Archive for the ‘economics’ Category

Radiation levels normal and falling at Fukushima nuke reactor

Tuesday, March 22nd, 2011

NPR, usually the first to panic about evil nuclear energy, is reporting some very undramatic numbers from the Fukushima reactor

Radiation inside the plant is arguably dangerous, but radiation at the plants main gate is 0.647 milliserverts per hour.  By comparison, when you take a flight, you get about 0.04 milliserverts per hour from cosmic rays, so standing at the main gate is fifteen times worse than flying.  So someone who flies to Japan from New York, and then wanders up to the main gate to take a look, and hangs out at the main gate for half an hour or so, is likely to get more radiation from his flight than from the nuclear power plant.

Of course if your house is in front of the main gate, 0.647 milliserverts an hour is still a problem if it remains that high year after year – but if your house was in front of the gate, it is no longer in front of the main gate, because the tsunami washed it away, in which case radiation levels are a long way down on your list of troubles, and in any case, radiation levels will not remain that high for long.

Reactor disaster

Sunday, March 20th, 2011

The television is full of panic stricken horror about the supposedly horrible horrible horrible horrible nuclear disaster in Japan.

This disaster looks like being worse than three mile island, but not nearly as bad as Chernobyl.

How many died as a result of Chernobyl?

Sixty people died.   Pretty similar compared to coal mining disasters, of which there are many each year, killing in total world wide thousands of people every year, usually without making much news.

People have been trying to get alarming cancer statistics from the vicinity of Chernobyl, and have come up empty.

If Chernobyl has elevated cancer rates in its vicinity, as is frequently alleged, somehow no one has been able to produce persuasive epidemiological evidence for it, the only epidemiological evidence being a high risk of thyroid cancers among children that were under four at the time of the incident or conceived but not yet born – leading to the deaths of nine children from thyroid cancer!  Nine!  Nine!  Nine! That is the worst anyone has been able to come up with for a great horrible horribly disastrous Chernobyl cancer epidemic disaster.

Nine!

Sunday, March 6th, 2011

I see it regularly claimed that financial crisis reflected de-regulation. I was mighty puzzled.  Deregulation?  Has not Basel been a spectacular landslide of regulation, with massive apocalyptic government takeover of the financial system, with government deciding who shall be winners and who shall be losers, with government allocating lending to favored groups and away from disfavored groups? Eventually I discovered that this “deregulation” was the Gramm-Leach-Bliley Bill, also known as the Financial Services Modernization Act of 1999, a bill three hundred and eighty five pages long, which repealed one page of the seventeen page Glass–Steagall Act of 1933

Among the many catastrophic things things Gramm-Leach-Bliley did was to make takeovers dependent on loaning to poor and non asian minorities, which had the effect that people who believed that lending to poor and non asian minorities was safe wound up in charge, and people who believed it was unsafe wound up unemployed.

This in turn led to lots of disastrous lending by bank managers infamous for their extreme political correctness.

It is often pointed out that most of the dud lending was not covered by the CRA – but just as breathing is covered by the commerce clause, all lending is in effect covered by the CRA.

Angelo Mozilo of Countrywide on January 13, 2005 catastrophically pledged $1,000,000,000,000.00 in mortgages by 2010 to minority and lower income borrowers, very little of which has been paid back. The Clinton Administration’s threat in 1994 to extend the Community Reinvestment Act paperwork requirements to nonbanks like Countrywide led Mozilo to sign a treaty with Clinton’s HUD secretary Henry Cisneros promising to lend like Countrywide was covered by the CRA.  But what really went wrong is that Countrywide sincerely believed that lending vastly more to Hispanics was a great business idea – because a banker that did not genuinely and sincerely believe that would not have been able to take over lots of other people’s banks with other people’s money the way that Mozilo was able to.

Bryan Caplan’s challenge

Thursday, March 3rd, 2011

Bryan Caplan wants people to go on record predicting the future of Egypt before the future becomes apparent, as compared to our usual procedure of claiming one knew all along afterward.

As I said before, democracy with universal franchise does not work.  It works worse with Muslims.  No Muslim should be allowed to vote anywhere, especially in countries with substantial numbers of Muslims.

Egypt might get another dictator like Mubarak, but if it gets democracy, will suffer war and economic disaster, both of which will be blamed on Jews.  Egyptian democracy will at best resemble Indonesian democracy: economic decay, quiet tolerance of terrorism against the west, with some arrests of those who terrorize westerners, but reluctant foot dragging in arresting them and slap on the wrist sentences in the unlikely event they get arrested, semi open tolerance of terrorism and mass violence against local infidels.  At worst they will elect a government that thinks that everyone who voted against them are apostates who need their heads cut off, and that most of those who voted for them are also apostates who need their heads cut off, but most likely will elect something in between, somewhat resembling Hamas.  Egypt will not officially abandon the peace agreement with Israel, but will abandon it in reality.

$1,200 billion increase cut by $60 billion

Tuesday, February 22nd, 2011

The “right” triumphantly announces that it has cut spending by 60 billion

Before these mighty cuts, the projected 2011 deficit was $1,645 billion, an increase in spending, and an increase in the deficit, of 1,200 billion as compared to our last comparatively normal year, 2005.

After these mighty cuts, the projected deficit is, I suppose, reduced to a mere 1,585 billion, though of course chances are that somehow, by the end of the year, it will turn out to have actually been something south of $1,700 billion.

And, of course, this does not count a trillion or so of off budget expenditures, among them being that the federal reserve has purchased a large number of worthless mortgage backed securities and suchlike, and will not tell anyone how much.

So both parties, democrats and republicans alike, have moved far, far to the left, the extreme right of this year being far to the left of the extreme left of a few years back.  Indeed, the same is true of the entire society.    The government, all schools, all universities, all churches, and all institutions, are moving to the left with explosive speed.  Big businesses are appointing CEOs by ideology and affirmative action – which strategy is in fact successful since success is by government favor, not competence, and ideology and affirmative action wins government favor. To appoint a CEO on the basis of competence, ability to make business turn a profit, you would have to be crazy.

Today’s Christian right believes that marriage and family law should treat husbands and spouses as if men and women were the same in mean and distribution, and played the same roles in sex and reproduction, and had the same desires and intentions with regard to sex and reproduction, and find the horribly sexist words of Jesus on divorce and suchlike far too embarrassing to mention.   If family law should treat men and woman as interchangeable, why object to gay marriage?  To make a principled opposition to gay marriage, the Christian right would have to make a principled opposition to the family law that treats husbands and wives as alike and interchangeable, that assumes there are no significant differences between the nature of men and women, which position would be horribly sexist, hence the Christian right would never dream of taking such a stand, a stand that in 1950, no one would have ever dreamed of doubting, nor would today’s Christian right ever dream of mentioning certain parts of the Bible that until recent decades were familiar to everyone.  Just as not one nominated political candidate would today dream of suggesting measures that might significantly reduce the deficit, not one Christian preacher would today mention bits of the Bible that support patriarchy.

In the recent elections, the only candidate who was proposing significant cuts was Christine O’Donnel, widely derided as a lunatic extremist, and a witch.  And she only proposed significant cuts during the primaries.  As soon as she got the republican nomination, as soon as she faced the main election, and had to get votes from the mainstream, she immediately threw that policy overboard, and headed back to the “center” – headed back to what is now the center, but a few years back would have been the crazed lunatic left.

And indeed, Christine O’Donnel was crazy (though probably not a witch) because if you want to be taken seriously as a political candidate, you have to go along with policies that will destroy our society in the very near future.  We are all in a bus, the bus is heading for a cliff at seventy miles an hour and the pedal is flat to the floorboards. If you are serious candidate, you discuss whether the pedal should be flat to the floorboards, or almost flat to the floorboards.  Releasing the pedal, let alone applying the brakes, is not something any serious, responsible, sane, normal candidate would mention.  You would have to be crazy – a lot crazier than Christine O’Donnel – to propose such a thing. You would have to be almost as crazy as a corporate board who appointed a CEO on the basis of his ability to turn a profit, rather than for his ideology, race, and gender.

I am reminded of the last days of the Roman empire in the west.  In AD406, it was completely crazy, ludicrous, and absurd, to suggest that the barbarians could possibly threaten Rome.  In AD410, the goths looted Rome, and raped every Roman woman.  In AD412, it was still completely crazy, ludicrous, and absurd, to suggest that the barbarians could possibly threaten Rome, which bizarre response strikingly resembles the British failure to notice their humiliating defeats in Basra and the Persian Gulf.  Rome failed to pull itself together in the way it had after past defeats, because it denied that it had been defeated, denied that the Roman empire in the west had ceased to be.

Total government debt was nine trillion, though this depends on how you count it – the nine trillion does not count the governments rapidly soaring pension commitments, nor the alarming multitude of promises it has made to backstop gambles made by bankers.

In the US there are about ninety million people who file tax returns and pay income tax (another forty million file tax returns, but pay no income tax).  So if you are one of those ninety million tax paying households, your household’s share of the debt is about one hundred thousand dollars, and this year it will grow by about eighteen thousand dollars.  It is not impossible that such a debt will be paid – it is physically possible to pay it.  Whether it is politically possible to get people to pay it is another question.  If you are a hundred thousand dollars in debt, and you ran up the debt in a big one off expenditure, like buying a house, you can probably pay it back.  If you are a hundred thousand dollars in debt and  you ran it up going to fancy restaraunts, going on trips, and buying friends, and you are still going to fancy restaurants and buying expensive friends, and next year you are going to be one hundred and twenty thousand dollars in debt, no way are you ever going to pay the money back.

So what happened:  Why is everyone moving left, even the Christian right, even libertarians, even white nationalists and suchlike?

One factor is that western governments around the world have decided to elect a new people, through mass migration from the third world, on a scale that significantly, substantially, and rapidly alters the political balance.

Another factor is that in a program akin to the Soviet program to create New Soviet Man, the government is attempting to transform the people, through a highly politicized education system, an education system whose political intensity is rapidly increasing.

But why, you may ask? “Communist plot, Jooish plot, Islamist plot, Harvard plot?”

No, its a government plot, though to call it a Harvard plot is not far wrong. There are more conspiracies, committees, and special interest groups than you can shake a stick at, and all of them want to suck at the tit of the state.  It is the nature of government to grow, and liberty to shrink.  Government is a metastatic cancer.  Each cancerous node spawns a dozen more.  There are half dozen communist conspiracies each trying to smash each of the others, despite the expiration of their foreign sponsors, at least two Gaean conspiracies, one big tranzi conspiracy with extensive links to the two main Muslim conspiracies, ivy league academia is a seething mass of conspiracies that no one can possibly keep track of, and there are many more, not that one can draw any sharp distinction between a conspiracy and a special interest group.

Growth of government is not driven by ideology, or even political institutions, rather  ideology is driven by the government’s need to justify the growth of  government.

Government originates in a stationary bandit, a bandit king, a bandit so  successful he deters or exterminates all competition.  The government at  first consists of little more than the bandit himself.  Taxation  consists of him suggesting that the eminent give him and his boys land  and money, thus taxes, though capricious and erratic, are quite low.  Laws are few, verging on nonexistent, but enforced with brutal  efficiency, the main law being that no one else does any banditry.

All organizations tend to fall apart.  It is simply difficult to have a  large bunch of people efficiently coordinated. Organizations that are  actually effective originate in intense competition, and sooner or later  are apt to decay – the Peter Principle, Parkinson’s Law, etc.

Absent intense competition, they decay very badly indeed.

Over time bureaucrats, laws, taxes, quasi governmental organizations,  and regulations multiply like vermin.   Eventually, laws, taxes and  meddling bureaucrats become a serious burden, and the bureaucrats face  the need to persuade everyone that a horde of bureaucrats is a good thing.

The left (both Democrats and Republicans near equally) is the bureaucracy’s PR apparatus – a collection of government  sock puppets, astroturf. Its mission is to persuade us that six hundred pounds of  fat is a healthy and handsome physique, and that government has never  been better, that more laws are good for you, the government is here to  help you, and more government will help you more. Thus from time to  time the story about what government is good for changes, yet the  central theme, that government is good for you, never changes.

Ever since the original bandit chieftain, government has moved ever further leftwards, and will always move ever further leftwards until checked by crisis and collapse, or reformed by internal totalitarian terror, “left” being  whatever rationalization justifies more government today, which rationalization is apt to change from time to time.

You cannot fix the problem by excluding the Joos, or getting rid of the commies in the state department, or even by excluding Harvard old boys (though excluding Harvard old boys would help quite a bit).  The whole damn thing, including the patent office and the post office, has got to go.

Thus we see numerous supposedly anti government people telling us that the fact that government does X and proposes to do Y is itself proof that X is necessary and good, and Y would be even better.

The deficit is out of control because the government is trying to buy support, and buy internal cohesion.  If it cuts some elements of itself off from the the trough, there will be internal warfare between different elements of the government.  The government unions will physically attack legislators as they have in Wisconsin, the Pentagon will bomb the state department, as it has already bombed state department proxies, and the police will raid the DEA for drugs and the NEA for loose cash.   If, on the other hand, it cannot get a coalition that supposedly represents fifty one percent of the voters to bless its budget, the budget will not be reduced.  Instead there will be external warfare between the government and the people.  The militias will shoot IRS reveneurs.  Hence the import of cheap voters from overseas.

When the Soviet Union was about to fall, one of the symptoms that I noticed, yet was not widely reported, was warfare between the army and GOSPLAN.  The army would randomly stop trucks, and if the trucks contained food, seize the food to feed the troops.  The Soviet army would seize what it, or its suppliers needed, as if it was living off the land in a hostile occupied country, as, of course, it was.

Transnationalism is just an effort to obtain legitimacy from “world opinion”, when legitimacy can no longer be obtained from local voters – to obtain legitimacy from all those poor third worlders without the inconvenience and potential for civil war of allowing them to enter the advanced countries.  The European Union is undemocratic because each European government wants to be able to have Brussels “force” it to do what it knows perfectly well it is going to wind up doing anyway.

From the fact that the deficit is $1,600 billion, and that the “right” triumphantly announces that it has cut spending by 60 billion, which “cut” will somehow fail to prevent the deficit from growing rapidly, I predict collapse in a decade or two – armed conflict between elements of the government, or between the government and the people, or, very likely, both.  I have been making a similar prediction, for the same decade, since 1994, and events seem to be proceeding on schedule.  The near civil war in France, and the violence by state unions in Wisconsin, are the beginning.

The Wallison dissent

Wednesday, February 16th, 2011

Steve Sailor, is as always great reading, and he issues some comments that on the Wallison dissent that everyone who wants to understand the financial crisis should pay attention to.

Peter Wallison tells us

Profit had nothing to do with the motivations of these firms; they were responding to government direction.

Rather than direction, they were responding to government pressure and persuasion.  Basel gave government not so much the power and authority to dispense off budget funds to friends and voter blocks, but rather to heavily influence and pressure banks to dispense off budget funds to friends and voter blocks.  Since government, or those authorized by government, decide what is risky and what is not, rather than those actually making the loans, any loan that is politically correct is unlikely to be deemed risky.

Steve Sailer tells us:

Among profit-seeking lenders there will always be optimists and pessimists about the ability of marginal borrowers to pay back their home loans. Government policy from 1991 onward was heavily biased toward being nice to optimist lenders and not nice to pessimists lenders This nurtured a climate in which the businesses of the optimists grew and people in the middle shifted toward optimism, while pessimists moved toward other lines of work.

Consider Angelo Mozilo of Countrywide, who on January 13, 2005 catastrophically pledged $1,000,000,000,000.00 in mortgages by 2010 to minority and lower income borrowers. The government can’t force anybody to lend a trillion bucks to bad risks. A billion dollars, sure. But a trillion? The lender has to want to do it.

That doesn’t mean that politicians weren’t intimately involved in cultivating Mozilo’s delusional state of mind where he thought he was doing well by doing good and vice-versa.

There’s no question that Mozilo was first prodded down this path by the hoopla over the stupid early 1990s Boston Fed “study” of discrimination in mortgage lending. Crucially, the Clinton Administration’s threat in 1994 to extend the Community Reinvestment Act paperwork requirements to nonbanks like Countrywide led Mozilo to sign a treaty with Clinton’s HUD secretary Henry Cisneros promising to lend like Countrywide was covered by the CRA.

But, Mozilo became infatuated with Cisneros’s “vision” and put Cisneros on Countrywide’s board. They both became convinced that lending vastly more to Hispanics was a great business idea.

If you didn’t believe that, well, you’d better keep your mouth shut because you could be sued for discrimination, and regulators could make your life hell. So, the government helped change the culture of mortgage lending in part by selecting more credulous people like Mozilo for favorable attention and giving more skeptical people a hard time.

Another example is Kerry Killinger of Washington Mutual. He survived 29 Community Reinvestment Act reviews as he bought up other lenders by making huge pledges of minority and lower income lending , up to $375,000,000,000 for the acquisition of Dime Bank. So, there is a selection effect. The government gave the thumbs up to optimists expanding and the thumbs down to pessimists. So, the culture of lending shifted toward credulity.

On Steve Sailer’s blog you can find much useful research you cannot find anywhere else, because it is just too horribly politically incorrect, but he does suffer from the fallacy of seeing jooz everywhere, and therefore believing the market is rigged by jooz against people like Steve Sailer. I hope some day to debate him on this topic – I argue that Jews are converts to progressivism, rather than progressivism being a sect of Judaism, (the Mencius Moldbug theory that progressivism is crypto calvinism) and that progressives were ruling the system and stealing all the money back when progressives were still nominally Christians, and did not allow any Jews to get in on the vig.

The financial crisis inquiry report

Saturday, January 29th, 2011

The government has investigated the “2008” financial crisis and released a detailed report.   (Actually it was the 2005 crisis, in that the panic set in towards the end of 2005 , but the government successfully covered things up and managed to get all the major players to pretend that everything was normal until 2008.)

The summary and conclusions are of course, piles of lies, intended to divert attention from those actually guilty.

Overall, it sticks to the cover story that hardly anyone noticed anything out of the ordinary until 2007.  It correctly observes that regulators failed to use the authority that they had, and to the extent that they used their authority, used it corruptly in ways that worsened the crisis – from which it concludes that the regulators need more power and to exercise that power more forcefully.

It correctly observes that

The kings of leverage were Fannie Mae and Freddie Mac, the two behemoth government-sponsored enterprises (GSEs). For example, by the end of 2007, Fannie’s and Freddie’s combined leverage ratio, including loans they owned and guaranteed, stood at 75 to 1.

So the next time you hear someone say that leverage caused the crisis, that is actually a euphemism for saying that government-sponsored enterprises were the major players causing the crisis, not an explanation of the crisis. After all, as the Republicans on the committee point out, leverage only produces bad results if you lose money, and the question therefore is how such large amounts of money were lost. So what, then, did Fannie and Freddie do to piss away large amounts of money?

It also tells us that

As early as September 2004, Countrywide executives recognized that many of the loans they were originating
could result in “catastrophic consequences.”

Yet fails to quote that testimony or document in full.   Surely those who saw the crisis coming, knew what was causing the crisis, yet we don’t hear what they said back then.

The report is overcooked, presenting conclusions without the data from which those conclusions were drawn.

Crabtree testifies to large numbers of abandoned houses in 2006, of entire neighborhoods collapsing, of the lawns unmowed, the houses empty except for homeless people squatting. If the mortgages were busted in 2006, surely the crisis was in full swing in 2006? Why then is every commissioner telling a story that has the crisis suddenly manifesting in 2007/2008?

In November 2005 I said “Now is the time to panic”, and it appeared to me that everyone did panic, within a few days of me saying it. People gave the commission the same testimony.

Warren Peterson, a home builder in Bakersfield, felt that he could pinpoint when the world changed to the day. Peterson built homes in an upscale neighborhood, and each Monday morning, he would arrive at the office to find a bevy of real estate agents, sales contracts in hand, vying to be the ones chosen to purchase the new homes he was building. The stream of traffic was constant. On one Saturday in November 2005, he was at the sales office and noticed that not a single purchaser had entered the building. He called a friend, also in the home-building business, who said he had noticed the same thing, and asked him what he thought about it. “It’s over,” his friend told Peterson.

Why then does the commission stick to the story that this crisis happened in 2008?

Bad loans were made. The money was lost in bad loans. Why were those bad loans made?

The Democrats on the commission conclude that bad loans were made for profit:

We find that the risky practices of Fannie Mae—the Commission’s case study in this area—particularly from 2005 on, led to its fall: practices undertaken to meet Wall Street’s expectations for growth, to regain market share, and to ensure generous compensation for its employees. Affordable housing goals imposed by the Department of Housing and Urban Development (HUD) did contribute marginally to these practices.

Peter J. Wallison argues that affirmative action and affordable housing contributed massively to these practices, in particular the HUD “Best practices initiative”

If a financial entity was failed to follow HUD “best practices” it was likely to be sued for racism, redlining, and any number of vague crimes that can never be disproven, so everyone had to follow “best practices” and if a company followed HUD “best practices” it was bound to make huge numbers of bad loans.

“Best practices” required that the lender accept “non traditional” evidence of ability to pay – and the reason such evidence was non traditional is that it is not evidence.  If a mortgage business followed HUD “best practices”, as in practice it had to do, best practices meant in practice that they were allowing borrowers or their loan officers to make $#!% up.

Ambac argues fraud committed for profit caused the crisis

Thursday, January 27th, 2011

I of course, argue that government pressure to make mortgage loans caused the crisis.  After all, the specific examples bad loans that Ambac lists in its lawsuit against Bear Stearns, are all loans that were made to poor people, though Ambac provides no information that would identify the race of these poor people.  Ambac, however, argues that Bear Stearn made bad loans, lied that the loans were fine, and sold them on to the next sucker in order to collect fees.  Ambac in its lawsuit against Bear Stearns explains the global financial crisis as caused by fraud conducted for profit, rather than caused by government policy.

It is, however, apparent that Bear Stearns kept a lot of bad loans, and took losses on them, even though it unloaded most of the bad loans onto various suckers by means of fraudulent warranties and representations.  I argue therefore that Bear Stearns was under pressure to please regulators by lending to the supposedly poor and oppressed, which poor and oppressed are notoriously unable and unwilling to repay loans, and finding itself with a pile of bad loans, proceeded to unload as many of them as it could, by fair means and foul, many of them onto Ambac.

If, in the end, the government winds up compensating Ambac, and the Bear Stearns boys who made these fraudulent warranties and representations to Ambac go unpunished as individuals, we should conclude that Bear Stearns was carrying out government policy, that this fraud, like so many others, was committed out of political correctness.  If, on the other hand, those who committed these massive frauds are themselves individually punished, for committing lucrative frauds that sank the world economy, then this will be evidence for the fraud was committed for profit.

Against the theory that the fraud was conducted for profit, is the fact that this is a civil lawsuit, even though fraud, and fraud that cost the taxpayer trillions, is a criminal offense.  That there is not the slightest suggestion that any of these many acts of fraud will be punished criminally, suggests that these frauds were committed not for gain, but for political correctness.

Who called the financial crisis before it happened?

Tuesday, January 25th, 2011

Among others, Ron Paul, in his speech to the house, proposing amendments to the laws that caused the crisis

… the government’s policy of diverting capital into housing creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have been had government policy not actively encouraged over-investment in housing.

The connection between the GSEs and the government helps isolate the GSEs’ managements from market discipline. This isolation from market discipline is the root cause of the mismanagement occurring at Fannie and Freddie …

I hope my colleagues join me in protecting taxpayers from having to bail out Fannie Mae and Freddie Mac when the housing bubble bursts.

… The flip side of regulatory capture is that mangers and owners of highly subsidized and regulated industries are more concerned with pleasing the regulators than with pleasing consumers or investors, since the industries know that investors will believe all is well if the regulator is happy. Thus, the regulator and the regulated industry may form a symbiosis where each looks out for the other’s interests while ignoring the concerns of investors. …

… the government increases the likelihood of a painful crash in the housing market. …

Needless to say, there was only one vote for addressing the looming financial crisis.  Looking at the tea party candidates, I think if the Tea party did a clean sweep, if every single congressman had belonged to the tea party, I think there would have been two or three votes for addressing the looming financial crisis.

Brad De Long explains he was wrong

Thursday, January 20th, 2011

Wrong, that is in that he failed to appreciate his own his immense genius, and wrong in that he failed to appreciate that the progressive left wing account of economics was ever more staggeringly true than he thought it was:

According to him, he was wrong to think that:

highly leveraged banks had control over their risks. With people like Stanley Fischer and Robert Rubin in the office of the president of Citigroup, with all of the industry’s experience at quantitative analysis, with all the knowledge of economic history that the large investment and commercial banks of the United States had, that their bosses understood the importance of walking the trading floor, of understanding what their underlings were doing, of managing risk institution by institution. I thought that they were pretty good at doing that.

Funny about that. What those not under the thumb of Cathedral, such as the Israeli Central Bank and the Chinese seem to think is that he was wrong about was to imagine that the state could direct great barrels of mortgage money deadbeat borrowers with any prospect of the money being paid back.

According to him, he was wrong to think that:

that the Federal Reserve had the power and the will to stabilize the growth path of nominal GDP.

that no advanced country government with as frayed a safety net as America would tolerate 10% unemployment. In Germany and France with their lavish safety nets it was possible to run an economy for 10 years with 10% unemployment without political crisis. But I did not think that was possible in the United States.

Which is a roundabout way of saying he was not wrong to think that the government could cure unemployment by printing lots of money and spending it, and the fact that it has printed vast amounts of money and spent it, causing only inflation and not restoring employment, is proof that the government is not spending enough money. The treatment, he tells us, is just fine, just needs to applied more vigorously.

And he was also wrong to think that other economists were as smart as he was:

I did not think that there were any economists who would look at a 10% shortfall of nominal GDP relative to its trend growth path and say that the government is being too stimulative.

It seems that all these other silly economists were so silly that they accurately predicted what the results of the governments policy would be – stagflation.

Official government inflation is still near zero, but the inflation people see when they do their shopping is quite shocking.