A Graying Germany Complicates Merkel's Task - Bloomberg
...While the West is graying overall, Germany getting older faster, with the highest median age in Europe, and one of the lowest birth rates....
... Despite Germany’s reputation for fiscal rectitude, the country’s pensions are headed for a cliff. Close to 80 percent of pensions remain pay-as-you-go and therefore unsustainable given Germany’s graying. Company-sponsored private pensions are supposed to fill the gap, but they are reported to be 30 percent to 50 percent underfunded, and they are overwhelmingly defined-benefit schemes. Recent reforms to raise the retirement age slightly and introduce defined-contribution pensions schemes didn’t come close to putting the country’s liabilities on a sustainable path....
...For all the plaudits that its system of skilled-worker apprenticeships earns, this year was the first one on record when a majority of firms cited skilled-worker shortage as the biggest risk ...
...Young people naturally react to an unresponsive establishment by disengaging from the process or voting for extreme parties....
...Germany’s Federal Statistics Office forecasts that by 2050, Germany’s population will have shrunk to 63 to 72 million from 82 million today, with one-third of those aged 65 or above. By that time, fully half of the under-40 population could consist of immigrants of North African and Middle Eastern origin and their children, while the overwhelming majority of the elderly would be of native German background. This introduces an ethnic, cultural and religious dimension to a generational split...
...
Saturday, September 30, 2017
Thursday, September 28, 2017
Low Inflation Is No “Mystery” - Maudlin
http://ggc-mauldin-images.s3.amazonaws.com/uploads/pdf/OTB_Sept_27_2017.pdf
...As for the lack of demand-side growth, the explanations are confusing. Yellen says low inflation is a
mystery, others say it’s because of new technologies, global trade, and rising productivity. Slow real GDP
growth is blamed on global trade, a Great Stagnation in productivity and the lack of investment by private
companies. QE gets credit for the things that went up, but things that didn’t are explained away, denied, or
determined to be mysteries.
We have promoted an alternative narrative that agrees with the 2008 Janet Yellen – QE didn’t work. It
flooded the banking system with cash. But instead of boosting Milton Friedman’s key money number
(M2), the excess monetary base growth went into “excess reserves” – money the banks hold as deposits,
but don’t lend out. Money in the warehouse (or in this case, credits on a computer) doesn’t boost demand!
This is why real GDP and inflation (nominal GDP) never accelerated in line with monetary base growth.
The Fed boosted bank reserves, but the banks never lent out and multiplied it like they had in previous
decades. In fact, the M2 money supply (bank deposits) grew at roughly 6% since 2008, which is the same
rate it grew in the second half of the 1990s.
So, why did stock prices rise and unemployment fall? Our answer: Once changes to mark-to-market
accounting brought the Panic of 2008 to an end, which was five months after QE started, entrepreneurial
activity accelerated. New technology (fracking, the cloud, Smartphones, Apps, the Genome, and 3-D
printing) boosted efficiency and productivity in the private sector. In fact, if we look back we are
astounded by the new technologies that have come of age in just the past decade. These new technologies
boosted corporate profits and stock prices and, yes, the economy grew too.
The one thing that did change from the 1990s was the size of the government. Tax rates, regulation and
redistribution all went up significantly. This weighed on the economy and real GDP growth never got back
to 3.5% to 4%.
Occam’s Razor – a theory about problem solving – says, when there are competing hypothesis, the one
with the “fewest assumptions” is most likely the correct one.
...Our narrative is far simpler. It looks at M2 growth, gives credit to entrepreneurs, and blames big
government. After all, the US economy grew rapidly before 1913 when there was no Fed, and during the
1980s and 90s, when Volcker and Greenspan were not doing QE. And history shows that inventions boost
growth, while big government and redistribution harm it. Because it has the fewest assumptions, Occam’s
Razor suggests this is the more likely hypothesis.
...As for the lack of demand-side growth, the explanations are confusing. Yellen says low inflation is a
mystery, others say it’s because of new technologies, global trade, and rising productivity. Slow real GDP
growth is blamed on global trade, a Great Stagnation in productivity and the lack of investment by private
companies. QE gets credit for the things that went up, but things that didn’t are explained away, denied, or
determined to be mysteries.
We have promoted an alternative narrative that agrees with the 2008 Janet Yellen – QE didn’t work. It
flooded the banking system with cash. But instead of boosting Milton Friedman’s key money number
(M2), the excess monetary base growth went into “excess reserves” – money the banks hold as deposits,
but don’t lend out. Money in the warehouse (or in this case, credits on a computer) doesn’t boost demand!
This is why real GDP and inflation (nominal GDP) never accelerated in line with monetary base growth.
The Fed boosted bank reserves, but the banks never lent out and multiplied it like they had in previous
decades. In fact, the M2 money supply (bank deposits) grew at roughly 6% since 2008, which is the same
rate it grew in the second half of the 1990s.
So, why did stock prices rise and unemployment fall? Our answer: Once changes to mark-to-market
accounting brought the Panic of 2008 to an end, which was five months after QE started, entrepreneurial
activity accelerated. New technology (fracking, the cloud, Smartphones, Apps, the Genome, and 3-D
printing) boosted efficiency and productivity in the private sector. In fact, if we look back we are
astounded by the new technologies that have come of age in just the past decade. These new technologies
boosted corporate profits and stock prices and, yes, the economy grew too.
The one thing that did change from the 1990s was the size of the government. Tax rates, regulation and
redistribution all went up significantly. This weighed on the economy and real GDP growth never got back
to 3.5% to 4%.
Occam’s Razor – a theory about problem solving – says, when there are competing hypothesis, the one
with the “fewest assumptions” is most likely the correct one.
...Our narrative is far simpler. It looks at M2 growth, gives credit to entrepreneurs, and blames big
government. After all, the US economy grew rapidly before 1913 when there was no Fed, and during the
1980s and 90s, when Volcker and Greenspan were not doing QE. And history shows that inventions boost
growth, while big government and redistribution harm it. Because it has the fewest assumptions, Occam’s
Razor suggests this is the more likely hypothesis.
Tuesday, September 26, 2017
Today's WorldView: Iraqi Kurds voted in their independence referendum. Now what? - btbirkett@gmail.com - Gmail
Today's WorldView: Iraqi Kurds voted in their independence referendum. Now what? - btbirkett@gmail.com - Gmail
...“The Russian campaign — taking advantage of Facebook’s ability to simultaneously send contrary messages to different groups of users based on their political and demographic characteristics
...“The Russian campaign — taking advantage of Facebook’s ability to simultaneously send contrary messages to different groups of users based on their political and demographic characteristics
Monday, September 25, 2017
'Gaydar' Shows How Creepy Algorithms Can Get - Bloomberg
'Gaydar' Shows How Creepy Algorithms Can Get - Bloomberg
...We have algorithms that, although better than random guessing and sometimes more accurate than human judgment, are very far from perfect. Yet they’re being represented and marketed as if they’re scientific tools with mathematical precision, often by people who should know better.
...We have algorithms that, although better than random guessing and sometimes more accurate than human judgment, are very far from perfect. Yet they’re being represented and marketed as if they’re scientific tools with mathematical precision, often by people who should know better.
This is an abuse of the public’s trust in science and in mathematics. Data scientists have an ethical duty to alert the public to the mistakes these algorithms inevitably make -- and the tragedies they can entail.
...Kosinski, who is also known for creating the “magic sauce” psycho-profiling algorithm that Cambridge Analytica later adapted to campaign for both Brexit and Donald Trump.
Public Pensions
http://ggc-mauldin-images.s3.amazonaws.com/uploads/pdf/170923_TFTF.pdf
...Worse, it will be a local mess. Unlike the last financial crisis where one could direct anger at
faraway politicians and bankers seen only on TV, this one will play out close to home. We’ll see
families forced out of homes while neighbors collect six-figure pensions. Imagine local elections
that pit police officers and teachers against once-wealthy homeowners whose property values are
plummeting. All will want maximum protection for themselves, at minimum risk and cost.
They can’t all win. Compromises will be the only solution – but reaching those unhappy
compromises will be unbelievably ugly. ...
... Residents of Allen don’t have to worry about
legacy pension issues, because the town is growing faster than whatever pension issues they have... The big inner cities have these monstrous legacy
pension problems; and the suburbs, which have prospered on the back of the growth that has come
from the big cities, feel no obligation to pitch in and help....
...What about subway service in New York City? The system is fraying under record
ridership, and trains are breaking down more frequently. There are now more than
70,000 delays every month, up from about 28,000 per month five years ago. The city’s
soaring pension costs are a big factor here as well. According to a Manhattan Institute
report by E.J. McMahon and Josh McGee issued in July, the city is spending over 11% of
its budget on pensions. This means that since 2014, New York City has spent more on
pensions that it has building and repairing schools, parks, bridges and subways,
combined.
...Worse, it will be a local mess. Unlike the last financial crisis where one could direct anger at
faraway politicians and bankers seen only on TV, this one will play out close to home. We’ll see
families forced out of homes while neighbors collect six-figure pensions. Imagine local elections
that pit police officers and teachers against once-wealthy homeowners whose property values are
plummeting. All will want maximum protection for themselves, at minimum risk and cost.
They can’t all win. Compromises will be the only solution – but reaching those unhappy
compromises will be unbelievably ugly. ...
... Residents of Allen don’t have to worry about
legacy pension issues, because the town is growing faster than whatever pension issues they have... The big inner cities have these monstrous legacy
pension problems; and the suburbs, which have prospered on the back of the growth that has come
from the big cities, feel no obligation to pitch in and help....
...What about subway service in New York City? The system is fraying under record
ridership, and trains are breaking down more frequently. There are now more than
70,000 delays every month, up from about 28,000 per month five years ago. The city’s
soaring pension costs are a big factor here as well. According to a Manhattan Institute
report by E.J. McMahon and Josh McGee issued in July, the city is spending over 11% of
its budget on pensions. This means that since 2014, New York City has spent more on
pensions that it has building and repairing schools, parks, bridges and subways,
combined.
Tech Digest - DARPA, Hurricanes, and the Zika Virus - btbirkett@gmail.com - Gmail
CORRECTION: Tech Digest - DARPA, Hurricanes, and the Zika Virus - btbirkett@gmail.com - Gmail
... 2017 marks the end of a record 12-year break during which no Category 3–5 hurricanes hit the US mainland. The longest previous record was an 8-year period between 1860 and 1869.
I think it’s unlikely that 2017 will be an anomaly. Hurricanes have historically come in cycles. Ten Category 4 or 5 storms made landfall on the US in the 50 years between 1920–1969. Only three have come onshore in the 46-year period since then. Clearly, we’re overdue for more.
...DARPA’s main function is only to identify and nurture scientific breakthroughs that offer solutions to natural and manmade threats. So it can fund early research and trials, but it can’t take a drug all the way through the costly clinical trial process.
For those interested in seeing cures for the big killers, DARPA is an important resource. If you’d like to follow some the agency’s work in biotech and other fields, much of DARPA’s research is online here.
Friday, September 22, 2017
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