Author: VD

BNP: the truth comes out

It took a while, but Daniel Hannan’s summary of the BNP’s ideology has finally percolated up to the front pages:

The trouble is that it is a national socialist party. Take a look at its 2005 election manifesto. You won’t find much about reducing the power of the state and increasing that of the individual. It has a curiously dated air of the 1960s and 1970s, with talk of controlling the commanding heights of the economy and building barriers to trade. To be kind to the BNP, one might call it a corporatist party. To put it more roughly, one might say that it is a fascist party, a Left-wing authoritarian party. One thing is certain. As a socialist party, the BNP can only be part of the problem, not part of the solution.

The important point to note is that the problem with the BNP is not that it’s a national party, but that it is a socialist one. That is why it takes votes from Labor, not the Conservatives, much less UKIP. Basically, if someone is talking about “commanding heights” in any non-military sense, there is approximately zero chance he is right-wing.

A rare mistake

By the NFL:

The National Football League has been careful not to suggest that the aim of its current effort to obtain a finding that, for the purposes of selling hats and shirts, the 32 teams are a “single entity” that cannot conspire with each other in dealing only with Reebok and shutting out companies like American Needle. However, the transcript of Wednesday’s oral argument before the Supreme Court suggests that, if push comes to shove, chief NFL outside counsel Gregg Levy (a finalist for the position of Commissioner in 2006) believes that the league is a single entity, for all of its relevant business purposes.

The key moment in the exchange between Levy and the Court comes at page 47 of the transcript, when Justice Sonia Sotomayor poses this question to Levy: “What decision could the sports teams make that would be subject to the antitrust scrutiny under your definition of the permissible range of the joint venture activities? It seems to me that if the venture wanted to make sure all the teams hired secretaries at the same $1,000-a-year salary, that under your theory, that’s okay, because it’s a joint venture.”

In response, Levy didn’t say, “We are taking that position only as to matters relating to the promotion of the league,” which is what he basically said in the NFL’s written brief. Instead, Levy said, “Your Honor, my view is that the — the NFL clubs are not separate sources of independent power. As a result, they are a unit. They are a single entity and it’s –“

At that point, Justice Sotomayor cut him off.

“So to the answer to my question is, there is — you are seeking through this ruling what you haven’t gotten from Congress: An absolute bar to the antitrust claim.”

Perhaps the Wise Latina isn’t quite as dim as I’d expected her to be. And if the NFL is seriously attempting to parlay its antitrust exemption for broadcasting into a broader one covering everything from player salaries to logo gear, it is insane. As an NFL fan, I’m hoping this does not turn out to be yet another example of an extremely successful organization sowing the seeds of its own destruction through foolish greed and overweening arrogance.

If I were an NFL owner, I would pull Levy off the case immediately. And it’s worth noting that when it serves the NFL’s interest to argue the contrary, it claims precisely the opposite:

“The question is whether Minnesota law permits Pat and Kevin Williams to be suspended for a first positive test, and whether Minnesota law allows punishment to be imposed on an employee who uses an over-the-counter substance on his own time. Among the league’s arguments is that the Vikings, not the NFL, employ the players.”

Prediction 3 is looking good

“3. The Federal budget deficit for 2010 will exceed the projected $1.17 trillion.”
– December 28, 2009

It’s nine months too soon to declare victory, of course, but that prediction isn’t looking too bad as of January 13th.

The December figures bring to $388.5 billion the deficit for the first three months of Washington’s 2010 fiscal year. That’s on top of a staggering $1.4 trillion budget shortfall for fiscal 2009, more than three times the size of the deficit that the government ran in 2008.

In other words, the federal deficit is on a pace to hit $1.554 trillion in FY2010. Which is remarkably strange considering that we’re now six months into an economic recovery featuring 3.5 2.8 2.2% GDP growth. Say, doesn’t the GDP formula include government spending….

Animals spirits sink

The Market Ticker notes that consumer confidence is sinking:

There’s no good news embedded in here. Personal finances and the buying climate dropped by amounts matching their largest one-week change ever, possibly spurred by people getting their credit-card statements from Christmas (or simply reflecting on what they spent – and determining it was too much.)

Only nine percent rate the economy positively.

Shockingly, the news of the Federal Reserve printing massive profits for itself and bankers paying themselves huge bonuses hasn’t convinced people fearing for their jobs and cutting back on their expenses that all is well. And the whole “stock market advance as leading indicator” isn’t exactly the most convincing argument on offer in light of the fact that everyone can still remember what all the cheerleaders were saying when the Dow was over 14,000.

UPDATE – Speaking of animal spirits, Beau offers his services: “Against the backdrop of economic Götterdämmerung, I have some cheerful news that might pick up some animal spirits. beau.matchmakingservice -at- yahoo.com is ready to assist ilk wishing to discreetly make their intentions known to other ilk. Some of the more prolific posters certainly need no introductions, but in uncertain times animal spirits could perhaps use a boost. beau.matchmakingservice is available for regulars, irregulars and lurking ilk.”

Breeding Ilk… that’s all the world needs now.

Mailvox: light up, it’s legal

Or it will be soon, anyhow. The media director of Law Enforcement Against Prohibition sends the following email:

As you may know, just moments ago, the California Assembly Public Safety Committee approved a marijuana legalization bill, AB 390, by a vote of 4 – 3.

This is the first time that a state legislative committee has voted to legalize marijuana for non-medical purposes. Judge Jim Gray, who retired last year from the California Superior Court in Orange County and is a speaker for Law Enforcement Against Prohibition, released this statement:

“The mere fact that there was a vote in the Assembly to regulate and control the sale and distribution of marijuana would have been unthinkable even one year ago. And if the bill isn’t fully enacted into law this year, it will be soon. Or, the bill will be irrelevant because the voters will have passed the measure to regulate and tax marijuana that will be on the ballot this November.”

This may be the first intelligent thing California has done in decades. It’s about time; now the rest of the country should legalize it too. Of course, a cynical economist might suggest that the only reason marijuana is being legalized now is that the PTBs are very eager to ensure that the citizenry is as mellow as possible before the next meltdown. Anyhow, I find it more than a little ironic that pot will probably end up being more socially acceptable than tobacco in another decade or three.

I don’t partake of the herb myself, but I am a strong supporter of drug legalization on libertarian grounds. So, this is good news even if it’s probably more driven by California’s desperate need to increase tax revenue and decrease prison spending than anything else.

There is still no global warming

As I have said from the start, the significant point is not that Man is not causing global warming, although that is true, or that there are more important problems to be addressed than global warming, although that is true too. The significant point is that the so-called climate scientists are all incorrect, there is no long-term global warming trend, there is only a short-term and irrelevant warming spike, and all of the predictions of global warming based on the climacaustal’s scientific models will be proven totally incorrect over the next ten years.

The bitter winter afflicting much of the Northern Hemisphere is only the start of a global trend towards cooler weather that is likely to last for 20 or 30 years, say some of the world’s most eminent climate scientists.

Their predictions – based on an analysis of natural cycles in water temperatures in the Pacific and Atlantic oceans – challenge some of the global warming orthodoxy’s most deeply cherished beliefs, such as the claim that the North Pole will be free of ice in
summer by 2013.

According to the US National Snow and Ice Data Centre in Colorado, Arctic summer sea ice has increased by 409,000 square miles, or 26 per cent, since 2007 – and even the most committed global warming activists do not dispute this.

Of course, the mere fact of being completely wrong won’t slow down the global government crowd, their scientific enablers or the scienthological faithful. I just wonder how long it will be before “global cooling is climate change too” becomes the new mantra.

Come on now

Turgot’s Tetrapylectomy! Jonathan somehow manages to make more mistakes while trying to defend the hapless Amazon critic.

Actually, the original reviewer is completely correct. Vox was forgetting that in the multiplier effect, the “new” money becomes deposits at other banks. It is still thus true that at each and every bank, the profits stated by the reviewer are correct.

The original reviewer isn’t correct in any way, shape, or form. The reviewer completely leaves out the multiplier effect, which merely happened to be THE SUBJECT AT HAND, in favor of a trivial focus on the interest revenue – not profit – from a single loan, which he also manages to miscalculate. (He used the wrong interest rate.) It is demonstrably incorrect to say that “the ‘new’ money becomes deposits at other banks”, the most that can possibly be said is that it will USUALLY become deposits at other banks. I assumed for the sake of simplication that the revolving loans and deposits were all taking place at a single bank; this is hardly an unreasonable postulate in light of the fact that Bank of America presently holds 12.2% of total US deposits and 14.8% of total US loans and leases. (Now you know why they can’t be permitted to fail.) That third sentence only applies for each and every LOAN, not for each and every bank. And finally, since it seems everyone is determined to be pedantic about this, I note that the reviewer’s profit calculation could never have been correct since the example in the book was 5%, not the 6% cited in the review.

I’ve made it perfectly clear that I should have created a better example of the multiplier effect in a fractional-reserve system. Mea maxima culpa. I should have referred to “banking system” instead of “bank” and I should have left out the “maximum profit” altogether since it’s not possible to calculate the net profit of the loan multiplier without knowing how many times the loan cycle will occur in the course of a year. But the trivial errors in my poorly constructed example do not justify this absurd level of pedantic and error-filled nitpickery, especially since it doesn’t even begin to call either my point about the fractional-reserve banking system or my conclusions about the systemic risks of such a system into question.

Krugman gets it wrong… again

Imagine that:

Paul Krugman has weighed in to an ongoing debate sparked by Jonathan Chait’s criticism of a passage in my essay “Keeping America’s Edge.” I believe that I have responded to Mr. Chait’s assertions comprehensively. Unlike Chait, Professor Krugman has argued that I have presented incorrect data.

Krugman says this:

But I went back to Manzi’s source of data, and it turns out that it’s even worse than that. If you use the broad definition of Europe, which includes the USSR, it did indeed have 40 percent of world output in the early 1970s. But that share has not fallen to 25 percent — it’s still above 30 percent.

His assertion is flatly false.

First, Krugman has incorrectly identified my source of data. I have never corresponded with Krugman concerning data sources and analysis for the passage in question (unlike Chait, who was careful to contact me prior to publishing his blog post, and to whom I sent data sources and calculation details), so I cannot know on what basis Krugman asserts that the dataset to which he links is my “source of data.” It is not. As per the blog post in which I reviewed multiple data sources for the analysis in question, I averaged multiple sources of data. Krugman has selected only one of these sources, presented it as if it were my sole source, and therefore (obviously) failed to replicate the published result. The error is his.

Second, Krugman incorrectly interpreted the economic dataset that he did identify.

I know I’m shocked that A NOBEL-WINNING ECONOMIST could get it so wrong. And speaking of errors and Krugman, a recent reviewer of RGD managed to impressively cock things up in “correcting” my explanation of the loan multiplier in a fractional reserve system. Amusingly, he seizes upon this “error”, combined with the fact that I dared to criticize A NOBEL-WINNING ECONOMIST, to claim that the book “Should Never Have Been Published”. While I have to take responsibility for failing to distinguish between “the bank” and “the banking system”, our intrepid reviewer nevertheless managed to completely miss both the obvious context (the fractional reserve system) as well as the point (the increase in the money supply created by the loans). I’ll explain this in more detail later this week for the six regulars who are actually interested in this sort of thing as well as any anklebiters who would like to revel in the possibility that I am wrong about something, but if you’d like to verify this for yourself, I would encourage you to plug a 0.75% reserve ratio into the table in the Wikpedia example – note that I was completely unaware of this table until about two weeks ago – and compare it to the Loan Multiplier of 133.33x to determine for yourself whether Mr. Eskildson’s “correction” is on target or not.

It should be noted, that this method only provides an estimate for the amount of interest collected over the course of the year, since this completely depends upon the number of loan-and-deposit cycles that occur over the course of the year as well as the three caveats mentioned in the book. Using the 10x example from Wikipedia would mean that $4.80 in annual interest is collected, which is neither the maximum $6.67 mentioned in RGD nor the $0.0599 which the reviewer claims is the correct amount.