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Articles by Yves Smith

AOC Rental Woes a Reminder of Worsening Conditions for Workers

3 days ago

The media coverage of the fact that Alexandria Ocascio-Cortez can’t yet move to Washington because she can’t afford to rent an apartment is another Versailles circa 1788 moments. Washington has so long been expensive that even before working-class AOC stormed the barricades there have long been stories of Congresscritters who live in their offices in DC rather than rent an apartment. The most famous case is Paul Ryan. As Kentucky representative Andy Barr said in 2015, “I think there’s more than you might expect. There’s quite a few of us, particularly the younger members with young families back home in our districts. There’s quite a few — men and women.”
Nevertheless, AOC’s disclosure had the effect of putting a sympathetic face on how housing costs chew up the budgets of young and

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J.D. Alt: Treasury Bonds Are Future Dollars

3 days ago

By J. D. Alt, author of The Architect Who Couldn’t Sing, available at Amazon.com or iBooks. Originally published at www.realprogressivesusa.com
In recent essays I’ve made reference to a new framing of what is actually happening when the U.S. Treasury issues a bond. It seems to me, this new framing goes to the heart of MMT and might well hold the key to a practical implementation of MMT principles in real world applications. The framing is this:
A U.S. Treasury bond is a certificate of issuance of future dollars.
I will expand on this in a moment, but first it is important to say what this framing says a Treasury bond is NOT:
A Treasury bond is NOT a promissory note promising to pay the bearer a certain number of dollars at some future date—with interest payments along the way or at the

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CalPERS Self-Dealing: Board and Staff Grift at CalPERS Expense Via Grossly Underpriced Liability Waiver; Fiduciary Self-Insurance Policy “Invalid on Its Face” Due to Lack of Reserves

5 days ago

CalPERS executives and its board seem determined to implement a private equity scheme which as our former Sullivan & Cromwell attorney Jerri-Lynn Scofield explained at some length would have an inherently deficient governance structure. One has to wonder if the reason that CalPERS executives and board have latched so hard onto such a bad idea, and are refusing to let any independent experts close enough to do due diligence is that they assume that their personal liability is well covered by the insurance policies CalPERS has in place. In fact, CalPERS’ self-insurance policies, created under the regime of the now-imprisoned CEO Fred Buenrosto, are at odd with CalPERS’ governing statue and are being operated out of compliance with the insurance policies themselves as well as state insurance

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Link 11/10/18

5 days ago

Good for the EU! Sic Semper Tyrannis (Steve C). On wildlife.
The war game that could have ended the world BBC (JTM)
Could these balls help reduce plastic pollution? BBC (David L)
How a key protein boosts memory, learning in the adult brain MedicalXPress
As if heroin weren’t dangerous enough, it may come with lead poisoning ars technica
China?
Is Xi Jinping finally walking the talk on opening up China’s economy as the trade war heats up? South China Morning Post
Trump’s top trade adviser just warned Goldman Sachs and Wall Street not to leave their ‘stench’ on the US-China trade war talks Business Insider (Kevin W)
Brexit
Jo Johnson quits as minister over Brexit and calls for vote on deal Financial Times
Brexit: getting ahead? Richard North. Epic:
I have it on very good authority from

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Raising Minimum Wages Reduces Recidivism

5 days ago

Yves here. Another reason to push for higher minimum wages. And someone needs to clue in conservatives that their alternatives are not so hot. Fewer people are interested in becoming cops due to news coverage of police brutality.
By Amanda Agan, Rutgers University and Michael Makowsky, Associate Professor, John E. Walker Department of Economics, Clemson University. Originally published at VoxEU
Individuals with a criminal record face difficulties in the labour market that can compel them to reoffend. This column reveals how increases in the minimum wage in the US reduce the likelihood of recently released felons being reincarcerated, while an income-related tax subsidy has a similar effect for women, but not men. The results suggest significant welfare benefits from policiesthat help

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The Super Rich Get Even Richer

5 days ago

By Paul Rogers, professor in the department of peace studies at Bradford University, northern England. He is openDemocracy’s international security adviser, and has been writing a weekly column on global security since 28 September 2001; he also writes a monthly briefing for the Oxford Research Group. His latest book is Irregular War: ISIS and the New Threat from the Margins (IB Tauris, 2016), which follows Why We’re Losing the War on Terror (Polity, 2007), and Losing Control: Global Security in the 21st Century (Pluto Press, 3rd edition, 2010). He is on Twitter at: @ProfPRogers. Originally published at openDemocracy
A decade after the financial crash, an epic repeat is on course.
Two reports by Swiss banks, published within a week of each other, offer further revealing evidence on the

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Confirming Birmingham Meetup for Monday, November 19

5 days ago

Looking forward to seeing you and enjoying lively conversation! If you live in the Birmingham area, I hope you can stop by our meetup. Start your Thanksgiving holiday early and on a good note!
Details:
Time: Monday, November 19, 5:00 to 8:00 PMGrand Bohemian Hotel, which is opposite the Birmingham Botanical Gardens (the bar is on the top floor, next to the restaurant, Habitat and Feed; there are two entrances, so if you have not been here before, use the valet parking and ask the valet to point you to entrance that takes you the restaurant)2655 Lane Park RoadMountain Brook, AL 35223(205) 414-0505http://www.grandbohemianmountainbrook.com/

See you soon!

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Cryptocurrencies: Financial (In)stability and (Un)fairness

6 days ago

By Jon Danielsson, Director of the ESRC funded Systemic Risk Centre, London School of Economics. Originally published at VoxEU
Cryptocurrencies are controversial.  Advocates see them as a better form of money that imparts freedom, useful economic functions, fabulous riches and hedges against bad government policies. The sceptics worry about investor protection and environmental impact.
Cryptocurrencies today do not pose much threat to financial stability, as noted by den Haan et al. (2017) and a recent Financial Stability Board report (Financial Stability Board 2018).
That will change if cryptocurrencies find widespread economic use, either coexisting with or fully displacing fiat money.  They will then have a strong and negative impact on financial stability, equality and social cohesion,

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Brexit Dithering and a Labour Push for Revocation?

6 days ago

Brexit is back to its usual Groundhog Day feel, if anything more so than usual.
Dominic Raab was supposed to see Barnier this week with new deal terms approved by the Cabinet. Instead, Theresa May is running to the Continent, apparently to beg for more time for the EU to get its act together and still have an EU Council session in November. I’m going to dispense with linking to press reports for the most part, since a lot of this rumor of the day stuff proves to be unreliable. However, it appears the new target date for a November session would be November 25, as opposed to the earlier November 21. But among other things, that depends on May getting agreement from her Cabinet next Monday. Insiders are trying to manage down that expectation. And the Irish government is skeptical too. From

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Marshall Auerback: Apple Has an Early Case of GE’s Disease

6 days ago

By Marshall Auerback, a market analyst. Produced by the Independent Media Institute
The boom witnessed in the U.S. equity market over the past few years has begun to echo the latter stages of the high tech bubble of the early 2000s, right down to the investor interest ultimately gravitating toward five stocks that have posted substantial gains, and obtained an almost cult-like status among their respective devotees. In 2002, it was Lucent, Cisco, Microsoft, Dell, and Intel. Today, it’s Facebook, Apple, Amazon, Netflix, and Google. They’ve even got an acronym among their followers: FAANG. Taken in aggregate, these five stocks account for approximately one-quarter of the NASDAQ’s total market capitalization. In fact, just three months ago, Apple alone became the first publicly traded U.S.

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US Policy On Iran After The Midterm Elections

6 days ago

By Barkley Rosser, Professor of Economics at James Madison University in Harrisonburg, Virginia. Originally published at EconoSpeak
A curious coincidence is that the US midterm elections happened one day after the US reimposed its second round of illegal economic sanctions on Iran, with the focus on oil, shipping, and banking, along with some other sectors. Despite all but a handful of governments around the world supporting Iran in this matter (despite apparently two attempted assassinations of opponents of Iran’s government in European nations recently) against the US out of a hope to keep Iran following the JCPOA nuclear agreement as it has by all reports been doing, the impact of the midterm elections is probably to reinforce support for Trump’s policy, even as mostly he lost support

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Stock Markets Do Not Create Value

7 days ago

By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK
As many readers will know, I am not the greatest fan of stock markets. I consider most activity on such markets to be exploitative because of the asymmetry of the information available to investors. Much of it, from the pay directors take to the actions of most market managers, I consider to be rent seeking. The idea that equities provide strong returns is pretty

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Links 11/8/18

7 days ago

Yves here. Apologies for being short on original posts, but the elections plus the Trump outrages du jour ate the news.
Kerala: 96-year-old who cleared literacy exam wanted to learn computer, education minister gifts her one Indian Express (J-LS)
First ‘retirement home’ for showbiz beluga whales BBC
Nothing Like a Fight Over Dinosaur Bones to Put Things in Perspective Law.com
World’s ‘oldest figurative painting’ discovered in Borneo cave Guardian (Kevin W)
Runaway train blazes through Western Australia for more than 50 miles MPR (chuck4)
David Attenborough has betrayed the living world he loves George Monbiot Guardian (Dr. Kevin)
Human drugs flowing into the animal kingdom Times Union (J-LS)
Changing temperatures improves corn yield in U.S. — for now ScienceBlog (Dr. Kevin)
What You Have

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Wolf Richter: The State of the American Debt Slaves, Q3 2018

7 days ago

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street
Consumer debt – or euphemistically, consumer “credit” – jumped 4.9% in the third quarter compared to the third quarter last year, or by $182 billion, to almost, but no cigar, $4 trillion, or more precisely $3.93 trillion (not seasonally adjusted), according to the Federal Reservethis afternoon. As befits the stalwart American consumers, it was the highest ever.
Consumer debt includes credit-card debt, auto loans, and student loans, but does not include mortgage-related debt:

The nearly $4 trillion in consumer debt is up 49% from the prior peak at the cusp of the Financial Crisis in Q2 2008 (not adjusted for

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How UK (and US) Surveillance Creates Havoc for Personal Data Movement Post Brexit

7 days ago

By J. Scott Marcus, a Senior Fellow at Bruegel, and an independent consultant dealing with policy and regulatory policy regarding electronic communications. Originally published at Bruegel
The UK government would like to keep EU-UK data transfers largely the same following the country’s separation from the EU. But talks have yet to even commence on a future data-sharing relationship, and a landmark European Court of Human Rights ruling in September bodes poorly for the UK’s future status under the EU’s General Data Protection Regulation.

The UK economy is closely integrated with that of the rest of the EU. One need only consider the number of UK firms with branches in the EU27, and the number of EU27 firms with branches in the UK, to realise that data interchange is of vital economic

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Trump Ouster of Sessions Gives New Life to Mueller Controversy

7 days ago

Trump’s inability to let almost sleeping dogs lie has kicked off yet another political firestorm.
As you almost certainly know, Jeff Sessions, long a Trump punching bag, resigned Wednesday at Trump’s request. Trump skipped what would be the logical path of succession, that of elevating Rod Rosenstein to be acting Attorney General, and instead installed Matthew Whitaker, who had been Sessions’ chief of staff. The Wall Street Journal reports that Whitaker would oversee Robert Mueller’s investigation of Kremlin influence on the Trump campaign, unless Department of Justice ethics officials decide Whitaker needs to recuse himself. Whitaker has been a vocal critic of the Mueller investigation, arguing that it could be curtailed to prevent it from becoming a “fishing expedition.” More detail from

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From Brothels to Independence: The Neoliberalization of (Sex) Work

8 days ago

Yves here. Further confirmation that the gig economy is not what it is cracked up to be. Sex workers in the UK have less privacy, lower returns, and much less safety in the days of online platforms than they did when brothels dominated the profession.
By Ava Caradonna, a migrant, a sex worker, a student, a mother, a citizen, a trans person, a person of colour, a teacher, a queer, a lesbian, and a militant. Ava allows us to speak from different positions as sex workers and as allies, without the stigma of using our ‘real’ names, and allows us to speak to the different realities in the sex industry and beyond. Originally published at openDemocracy
For decades, the British sex industry has straddled both informal and illegal work. This is because while the buying and selling of sex is

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Links 11/7/18

8 days ago

Idiot jumps into crocodile pit wearing Crocs, gets bitten by a croc BGR (David L). Only in America…
Overwhelmed passengers abandoned an Indonesian flight crammed with 2 tons of a notoriously smelly tropical fruit Business Insider
ESOcast 182 Light: ALMA and MUSE Detect Galactic Fountain (4K UHD) ESO. UserFriendly: “Wow, this is new and surprising. Galaxy’s are known to shoot out gas like this, but never so weakly that it collapses back into the galaxy.
Climate change killed the aliens, and it might kill us too, new simulation suggests NBC. UserFriendly: “few months old, still relevant.
Large hydropower dams ‘not sustainable’ in the developing world BBC (David L)
Floating solar is more than panels on a platform—it’s hydroelectric’s symbiont ars technica. Chuck L:
The recreational boating

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UK Contests European Court of Justice Case on Article 50 Withdrawal, Averring No Way Will It Back Out of Brexit

8 days ago

Wellie, for those of you who were hoping that the UK might wake up from it derangement,1 channel its inner Emily Litella, and say “Never mind” to Brexit, the Government has dug itself in deeper on its current plans.
Some readers had pointed hopefully to a case lodged at the European Court of Justice by the Inner House of the Court of Session in Scotland on whether the UK could unilaterally withdraw its Article 50 notice. We were at a loss to understand how this case would be helpful to the Remain camp, since the EU has all but said it would let the UK back out of Brexit up to the very last moment. But for that to happen, the UK has to ask, and we didn’t see that happening.
This reading was confirmed by a policy paper published yesterday on the case, Wightman and Others v Secretary of

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Former Health Insurance Executive Debunks Trump Attacks on Single Payer

8 days ago

Yves here. This Real News Network interview with former Cigna executive Wendell Potter, who among other things now heads Tarbell.org, a site that investigates money in politics, provided a point-by-point takedown of the factually-challenged criticisms Trump has made of single payer. The fact that this rebuttal comes from a former health industry insider may make it more persuasive to skeptics in your circle.
And let us not forget that polls shortly before the election showed that health care was the most important issue to voters, but as we know, the Vichy Dems are much more willing to give lip service to the idea of addressing this inefficient and too often predatory industry than doing something about it.
[embedded content]
GREG WILPERT: It’s The Real News Network, and I’m Greg Wilpert

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Northern Ireland Constitutional Settlement: A Brexit Booby Trap?

9 days ago

Today we’ll stick our noses into Northern Ireland politics, which it turns our matters more than it might appear in Brexit. And I don’t mean the DUP’s position in the UK parliament or the fact that on Monday, the Taoiseach Leo Varadkar told Theresa May that the UK could not push the Republic around on the topic of the backstop. Per the Guardian:
Varadkar’s office released a statement shortly after May had called him on Monday morning, which said that while Ireland was open to the possibility of “a review mechanism” for the backstop, “the outcome of any such review could not involve a unilateral decision to end the backstop”.
An issue that appears to have been widely ignored, but our alert Brexit experts have picked up on, is that the UK does not have the authority to alter the

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CSU Council Calls for Investigation of CalPERS CEO Marcie Frost’s Hiring

9 days ago

CalPERS CEO Marcie Frost no doubt assumed that she had managed to ride out the fact that she made misrepresentations about her educational history and work experience, going back to 2013 in Washington State, where she made false statements in her own hand on a gubernatorial questionnaire filed under penalty of perjury.
After her annual review, in which it was clear that the board decided to do nothing, State Treasurer John Ching issued a press release calling for an independent investigation. And more shoes seem to be dropping. For instance, the head of an important stakeholder organization remarked to someone who had supported investigating Frost, asking for reassurance that they hadn’t given up on getting rid of her.
As you’ll see below, the lead story in the California State

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The Rapid Acceleration Towards Peak Oil Demand

9 days ago

By Dwayne Purvis, a reservoir engineering and management consultant based in Texas. Visits his website at www.dpurvisPE.com. Originally published at OilPrice
The drumbeat towards peak oil demand is accelerating, but since much of the acceleration is happening outside of the United States, its cadence is muted.
To be clear, the developed world passed peak oil demand a decade ago and has for years been forecast to continue reducing its demand. Increasing demand in industrializing countries, particularly China and India, each with a population tantamount to that of the OECD, slightly overpowers declines in the developed world, and as a result, global demand continues to increase. In its 2015 World Energy Outlook, the IEA forecast 1.5% y/y increase outside the OECD, -1.2% y/y in the OECD, and

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Brexit: Even More Noise in the Signal

10 days ago

Figuring out what if anything is happening with Brexit is becoming even more difficult due to the decay in the caliber of reporting, which wasn’t so hot to begin with. I hope to post on some structural issues that the press has ignored later this week, but a bit of catch-up first seemed to be in order.
One has to wonder if the frequency of bogus stories about Brexit progress and breakthroughs are simply intended to keep the pound aloft. Recall we had a blizzard of optimistic stories before the October summit, when the push to reach closure came to naught. Then we had the flurry on a UK-EU financial services deal, which was much less connected to reality.
The idea that the press might be manipulated to support the currency would be particularly unfortunate since as vlade and other readers

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Mortality Risk, Valuing Lives, and the Impact on Health Care

10 days ago

Yves here. This article will no doubt come off as unduly clinical, in the bad sense of the word, to many readers, but I hope you’ll bear with it. This piece contains useful information about how economic assumptions about the value of lives plays into health care policy. Better to be informed.
By Daniel Bauer, Hickman-Larson Chair in Actuarial Science and Associate Professor of Risk and Insurance, Wisconsin School of Business; Darius Lakdawalla; Director of Research at the Leonard Schaeffer Center for Health Policy and Economics at the University of Southern California; and Julian Reif, Assistant Professor of Finance and Economics, University of Illinois. Originally published at VoxEu
People with shorter life expectancies place more value on increases in survival than people who anticipate

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Erasing Economics and Economic Policy from Politics: The Race and Xenophobia Sideshow

12 days ago

By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for NeW Economic Thinking website
Adolph Reed, who researches race and politics, warns that “identitarian” politics can conceal the structural inequities of capitalism.
Lynn Parramore: As the elections approach, media pundits seem focused on the idea that the country is facing a racist and xenophobic breakdown promoted by Trump and the GOP. The Democrats posit themselves as the answer to this threat. What do you make of this framing?
Adolph Reed: Immediately after Trump’s victory, I was particularly struck by the debate over how to interpret the victory. In my mind, this was always a debate over how to respond strategically and point towards the midterms and 2020.

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Publishing and Promotion in Economics: The Tyranny of the Top Five

13 days ago

Yves here. In case you hadn’t noticed it, the economics discipline has doctrinal norms. Academics who stray too far from it find themselves welcome only at the small number of colleges and universities, such as the University of Missouri – Kansas City and the University of Massachusetts – Amherst, that embrace heterodox views.
The top five economics journals play a large role in enforcing the orthodoxy. Jamie Galbraith has described how he’d submit suitably mathed-up papers to one of the heavyweights, get an initial positive response, but when they understood where he was going, they’d alway reject the paper. The reviewers would claim that the mathematics were flawed, when that was not the case. But being published by the top five is essential to advancing in prestigious economics

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Links 11/2/18

13 days ago

Machine learning spots natural selection at work in human genome Nature (David L)
Woman survives six days in Arizona desert after crash Reuters (EM)
Climate change will make America much warmer by 2050. See how these US cities will change Vox (UserFriendly)
‘Hologram’ lecturers to teach students at Imperial College London BBC. Not appealing to people who don’t have depth perception.
The Ethical Data Scientist Slate (David L)
Apple launches vintage repair pilot program to fix aging iPhones, MacBooks and more 9to5Mac
Google says ‘exponential’ growth of AI is changing nature of computers ZDNet (David L)
Major Study Finds ‘Some Evidence’ of Link Between Cellphone Radiation and Brain Cancer New York Times (David L)
China?
China leads market recovery as predicted trade deal emerges Asia Times.

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Big Money—Not Political Tribalism—Drives US Elections

13 days ago

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Recent Items

Publishing and Promotion in Economics: The Tyranny of the Top Five – 11/02/2018 – Yves Smith

Links 11/2/18 – 11/02/2018 – Yves Smith

Big Money—Not Political Tribalism—Drives US Elections – 11/02/2018 – Yves Smith

Quick Thoughts on the Google Walkout – 11/02/2018 – Yves Smith

Mischaracterizing HAMP and Principal Reduction: A Regression Discontinuity Test Error – 11/02/2018 – Yves Smith

2:00PM Water

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