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The latest polls showing Clinton would win the presidential election is more evidence to support my argument that trying to predict human behavior  — whether it involves economic decision making or politics decision making — involves dealing with a nonergodic stochastic process. Pollsters believe that if you take a RANDOM SAMPLE OF THE VOTING POPULATION ON DAY X  BEFORE THE ELECTION  and calculate the probability distribution of voting for the various candidates, then this x day before...

Attached is an excellent piece on the euro zone by Professor Andrea Terzi Sales aren’t falling year over year but they aren’t growing at 5% as they would do in ‘normal’ times:In ‘normal’ times inventories increase with sales, adding to output. But when sales slow inventory growth stops and reverses: I like this headline:

I guess it is time to publish this graph, from the USA NASA.gov site. My prediction: this series will soon be discontinued. I did add some text, as grading has tought me that even intelligent people often have difficulties with the interpretation of graphs. My interpretation: the ‘no warming’ meme, which has been quite influential in climate denial circles, is and Always has been bonkers and climate change is progressing faster than expected. But are these deniers really stupid, or bad at...

The Saudis set prices via discounts to benchmarks, which will trigger either price appreciation or depreciation, or, if they happen to get the discounts ‘exactly neutral,’ at least near term stability. They then allow their clients, who are all refiners, to buy all they want at the posted prices. To date the total purchased has been less than their presumed 12 million barrel per day production capacity. the chart shows that the price cut a couple of years ago, from over $100...

Online sales growth now decelerating as well:NFIB small business sales Trump won largely because people couldn’t bring themselves to vote for Clinton, and not so much because anyone like him or his presumed agenda. And along the way he destroyed the Republican party, which may or may not sitso well with Republicans in Congress. So it’s not like he has a mandate to do anything or that he can rely on Republican support for anything. Regarding his proposed tax cuts, under...

When this chart heads lower as it’s doing it’s all over: The chart is well below what in the past were recession levels, and still looking like it can go a lot lower: Highlights The small business optimism index rose 0.8 points in October to 94.9, slightly exceeding expectations and extending a rebound from the 2-year low at 92.6 set in April. Of the 10 components of the index, 5 posted gains, 3 were down and 2 remained unchanged. The largest gain was recorded in plans to...

By David Orrell In a previous article for this newsletter, I wrote about the rather long and withdrawn grief process that the economics profession is working through, as it comes to terms with its role in what has become known as the Great Financial Crisis. Initial denial was followed by anger towards critics, which in turn was followed by a bargaining stage. The latter (I used Dani Rodrik’s book Economics Rules as an example) involved claims that there is nothing seriously wrong with...

One essential aspect of Minsky’s Financial Instability Hypothesis was the argument that there are two price levels in capitalism: consumer prices, which are largely set by a markup on the costs of production, and asset prices, which are determined by expectations and leverage. This argument originated with Keynes in Chapter 17 of the General Theory, when he noted that investment is motivated by the desire to produce “those assets of which the normal supply-price is less than the demand...

Best I can tell this is mainly about health care insurance premiums, which ‘count’ as personal consumption expenditures and have been adding support to GDP: Inflation adjusted: Not inflation adjusted: Looks like the support is starting to fade: The ‘one time’ adjustment for Obamacare may have passed, along with it’s supportfor GDP. And note the growth of employment was well below the growth in costs: Bank credit tends to tighten up as the economy slows, which slows lending...

Subject to an unregulated free market for labor, Polanyi believed that “workers would die as the victims of acute social dislocation through vice, perversion, crime, and starvation”. The US has the most “flexible” labor market of all OECD countries, meaning the freest market for labor, with the least intervention by government or social institutions, as defined by Polanyi. “Essentially, to get high ratings, a country must have low marginal tax rates, a low minimum wage, a high degree of...