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Robert Brusca  

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  • The Fed's Evolving Rate Forecast [View article]
    you have presented a time-series of 'forecasts' not a yield curve.
    Jun 23, 2012. 08:57 AM | Likes Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    Re-double dip'.. since this recovery began some have been forecasting a second recession. And while we are far enough along this 'recovery' that some might think that the next recession is 'independent,' the very awkward and incomplete nature of this recovery, the fact that we have not made anything like a complete recovery, and the height of the unemployment rate now ensure that these two recessions (were one to occur 'soon') would be forever linked as a double dip.

    Whether a set of recessions is double dip or not has to do with more than just the passage of time..

    It is not even recovering to the previous cycle peak.

    I doubt that if we went into recession with the unemployment rate at around 8% there would be any sense of this next recession being 'independent. It would be the result of not getting sufficient recovery and being pulled back by the very same forces that activated the first one. it would give credibility to those who look at the current recovery and say its not a real recovery, we are still in recession. Indeed this recovery looks like no other post WWII recovery.

    At some point we may have to come to grips with he last THREE recoveries in which the 'economy' went into recovery but the labor market did not...(until much later).

    There is no formal definition of double dip, so everyone can have their own standard. I can't say yours is 'wrong' in any technical sense but I want to explain where my thinking comes from. There is grounds for disagreement here lacking any formal definition. I can respect your choice, but still disagree with it.

    Jun 8, 2012. 08:55 AM | 1 Like Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    Of course GDP is weaker! Potential GDP growth is weaker. That is the point.

    We have no historic reference for current GDP growth metrics in raw form since we have not seen our growth potential this low. That is why I use the metric of GDP growth relative to potential instead of the unadjusted growth rate. Try this: read the article to see why that is important.

    I guess you don't want to read the article just diss it.

    Ok with me.

    But why not READ IT and learn something instead of picking at points I have not made or making the same mistakes I warn against making?

    ANd..after all you bluster about using recent pre-lim data you are doing it yourself with other GDP components. Good Show! I guess even you were not convinced by your own argument.

    By the way the NBER method is not at all convoluted. It talks of recessions as having three metrics: depth, breadth and length. When economic contraction is deep enough, long enough and widespread enough its a recession. No one has some up with any formula to reduce these three metrics a scalar or a binary signal. I continue to ponder the possibilities.
    Jun 8, 2012. 08:43 AM | 1 Like Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    Yes. we have lost all all attachment to reality.

    While data may be flawed it is still our only way to 'know' what is going on. I don't the like the 'make it up as you go along' method.

    I really don't want someone with partisan views telling me what really IS going on. I'll take the 'flawed government numbers any day.

    I wrote this price because some have been arguing that GDP growth below 2% is a recession signal. The point was to de-bunk that.
    Jun 8, 2012. 08:32 AM | 1 Like Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    I agree. The problem ow is on the supply side as much as on the demand side. Higher rates might help.
    Jun 7, 2012. 10:13 AM | 1 Like Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    You use what you have. You don't use what you do not have.

    I don't see what you want. THIS IS REALITY. Are you opposed to reality?
    Jun 7, 2012. 10:12 AM | 1 Like Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    Your comment is flawed. we are not interested in any in a time series of preliminary data. Historic data are revised for any number of reasons one of them being a new approach to measuring GDP. We want a definition consistent set of GDP data. Of course you use the most recent data to assess things. Revisions are simply an occupational hazard. There is nothing flawed about it; it's just reality. You don;t really think because our current GDP will be further revised that we should look at history using flawed GDP metrics, do you? Moreover we have no idea the direction of the next GDP revision. Dumbing down history in the name of consistency is a nonstarter.

    As for 'stop calling it a double dip'.. since this recovery began some have been forecasting a second recession. And while we are far enough along this 'recovery' that some might think that the next recession is 'independent,' the very awkward and incomplete nature of this recovery, the fact that we have not made anything like a complete recovery, and the height of the unemployment now ensure that these two recessions (were one to occur 'soon') would be forever linked as a double dip regardless of your assertion to the contrary.

    Whether a set of recessions is double dip or not has to do with more than just the passage of time..

    Beyond that the logic of the article is fine. Your dog analogy is a dog and its barking.
    Jun 7, 2012. 07:26 AM | 2 Likes Like |Link to Comment
  • The Best Of The Best Of The Stressed [View article]
    I see. I am not a bank analyst. Stress tests are the wrong tool for determining that.

    They are the wrong tool for the purpose they allegedly serve too.

    Good luck sorting out the banks

    Soon none of them will able to take any risk and they all will be 'safe.'

    Mar 26, 2012. 11:33 AM | Likes Like |Link to Comment
  • The Best Of The Best Of The Stressed [View article]
    NO sorry about that. My point is that such a list is worthless and that the stress tests are meant to give you comfort even where there should be none.

    I did not mean to mislead you only to explain why stress test performance should be viewed with a whole shaker full of salt.

    I do hope that that observation helps you.

    Mar 23, 2012. 09:25 AM | Likes Like |Link to Comment
  • Fed's GDP Gap Belief Collides With Reality Gap [View article]
    I could not find a series so I constructed one with the broadest employment definition. I get 0.4%. And we are at an historic low rate of expansion. Per-capita GDP has been slowing ahead of the financial crises but has since has slowed further.

    The growth of per capita income in the recovery has been very slow too, but is in line with the past two recovery episodes.

    And, of course, population growth it self has slowed and is at a low point since 1960.
    Mar 18, 2012. 04:16 AM | Likes Like |Link to Comment
  • U.S. Trade Trends Step Back Into The Hot-Tub Time Machine With All Its Risks [View article]
    Good bye

    In Nature, naturally.
    Mar 18, 2012. 03:37 AM | Likes Like |Link to Comment
  • Fed's GDP Gap Belief Collides With Reality Gap [View article]
    GDP per capita is an interesting choice. But there are oh so many moving parts to deal with understand it...

    The employment-population ratio is falling. So that will challenge GDP/Population measures.

    In Japan population is shrinking.

    Aging populations are an issue globally not just in the main most-developed countries. And we need to be careful of excess pessimism.

    Indeed demographers have pointed to lower GLOBAL fertility rates and are more a worry and that the trend will imply shrinking GLOBAL POPULATION far down the line. Malthus is dead! Really dead! So dead his ideas are even dying. Now that is dead.

    Danger Will Robinson! Danger, danger!

    The fact is that in the US jobs growth is really taking off, averaging 375K per MONTH over seven months in the Household report ( the one where they measure the unemployment rate) . The 'headline' payroll report is creating under 200K over the same period.

    Put participation rates aside; there is job growth. All job measures are improving. Do not throw the baby out with the bathwater.

    It is a separate thing to say that growth is picking up from saying the economy is in good shape.

    You would not measure Wilt Chamberlin's (Wilt the Stilt) son at 5yrs of age and say he is not 7 foot tall yet so he will never be as tall as his father! You need to check his height against the age of his peers. Similarly you can't be constantly critical that we are not at full employment. It will take a long time to get back there. Ask instead, is there progress? And there is progress. By some measures there is a lot.

    Denying it - I think- is wrong. Attributing it to someone is the key political issue of the day. But I do not want objective economic analysis spoiled by political agendas. So don't drag me into that quagmire. I am not taking sides on the blame or kudos game. I do want to be able to objectively assess the economy- politics be damned!

    I don't think per-capital GDP is useful in making a growth assessment right now. While there are some clear challengers to economic welfare when people leave the labor force and stop contributing to GDP, its really hard to say what that is. Some see the exit from the labor force as the result of failed economic policies. But people leave the LF for all sorts of reasons.

    I grew up in Michigan. I worked on auto assembly lines. Hot, sweaty, grunt work but great pay -at the time. Now in Michigan many plants are closed. the high wage jobs are gone. The multiplier effects have ravaged Saginaw, Flint and Bay City. House prices fall. People have roots there but no longer jobs. The wages paid no longer can support the stock of homes at past prices so house prices fall. People are trapped in underwater mortgages. Unemployment assistance runs out.

    There are NO JOBS there. People stop looking. Are they unemployed?

    are they?

    Its an interesting question. Because many are not looking for the job that, in fact, does not exist. Yet they really do want to work. They are not slackers; they are just TRAPPED. They need to move, to seek work in a better environment. If they stay and wait they may be 'unemployed' or should I say 'not working' for another five years. Is that Obama's fault? Bush's fault? Who is at fault?

    Whose job is it to create new jobs? GM failed them. They failed themselves with unions who failed them for getting wages too high for GM to compete. I think that is true but but many will hate me for saying it. GM failed because it paid its workers much more than they were paid down South or in China. Free trade is one unrelenting factor So do we blame Richard Nixon for 'opening' China? Who do we blame? .

    Move South and east from the tri-city area to Detroit. Again, union benefits are strangling the city that has lost one-quarter of its population. If it fired everyone of its remaining 11K public sector workers, pension costs alone would dry up its cash by around mid year.

    Detroit, the city of collective bargaining love, let itself pay more than it can afford to retired workers, let them retire too early etc.

    Now everyone is in trouble. Retirees want their benefits. They worked and were promised... I see that. But the city HAS NO MONEY. Can't pay what you do not have.

    So these are the real world forces that underlie phrases like employment to population ratio, participation rate, and per capita GDP.

    The times they are a changin' as the man once sang. And with it there is stress. The industrial revolution was a great period in history but I doubt any of us would have liked to have lived through that transformation.

    I do not think there are easy answers here but I do not think per captia GDP is a useful measure of how the economy is progressing. But this just an opinion of mine and it is more mine than it is justified by any economic concept.

    At this point per-capita-GDP is a political stick to hit the Fed or Obama or someone with. The argument bites but in the end it's not an exercise that will get you anywhere but frustrated.


    RAB .
    Mar 16, 2012. 10:56 AM | Likes Like |Link to Comment
  • U.S. Trade Trends Step Back Into The Hot-Tub Time Machine With All Its Risks [View article]
    Wow! thank you for your insight and your generosity of thought. I'm not arrogant or stupid but I do appreciate your assessment. I will take it under advisement after considering the source.

    ...and you need to understand what circular reasoning is really about. It not about me disagreeing with your (who makes thinks up: Larry-land!) and you disagreeing with me (who tries to benchmark the argument to economic thought) and then you rejecting me and making something up again and so on and so forth. That is a circle of sorts but not circular reasoning.

    .And I spent a good deal of time actually dealing with your attempt to be an expert where you are not. I demonstrated (in the post you did not read) why my position is not based on circular reasoning. But in the end you are more wedded to your thoughts than to learning or to confronting actually opposed opinion. Again and again you simply refused to deal with the points I made. While I actually confronted and dealt with each of your arguments. So who showed whom respect here Larry-boy? In the end I used more strident language to try to get you to confront reality, but alas, you wish to live in larry-land.

    So be it. have fun there.

    I have been respectful if stern. I have related my criticism to economic tenets which you reject and I can see how that makes me arrogant and stupid, in your mind.

    This is the last lawyer trick. If you can't win the argument you try to destroy the credibility of the opponent/witness. Brilliant, Larry. You now rest your case and leave the court room - to the stunned silence of one-hand clapping.

    Since I do not see the light of Larry's wisdom as superior to centuries of economic thought I am stupid, I am arrogant. Oh God do forgive me, my hubris!.

    The internet is free. And as economists say, you get what you pay for.
    You are an example of that. I try to give more and to at least give a good accounting of myself and my views.

    I remain proud of the posts I write because they reflect me and my thinking. I was in the end harsh with you but only after you ignored me and trashed me and denigrated my arguments with words of made-up Larry wisdom.' I Reject rules I reject systems!' Oh wow can we publish that in the American Economic Review? Brilliant just Brilliant. Sure proves MY arrogance, doesn't it?

    I had to do something to wake you up. In response to one of my posts you actually cut and pasted your treatise on capital flows from anther place. Who is really the arrogant one?

    Anyone who reads my post(s) will see that I took a position and defend it with reference to economic thought and knowledge. It took time for me to more aggressive with your Larryisms. I showed you a great deal of respect even though your ego will not let you see it.

    In the end, you took the low road and just spewed insults.

    Shame on you, Larry.

    Shame on you. But that was your way all along wasn't it?

    I am glad I no longer have to deal with your opinionated unfounded spew, for that is what it is as I have demonstrated in my writing. I feel sorry for you that you cannot be content with expertise you have and want to spread you wings to shadow over a domain where you do not rule and can barely walk or crawl. But you can write well so you can dress up your ill-logic in some fine rhetoric. .

    You are the arrogant one, I am not. I have only and consistently marked your arguments to economic fact while you have spurned economic rules and asserted your own values. And, after all of that, you can't understand why I do not want to sign on for Larryy-nomics.

    I doubt anyone does.

    Good luck with that, Larry

    By the way, you can be critical of someone's ideas and not attack them personally but I can see you are incapable of understanding that process.

    Somewhat less respectfully,

    Mar 16, 2012. 09:48 AM | Likes Like |Link to Comment
  • U.S. Trade Trends Step Back Into The Hot-Tub Time Machine With All Its Risks [View article]
    Because you do not have the foundations in economics you do not understand how wrong your own assertions are.

    I'm sorry to render that stark and scathing comment but it is true.

    My reasoning is not circular. Your calling it circular is another lawyer trick that you clearly have a bag full of from your many years of 'lawyering'. The lawyer trick to engage in illogical refutation by creating a bogus argument is a great tactic if it works.

    Lawyers understand that there are weak and strong positions. They have a saying, (and please correct me if i get this wrong, since you are the expert in that field) I believe it is this: if the facts are on your side argue the facts, if the facts (of the case) are not on your side, argue the law.

    In this case neither of them are on your side. The facts speak plainly to the existence of a gargantuan distortions, in US trade and current account deficit (in absolute size and as percentage of US GDP and as a percentage of foreign savings etc etc).

    The economic laws and theory you simply reject and you want to replace them with personal sophistry. So fine. Go build Larry Land right to Chevy Chase's Wally World.

    To create a straw-man argument and destroy is simple, but it does not make your position correct. Such tactics are more face-saving than anything else. .

    SO LET...ME...TRY...THIS....

    If export led growth strategy is what causes reserve accumulation to occur, it implies excess reserve accumulation That IS the cause and the argument is not circular, it is direct.

    POLICY: export led growth->FX_rate too low-> Excess exports-> excess trade surplus-> excess capital outflows-> excess asset accumulation-> excess FX asset build up. QED.

    Also, though, -> larger FOREIGN deficits since the sum of global trade or current account balances must equal zero (they do in theory but not in practice... for too many reasons to discuss here).

    I'm sure you are bristling to take aim at my excessive use of the word 'excess' so let me explain...

    In economics the right values for variables in markets are the values that occur 'in nature' without government distortion. So when a government policy distorts the free market the distortion created by that policy is the cause of it ( that's 'THE CAUSE,' as in 'policy of export-led growth'). that distortion traces back to the policy that caused it. Moreover, in economics, distortions do not live in isolation. Here think of double entry book keeping or action and reaction.

    A too big current account surplus implies a too big capital account deficit as the financial consequence and similar pairs of distortion for some other nation or for several of them.

    Any knock on effects from that initial policy distortion are due to government policy that created it. And since in trade one country's surplus is another's deficit if a government policy for export-led growth in China creates a surplus that 'would not occur in nature' (by continually suppressing the rise in the yuan's FX value that would diminish China's competitiveness edge and reduce the surplus, for example...) that it will create/transmit a distortion to another country that will wind up with the other side of that trade, the deficit. You see, its action and reaction or double entry book keeping in action.

    This is why I keep saying economics is about systems and how they operate. For systems to operate fairly they have rules. Because of these rules everyone on both sides of the transaction, whatever it is, get fair value.

    If someone gives you something too cheap there are consequences. They may not be immediate.

    In this world too cheap goods from China while seemingly a windfall, lead, through a complex process, to fewer jobs in the US excess consumption and excess debt to finance that consumption and a degradation of US welfare through the back door of debt accumulation and rising unemployment.

    That is not immediately evident when you take something too cheap. And it does not appear immediately in the doctrine of free trade which ASSUMES (critically!!) that transactions occur at fair market prices. The systematic nature of Free Trade is only understood in the context of closed economic system with a finical sector where the knock on impact of too cheap goods to too few jobs and too high unemployment and too much debt eventually reveal its dark side.

    By the way this is one shortcoming of economics which usually teaches 'real theory' separate from 'financial theory'.

    These knock on effects are not there in a recitation of Ricardian comparative advantage theory because it is only a partial demonstration. It is usually offered as a comparative static result: look at this state vs that one, under the assumption that financial side that is left out is in equilibrium - a true market equilibrium not a phony one..

    China is violating the rules of this financial system along with other countries. When trade and capital flows are out of kilter transactions take place as sub-optimal prices and the result of 'sort of free trade' is not what you would get in true free trade.

    ...and the trade deficit IS gargantuan prima facie! It is huge relative to GDP is is no where close to zero or want normal reserve accumulation by other countries might call for. I can't imagine having to justify that statement and will go no further to do so.

    The Walmart example is yours. Walmart workers are neither underpaid nor over paid according to what some people think. Rather they are overpaid or underpaid in reality. What some people 'think' is irrelevant.

    As I have said before, If some people think the law of gravity does not apply to them they are free to think that but the law of gravity will not be 'repealed for them.

    Economic theory is not about what people think but the about real truth, which is hard to discern, but it is out there somewhere.

    If Walmart underpays people, they can work somewhere else. If too-skilled a person chooses to work there for wages that are too low that person probably will leave when the economy picks up. etc. Or maybe he/she will relocate..if he/she can.


    As for you proposition on strategic goods, this is a very very old argument in economics and there is a lot of theory that has nothing to do with your own made up logic about what you think. Again you are welcome to your thoughts. but being unaware of CENTURIES of economic discourse on this subject hardly leaves you in a position to plow any new fertile ground. You might start your economic education by reading about the Corn Laws in England around 1815. These laws were in effect from 1815 to 1846 and economic literature has abundant commentary on the welfare effects of these laws. 'Corn' was taken to be of strategic importance in the case of war England wanted to be able to feed itself...or so the Corn Law cover-story goes...

    In economics 'welfare' has a more objective meaning than the one commonly associated with the term today so you might want to get some background on that too.

    Governments of course have more than 'welfare considerations' when they make laws but if in the name of national security some trade impediment is put in place there are still economic distortions and consequences. Saying that there is a national security reason does cause economists to say Oh, OK, never mind.


    You can write on economics all you want. It's a free country. But with each step you simply demonstrate how much of a foundation you lack in this field. You undermine your own conclusions.

    I'm sure I'd look equally clumsy if I tried to write about law. But you do not have a leg to stand on in this argument. I don't care if you have written a book or who has published it. The more I read of your comments the less I care to ever read your book. Maybe you should write one about law, an area where you are an expert?

    You are clearly a smart guy. I bet you would write one heck of a good book on some legal issue that you understand inside and out.. Why not put your talent to better use?


    Mar 15, 2012. 11:02 AM | Likes Like |Link to Comment
  • Fed's GDP Gap Belief Collides With Reality Gap [View article]
    Good question.

    there has been real growth ( real meaning growth in volume not just value driven by price) . It has been inadequate. I will have to look at some data to see if GDP per-capita has done much as I do not keep the regular pulse on that series. I'll get back on that later.

    Mar 15, 2012. 09:21 AM | Likes Like |Link to Comment