Posted by: Tom Keene on September 2, 2011
A worker who is employed in an area of high unemployment earns less than an identical individual who works in a region with low joblessness.
Blanchflower & Oswald, The Wage Curve, 1995
Jobs. We are in search of a glimmer of light. Actually, multiple glimmers will be needed to move the unemployment-rate needle. September and October and November's reports will be inspected. Responsible parties will take revised and smoothed moving averages. First derivatives will be noted. Deviations explored.
Wise men will seek sub-sets of data (beneath the headline numbers) that fit their belief. Less wise men will either get the analysis wrong or, they will not dig diffusion-deep.
We mere mortals will fall back on the social and behavioral outcomes of these trends. We will trend to restrained first-Friday-of-the-month panic.
The subtle Wage-Curvian knock-on effects are tangible. Forget the math. Forget cyclical-structural debate. Forget suits-and-bow-ties bathing (drowning?) in the aggregate.
I receive their e-mails. The most difficult come Friday nights. They write from a nation fallen off the wage curve. Unemployed. In levels of desperation. Identical individuals. Discuss.
Posted by: Tom Keene on August 30, 2011
"...to build defenses against the risk of falling into deflation and stagnation, central banks should look beyond bond-buying programs, and instead target a growth rate of nominal economic output. This would allow a temporary period of moderately higher inflation that could push inflation-adjusted interest rates well below zero and facilitate a lowering of debt burdens." --George Magnus, Bloomberg View, 28 August 2011
This is next year's debate.
I am trying to get out front by listening to mostly agreeable, and completely smart people, who agree to violently disagree on inflation as a tool/weapon to increase economic growth.
Let's dissect.
A growth rate: it's about goosing the rate of growth of output to break a cycle of stagnation that can/is leading to selective deflation and the great fear of aggregate deflation and chronic declining wages.
Nominal: means current, not real, not inflation-adjusted. Say, 6% is fine, 5% we'll say thank you, and sub-4% is unacceptable and will not get the gentleman from Illinois re-elected.
Below zero: the nominal rate minus larger inflation takes the real rate way south. It relieves central bankers of present burden and as Magnus describes, assists those in debt.
A temporary period: this is the key phrase. Plosser aged, Goodfriend grayed, and a lecture hall of others had to be sedated. Temporary my Samuelson! (Robert, not Paul.)
A select group agrees with Magnus with Olivier Blanchard way, way out front. Rogoff deserves study. Skidelsky vents. Robert Shiller is angst-laden, ambiguous, and must-watch in my Surveillance Midday interview of Tuesday.
Concept, Andy. The Real Economists of AEA.
I will attempt to describe the debate. I will attempt to adapt to events. When they change, I will. Or better, what if events overcome the debate of these good economists? What if we don't have a choice? Ask Allen Sinai. Discuss.
Posted by: Tom Keene on August 30, 2011
The cone represents the probable track of the center of a tropical cyclone, and is formed by enclosing the area swept out by a set of circles (not shown) along the forecast track (at 12, 24, 36 hours, etc). The size of each circle is set so that two-thirds of historical official forecast errors over a 5-year sample fall within the circle.
NOAA, National Science-as-Virtue Center
Thank God, they're "not shown."
Friday.
It's coming. At least now, it is coming. This is a modest get-to-Monday-evening journal. There are at this moment three hives of the East Coast human species.
Those Removed, awaiting danger with a certain buy enough beverage-of-your-choice confidence.
Those Suspect, gazing at maps/science/technology that suggest, presently, immodest over-reaction.
Those Responsible, who actually have public duty. (Full Disclosure: the rent is paid by one said official.)
Grandparents repeat select stories, often. Her Worship would regale in the vicinity of the second highball over how she and he (my father) went to the dentist and, Barely Got Back Alive! Peruse 1938 hurricane photos to receive the full pre-certain effect.
To be 21:06 Friday honest, the maps don't match the panic. Reporters, too often blonde and in Patagonia, are ensconced beachside in Right, North Carolina hoping (circle now) for a Category 5 ratings outcome. Let's Tweet!
Meanwhile, officials address Katrinaian re-election Min-Max theory. Red, Blue and Purple should read The Art of Strategy flashlight in hand.
We enjoy more-immediate, less-scientific Cones.
Saturday.
Cove Road in Mattapoisett had 29 of 37 homes destroyed, while Angelica Point lost 32 of 35 homes along the shore. Boat damage was significant, as many boats were torn from their moorings.
Hurricane Bob, Wikipedia.
The 40+ foot sailboat came rapidly with the hockey-goal wall of water. Bow left; stern right, a sight to remember, and not fear, as it was certain the downed power lines would entangle the mast.
Less certain were the children. The collective Pilgrims had moved the offspring inland towards the Indians, to tree-filled safety. 6/60 hindsight suggests we were idiots as the Commonweal faced falling arrows of timber and would have been safer adrift in a 13' Boston Whaler crosscut saw in hand. Their cone was fragile, not probable, and to this day, not funny.
Finally, rain and an understanding that this is a lesser Category 3 storm. Events will unfold but the single message is the "set of circles" is highly selective and outside of certain meteorology. One person/family can be in the same "probable track" as another and have a different, harmful outcome. See: historic covered bridge in Vermont torn asunder.
Sunday.
All clear! Bonus! My TV is out of commission so I have avoided media gathering-of-ratings.
There are other cones. The Cone of Uncertain Employment may be rationalized by the relative optimists but it is of little good to those living the bad-dream. Our President is not an economist and can tell the collective Krueger-aspiring "set of economists" that they don't have to get re-elected.
A job seeker's ratio of 4-to-1 means that for three out of four unemployed workers, there simply are no jobs. Two-and-a-half years--130 weeks--of a job seeker's ratio above 4-to-1 is why the current extended unemployment insurance benefits, which last a maximum of 99 weeks, remain crucial.
Economic Policy Institute, 10 August 2011
President Obama will address the nation come September. He will address a set of disparate nations, a few, satisfied. Many are in a different world, a Cone that makes our Ireneian certitude laughable. As a nation, employment is our anxious cone of uncertainty. Discuss.
Posted by: Tom Keene on August 25, 2011
Congressional Budget Office, August 2011
1948 was less difficult. Less difficult than say, Audrey Hepburn and the Dutch starving 36 months prior. It was less difficult for Cleveland. (The Indians defeated the Braves; the undefeated Browns went to Disney World.)
James Taylor was issued. Jane Wyman ditched Ronald Reagan. And, the Candid Camera-watching US, spent 17.1 percent of what we made on Government.
We do not, now. (35 point 0 percent.)
The 6.18 page CBO summary is brilliant. Taut, focused, must-read about your children's non-future.
I will steal Summary Figure 2 for Surveillance Midday. We must all steal a bracing cold shower from Team Elmendorf. We need it. For our collective politician it is a required consider.
It is not 2011. It is 2021 in budget-speak. We are too close, too close to 1984. It is not 1948. Discuss.
Posted by: Tom Keene on August 24, 2011
The USGS database shows that there is a 1.318% chance of a major earthquake within 50 kilometers of Dillon, South Carolina within the next 50 years. The largest earthquake within 100 miles of Dillon, South Carolina was a 3.9 Magnitude in 1998.
USGS on it can't happen here.
Virginia and Euribor-OIS are distant from the Chairman's childhood.
Lambda. Actually, one-over-the-square-root-of-lambda will get you there. There is the kurtosis of a rare event. Kurtosis means fatter, scarier tails to an evil and dreaded Poisson probability distribution. A Talebian Black Swan that happens more often than modeled.
Smart authorities (when not rooting for the Red Sox and/or other treasonous activity) tilt towards an asymmetric bias. Wise authorities prove conservative.
The key distinction and unstated hope (circle, hope!) is that they intelligently apply their conservatism and solve the greater crisis while not shaking immediate foundations to the ground. They must be, and think, dynamic and NOT static as selected Texas Rangers fans suggest.
I would suggest that humility is in order.
We need to get this economic, finance & investment crisis fixed, now. We need to stop dithering (a terrific word that Goldman Sachs Economics coined.)
We need for our collective global elites to travel south of Zachary Taylor Highway; drive east-south-east to Tavern on the Rail and ask of the likelihood of rare events to the shaken citizens of Mineral, Virginia. Discuss.
