Friday, August 22, 2014

TNX: Yellen, labor supply not tight? "cautious in drawing such a conclusion"

Labor Market Dynamics and Monetary Policy

And, since wage movements have historically been sensitive to tightness in the labor market, the recent behavior of both nominal and real wages point to weaker labor market conditions than would be indicated by the current unemployment rate.
There are three reasons, however, why we should be cautious in drawing such a conclusion. First, the sluggish pace of nominal and real wage growth in recent years may reflect the phenomenon of "pent-up wage deflation."15 The evidence suggests that many firms faced significant constraints in lowering compensation during the recession and the earlier part of the recovery because of "downward nominal wage rigidity"--namely, an inability or unwillingness on the part of firms to cut nominal wages. To the extent that firms faced limits in reducing real and nominal wages when the labor market was exceptionally weak, they may find that now they do not need to raise wages to attract qualified workers. As a result, wages might rise relatively slowly as the labor market strengthens. If pent-up wage deflation is holding down wage growth, the current very moderate wage growth could be a misleading signal of the degree of remaining slack. Further, wages could begin to rise at a noticeably more rapid pace once pent-up wage deflation has been absorbed.
Second, wage developments reflect not only cyclical but also secular trends that have likely affected the evolution of labor's share of income in recent years. As I noted, real wages have been rising less rapidly than productivity, implying that real unit labor costs have been declining, a pattern suggesting that there is scope for nominal wages to accelerate from their recent pace without creating meaningful inflationary pressure. However, research suggests that the decline in real unit labor costs may partly reflect secular factors that predate the recession, including changing patterns of production and international trade, as well as measurement issues.16 If so, productivity growth could continue to outpace real wage gains even when the economy is again operating at its potential.
A third issue that complicates the interpretation of wage trends is the possibility that, because of the dislocations of the Great Recession, transitory wage and price pressures could emerge well before maximum sustainable employment has been reached, although they would abate over time as the economy moves back toward maximum employment.17 The argument is that workers who have suffered long-term unemployment--along with, perhaps, those who have dropped out of the labor force but would return to work in a stronger economy--face significant impediments to reemployment. In this case, further improvement in the labor market could entail stronger wage pressures for a time before maximum employment has been attained.18 

PRC MD: suicide? "We see this as a natural death".. "three sons--pesticide son, rope son, and water son"


n the first village the researchers visited, in Jingshan County of Jingmen City in central Hubei Province, a number of villagers said the same thing when being asked about whether there were unnatural deaths of elderly people. “Few of the elderly die naturally in our place,” was the response, Liu said.
In this village, “At least 30 percent of the elderly die from suicide, and this is just a conservative estimate.” Liu said. Just during the two weeks the researchers spent in the village, three older people died from suicide.
In one of the suicide cases in Jingshan County, a 69 year-old man committed suicide in the living room of his house by drinking pesticide while burning paper money to mourn himself.
A villager told Liu that the old man had a bad relationship with his son and daughter in-law and was afraid that they wouldn’t mourn him when he died. So, he did it for himself.
Senior people committing suicide in the village have become such a common thing that it is no longer shocking to local residents.
“We see this as a natural death,” a doctor in the village said. The doctor told Liu that many senior people chose to commit suicide after suffering severe illness in order not to be a burden to their children.
Even older people themselves have accepted the situation.
An old lady surnamed Chai said to Liu, “Old people in this place all have three sons—pesticide son, rope son, and water son. They are the most reliable sons.” The “three sons” are three major ways of committing suicide: drinking pesticide, hanging, and drowning.

Thursday, August 21, 2014

Productivity & Leverage: SHawking v ABelcher


Brain scan 
The DNA of materials 
Angela Belcher is a materials scientist who makes things with viruses. She is now using them to attack cancer

“IT’S getting a little challenging,” says Angela Belcher. “I feel I am having to make choices now, which I never really wanted to.” But there are only so many hours in the day


What I discovered was that to understand Hawking, you had to understand the people and the machines without whom he would be unable to act and think; you had to understand the ways in which these entities augmented and amplified Hawking’s competencies. For example: The specialties of his students, which are spread across very different research fields, enable him to integrate diverse information and the different facets of a problem in a way that others cannot. His secretary provides him with a mental assistant many of us would never have, by sorting and arranging his data according to his interests and what he is able to process.

Both Hawking and celebrities hold authority from their positions at the top of the hierarchy, while the bottom of that hierarchy makes it possible for these stars to enact and maintain their positions at the top. But in Hawking’s case, the network is much more – almost completely – distributed and intimately embodied. Hawking isn’t just issuing remote commands and expressed desires, his entire body and even his entire identity have become the property of a collective human-machine network. He is what I call a distributed centered-subject: a brain in a vat, living through the world outside the vat.

Traditionally, assistants execute what the head directs or has thought of beforehand. But Hawking’s assistants – human and machine – complete his thoughts through their work; they classify, attribute meaning, translate, perform. Hawking’s example thus helps us rethink the dichotomy between humans and machines.

Wednesday, August 20, 2014

VIX: Inker,Grantham, "buy options rather than sell"

Inker Q2 2014 Letter:
Interestingly, while those who dine on equities may be well served goingforeign for their investment lunch, on the fixed income side, the U.S. looks just about the most appetizing ofthe bunch, far preferable to your European or Japanese cuisine options.  Implied volatilities are very low acrossmuch of fixed income, and while historically you have been well served by selling options in the marketplace,our temptation today would be to buy options rather than sell.

gmo from climateer

Buffett v Buffett: investors, brains optional v he has "photographic memory. effortless. mental computations" &c


From Farnam Street:

What makes Warren Buffett a great investor? Is it the intelligence or the discipline?

Warren: The good news I can tell you is that to be a great investor you don’t have to have a terrific IQ.
If you’ve got 160 IQ, sell 30 points to somebody else because you won’t need it in investing....


In person, Mr. Buffett is as warm and empathetic a person as anyone I have ever met — but he also seems, in Ms. Schroeder’s telling, to be forever observing himself from a distance as well. There is, in her portrait of him, a streak of something at least mildly reminiscent of autism: a photographic memory, an effortless command of complex mental computations, an enduring obsession with collecting and measuring everything imaginable.

US Civil War: exBAC Debt Head v Princeton: north anti-slavery v pro empire

refusal to come to terms, my man... get real, whitey mostly didn't fight to help the black man

princeton: us civil war pu yankee soldiers fought


Apropos of the Ferguson riots it is reprinted below. It should make no-one happy. The crippling failure in American culture, I argue, is our refusal to come to terms with our own Civil War. This failure afflicts the conservative movement. For example: Last June I had the privilege to teach a course at the annual Acton University in Grand Rapids, MI. One of the keynote speakers was Judge Andrew Napolitano, whom I admire and whose remarks in the main I applauded. But Napolitano argued in passing that Lincoln had done a terrible thing by fighting the Civil War: surely, the judge said, he could have found a better way to end slavery than by tearing the country apart. That is utter nonsense for two reasons: the first is that a large part of the South was willing to die to preserve slavery, and the second is that the European imperial powers were already conspiring with elements of the South to expand slavery through Cuba, Mexico and Central America. If Lincoln had not fought the Civil War in 1861, the French invasion of Mexico in 1862 would have established a link with the Confederacy and prevented a Northern blockade.

GC: climateer, "the bottom is in for interest rates"

climateer: "the bottom is in for interest rates"

From Charts Confirm An Interest-Rate Bottom Last Friday, interest rates hit 2.30% on the 10-year bond. While counter intuitive, this looks like a long-term bottom prior to a move back to 3%.