Central Perk

luni, 7 iulie 2014

Seth's Blog : The artist who dances on the edge

The artist who dances on the edge

You are brave.

Such a generous soul, someone who doesn't hesitate to leap when others shrink in fear. Your work means so much to you and to the people you share it with, we can't help but be inspired at the way you make your magic.

You're a warrior in the service of joy and you never seem to stop standing up and speaking up and doing your very best work.

Sometimes, a particular audience doesn't deserve you. But that doesn't matter in the long run, because of your relentless generosity in sharing your gift.

I can't wait to see your next work, and the one after that.

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duminică, 6 iulie 2014

Mish's Global Economic Trend Analysis

PIMCO's Nonsensical Inflation Analysis; "Brain Worms" Revisited Already

Posted: 06 Jul 2014 09:49 PM PDT

Mihir Worah, PIMCO's Deputy Chief Investment Officer and head of PIMCO's real return and multi-asset portfolio management teams says Inflation Is Rising, But No Sirens Ahead.

Pay particular attention to the third paragraph in which Worah states: "In the developed markets, the U.S. and Europe in particular, inflation is bottoming and poised to move up modestly. We expect inflation in the U.S. to move close to the Federal Reserve's 2% target, though it is still likely to be relatively low over the secular timeframe. However, we have a slight bias to higher inflation since that is what the Federal Reserve wants – stronger economic growth in the U.S. cannot be achieved without higher inflation."

Emphasis mine.

I nearly choked when I read that paragraph. The idea one needs inflation to have economic growth is ridiculous.

Hayek trashed that notion in his work "Paradox of Savings".

Interestingly, a discussion about inflation and growth came up in an email conversation I had last week with Pater Tenebrarum at the Acting Man blog.

From Pater ...

We have become used to think of economic progress in purely monetary terms by the highly inflationary fiat money system, but this is actually not how it should be seen or measured. In fact, every single industrialized society has attained its economic superiority in a time when prices did not rise at all. Economic progress would continue even if the money supply were forever completely fixed. Hayek has demonstrated in 1928 (in the only reply to the Foster-Catchings challenge that actually made sense and completely demolished their assumptions) that profitable production can continue if under conditions of a fixed money supply savings are increased and consumption concomitantly reduced to enable increased investment in the economy's production structure. The interest rate spread between the stages of production will decline, but at the same time physical productivity will rise.

As I have related before, I have observed the evolution of technological and economic progress specifically in the music and recording industry in great detail. It is quite amazing really - e.g., a high quality Lyrec 24 track machine used to cost almost 80,000 USD in the mid 1980s. Today a PC in combination with the relevant software delivers multi-track recording capabilities that are a 20 times larger, at a total cost of $2,500. And that includes peripheral gear that nowadays exists as software that used to cost many thousands of dollars more. Obviously, all the profits of the makers of 24 track tape machines have been wiped out, and the jobs that came with them as well. But the industry overall is booming like never before. Only the job descriptions have changed. And obviously, total wealth in society has increased significantly by these developments.

Brain Worms and the Paradox of Saving

The "Paradox of Savings" is a difficult read, but Robert Blumen offers a relatively easy to understand explanation in Hayek on the Paradox of Saving.

Please read it, then send a copy to Mihir Worah. Perhaps Worah picked up a nasty infection of "brain worms" from somewhere. Has Worah been hanging around Noah Smith by any chance?

For an discussion as to who has brain worms and who doesn't please see Brain Worms - Bloomberg Writer Noah Smith Has Them, written in response to an absurd attack on Austrian economics by Noah Smith.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

The Big Picture: This Month's Jobs Numbers

Sunday, July 06, 2014

You might be seeing a lot of news about the economy creating more jobs.

That's because at the beginning of every month, the U.S. Bureau of Labor Statistics releases a report on our country's general employment situation for the previous month -- and this month's showed good news.

What's it all mean, and why should you care?

There's still much more to do to keep moving forward, but we've put together a few key points about how our economy is doing generally. Take a look -- and if you learn something new, pass it on.

Our country hasn't seen this kind of job creation since the 1990s -- and we've been adding more than 200,000 jobs a month for five months straight.

The 1.4 million jobs added in the first half of this year are the most in any half since 1999. What's more, this is the first time since September 1999-January 2000 that we've seen total job growth above 200,000 for five straight months.

Auto sales in June are also the highest they've been since mid-2006 -- before the financial crisis.

Let's not forget that the American auto industry is continuing to bounce back -- adding 18,000 jobs this past month for a total of 463,000 jobs added since Chrysler and GM came out of bankruptcy in June 2009.

Meanwhile, we're continuing to produce more oil at home than we're importing from overseas.

In addition to doubling renewable electricity generation from sources like wind and solar, last October something big happened: For the first time in nearly two decades, we started importing less foreign oil than we were producing at home.

It's progress -- but we've still got work to do.

Want a more in-depth look at what the jobs numbers mean, complete with more charts, numbers, and economist-speak?

Take a look at this post from Jason Furman, Chairman of the Council of Economic Advisers.

And if you're looking for more great charts and infographics related to the economy, visit our Shareables hub.

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Seth's Blog : Discretion

Discretion

How much do you trust your people to do the right thing?

Consider giving every person on your team a budget—$1000 a year? $200 an incident? and challenging them to spend the money to make things right, to create efficiency, to delight.

If the CFO freaks out, invite her to meet with each employee at the end of the year to hear how they chose to spend the money. $5 extra to park close enough to the airport to not miss a flight. Giving an unhappy customer a refund on the spot. Buying a subscription to an inexpensive web app that dramatically decreases customer service time...

At the Ritz-Carlton, every single employee (even the maintenance folks) has a budget of $2,000 per guest to make things right. On the spot, without asking.

Without a doubt, the guest is blown away by this rapid response. A caring person who, instead of saying, "I'll have to ask my supervisor," just makes it right. But even more important, I think, is the effect of trusting your people. You've already given them the keys to your brand, you've already made them the face of your organization—isn't it time to trust them enough to do the right thing?

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sâmbătă, 5 iulie 2014

Mish's Global Economic Trend Analysis

Brain Worms - Bloomberg Writer Noah Smith Has Them

Posted: 05 Jul 2014 06:55 PM PDT

On July 2, Bloomberg columnist Noah Smith wrote a column on Austrian Economists, 9/11 Truthers and Brain Worms.

Noah claims ...

When the Austrian brain-worm invades, you start believing things like: 1) Federal Reserve money-printing is a government plot to boost big banks, 2) prices are rising much faster than anyone thinks, 3) real "inflation" means money-printing, not an increase in prices, 4) printing money can never boost the economy, 5) academic economics is a plot to use mathematical mumbo-jumbo to cover up government giveaways to big banks, etc., etc.

Curiously, and leaving the conspiracy plots aside that many, if most Austrians do not believe, I propose that when the brain-worm invades you start believing things like monetary printing boosts the economy, and inflation only pertains to prices.

Noah goes on to brag that a "history-book moment came when David Henderson of the Naval Postgraduate School defeated Austrian champion Robert Murphy of the Ludwig von Mises Institute in a bet about inflation."

Ho-Hum. Murphy made a bad bet, and one I would have strongly advised against. David Henderson described the bet in My Inflation Bet with Bob Murphy.

I am an Austrian, and I would have made the same bet as Henderson.

Want proof? Then consider this debate I had with Murphy.

Constraints are Key

On November 23, 2010, Austrian economist Robert Murphy predicted "high inflation" in his post Has Mish Deflated the "Inflationistas"?

My reply, which clearly carried the day was Failure to Consider Constraints - My Response to "Has Mish Deflated the Inflationistas?"

Such debates aside, and unless one has brain worms, precisely how is Murphy's ill-advised bet the be all and end all of anything?

Noah rants on about "ShadowStats" as if that ShadowStats speaks for Austrians on inflation. He doesn't. Shadowstats' hyperinflation predictions are as ridiculous as the article Noah Smith wrote.

Noah took everything any alleged Austrian ever said that turned out wrong and trumped it up. Noah failed to mention that Keynesian clowns once believed that inflation and recession could not possibly happen at the same time.

Here is a sentence at that heart of Noah's brain worm infection: "Massive torrents of Fed "money-printing" failed to budge prices; this fact directly cracked the central foundations of Austrian thought."

That sentence is a willful lie, blatant ignorance, or the result of brain worms.

No Austrian economist would suggest money printing "has" to result in price inflation. It doesn't. But the money will go somewhere. Where did it go?

If you have brain worms, you might not know, so here is the answer: asset inflation.

And shocking asset inflation came with the dotcom bubble in 1999 and the housing bubble in 2005. We are back in bubble-land asset inflation again and Noah Smith cannot see it.

Why?

Either Smith does not want to see it, or he has brain worms. Take your choice. There are no other reasonable choices.

For another brilliant takedown of Smith's brain worms and "Bloomberg's Unqualified Smear", please see In Defense of Austrian Economics by Pater Tenebrarum on Acting Man.

One never can figure out the timing of such things, but it would be very fitting if Smith's support of brain-worm Keynesianism marked the top of this market and something close to a bottom in gold.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Spain Issues Retroactive 0.03% Tax on Bank Deposits to "Boost Economic Growth and Job Creation"

Posted: 05 Jul 2014 10:16 AM PDT

Via translation from Libre Mercado, Spain will retroactively tax bank deposits to January 1, 2014 stating the move will boost growth and job creation.

Guru Huky correctly labeled the tax for what it is "More than a tax, this looks like a mini seizure of deposits. Someone likely needs a few million and to balance the books."

The notion that a tax increase will boost the economy is of course absurd. But don't worry, it's only 0.03%, nudge nudge, wink wink ... for now.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com