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John Quiggin 
A hypothesis on the gilets jaunes protest in France. One thing everybody agrees on is that the protesters come from stagnating or declining towns in rural France. I connect this to the complete administrative block on new wind farms. (****windeurope.org/newsroom/news/french-ambitions-for-onshore-wind-toothless-without-urgent-action-from-government-on-permitting)
Bisect France in a NNE-SSW axis roughly from Sedan to Biarritz. Almost all the left-hand half is suitable for wind farms, with better conditions than Germany and lower costs. France is the archetypal centralised state; if the government really wants something, it can steamroll over local opposition. Here is it has just capitulated to a small but vocal alliance of romantic Greens and reactionary notables opposed to all change. The dithering has meant the loss of jobs in wind farm construction and maintenance, the loss of rental income to farmers and other landowners, the loss of property taxes going to local authorities. These would have been very widely distributed: and rural/city geographic inequality is almost as important as class inequality politically.
You can blame Hulot here as well as Macron and Philippe. Hulot probably invested too much effort in trying to speed up the nuclear phaseout: a hobby for Greens, but in France, unlike Germany, an issue that does not mobilise wider support. Sensibly too, as it’s irrelevant to climate change.
Paper here on the multiple benefits of wind power in Iowa: ****nrdc.org/experts/katharine-mccormick/benefits-wind-energy-iowa-valuable-reliable-crop-agricultural-state. The wrinkled GOP dinosaur Senator Grassley is a reliable supporter of tax breaks for wind. In Germany, the EEG was designed to support village cooperatives, and many have taken advantage of the breaks.
Brisbane local interest: a team at QUT has made progress on a cheaper catalyst for splitting water. It uses a little gold, which is still cheaper than some alternatives.
*****pv-magazine.com/2018/12/10/australias-qut-discovers-process-to-lower-the-cost-of-renewable-hydrogen/
Broadly, at a current level of practicality, I agree. The implementation of wind farms could have met a number of objectives. Within the current political economy of France, it could have been reasonably effective in helping to reduce regional inequalities plus of course help to address some energy and climate concerns.
Your statement about “the loss of rental income to farmers and other landowners” reveals a deeper issue. Creating a new class of rentiers does not address the basic problem of rentier capitalism. Don’t get me wrong, as an interim step it would have been better than the current situation and as you point out there would be more property taxes going to local authorities, which is a social income result.
Still, eventually we need to consider solutions to the structural problems of rentier capitalism itself. There is no standard rentier solution for the urban poor for example. They own no property and have only their own unskilled labour capacity for sale which is neither developed nor wanted by the current system.
The assumption that ownership of property should underpin (some) income leaves all those with no property with no mode of income unless they have saleable labour to offer (as physical or mental work). As intimated above, the system has no need for unskilled labour and no system-wide incentives to generate full employment.
Income from ownership per se is income from no personal effort. Clearly our modern production system can generate a lot of products and services, and thence income, from no appreciable human personal effort by generating products and services from the motive and automated powers of machines. Obviously, these productive forces originally must be designed and set in motion by human physical and mental effort but once in motion they multiply the product of that said human physical and mental effort and the product arrives as a surplus not generated by appreciable human effort.
Why should the surplus that is not generated by appreciable human effort be assigned solely to those historically gifted with property ownership by inheritance? Or to those who become skilled at the games of ownership manipulation by the luck of being born into a class and milieu where they can can get a good education and then practical entry paths into the game of ownership?
Ultimately, we have to question the issue of the ideological construction and social, political and economic instantiation of ownership itself. “Ownership” is the fundamental unexamined assumption of the entire system.
The BBC tells us “France’s President Emmanuel Macron has promised a minimum wage rise and tax concessions in response to weeks of violent protests.”
This is very revealing. The elites of Europe, represented and exemplified by Macron in France, do not respond when the people ask for reasonable things in a reasonable manner. The elites only respond when people revolt and take to the streets, after reasonable requests have been ignored for years and indeed decades. The take-away lesson is this. The only way to change things, in the current system, is to take to the streets and revolt.
Clearly, the French and EU systems are not working for ordinary people. There needs to be radical change to the system or else street revolts will continue to be the only option for the people. Is that what the elites want? If they do then they will get it in spades and have their privileges and wealth abolished in the process. It’s happened before, especially in France.
Advert for a blog post on a hard Brexit: ****samefacts.com/2018/12/economics/the-brexit-zombie-apocalypse. No original insights, but my riff on chaotic Brexit as the zombie apocalypse is a decent joke, sparked by the published fears of (Tory) Kent County Council that monster traffic jams will stop the morgues from functioning.
There is a nice methodological issue over Paul Krugman’s criticism of the Bank of England’s forecasts as too gloomy. I’m with the Bank. as hard Brexit is a discontinuity (= zombie apocalypse) and IMHO makes conventional Krugman-style models unreliable.
If you join a highly dysfunctional organisation which holds you to ransom both during membership and on any move to leave, then hard-exiting will be painful and costly. However, remaining in the dysfunctional, blackmailing organisation will be an even worse option. Just ask Greece… or France. Ask the ordinary people, not the exploitative elites. The EU is anti-worker and pro-neoliberal.
When Paul Krugman, Joseph Stiglitz and other prominent Keynesian economists gave opinions about economics such as austerity is not expansionary, cutting interest rates and QE is of limited use in liquidity trap, cutting taxes will not lead to trickle down etc., the Left praises them as the champions of the Left and the subsequent data in the past 10 years since the GFC proved them to be right on almost every single issue is a vindication of Keynesian economics.
When the same figures gave opinions about economics of Brexit, that it will be painful, but it will not be doom and gloom, and thriving outside of the EU is a possibility, perhaps maybe even better than inside the EU. The Europhile Left then argue a) they don’t live in the UK, therefore their opinion is unwarranted, b) they got it wrong this time about the economics of Brexit, c) whatever other reasons.
Unfortunately I think the Europhile Left is as tribalist as climate denialists.
“Unfortunately I think the Europhile Left is as tribalist as climate denialists.”
Should be
“Unfortunately I think the Europhile Left is as tribalist as climate change denialists.”
Ikonoclast, how many French people have you asked whether they would like France to leave the EU? Would the number be more or fewer, do you think, than twenty-three?
Tom, is this ‘Paul Krugman’ you’re mentioning the same Paul Krugman who is on record as saying ‘I don’t think there’s any plausible case that Brexit is a good thing for the British economy as a whole’ and ‘many of the arguments for Brexit were lies, pure and simple … So what was the point of Brexit? Good question’ and ‘I’m anti-Brexit and have no doubt that it will make Britain poorer’?
Personally I’ve got no particular stake in the accuracy of Paul Krugman’s opinions, but you brought him up.
Tom: The only argument you have to prefer Krugman’s views on the economic impact of a hard Brexit (bad) to those of the Bank of England (very bad) is the argument from authority. It’s worth recalling that the Bank’s Andy Haldane may not have a Nobel but he’s a substantial figure in the profession, in the same reputations ballpark as our esteemed host JQ. Haldane is very far from a conventional mouthpiece for City orthodoxy. Read him for instance on shareholder capitalism: bis.org/review/r150811a.pdf
His views, like Krugman’s, deserve serious consideration on their merits.
“A poll by the Pew Research Center in June 2016, before the United Kingdom European Union membership referendum, 2016, found France to have a 61% unfavourable view of the EU, second only to Greece’s 71%, with the United Kingdom on 48%. However, when asked about an actual departure from the EU, 45% of French wanted to stay at the heart of the bloc while 33% expressed a desire to leave.” – Wikipedia.
I think we can be sure that French support for the EU membership has declined since then. The yellow vests protests are symptomatic of that decline.
Every country that is currently a member of the European Union, including Britain, should remain as part of the Union. No country should be part of the Euro currency area except Germany.
There. Fixed it.
Stay tuned, as next week I’ll explain world disarmament. (Step 1 — Disarm the world.)
You can be sure. I admit that it’s possible. But you can’t know what the outcome of a French vote on EU membership would be.
Of course, even if a majority of French people think they would be better off leaving the EU, it doesn’t follow automatically that it’s true, just as it doesn’t follow automatically from the result of the UK referendum that people in the UK will be better off if they leave the EU. Likewise, when people protest in the streets, it demonstrates that they have strong feelings but it doesn’t demonstrate that their judgements are accurate.
Ronald,
Yes, the monetary union is a major cause of their problems. Single currency areas do not work correctly when there is not a Federal fiscal transfer system. In Australia, for example, the Federal Government subsidises the Tasmanian State Government (and thus its people) by fiscal transfers. This is necessary and equitable because of the dis-economies of running a small-scale state.
In the EU, by contrast, all the periphery nations subsidise Germany, the richest and most powerful state. This subsidy occurs because the Euro’s value is too low relative to Germany’s productive power. The claim made in some quarters that German and French loans subsidise Greece is patently false. All those loan monies and repayments follow a circuitous route back to private banks mainly in Germany and France. Those loans function to subsidise and protect the rich private banks of Germany, Fracnce, Benelux etc. Greece has austerity forced on it repay these loans. Note, loans are different from fiscal transfers. Loans have to be paid back, fiscal transfers do not.
The EMU is a deliberately dishonest and fraudulent system. The neoliberal designers and beneficiaries of this system knew and still know exactly what they are doing. The EMU is designed to enrich the center (Germany/France essentially) and by default to impoverish the periphery. This process has intensified to the point that it is now impoverishing large regions of France, hence the yellow jackets revolt.
Iko, there’s nothing especially neoliberal about the Euro. You could just as well argue that having your own currency is neoliberal because this lets the market set the exchange rate with other currencies.
@J-D
I think that is rather selective quoting of Krugman. It is indeed true that Krugman is of the opinion that leaving Brexit is a mistake, however he has the integrity to point out that he does not agree with the doom and gloom forecasts that is done from non-standard assumptions and recovering and thriving outside the EU is possible. His post “Brexit, Borders, and the Bank of England (Wonkish)” is his take on the subject. I have always acknowledged hard Brexit will hurt, but recovering and thriving outside the EU is not a fantasy. In my opinion I think that aligns quite closely to Krugman and Stiglitz.
@James Wimberley
That my argument is based on authority is, half true. I do believe that given Krugman & Stiglitz et al. has been right on most of the economic forecast since the GFC makes their analysis a lot more trustworthy, and they do give proper analysis and reasoning, not just “trust me, it Brexit can work” type arguments.
Secondly, saying that I argue from authority and then you doing the same doesn’t really win you arguments.
Lastly, raising a figure who admitted they have gotten their forecast wrong isn’t really helpful…
https://www.theguardian.com/business/2017/jan/05/chief-economist-of-bank-of-england-admits-errors
Tom, if the question is ‘Will it be possible for the UK to recover and thrive after leaving the EU?’, the answer is obviously yes. That doesn’t make leaving the EU into a good idea. It is not a good idea to do something which will make you worse off, and the existence of a possibility of recovery does not make it into a good idea.
Storing energy in the form of molten silicon sounds like it may be a game changer. The proponents say it is much cheaper than both batteries and pumped hydro. A trial by a local company is expected to be up and running in March 2019.
****reneweconomy.com.au/1414-degrees-molten-silicon-biogas-energy-storage-system-set-for-trial-in-s-a-96667/
We are experiencing an Energy Revolution that only a few optimists anticipated 20 or 30 years ago. Yippeee!
I will ask how this may become public.
http://csrm.cass.anu.edu.au/research/publications/optimal-policy-modelling-microsimulation-methodology-setting-australian-tax
“The illustrative case used is minimising relative income poverty. We do this by using a microsimulation approach in which we alter welfare payments (or other parameters) to minimise household poverty, subject to a range of constraints, such as the overall social security budget or relationships between payment rates. The relationship between payment rate and poverty gap is then estimated using a linear regression model that provides parameter values for an equation that describes how changes in payment rates affect the poverty gap. This equation can be used to determine ‘optimal’ payment rates, subject to constraints such as a budget constraint or changes from current payment levels.”
KT2 (13, 2018 AT 4:21 PM)
At present and in the near future, I don’t have time to study the paper you have linked to answer a question I have. I’d be most grateful if you would allow me to pick your brain in this regard.
My question concerns the notion of ‘relative income poverty’. Does relative income poverty refer to the entire range of an income distribution or does it refer to the distribution of incomes within the sub-category of incomes that is bounded below by zero and above by a poverty line?
Whatever the answer to my question, I find the approach interesting. It is important, IMO, to have clarity on the above question.
China emissions spike. I’ve been looking for explanations, and ran across this odd item.
The background is that coal usage is driven by electricity consumption. This rises pari passu with GDP, at over 6% a year. Annual growth in renewables covers about half the increase, so coal still normally has to keep rising. If Chinese electricity demand slowed to 3%, still higher than the OECD rate, renewables would cover all the annual increase. So where does the increase come from? China’s NEA (*****english.gov.cn/state_council/ministries/2018/01/22/content_281476022324040.htm):
“Electricity used by service sector rose 10.7 percent last year, followed by a 7.3-percent increase for the agricultural sector and 5.5 percent for the industrial sector. Residential power use rose 7.8 percent.”
This is not encouraging, though industrial demand is still surely much the largest slice. Why should electricity demand be rising fast in services? Air conditioning? EVs? Bitcoin mining?
Ernestine. It would be an honour to have you pick my brain. I too, will not be able to consider this until mid Feb 2019.
You question is also one of mine;
“My question concerns the notion of ‘relative income poverty’. Does relative income poverty refer to the entire range of an income distribution or does it refer to the distribution of incomes within the sub-category of incomes that is bounded below by zero and above by a poverty line?”
Relative Income Poverty it seems will be hotly contested by:
“The United Nations is at it again with yet another report on how bad poverty is in the United States — and how things would improve greatly if the US raised taxes. This time, the UN denunciation of the US has raised the ire of US ambassador Nikki Haley who has called the report “patently ridiculous.”
https://mises.org/wire/uns-absurd-measure-us-poverty
(Gotta luv em: “Our scholarly work is founded in Misesian praxeology, and in self-conscious opposition to the mathematical modeling and hypothesis-testing that has created so much confusion in neoclassical economics.” Read:; ‘created viseral cognitive dissonamce for us’.)
… against this and later reports;
https://www.unicef-irc.org/publications/655-relative-income-poverty-among-children-in-rich-countries.html
My main concern is the said model is looking like an excuse for a bit of “optimal neolibralism” yet is just a set of equations with method which we will be able to refine, for good.
Thank you KT2 for your reply and the additional information. Depending on the weather, I may follow this up over X-mas – no promise though.
At the risk of repeating myself once too often, IMHO, the three most important contemporary interrelated fundamental economic problems are:
1. Income and wealth inequality within and across countries
2. Financial instability
3. Environmental degradation.
Today I found an article in the smh which reports on the BIS’ concern regarding item 2. This article contains the argument why I believe Keynesian macro-economic management no longer works, except in the very short run (eg Australia and Germany in 2008 – both countries being in a position to have a bit of financial fire power). The problem is debt generation (in its many forms) by private financial institutions. The solution (conceptually) is to limit debt generation via one form or another of quantity restrictions. This is not my armchair proposal but the logical implication of work by Roy Radner in the area of general equilibrium theory – the math econ variety and not the belief variety.
The GFC is associated with a worsening of item 1 and, I believe also item 3 (we can’t afford …..)
To avoid getting caught in a filter, I have removed https// in the following smh link.
http://www.smh.com.au/business/the-economy/world-s-financial-structure-is-unstable-20181217-p50mmp.html
I have been toying around with the idea of separate “half-lifes” for three items, namely money, goods and non-renewable resources. Each of these has a calculable or at least estimate-able half-life.
Inflation measures the half-life of money. At an inflation rate of 2%, the half-life of money (when it is reduced to half of its original value) is about 35 years. Money is a notional quantity so only has a notional half-life.
Commodities and goods have a real half-life and a notional half-life. The real-half life is when half of a commodity store is spoiled (half the apples in a barrel, half the tins of baked beans on a shelf etc.) or the useful remaining life of a good (a car tire say) is half what it was at manufacture. Standardly, this is half-life with use, although many products like car tires also deteriorate without use as most materials deteriorate with age. Commodities and goods tend to be assigned a notional half-life as well, known and measured as depreciation.
Non-renewable resources have a half-life which indicates when they will be half used up at current rates, including any allowance for accelerating use (the standard case under conditions of growth). Normally, no accounting is done at all for the depletion of natural resources on a global scale.
It seems we have set up a position now in the global economy where the money inflation rate is low (the half-life of money is extended), the deterioration rate (real) and depreciation rate (nominal) of commodities and goods is high (including issues of obsolescence and deliberate wastage) and the non-renewable resource destruction rate is unmeasured.
The time treatments of these processes, relative to each other, are inconsistent to ignored. Given the future problems we face, money should be inflating (or be deliberately inflated) rather rapidly at the present time. I suspect instead that a lot of money will be destroyed by defaults. That’s the other way to destroy (debt) money.
Or maybe, this doesn’t make any sense. Not sure.
James Wimberley says:December 14, 2018 at 9:22 pm
johnquiggin.com/2018/12/10/monday-message-board-401/#comment-200722
“Annual growth in renewables (“ren”=56.2% & “ren”+hydro=65.8% of 6.6% total) covers about half the increase, so coal still normally has to keep rising (34.2% of 6.6% total growth).”
James, you linked english.gov.cn/state_council/ministries/2018/01/22/content_281476022324040.htm which linked another article at the page bottom a month earlier and covering the same year:
http://english.gov.cn/state_council/ministries/2017/12/27/content_281475991437268.htm
“China’s energy production is expected to reach 3.6 billion tonnes of standard coal equivalent in 2017, among which non-fossil fuel output accounts for 17.6 percent” … or 63.36 million tonnes standard coal equivalent.
Therefore China’s energy production other than from nuclear, wind, hydro, and solar was 3.6 billion less 63.36 million = 3.5 billion tonnes of standard coal equivalent in 2017 from fossil fuels. And that continues growing.
There, Nur Bekri, head of the National Energy Administration said, “China is actively adapting to the green trend in the energy supply,”
He’s gotta be joking. An increasing 82.4% fossil fuel slice of a growing total mess..
The best way to view Svante’s “can’t do” attitude is through the lens of historical naysaying, which shows that every transition in energy use and technology has attracted Doubting Thomas’s like so many blowflies at a barbecue.
– The idea of electricity in the private home was seen as barking mad by the naysayers, since everyone would dies ‘cos everyone would eventually inadvertently electrocute themselves or die in electrical fires or get cancer.
– the idea that coal fired power stations could power cities via a vast infrastructure of billions of metres wiring, substations etc etc was unrealistic according to the naysayers.
– etc etc etc
Whingers gotta whinge, haters gotta hate and naysayers gotta say nay. Whatever floats your boat, I guess.
Hugo,
As a former fossil-doomster, I have to admit I was wrong about solar PV. Solar PV is now much cheaper and more efficient in financial, material and energetic terms. When the facts changed, I changed my mind on that issue. However, I have not been proved wrong (so far) in predicting that our production system (that of neoliberal capitalism) would fail to change in time to prevent dangerous climate change. It’s clear trajectory at this late stage is still towards widespread disaster.
To date we have done too little, too late. The damage to climate and ecosystems is now severe and feedbacks are kicking in (like albedo effects and methane release from tundra) which are working against our (as yet feeble) efforts at emissions mitigation.
It’s not whinging to point to inconvenient facts. But it is pollyanna-ish to cherry pick little cherries of hope and live on cherries while the tree is dying.
Ikonclast:
I don’t believe I am a Pollyanna. It is probably also a good thing to have a few doomsters in the public debate provided they are well informed. However the rate at which renewable technology is developing, reducing in cost and being implemented is a reason for cautious optimism.
The developments in South Australia, especially what is happening in Whyalla in relation to the steelworks, thanks to the visionary Mr Gupta, is one of many reasons for cautious optimism.
So much has already been done even though, as you say, mitigation efforts have been feeble. Imagine what will be achieved once we kick into high gear.
I love reading through an article that will make people think.
Also, many thanks for allowing for me to comment!
Labor’s election campaign slogan is “A Fair Go for Australia” – a vacuously feeble slogan whose miniscule content is mainly a misleading populism. Andrew Leigh in an article in the AFR has sought to give content to this near vacuous slogan by addressing specific problems of (i) rising income inequality (inequality has, in fact, scarcely worsened in Australia for 30 years) and (ii) diminished competition in industries such as retailing and brewing (the latter are poor examples as competition in these latter areas has never been more intense).
It is foolish to push a program based on non-existent problems. It would be far better to develop a policy agenda which focuses on substantive issues such as climate change or the stressed character of living in major urban areas because of excessively rapid population growth – real problems that can be readily addressed via straightforward policy changes.
Why a populist campaign based on non-problems? The AFR makes some strong points in its editorial rebutting the claims of Andrew Leigh including the useful suggestion that Labor should address some of its own self-created monopoly problems:
https://www.afr.com/opinion/editorials/labor-should-fix-the-monopolists-in-its-backyard-20181217-h196vb
Hugo @ 2:43 AM: “The best way to view Svante’s “can’t do” attitude is through the lens of historical naysaying”
The best way to view anything is to also note the effects of any elephants in the room. What is not historical is what could never have been.
You’ve put me in mind of the brilliant first and impossible last sentence in “Daniel Martin” by John Fowles (1977), “Whole sight; or all the rest is desolation.”
Hugo @ 11:16 AM: “However the rate at which renewable technology is developing, reducing in cost and being implemented is a reason for cautious optimism.”
What, ostrich effects in here too? Renewable energy continues to merely add to fossil energy not replace it. Fossil sourced energy production/consumption continues to grow (not diminish) at record levels, and part of that growth is in continuing to fuel the major part in producing renewables. On current trends this situation doesn’t look like changeing sufficiently in time to avoid global climate related catastrophes continuing, and worsening.
Incidentally more “Daniel Martin” of note, the remarkable epigraph Fowles chose to preceede that opening line:
“The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appears.” – Gramsci, “Prison Notebooks” (circa 1930).
@ Harry Clarke:
The rich hide their wealth in tax havens. The rich hire fancy lawyers and accountants to avoid paying tax. The rich executive class commit crimes against the public and their customers then give themselves a big fat bonus. They rarely go to jail.
The not-so-rich have millions of dollars stolen from them in wage theft and superannuation theft. The not-so-rich are paid a pittance then ridiculed by the rich for not paying enough tax. The not-so-rich go to jail for crimes involving a few thousand dollars.
A fair go sounds like a good idea to me.
You’ve got spam!
Not certain of the motivation – expediency? – but it does seem to amount to progress. The NSW Parliamentary Liberal Party have targeted zero net carbon emissions by 2050. Presumably there is now bipartisan endorsement of strong action to address climate change in Australia’s largest state.
https://www.afr.com/news/economy/nsw-can-be-the-circuitbreaker-on-stalled-power-policy-20181218-h198pb
hc
Like Sherlock Holmes’ dog that didn’t bark, what is more interesting is what the NSW Energy Minister didn’t say. He didn’t say that NSW would have renewable energy target, which is the one policy that a state government can use to reduce emissions – if they are serious.
The only thing the NSW Liberals are serious about is trying to get re-elected next year, and putting out non-policy policies on climate is their way of attracting back Wentworth Liberals. The problem is that Wentworth Liberals are not easily fooled.
Today’s “The Age” has a perfect example of how the rich are screwing workers and putting the proceeds of wage theft in tax havens.
The Fair Work Ombudsman is investigating. Blumenthal might get a small fine but many of the ripped off workers will never get their money back because they will have no proof and the FWO only recovers money over a time period that they call an “audit period”. Most workers will not even report wage theft to the FWO because they fear being blacklisted and never working in their profession again.
Even after a fine, Blumenthal will probably come out in front and go back to stealing wages when the hopelessly under-resourced FWO moves on to another target.
There is no fair effing go in Oz. We don’t even get close.
Ernestine, I read that article and was -no I wasn’t – astounded at the value of derivatives. Again!
“The notional value of the derivatives cleared worldwide is 4.4 times world GDP, up from 2.8 times in 2008. JP Morgan alone has a $US30 trillion book.”
“In that case, a €114 million ($180 million) default by Norwegian trader Einar Aas – caught on the wrong side of a “convergence play” on electricity prices – burned through his collateral and then through two-thirds of a reserve fund from non-defaulting members.” (Has Morrison / treasury / Origin read this?)
I won’t be able to comment at your’s and our host’s level re “why I believe Keynesian macro-economic management no longer works, except in the very short run” I assume QE and our surplus are one of the main macro economics costs to be bourne or to effect us in the short term. By how much and when?
Your top 3 ( inequality, fin instability and enviro) are all being ‘played’ and ‘2’ is directly effected for real by “JP Morgan alone has a $US30 trillion book.”
“The solution (conceptually) is to limit debt generation via one form or another of quantity restrictions.” Sounds eminently sensible until we try to take on 4.4x world gdp. I have re-found my amazement due to 542tn outstanding on 12tn realisable assets.
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?start=2012 – gdp from 2012 to 17 and shows in world bank graph the depth of gfc visually and world gdp at 88tn. So lets say $88tn x 4.4 = 374tn – too low? – and the derivatives have
“According to the most recent data from the Bank for International Settlements (BIS), the total notional amounts outstanding for contracts in the derivatives market is an estimated $542.4 trillion. But the gross market value of all contracts to be significantly less: approximately $12.7trillion.” investopedia.com/ask/answers/052715/how-big-derivatives-market.asp
I saw ine oundit suggest 10x wgdp! Can you or our host make sense of contracts worth $542tn but gross market value 12.7tn? 45x leverage? This is within the rules. Apply 5 or more ‘derivations’ … 45x asset value, a story + scenarios + solipy + 3rd order effective control? I truly am unsure as this seems like ‘surplus’ to me. An accounting method able to be removed at a stoke or is it a barrel used to control realizable value? NVR boring yet accountable. wikipedia.org/wiki/Net_realizable_value
Dies liquidity need 45x depth?
I will vote for such a debt quality mechanism as you suggest, but until governments treat a bank as a bunch of humans, make laws which effect them directly without recourse to a financial corporate instrument called “a bank”, do not think all the derivative play money will disappear or be re-systematised to assist the commons before doing more damage.
Which leads to my ‘war’ story. An Australian army seconded a bright mathmatician-tactician to do battle analysis in Vietnam. Fell ill and was returned to Australia just before his post was caught in fire fight. Many casualties. Lucky. Recuperation for caught disease, 2 yrs. So he looked at money markets. Came up with a serious algorithm and went to work in markets. By 1990 he had ‘proved’ algorithm with insider data – patience plus. I provided system dynamics software 1991 for scenario generation. ‘No!. You can’t look at model.” (i was younger and could see a free ride) He stated: “I will have at most 2 years before futures and currency traders have incorporated my style into their models”, and, ” I could go to the pub any friday, get bar flies trained on currency swaps and the job pass test – trades positive 51%.”. I thought about trading, but as it seemed like play money and souless and I had my ‘best job ever’ I never did.
If we could beat the market for more than 2 yrs and legislate quality debt we may then get your want. Labor are going to be – probably – in power and get the next down turn gfc meltdown and the cycle will repeat all with ruperts urging… rudd-says-murdoch-media-is-a-political-party-108992 ( the conversation today ).
As the world stands, your worthy goals may take as long as gender pay parity -100-200yrs.
Only by everyone knowing the above, regaining their amazement as I have mine, and acting on making only quality investments and demanding same, will we reduce the 222 by a factor of 10 – a generation.
Depending in the weather I may or may not look at this: researchgate.net/publication/228422977_Microworlds_A_System_Dynamics_Application_in_Learning_Keynesian_Macroeconomics
My search returned the old system dynamics terminology ‘microworld’ and the search seems to have ‘environmental ‘ in many titles. An encouraging sign for humanity.
Hmmmm… now what was I going to do before my amazement returned?
Ahhh, thanks Ernestine, Roy Radner;
“The Roy Radner equilibrium (1968), is a model of financial markets”…
wikipedia.org/wiki/Roy_Radner
But,
RR: …”Not so with incomplete market”…
Asymmetrical they replied.
“payoff has to be replicable by trading of available assets that are now part of the definition of the economy.”
I’d like a go at redefining assests.
“is that budget sets do not fill the available space and are typically smaller than hyperplanes.”
I am sure someone very inebriated said this to me once, and it made complete sense. Bifurcation (or in this case bi replaced with as many ‘n’ variables as to destabilize) sorts out the hyperplane. And prime ministers.
“if the value of an asset or a contingent claim is affordable then it can be achieved.”
IF… only… Merry Christmas.
The coalition are doing a great job, of losing electoral support, and if the alp can hold it together long enough they just might fall over the line.
On equality; HILMA disputes popular #memes on the rich/poor divide.
Is HILMA a reliable source? On one level it has to be ie the media driven anecdotal analogy.
@Reg, Inequality is fairly severe but numbers in poverty declining. Inequality certainly not a stark issue that has recently emerged.
https://www.news.com.au/finance/economy/australian-economy/new-report-reveals-reality-of-inequality-in-australia/news-story/5e126a2c908551e90365dc260fce57c6
Sorry @Rog
From Der Spiegel in an article on the war in Yemen
The United Arab Emirates bought themselves a war — they pay for the men, the weapons, the ammunition, the food and the medical care. But they aren’t waging the war themselves, instead having created a finely tuned system of military subcontractors: Yemeni militias that have been trained by Emirati elite units but who are under the leadership of a former Australian general.
WTF?
Is it wrong of me to delight in schadenfreude as the party with peace as one of its core principles, the Greens, turns into a squalid rabble of factions, plots, back stabbing, scandalous accusations and outright fear and loathing of fellow party members?