born aggressor and a typical militarist, because my campaign in Malaya and the fall of Singapore excited the entire Japanese nation. I understand that this is quite natural. I do not excuse myself, as I was a professional soldier and dedicated myself to the military. But even while being a military man, I also have a relatively strong sense as a Japanese citizen. There is no resurrection any longer for the ruined nation and the dead. From ancient times, war has always been a matter for exceptional prudence by wise rulers and sensible soldiers. It was entirely due to our military authorities' arbitrary decisions, which were made by just a handful of people, that a large number of our people died and the rest of the nation was dragged into its present unbearable suffering. I feel as if my heart will break when I think that we professional soldiers will become the object of your bitter resentment. I believe that the Potsdam Declaration will wipe out the leaders of military cliques who led the nation to its downfall, and Japan will start rebuilding as a peaceful nation under new leaders elected by the popular will. However, the path of rebuilding the nation will not be easy in the face of many obstacles.

The experience that you went through, enduring various difficulties and poverty in the last ten years of war, will inevitably give you some strength, even though it was as an unwelcome result of pressure from the military authorities. To construct a new Japan, you really must not include militarists who are the relics of the past or opportunistic unprincipled politicians, or scholars patronized by the government who try to rationalize an aggressive war.

Probably some appropriate policies will be adopted by the Allied Occupation Forces. But I would like to say something on this point, as I am just about to die and thus have great concern about Japan's future. Weeds have a strong life force, and grow again when spring comes, no matter how hard they are trodden underfoot. I am confident that, with strong determination for development, you will rebuild our nation now completely destroyed, and make it a highly cultured one like Denmark. Denmark lost its fertile land in Schleswig-Holstein as the result of the German-Denmark War in 1863, but gave up rearming themselves and made their infertile areas into one of the most cultured of European nations. As a ruined people, we repent having done wrong. I will pray for Japan's restoration from a grave in a foreign country.

Japanese people, you have expelled the militarists and will gain your own independence. Please stand up firmly after the ravages of war. That is my wish. I am a simple soldier. Faced with execution in a very short time, a thousand emotions overwhelm me. But in addition to apologizing, I want to express my views on certain matters. I feel sorry that I cannot express myself very well, because I am a man of action, reticent and with a limited vocabulary. The time of my execution is drawing near. I have only one hour and forty minutes left. Probably only convicts on death row are capable of comprehending the value of one hour and forty minutes. I asked Mr. Morita, a prison chaplain, to record these words and I hope he will pass my ideas on to you some day.

Facing death, I have four things to say to you, the people of the nation of Japan as it resurrects.

First, is about carrying out one's duty. From ancient times, this topic has repeatedly been discussed by scholars, yet it remains most difficult to achieve. Without a sense of duty, a democratic and cooperative society cannot exist. Duty has to be fulfilled as a result of self-regulating and naturally motivated action. I feel some misgivings in thinking about this, considering that you are suddenly to be liberated from the social restraints under which you have long lived.

I often discussed this with my junior officers. The moral decay of our military was so grave that the Imperial Code of Military Conduct as well as the Field Service Code were simply dead letters. Therefore, we had to remind people of this all the time, even in the military where obedience was strongly demanded and defying orders was not allowed at all. In this war, it was far from true that officers under my command carried out their duties satisfactorily.

They were unable to fulfill even the duties that were imposed upon them. Therefore I have some concern over your ability to fulfill your duty voluntarily and independently, after being released from long-standing social restraints. I wonder if you'll be dazzled by suddenly bestowed freedom, and whether some may fail to carry out your duty as required in relations with others, as you've received basically the same education as military men. In a free society, you should nurture your own ability to make moral judgments in order to carry out your duties. Duties can only be carried out correctly by a socially mature person with an independent mind and with culture and dignity.

The fundamental reason why the world has lost confidence in our nation, and why we have so many war-crime suspects who left ugly scars on our history, was this lack of morals. I would like you to cultivate and accept the common moral judgment of the world, and become a people who fulfill duties on your own responsibility. You are expected to be independent and carve out your own future. No one can avoid this responsibility and choose an easy way. Only through that path can eternal peace be attained in the world.

Second, I would like you to promote education in science. No one can deny that the level of Japan's modern science, apart from certain minor areas, is well below world standards. If you travel outside Japan, the first thing you notice is the unscientific way of life of the Japanese. To search for truth with Japan's irrational and cliquish mentality is like searching for fish among the trees.

We soldiers had great difficulties in securing the necessary materials to fight and to make up for the lack of scientific knowledge. We tried to fight against the superior forces of the United States and to win the war by throwing away the priceless lives of our nation as substitutes for bullets and bombs. Various methods of horrendous suicide attack were invented. We exposed our pilots to danger by stripping vital equipment from the planes in order to just slightly improve their mobility. This shows how little knowledge we had for conducting war. We made the greatest mistake — unprecedented in world history — by trying to make up for the lack of materials and scientific knowledge with human bodies.

My present state of mind is quite different from that at the time of surrender. In the car on the way to Baguio from Kiangan, Mr. Robert MacMillan, a journalist of the magazine Youth asked, what I thought was the fundamental reason for Japan's defeat. Something suppressed for a long time in my sub-consciousness suddenly burst out and I instantly responded "science," before referring to other important issues. This was because my long-lasting frustration and intense anger were loosened all at once when the war was over.

I am not saying that this is the only reason, but it was clearly one important reason for Japan's defeat. If there will be another war somewhere in the world (although I hope there won't be), it is expected end in a short time through the use of horrific scientific weapons. The foolish methods of war that Japan adopted will be regarded as the illusions of an idiot. Human beings throughout the world, I presume, will make efforts to prevent such a terrible war — not just the Japanese who thoroughly endured the horror of this war. This is the task that is given to humanity.

The atomic bombs dropped on Hiroshima and Nagasaki were horrendous weapons. Never before have so many people been killed instantly in the long history of slaughtering human beings. As I have been in prison, I have not had enough time to study the A-bomb, but I think that no weapon will be invented to defend against atomic weapons. It used to be said that it would always be possible to fight against a new method of attack. This is still true. If there is any method to defend against atomic bombs — the weapon that has made obsolete all past warfare — it would simply be to create nations all over the world that would never contemplate the use of such weapons.

A defeated officer like me reflects sadly that if we had had superior scientific knowledge and sufficient scientific weapons, we would not have killed so many of our own men. Instead we could have sent them back home to use the knowledge as the foundation to rebuild a glorious and peaceful country. However, the science that I mean is not science that leads mankind to destruction. It is science that will develop natural resources still to be tapped, that will make human life rich, and will be used for peaceful purposes to free human beings from misery and poverty.

Third, I want to mention the education of women. I have heard that Japanese women have been liberated from the feudal state authorities and been given the privilege of suffrage. From my experience of living in foreign countries for a long time, I can say that the position of modern Japanese women is inferior to that of women in the west.

I am slightly apprehensive about the fact that freedom for Japanese women is a generous gift from the Occupation Forces, not one that they struggled to acquire themselves. A gift is often enjoyed as an object of appreciation and not actually put to direct use. The highest virtues for Japanese women used to be "obedience" and "fidelity." That was no different from "obedient allegiance" in the military. A person who respects such castrated and slave-like virtues has been called a "chaste woman" or praised as a "loyal and brave soldier." In such values, there is no freedom of action or freedom of thought, and they are not the virtues by which one can self-examine autonomously. My hope is that you will break out of your old shell, enrich your education, and become new active Japanese women, while maintaining only the good elements of existing values. The driving force for peace is the heart of women. Please utilize your newly gained freedom effectively and appropriately. Your freedom should not be violated or taken away by anyone. As free women, you should be united with women throughout the world and give full play to your unique abilities as women. If not, you will be squandering all the privileges that you have been given.

Finally, there is one more thing that I would like to tell women — you are either already a mother or will become a mother in future. You should clearly realize that one of a mother's responsibilities is a very important role in the "human education" of the next generation.

I have always been unhappy about the idea that modern education begins at school. The home is the most appropriate place for educating infants and the most appropriate teacher is the mother. You alone can lay the foundation for education in its true meaning. If you do not want to be criticized as worthless women, please do your best in educating your own children. Education does not begin at kindergarten or on entry to elementary school. It should begin when you breastfeed a newborn baby. It is a mother's privilege to have a special feeling that no one else can have when she cuddles and breastfeeds her baby. Mothers should give their love to their baby both physically and mentally, as they are the baby's source of life. Breastfeeding can be done by another, and nourishment can be provided by other animals, or can be substituted for by a bottle. Yet nothing else can substitute for mother's love.

It is not enough for a mother to think only about how to keep her children alive. She should raise them to be able to live independently, cope with various circumstances, love peace, appreciate cooperation with others and have a strong desire to contribute to humanity when they grow up.

You should raise the joyful feeling of breastfeeding to the level of intellectual emotion and refined love. Mother's love will constantly flow into her baby's body through breastfeeding. The fundamental elements of future education must exist in embryo in mother's milk. Attention to the baby's needs can be the basis for education. Untiring mothering skills should naturally develop into a higher level of educational skill. I am not a specialist on education and therefore I am not sure how appropriate it is, but I would like to call this kind of education "breastfeeding education." Please bear this simple and ordinary phrase in your mind. These are the last words of the person who took your children's lives away from you.

Gordon Haave writes:

Yamashita got a bad deal (comparatively speaking). The whole reason he ended up in the Manchuria theatre was because he was actually lenient and kind to the conquered peoples of the pacific, so he was transferred because his superiors didn't like that.

Much worse people than him avoided execution.

Stefan Jovanovich adds: 

Yamashita committed the terrible sin of addressing the people in Singapore as "citizens of the Empire of Japan". That was precisely what Tojo and the racist idiots of the General Staff did not want to consider the people of Southeast Asia so, as GH notes, he was shipped off to Manchuokuo.

There was no actual evidence that Yamashita had ever ordered any subordinate to commit what we would recognize as a war crime. That he recognized his own responsibility as commander and accepted his punishment has nothing to do with "the law". What Yamashita was actually guilty of were two terrible sins:

(1) his 25th Army's conquest of Malaysia and Singapore was the most brilliantly successful campaign since Grant's capture of Vicksburg. Churchill considered Percival's surrender the single event that ended the British Empire.

(2) his defense of the Philippines against MacArthur and Halsey's greatly superior forces ruined both men's reputations as invincible warriors. Yamashita forces skillful resistance so delayed the timetable for MacArthur's half of the joint American offensive that it allowed Nimitz's "island hopping" to get far ahead. That, in turn, made Hiroshima and Nagasaki possible and defeated all chance of MacArthur's being the Caesar who conquered Japan. That cost MacArthur all hope of being the Republican Presidential nominee in 1948. 



The wikipedia article is worth reading: Wall Street Bombing.

The day was chosen because Constitution Day, which is today, was, at the time, as important and serious a holiday as Thanksgiving is now.



 The 2 elections in North Carolina give us some actual data–at last–that can be compared against the polls' predictions; but they only offer a vague sketch of where we are heading in 2020. As anyone who has ever tried to use a sextant knows, there was a very good reason that Nelson's Navy had every midshipman on board do a noon sighting. A single set of readings is not nearly enough information by itself. But, with the polling data as charts, you can finally get a decent confirmation of roughly where we are.

Amy Walter of the Cook Report has a new piece that is a very good description of the present location.

The piece has the unavoidable bias of the Cook Political Report; since Mr. Cook's subscribers and consultancy customers lean Left, Ms. Walter gives the Democrats the place above the fold. (For the younger List members this metaphor is a reference to the time when the NY Times, Washington Post and other "serious" newspapers were large enough that they had to be folded in half. The part with the masthead and the column headlines was placed facing up on the newsstand piles - hence "above the fold".) But, Ms. Walter is a journalist first and a partisan second.

If you read to the end of the piece you come to this startling conclusion by David Hopkins, a Boston College political science academic: "Democrats can't make up for losses in rural areas by winning 'the suburbs'." Democrats can win the large metropolitan area suburbs because those districts are now as much majority "minority" jurisdictions as the major central cities themselves. As Ms. Walter notes, "There are now almost as many Democratic-held suburban seats that are majority-minority (49) as there are Democratic-held urban seats that are majority-minority (54)."

Rather than being a major shift, 2018 was, in fact, a continuation of 2016. The Democrats ran up large vote totals in the districts that they never lose; but in the swing districts the vote was split right down the middle.

If I were a Democrat, I would demand that the Electoral College be abolished. That mechanism succeeds exactly as it was designed to do: the smaller, more rural jurisdictions cannot be overwhelmed by the sheer numbers of the urban demos. In writing this I am not trying to excuse away my utter failure to predict the 2018 results; but I am explaining why what appeared to be a landslide was, in fact, another narrow election, just like 2016. Give Mrs. Clinton the right to take 2/10ths of 1% of the national popular vote - 257,677 - and take them from California and put them in the states of her choosing, and she would be President. Give the Republicans the same fraction (.00216 to be precise) of the 2018 total vote and let them put them in the 18% of the House districts that were "swing" seats and the Republicans not only retain control but add seats.

What Trump has achieved is the restoration of the Republican brand with the white-skinned majority of the electorate. Democrats have been out of favor with Whites for a decade and that negative opinion has been consistent: in 2010 Whites' feelings towards the party of slavery, segregation and affirmative action were -18, and this year they are -17. But, as recently as 2014, the Republicans were no better: in that year they were -11 and the Democrats -16, a spread of only 5 points. This year the spread is 21 points, and the Republicans have a positive rating of +4. That "reboot" of the GOP as the party of white-skinned privilege is the best single explanation for what happened on Tuesday here among the pine trees and live oaks.

What is most likely to explain next year's election is the decision of Trump's campaign to use "Socialism" as the nasty label for the Democrat nominee. For the Democrats' strongest voting segments - single women, urban and large city suburban residents, the young with college diplomas and student loans, and African - that label is an endorsement. But, for the less-than-college educated white and brown-skinned voters and the people with savings counted in the thousands, not millions, "Socialism" means more money for the schoolies and more taxes for them. It is a devastating message, especially for the suburbs in the swing states.

For those who want more poll data, I recommend this.



Admiral Conolly is another person who deserves being remembered.  If Kelton had written American naval yarns, Conolly would have been a model for one of his brave characters.

The subject line refers to how the Admiral and his wife died.
The 737 Max and its difficulties have their predecessors.



Thomas Edison once described Charles M. Schwab as "the master hustler". He meant it as a compliment.

For one brief moment in 1916 Schwab had an offer in hand that would have made him the richest man in the world. At the close of the first year of the Great War the German ambassador to the United States offered Schwab $100 million for his controlling interest in Bethlehem Steel. The British armaments industry was almost completely dependent on Bethlehem to produce the high carbon steel essential for manufacturing cannon barrels and submarine hulls. When the British learned of Count von Bernstorff's offer, they were scrambled to make a counter-offer. The British ambassador Cecil Rice and the President of Chase National Bank, Barton Hepburn, approached Schwab and proposed to buy him out for $150M. Schwab said no.

Reading the numbers for Amazon today [September 2cnd] made me think of what Mr. Bezos could realize if he sold out. The likelihood is that he would say "no".

The numbers: Amazon's common stock sells for 58 times next year's predicted earnings and 36 times the total earnings for the company in its 22 years of public trading.



"Guy Gabaldon: an Interview and Discussion"



Brexit is, for our time, what the "free trade" movement actually was.

It was the rejection of Left-Right as the model of the public mind.

The man who has begun that transformation and who knows more about the mathematics of turnout and persuasion than anyone is Dominic Cummings.



Armstrong Economics on "Private vs. Public Rate".



If you waste your time as I do, reading through academic journals on JSTOR, you already know that Great Britain had a "Great Depression" between 1873 and 1896.

Musson, A. E. "The Great Depression in Britain, 1873-1896: A Reappraisal." The Journal of Economic History, vol. 19, no. 2, 1959, pp. 199–228. JSTOR.

If, as I hope, you have more interesting and profitable things to do, this information will come as a complete surprise. How can Britain have had a two decade long depression at the same time it was the greatest financial power in the world, with the largest empire and a navy that literally ruled the seas?

The answer is that "Britain" did not have a depression; its owners of capital did. During the period "the standard of living improved. Prices certainly fell, but almost every other index of economic activity-output of coal and pig iron, tonnage of ships built, consumption of raw wool and cotton, import and export figures, shipping entries and clearances, railway freight and passenger traffic, bank deposits and clearances, joint-stock company formations, trading profits, consumption per head of wheat, meat, tea, beer, and tobacco - all these showed an upward trend." "(T)he wail of distress did not come from the mass of the people, who were for the most part better off, but mainly from industrialists, merchants, and financiers, who felt the pinch of falling prices, profits, or interest rates."

It could be that the developed world - the part of the planet that now has half of its outstanding bonds quoting negative rates of return to holders and prospective buyers - has just embarked on a similar historical journey. The parallel appeals to me because of all our past political figures Benjamin Disraeli seems the one closest in temperament and style and interest to Donald Trump. Disraeli's greatest tenure as Prime Minister was from February 1874 to April 1880 - the dates during which this Great Depression got underway.



"Ricardo: China is Weak: Part 1"



 When the people, through the Constitutional Convention and the votes of the States, adopted Article I Section 8 of the Constitution, they gave Congress the power "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures". By its Currency Act Congress could define the country's money as specific weights and measures of particular metal and authorize the Mint to produce that currency in standard forms. Only Congress could do this. Section 10 of Article I removed from the States any power to "coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts". Only the Coins authorized by Congress would be legal tender.

Note what is omitted from Congress' limited powers and what is not prohibited to the States. The Congress is not given the power to create a central bank, like the Bank of England. The States are free to continue doing what they have been doing. They can authorize the formation of private banks and those banks can issue notes.

By establishing a gold currency standard and not putting it under the authority of a central bank, the Americans were, once again, violating the accepted rules of nations. They were explicitly prohibiting the establishment of any claims to aristocracy or state religion and rejecting the presumption of all governments that they had "sovereign" authority over property. Their idea of a mint coinage currency standard of precious metals was anything but simple. It was rejecting the notion that, like God, "the law" can be immutable and unchangeable. That, of course, was and is the plain meaning of the assertion that legal tender can be a "store of value". It cannot. Whether made of gold (or silver, nickel or copper or any other metal) or paper, money cannot avoid having its price fluctuate any more than anything else that is traded. What a gold standard can do is fix, with absolute certainty, what everyone, including the government itself, must recognize as the national unit of account.

And why was this necessary? Because, if you were going to embark upon the grand voyage towards the wealth of nations, you and foreigners had to be able to agree upon the terms of trade. That is why the Constitution was so specific about requiring Congress to "regulate the Value" of both U.S. and foreign Coin. Both Americans and foreigners had to share a common standard for their dealings with one another in money. Clearly, paper would not do. The colonists, the English and the French had all tried printing their currency. "The law" had done its best to make people accept paper as fully-valued money. But, whenever people were free to say "no", they did. But everyone would accept coin as a common unit of account. And, indeed, they did.

When Professor Cochrane writes: "The idea behind the gold standard is simple", he is ignoring all this history. I doubt he knows much of it. If he did, he could not write this about the 19th century: "If the value of gold rose relative to everything else (deflation), people gained an incentive to spend them, and thereby drive up the prices of everything else. If the value of gold fell (inflation), people needed more of it, so they spent less and drove down other prices. This crucial mechanism linked the price of gold to all other prices."

Nothing "linked" gold to all other prices. The common units of account for international trade - both gold and silver - were the prices. Whether people kept more or less money depended entirely on their expectations: (1) would their creditors pay? (2) would the harvest be "good" or "not so good" or "bad"? (3) would there be a war? (4) would lending at these rates be profitable?

All of the same questions that people now ask about finances were asked then.

There was only one difference: the government had to pay for its credit like everyone else. Now, governments have central banks that can literally make it profitable for governments to borrow money. Yet, at the same time, actual credit for people remains as rationed as ever. No bank anywhere is offering negative interest rates on credit cards.

In the 19th century this brave New World had yet to be invented. If governments wanted something and could not use force to steal it, they had to go to the market like everyone else. They could either offer money or make promises sufficiently sound that they could borrow money; but they had to follow the same rules.

No wonder reformers demanded that the United States have a central bank, like all the other countries. No wonder applying a gold standard to the country's money (and demanding that foreign countries do the same if they wanted us to accept their payments) now seems to every "educated" person a disastrously terrible idea. Professor Cochrane was not, but States were free to establish private banks and those banks could issue notes.

States could not themselves issue legal tender, but they could authorize the creation of banks Actually the idea behind the gold standard us anything but simple; it is so subtle that its defenders and critics alike cannot be bothered to learn its history or understand its function.



 With little previous warning and without any notable event to bring about the crash, buying power suddenly disappeared from the market about the 13th of March and, after serious losses on that day, prices of leading stocks plunged downward many points on the 14th. Reading, which opened at 115, closed at 93; Amalgamated Copper fell from 98 to 80; American Smelting from 130 to no, and Union Pacific from 145 to 120. Losses in many other cases were 20 percent, and in some cases much more. Issues which were not of a first-class and well-known character became almost unsalable. Margins were wiped out, stocks were thrown over without regard to price, and heavy losses were suffered by wealthy men who had been induced to buy Union Pacific and other stocks in the expectation of an advance. Paper profits shriveled up more rapidly than in the great market breaks of "Black Friday" in 1869 or of the panic of 1873.

Charles Conant



Watch "Bridgewater's Ray Dalio Discusses the Impact of China's Growth on the World Economy" on YouTube

Watch "Gordon Chang: On Hong Kong Protest, Chinese Economy, Trade War, & Trump's New Tariffs" on YouTube 

Very distinct views. What is yours? Btw, any news on Jim Chanos' latest China results? Seems like he backed out his short earlier?

Stefan Jovanovich writes: 

When Cantillon shorted "France" - i.e. John Law's system, he went to the Bourse in Amsterdam and bought gold with a promise to deliver assignats. The difficulty with shorting "China" is who are your buyers? Cantillon's counter-parties were not AIG fools; they needed Law's paper to pay their French taxes, which could only be done with Law's paper legal tender. But who outside the jurisdiction of the PRC has a need for the delivery of Yuan?

Mr. Chanos' shorts, to the extent he disclosed them publicly, were derivative bets against exporters to China that did not touch the currency at all. Kyle Bass' hints at his short position, which he has closed, involved the exchange between renminbi and the Hong Kong dollar. A question for the List: where, in fact, can a sizable bet be made right now that shorts Chinese legal tender? A bet against the dollar in BitCoin can be laid on in volume but not Yuan. The price CNBC puts on its screens is no more a market quote than the exchange rate for Venezuela's money. Or, have I answered my question already. A purchase of BitCoins in China with the domestic currency would seem to be, for now, as good as selling assignats for future delivery in Holland in 1719. 

Peter Ringel writes: 

Hi Leo, I don't see necessarily a contradiction between the two.

Dalio seems to highlight opportunities in the Chinese private sector. Chang points to the many issues and question marks, that arise from the behavior of the Chinese government.

Anecdotally, I only hear of foreigners exiting China's "physical" sector. I don't know what foreigners are doing in the financial sector in China.

Isn't Dalio concerned about the rule of law? Will he get his money out at some point? I believe Dalio talks a bit to his book and to ears in China. His historical analysis of past global powers, which was also posted on his blog a little back, is aimed in this direction. I do see contradictions mid and long term. With all due respect to China's culture and idiosyncrasies, how can an economic power house and a police state coexist? (Mainly corruption will rip any economy apart).

What do you think the prospects are (in case as an analogy)? The ear on the ground is always the best source.

anonymous writes: 

Hi Peter,

I have been quite negative since a few years ago, and so started long term traveling outside the country since 2015.

I feel quite the same that Dalio was talking to his book and the top ears in the country, and suspect that might be a precondition for him to take his money out now.

His data presentation looks convincing, but it seems dated without considering the country's abrupt shift to the far left in these few years. One may argue that he is looking at a trend on a century level and a few years time can thus be well neglected. Well, people in the West really lacks the experience of what "far left" means. That alone, not to mention about other big issues in the country, will cause a deep and likely long hiccup in the near term, which might well expire everything imagined for the long term.

Larry Williams writes: 


Never forget: the Long Term Trend Is Up…do not fear the future. Fear does not create death. Fear limits life.



The Cornucopian history of the last two hundred years will continue into the future.

"Impending Defeat for the Four Horseman of the Apocalypse"

Stefan Jovanovich writes: 

With friends like Mr. Bailey the odds of a decent future for our species already has enough reasoned enemies. Who else could write this - "(M)an-made climate change arising largely from increasing atmospheric concentrations of carbon dioxide released from the burning of fossil fuels could become a significant problem for humanity during this century." - yet fail, in an article about the to mention either nuclear weapons or pandemics? We should all pray that crowds in their wisdom remain as sceptical as possible. When the future gets so bright you have to wear shades, someone has just delivered a bomb.



 Today [July 30th] in 1609 Champlain introduced gun powdered weapons to New England by helping the Hurons attack the Iroquois.

The result was what the folks at StrategyPage rightly describe as the final phase of the largest of the original aboriginal wars in North America. For at least a hundred years before Europeans sailed up the St. Lawrence, the two nations had contested for control of Western New York. The pressure from the Huron in Ontario had helped form the Iroquois Confederacy among the Seneca, Onondaga, Mohawk, Cayuga, and Oneida.

"By 1627, the Huron, with French support and guns, had effectively driven the Iroquois out of the Valley of the St. Lawrence…The Iroquois sought support from the Dutch, then just settling in the Hudson Valley, and later the English, who seized New York from the Dutch in 1664. Termed by one historian "the only people north of the Rio Grande who consistently practiced every principle of war at all times," in 1648 the Iroquois, who could field some 16,000 warriors, began a devastating series of campaigns that in a generation saw them harry their foes relentlessly from New York across the Great Lakes and into Canada, until the Huron and anyone who offered them aid had been effectively exterminated."

George Zachar writes: 

Upstate New York has such an interesting history. I'm always saddened when I go up there now, and see its current status as a suppressed backwater.

Stefan Jovanovich writes: 

"Suppressed backwater" is, alas, a perfect description.

Peter St. Andre writes: 

One wonders how upstate NY would do on its own.

We need 250 states.



 Mine. 46 years ago. The best, by far, of all my many efforts at being Melville's Confidence Man. "A Mute Goes Aboard a Boat on the Mississippi"

When I arrived in Berkeley in 1972 to go to law school with a duffel bag and nothing else and met the only woman in the world I have ever wanted to marry, she asked me if I was a Polish seaman off one of the break-bulk freighters that still occasionally docked at the Port of Oakland. (All gone now; only containerships.) Thinking about that reminded me of Melville's extraordinary work–which is nearly impossible to read now but remains the best single description of what this country has been and is. It was also the catalyst for the careers of my two favorite Americans - Ulysses Grant and Samuel Clemens.

I have successfully run the happiest of long cons on Susan and then our daughter and now her husband and infant son. With luck and the help of Almighty Providence I may last beyond these 74 years long enough to teach Whumpa how to drive stick.



 We left off Sunday with a speculation about whether or not the Chinese would find collecting the rewards from their contractor imperialism as frustrating as the European nations did. But, as a long-suffering Mets fan reminded me after his team went down in extra innings against the Giants for the 3rd time in 4 days, shouldn't the question be whether military might can ever be sustained without the profits from foreign lending and direct investment?

It is worth considering.

In spite of the truly awful carnage of the Great War, none of the European imperial powers questioned the profitability of imperialism itself. The Versailles Treaty "failed" not because of German reparations but because half of the winners were excluded from what they considered their fair share of the spoils. Of the 6 Allied nations who fought against the German, Austrian and Ottoman Empires, 3 received no substantial rewards from the redrawing of the world's map in the name of ending all war: Italy, Japan and Russia. Their various responses to having been "badly cheated" are the preconditions without which no Second World War could have occurred. Whether empire was ever, in fact, going to be profitable for Italy, Japan, Russia or Germany is the perfect kind of question for academic debate. It ignores the central fact: no country after 1918 thought its currency could resume being freely exchanged in international trade and finance without having the rewards that came from imperial commerce.

I doubt very much that Donald Trump knows this history; yet he seems to have hit upon the policy that the British Empire used before World War I with great success. Even before his election, Donald Trump was asking why American imperialism had failed to achieve similar success. Since taking office, his one consistent foreign policy has been to have America's "allies" place more defense orders with U.S. manufacturers. In the industries that it chose to support - civilian and military shipbuilding, shipping and the finance that went with it - Britain was #1 for much more than a century. As late as 1914 a third of all world trade was carried on British ships, built in British yards and insured by Lloyds. Britain's naval construction program was an essential component of that system; it was, along with railroad construction, the base for British industry. For Britain the achievements of "free trade" were, in fact, the rewards of military dominance; and the "strength" (sic) of the pound sterling was Britain's ability to collect, by fair means and foul.



 But, first, a reminder of why this is the best time of year if your team still has any chance at the wildcard. After beating two of the best starting pitchers in baseball, deGrom and Thor, the Giants go up against a starting pitcher with an E.R.A. of 11.34. He shuts them down without a run for the first 5 innings and they lose 11-4. As Joaquin Andujar, marvelous player and a great wit, once said: "There is only one word for baseball: 'Anything can happen".

Contrary to the Federal Reserve anime fairy tale (thx, Kim), there has never been only "money". The archaeology of artifacts and accounting records always finds at least two different kinds of cash: (1) the currency that the people with edged weapons (now guns), official uniforms and titles collect from people for tribute, taxes and bribes; (2) the currency that other people with edged weapons (now guns) who can't be bullied will accept as payment

I am a Constitutionalist on this question because Washington, Morris and the majority in Philadelphia never let the common sense of experience be defeated by theory, even one as useful as Adam Smith's. Hence, these provisions in Article I Section 8 for enumerating the powers of Congress: To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States; For the Constitution's authors and the people who voted to ratify its words as Supreme Law, the labels for these two kinds of money were (1) legal tender and (2) free exchange. Coin, both American and foreign, could serve as either or both monies. But, evidence of debt and property ownership in whatever form would be Securities. When Washington warned his countrymen about foreign entanglements, he was talking about money as much as war. Grant said the same thing 3 generations later, when he advised China and Japan, "to avoid foreign debt and the ruin of war that always comes with it". Both men knew, from direct experience, how empire was always and everywhere a corruption. They also knew how it got started. Countries that found a technological advantage - in arms, transport, manufacture and/or agriculture - would quickly accumulate international exchange. Those accumulations would get spent - on wars and on distributions to the politically important, which could include "the people". (Pericles will always survive as a hero of Athens, in spite of his disastrous wars, because the newly-discovered and productive silver mines worked by slaves showered the demos with MMT free money.) The amounts not spent would be "saved". Since "saved" money, whether legal tender or international exchange, could only gain profits beyond arbitrage by being invested, successful empires quickly found themselves lending or directly spending money abroad. That automatically raised the question: what money would be used to reward the investors back home? The easy and obvious answer for imperial investors was to have payments done in a currency that was both legal



 In the years before electronics, cash meant Federal Reserve notes. The Fed, in deference to the fact that it still needs to order currency to be manufactured by the Treasury, still reports how many of its notes are in the vaults of banks and "issued and outstanding" in the world. But that number no longer has much direct relevance to the question of banking reserves. When the banks report their Liquidity Coverage Ratios, the calculation is "net cash" but that number is composed of the following components:

(1) Unsecured wholesale funding - unsecured debt and institutional deposits

(2) Secured wholesale funding - repurchase agreements and securities lendings

(3) Retail deposits - brokered and transactions deposits, certificates of deposit

(4) Derivatives and commitments

(5) Contingent funding

Currency itself is no part of the "net cash" figure. For those of us in the bleachers enjoying the Giants' return from the dead, the focus on cryptocurrencies is as puzzling as the Dodgers' inability to acquire a bullpen. Why would cash in any form - digital or printed - be the financial problem that requires a brave new technological world for its solution?

anonymous writes: 

Strictly speaking, LCR is one of a long list of capital adequacy tests, and not a reflection the optimum amount of physical currency on hand at the branches. In any case, vault cash is now largely comprised of ATM lockboxes spread across a wide geographic area. If an institution needs to depend on vault cash to settle immediate capital calls, pay off depositor withdrawals, to maintain reserves, or to comply with any of the other testing regimes, then they've probably already failed one or more metrics, such as NSFR.

Incidentally, if you're wondering why any institution would purchase negative yielding instruments, the HQLA (high quality liquid assets) component of bank capital adequacy testing is the reason.

another anonymous commenter adds: 

Are you evaluating solely the currency utility of cryptocurrencies? The below doesn't seem to touch on a store of value. Also, I'm not clear on where you say e-money if you mean digital dollars or cryptocurrencies.

With regard to interest, you mean other than disintermediation of banks? This seems like a worthy goal in itself. Maybe a bit retro, it is my understanding that some time ago it was common not to trust the banks at all and keep cash at home. As a virile youth, I would not know how much of that is apocryphal. In any event, that option has been largely taken off the table as cash becomes part of a the shame and suspicion culture. Future transactions will stay entirely in bank accounts from deposit to spending.

With that in mind, I'd argue financial privacy is another large driver. As nations move down the path of digitizing their currencies and eliminating physical cash (even though India reversed course for now), the tracking and sharing of every transaction and financial habit becomes more thorough. I've noticed that my Chase Sapphire Preferred card happily shares all of my local transactions with Square and I get emailed offers from local businesses I've never shared information with. In my cryptocurrency fantasies, I would love a future where I could buy a movie ticket online anonymously by just paying with a QR code. Instead I end up logging in or filling out pages of personal information (carefully deselecting all optional email promotions) only to have my information profitably shared behind the scenes.

Additionally there is, of course, the innovation itself. The new concept of distributed digital scarcity hasn't found it's limits. That probably interests only a few of us, but it's enough to keep spurs to the development even in people's spare time.

I'm guessing a bit on your question and the answers and may have missed the mark so I'll stop here. To me there are so many interesting points on the topic, that I don't understand why others aren't equally fascinated.



 The NY Fed has produced a marvelous interactive map of U.S. dollar funding.

Zubin Al Genubi writes:

I wondered: Where does credit card money creation fit in M1?

According to an article I read:

"In short, credit cards, debit cards, and smart cards are different ways to move money when a purchase is made. But having more credit cards or debit cards does not change the quantity of money in the economy, any more than having more checks printed increases the amount of money in your checking account"

That doesn't seem right to me. Credit cards are the universal payment method and create much much more liquidity than cash, is easier to spend. Often people buy beyond their ability to pay in one month, so liquidity is being created. And the US economy runs on consumer purchases.

Stefan Jovanovich responds: 

ZAG has asked the questions that, in one form or another, American law and banking practice have done their best to avoid answering, ever since the country was founded: where is the boundary between money and credit and what is the definition of the U.S. dollar? The U.S. Code is no help; its only definition of the U.S. dollar is that it is legal tender. "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts." 31 U.S.C. 5103. But what "it" is remains wonderfully vague. So, too, do the Treasury's own practices. It does not require payment of legal tender for taxes; you can use your credit card.

There is a good reason for all this seeming confusion. The country needed it in order to get started. When the war veterans met in Philadelphia in 1787, they had to establish a national unit of account that was not a fraud while, at the same time, borrowing enough money to pay the veterans' promised pensions and the government's own expenses. Their solution was an elegant finesse. Money would be defined, by weight and measure, but any Coin, foreign, private or newly-Minted by the U.S. government, would be legal tender currency. The United States would not issue paper money, as the British had; and there would be no national bank. Congress could borrow Money, but there would be no Bank of England that could use its own notes for repayment. Congress would be responsible for defining the unit of account to be used as the yardstick for measuring foreign and domestic currency, but U.S. law would only specie as Money. And, the States of the new United States would be specifically prohibited from doing what they had done during and even before the Revolution - turning their own bills of credit into money. This was so important that the Constitution goes far beyond its usual tact is pronouncing where Federal sovereignty would be supreme. The States would NOT issue bills of credit and would NOT go to war. For the veterans of the Revolutionary War, who had seen what the States had done to the country's money and what Tories had done when they had control of state government, those were the two rights the States would never be allowed to have. It worked. Before Washington left office, the U.S. had a perfect record of borrowing and paying back the money lent by its Dutch bankers.

There was only one problem: people were hot to buy more and more land, and the U.S. and most state governments were insisting on being paid, in money. Clearly, this would not do. The solution was for the States to get into the credit business. By creating banks, they could find their way around the Constitution's prohibition on bills of credit; the banks could issue notes, and those notes could be accepted by the Federal and state Treasuries as payment for Federal and state lands. The arguments over the Second Bank of the United States was not, as Schlesinger says, over "hard" money; it was over whose bank notes would be considered sufficient payment for the land sales. When Jackson decided that only gold coin would be accepted, he was creating the very paradise that Ron Paul wishes for - a country with only 100% gold-backed bank notes and, therefore, very little, if any, private credit.

A correspondent reminds me that the land sales were very much like the Treasury auctions in the good old days of guaranteed spreads. The land was sold to primary dealers at fixed prices per acre; the dealers then resold the property purchased at auction. When and where the auctions would be held became a matter of public record only after they were completed, and the funds paid to members of the House and Senate for what was truly inside information were worthy of the bribes that Vanderbilt and others paid to the New York State legislature. "There is no distinctly native American criminal class except Congress." 



 They can take turns looking through the large end of the financial telescope. In his comments yesterday Powell said that the Fed could "stabilize the dollar price of gold" but it might not want to do so. Shelton may disagree about what the Fed should do, but she shares the same delusion that the purpose of the gold standard is have a fixed dollar price for a piece of the metal.

They may have always been a native criminal class, but Congress really did no better. The Currency Acts stated the currency value of a full fine ounce of gold because even in 1791 a dollar's weight and measure would be so small a piece of metal that its coinage would be impractical. But the elected near criminals did not think they were "pricing" gold. They were defining what exactly the weight and measure of the nation's monetary unit of account would be, and they had every confidence that its "price" in wheat, horses and coal would be whatever the markets for those things would be. Bankers could no more set the price of gold than they could choose the length of a mile; bills of credit, bank notes, and U.S. notes were all to be priced by how far their nominal amounts had to be discounted against coin.

The "Gold Room" in the Civil War did not price gold. It stayed at par. The quotations were the prices for how many Greenbacks and other forms of paper were required to own an ounce of money.

As to why this mattered and MMT was not a sufficient answer…



 I think Ms. Shelton's odds for surviving the attacks by CNBC et. al. will improve significantly if she adjusts her Lafferite theology. In a old C-SPAN interview I watched this morning I saw her making the same claim that Boris Johnson made this week on his hustings tour: "lowering taxes raises more revenue".

Clearly, it doesn't; taxes are the government's revenue, and lowering them means that the government has less to spend. This confusion has been a chronic problem for "conservatives" ever since Professor Laffer first scribbled on his napkin. It seems to have created a fog even for Laffer. How else can one explain his support for a single tax rate across all income levels? As a policy and political platform "lowering taxes" is a pure folly equal only to the defense of "capitalism". (Ms. Shelton commits that sin as well; she is an advocate of "democratic capitalism" which is itself an oxymoron.)

Where the progressives are instinctively right is in their belief that the rates should increase as income brackets go up. Where the progressives are and always will be disastrously wrong is to believe that the fundamental purpose of a tax system is to inflict punishment on the rich, to be a collective act of revenge against those who make the most.

A flat tax rate ignores the common sense truth we all see around us: the successful are much better than the poor at making money and the rich are much better at making money on their money. All the babble about the American dream ignores the obvious fact that the power law applies to enterprise just as it applies to the ability to hit baseballs 400 ft. All of us who love the sport can play the game, but only a very few can make the All-Star Game roster. What produces more wealth for both the government and the people who pay taxes is the lowering of TAX RATES if you get the proper shape for the stair-step of brackets and rates. The current tax code has gone a long way towards achieving that result; that may explain the seemingly inexplicable–how both net wages and tax collections can continue to grow in the United States even as they flatten out elsewhere.

Rudolf Hauser writes: 

The Laffer curve idea that lowering marginal tax rates increases revenues only works to the extend that it makes it cheaper to pay the tax than the costs and losses incurred in trying to avoid the high tax rates. In regard to the incentive impact on growth, it is best not to focus on how much the tax rate is reduced than on how much after tax income is increased. The incentive impact of reducing the tax rate five percentage points is a lot more important when the initial marginal rate is 90%, thereby increasing after tax income by 50%, than it is when the initial rate is 50 and the increase in after tax income is only 10%. When the cut applies to the capital gains tax rate, there might initially be a larger increase in tax revenues, as many long term investors might tax advantage to sell their stocks that they only held for so long because of the tax consequences of selling and/or to repurchase the shares to establish a higher cost base should the tax rate be increased again in the future.

But beyond that, there is a conflict of interest between the wealth of the nation and the wealth of the government. Lowering rates does increase the incentive for greater growth. But if the average tax rate is only 20%, the growth in the economy has to increase five-fold for the tax cut to result in more revenues. That is unlikely in most cases. It also has to be remembered that many people are by nature game players, that is they are very competitive and like to win. Why would a billionaire have any incentive to work hard? After all, he has more money than he could ever need to satisfy his consumption needs? It's because gaining the most money is like winning the most points in the game. So even when the government takes a large share of the gain, there is still the competition to have the most points, that is after tax profits and wealth, even with the reduced incentives. Naturally, that only applies to some people. Many will behave like the British aristocracy of old and become a leisure class. But it does explain why we were still able to have economic growth when marginal tax rates were so high in the 1950's, along with the fact that the various loopholes, etc. reduced the actual tax rates that were paid. 

Stefan Jovanovich replies: 

I hate to disagree with RH, especially this week when I am enjoying a biography of Gresham that I owe to his recommendation. My view may be distorted by my experiences as a low-rent criminal, both with and without a law license. My direct observation of both clients and customers is that they all followed the Gompers rule where taxes and penalties were concerned. ("What does labor want? We want more schoolhouses and less jails; more books and less arsenals; more learning and less vice; more leisure and less greed; more justice and less revenge; in fact, more of the opportunities to cultivate our better natures, to make manhood more noble, womanhood more beautiful, and childhood more happy and bright.") Taxpayers want to pay LESS at every possible rate. When rates are confiscatory - at the rates that Democrats have traditionally favored - taxpayers literally stop being taxpayers. They find ways to categorize their wealth and income so that it is not subject to any rate at all. They don't look for marginal reductions; they look for escape.

The ability to escape explains the seeming paradox of the 1950s when private incomes and wealth grew even though the legacy tax rates of WW II remained in place. Thanks to the magic of non-recourse debt financing, the effective tax rates paid in the 1950s were no higher than they were in the 1980s after Reagan's tax cut. The 1954 Tax Act became the bible of the 1950s whiz kids in Beverly Hills whom I was lucky enough to go to work for in the 1970s and it made their fortunes. (The reference is deliberate: Tex Thornton's Litton Industries offices were just down the block on Little Santa Monica.) 

When Jerry Ford, the economic moron who succeeded those other economic morons Johnson and Nixon, signed the 1976 tax reform act, he not only did me out of a job (no more 8-1 write-offs on real estate, oil & gas and movie deals); he also raised the effective tax rates on the wealthy to where they had been in the late 1940s. It produced exactly the same kind of inflation that Truman's vetoes and price freezes had done. The Federal government collects roughly 21% of the national income. The individual income and employment tax share is about 17%. It is rumored that Kevin Hassett's magic calculator at CEA produced a Laffer ziggurat (it is never a curve) that begins at 5% and ends at 30% for all personal incomes; its output was 20% of the national income - 3% more than the current collections. The result was never published because it would be the ruin of the Republican Party.

Integrating Social Security and income taxes would be even worse than Bush's "privatization"; and they would never be able to get it through the Rich's brains that their loss of exemptions and carve-outs would be more than offset by a simple 30% top rate. But, to be fair to the Rich, they know - from long experience that a simple stair-step is a Congressional impossibility. What would Representatives do is they could not offer special rules for wool growers and weavers? Still, as a thought experiment, it is intriguing. 

Alex Forshaw writes: 

Getting back to Stefan's original post, I don't understand how anybody can take seriously someone who for tight money in 2011-13 who's simultaneously in favor of loose monetary policy today. (Stephen Moore, Shelton, others) You can be for one or the other but not both, unless you 'evolved' to a completely different philosophy… which rarely happens honestly in my observation.

Stefan Jovanovich writes: 

Let's go back to RH's point as well. If monetarists think that "money supply" is both the fulcrum and the lever for Archimedesian economics, we taxistas tend to have the same certainty that tax rates move everything. They don't.

For me Ms. Shelton's heresy is the belief that legal tender in any form can be a "store of value". I also find her giving Jefferson and Madison credit for putting the U.S. dollar on "the gold standard" the worst kind of Ron Paul historical fiction. If credit is to be given to Virginia Presidents for fixing the dollar by weight and measure, it has to go to the first and last of the Founders - Washington and Monroe.

Rudolf Hauser writes: 

The monetarist point is simply that an excess of money ( the accepted means of exchange and those liquid assets held that are considered reasonable means of quickly obtaining the means of exchange at minimal cost) results in an attempt to dispose of the excess, which initially results in more nominal purchases of other assets and goods and services and subsequently inflation as the sellers of those goods and services realize that the increased production was not really economical. When there is a deficit of such liquidity, the opposite happens. If income and nominal wealth gains go to those who have a low propensity to consume, the increase may mainly be reflected in higher prices of existing asset, both physical and those financial claims behind such assets. If monetary policy is erratic and causing erratic inflation, the increased uncertainty as to the future might deter future real economic growth potential. Aside from that, monetary policy has negligible impact, if any, on real growth potential. Another mechanism is the increase in money driving up prices of financial assets, thereby lowering interest rates. That in turn can shift some purchases of durable goods financed on credit and investments likewise financed on credit to be shifted forward, whereas a deficiency of money can work in the opposite direction. Stefan believes that the central bank can control interest rates. But a central bank can only keep interest rates low when it has created an inflationary situation by continuing to accelerate the rate of monetary growth. When that stops or the public expectations catch up with what is really happening, those interest rate will rise. As the central bank is not the only creator of near forms of money, the demand for money created by the banking system can change for numerous reasons such as opportunity costs, the speed of transaction settlements, inflation expectations, and financial uncertainty. One impact of financial uncertainty is reduced access to quick credit and less confidence in the ability to convert such assets as commercial paper into money that can be used to settle transactions quickly and at minimal cost is diminished. Shifts in the demand for money depend on public desires for the amount of money they wish to hold and are not well understood or necessarily constant.

In contrast the main impact of tax policy is on economic growth potential. There are both temporary shifts as changes and expectation of changes in tax policy can drive income recognition forward or backward and the far more important permanent effects. To the extend producers try to pass on tax increases to consumers, it might have some inflationary impact as industry shifts the tax burden on to consumers, but since the income of consumers is not increased, eventually it should mainly have a real impact on the purchases of goods and services.



Calvin Coolidge Speech on the 150th Anniversary of the Declaration of Independence

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