THE "CHATBOX"

[LightCone]

They just awarded economic Noble prize to the guy clueless about economics ( Eugene Fama )

Would you mind a preliminary elaboration on this?

This is a nice synopsis of the arguments among the three economists sharing this year's Nobel. Fama's not clueless about economics, but unfortunately for him his 'efficient markets' theory is silent both on the effect of unanticipated dislocations in the financial markets [so-called 'black sheep' events], and on the impact of bribery, insider trading, and other ongoing criminal acts inherent in the financial markets, both American and overseas.

http://www.chicagotribune.com/business/ ... 4522.story

Thanks for the synopsis. However, unfortunately, the article you linked is behind a paywall.

[Libero]

Here's my entry for the Nobel Economic Prize, although shamelessly I can admit that I am no college professor.

If you control the media, you can control the stock market, precious metals market, housing market... likely every market.

This includes the causing of "random events" (i.e. 9/11) that can affect market action either way. It also includes releasing a myriad of potentially false or flawed information that may influence a person to take a certain position over another. There are also publicly traded corporations that may appear to be in a certain business with a certain market cap, but perhaps, aren't engaged in the actual advertised business at all. This is on top of the trading systems etc. that are undoubtedly programmed by some very astute folks that have an excellent grasp on human psychology and are likely privy to all information mentioned.

And then you gotta wonder what the real stories are behind the Enron's and WorldCom's -- wasn't their shit said to go *poof* in the Building 7 debacle? <--(Whhaaaat? No offsite backup or super-fast failover that the corporations in the Twin Towers surely must have claimed to have had for immediate business continuity??)

And what about MFGlobal with their ex-politician, ex CEO of Goldman Sachs, Jon Corzine?... The Bernard Madhoff's (helped develop the NASDAQ) and the Allen Stanford's of the world? Each of latter examples give the impression that financial crime is punished, but each story has its own fishiness when you look into them.

I have been burned burned myself pretty badly 'investing' in the stock market previously in my life. Can you tell?

So do I win? Where is my Nobel?... my Pulitzer?... my Ridenhour?...

http://en.wikipedia.org/wiki/Jon_Corzine
http://en.wikipedia.org/wiki/Bernard_Madoff
http://en.wikipedia.org/wiki/Allen_Stanford

P.S. It would be interesting to hear from any Icelanders regarding their financial crisis and resulting "booting of the bankers" to find out how much truth there was to that story as it garnered quite a bit of media attention here in the U.S.

http://en.wikipedia.org/wiki/2008%E2%80 ... ial_crisis

[bostonterrierowner]

They just awarded economic Noble prize to the guy clueless about economics ( Eugene Fama )

Would you mind a preliminary elaboration on this?

This is a nice synopsis of the arguments among the three economists sharing this year's Nobel. Fama's not clueless about economics, but unfortunately for him his 'efficient markets' theory is silent both on the effect of unanticipated dislocations in the financial markets [so-called 'black sheep' events], and on the impact of bribery, insider trading, and other ongoing criminal acts inherent in the financial markets, both American and overseas.

http://www.chicagotribune.com/business/ ... 4522.story

His efficient markets theory is not the only thing that is flawed in his work , he also pushes loanable funds fallacy . I will let myself refer to Ramaman's blog (http://www.concertedaction.com/) where he deals with this year's Noble Prize winner :

A Clueless Sveriges Riksbank Prize Winner

by Ramanan on 14 October 2013



The subject of money, credit and moneyflows is a highly technical one, but it is also one that has a wide popular appeal. For centuries it has attracted quacks as well as serious students, and there has too often been difficulty in distinguishing a widely held popular belief from a completely formulated and tested scientific hypothesis.

I have said that the subject of money and moneyflows lends itself to a social accounting approach. Let me go one step farther. I am convinced that only with such an approach will economists be able to rid this subject of the quackery and misconceptions that have hitherto been prevalent in it.

- Morris Copeland, inventor of the Flow Of Funds Accounts of the United States, in Social Accounting For Moneyflows, in Flow-of-Funds Analysis: A Handbook for Practitioners (1996) [article originally published in 1949]

So the news is that Eugene Fama shares this year’s Economics Nobel with Robert Shiller and Lars Hansen.

Instead of going into Fama’s main work, I thought I will point out Fama’s quackery on national accounts and flow of funds – which economists are supposed to know but is rarely the case.

In an article from 2009, Bailouts and Stimulus Plans, Fama again puts down fiscal policy in a rather comical way. Fama starts with the sectoral balances identity:


There is an identity in macroeconomics. It says that in any given year private investment must equal the sum of private savings, corporate savings (retained earnings), and government savings (the government surplus, which is more likely negative, that is, a deficit),

PI = PS + CS + GS (1)

In a global economy the quantities in the equation are global. This means the equation need not hold in a particular country, but it must hold in the world as a whole.

There is so much muddle to start the analysis. The above is incorrect to start with because “private savings” automatically includes corporate savings. Perhaps this error is a typo but going through his analysis doesn’t support the hypothesis that he even knows the equation right. Incidentally government saving is not government surplus in standard terminology. He seems to think these are equal.

Another error in the above equation is that the left hand side should include government investment as well.

Anyway …

Fama continues:


Government bailouts and stimulus plans seem attractive when there are idle resources – unemployment. Unfortunately, bailouts and stimulus plans are not a cure. The problem is simple: bailouts and stimulus plans are funded by issuing more government debt. (The money must come from somewhere!) The added debt absorbs savings that would otherwise go to private investment.

There are so many incorrect things with this. First, there is a reverse causality in the saving/investment identity. Investment creates saving. Second, Fama seems to think that government deficit reduces private saving but the identity itself is suggestive of another interpretation. If I write it as (in the context of a closed economy):

S = I + G – T

where S is the private saving, I is private investment and G and T are government expenditure and tax receipts, respectively. It then becomes clear that government deficit – instead of reducing private saving, creates private saving.

Even more worrisome is his statement “the money must be somewhere” – as if the stock of money is an exogenously fixed quantity. A fiscal expansion (meaning higher governmen expenditure and/or decrease of tax rate) can increase the stock of money in two ways. First is direct – if there is a government deficit with the fiscal expansion and banks purchase a fraction of government debt, the stock of money increases. The second is via a rise in domestic demand which will lead to higher borrowing by the private sector from banks thereby increasing the money stock. Of course there are other effects too via the non-bank private sector asset allocation decisions etc.

Not going in much details for now as I write a lot about it and in any case there is Post-Keynesian monetary economics on this. My aim was to show how an economics Nobel Prize winner is clueless about basic economics! The prize is to be awarded to people who have made great contributions to society but we have an example of someone – Fama – who pushes fiscal contraction with clueless analysis of national accounts.

[Rudy Algera]

Waching "news" on tv or reading "news"papers is perhaps a bit like eating calamari and actually consuming pig anus:
http://gothamist.com/2013/01/14/is_that ... rectum.php
It's a big scandal in Holland at the moment. Fried octopus rings calamarus has been renamed calamanus.
Media fakery is very much like food fakery. Nobody knows or tastes or smells the difference.
Just a thought.

[AmongTheThugs]

If any of you like punk with your rock-n-roll and you live close by come out, have a beer and say hi.

25.10.2013 Dülmen (D) – Neue Spinnerei
26.10.2013 Erfurt (D) – AJZ Erfurt
27.10.2013 Groningen (NL) - Cafe De Zolder
28.10.2013 Paris (F) – La Java
30.10.2013 Leipzig (D) – Conne Island
31.10.2013 Essen (D) – Südrock
01.11.2013 Eernegem (BE) – B52 Club
02.11.2013 Erlangen (D) - Scheune
03.11.2013 Wien (A) – Viper Room
04.11.2013 Dresden (D) - Chemiefabrik
05.11.2013 Kladno (CZ) – Auto Da Fe
06.11.2013 Prague (CZ) – Cross Club
07.11.2013 Teplice (CZ) - Bozak
08.11.2013 Berlin (D) – Wild At Heart
09.11.2013 Rees (D) - Keller
No Italy or UK

[brianv]

If any of you like punk with your rock-n-roll and you live close by come out, have a beer and say hi.

25.10.2013 Dülmen (D) – Neue Spinnerei
26.10.2013 Erfurt (D) – AJZ Erfurt
27.10.2013 Groningen (NL) - Cafe De Zolder
28.10.2013 Paris (F) – La Java
30.10.2013 Leipzig (D) – Conne Island
31.10.2013 Essen (D) – Südrock
01.11.2013 Eernegem (BE) – B52 Club
02.11.2013 Erlangen (D) - Scheune
03.11.2013 Wien (A) – Viper Room
04.11.2013 Dresden (D) - Chemiefabrik
05.11.2013 Kladno (CZ) – Auto Da Fe
06.11.2013 Prague (CZ) – Cross Club
07.11.2013 Teplice (CZ) - Bozak
08.11.2013 Berlin (D) – Wild At Heart
09.11.2013 Rees (D) - Keller
No Italy or UK

All the best thuggy - sounds good! I'm trying to extract about e500 from "she who must be obeyed" for the latest PodHD500x, so a trip to Wien to see you is out I'm afraid.

[MsQ]

If any of you like punk with your rock-n-roll and you live close by come out, have a beer and say hi.

25.10.2013 Dülmen (D) – Neue Spinnerei
26.10.2013 Erfurt (D) – AJZ Erfurt
27.10.2013 Groningen (NL) - Cafe De Zolder
28.10.2013 Paris (F) – La Java
30.10.2013 Leipzig (D) – Conne Island
31.10.2013 Essen (D) – Südrock
01.11.2013 Eernegem (BE) – B52 Club
02.11.2013 Erlangen (D) - Scheune
03.11.2013 Wien (A) – Viper Room
04.11.2013 Dresden (D) - Chemiefabrik
05.11.2013 Kladno (CZ) – Auto Da Fe
06.11.2013 Prague (CZ) – Cross Club
07.11.2013 Teplice (CZ) - Bozak
08.11.2013 Berlin (D) – Wild At Heart
09.11.2013 Rees (D) - Keller
No Italy or UK

& no Australia either.
Have a fun tour! :-)

[simonshack]

All the best thuggy - sounds good! I'm trying to extract about e500 from "she who must be obeyed" for the latest PodHD500x, so a trip to Wien to see you is out I'm afraid.

Yes, all the best ATT ! I'm red with envy - a European Tour is what I was hoping for a few years ago when I had my band - The Social Service - still on the road - (in Italy only).

Right now I have no valid passport, but if I get it renewed in time I'll try to make it to one of your European gigs. Hey, will you be wearing that great "You cant' handle the truth" T-shirt you printed out - with "septemberclues.org" on the back? I'm wearing one right now as I write, btw!

[bostonterrierowner]

All the best thuggy - sounds good! I'm trying to extract about e500 from "she who must be obeyed" for the latest PodHD500x, so a trip to Wien to see you is out I'm afraid.

Yes, all the best ATT ! I'm red with envy - a European Tour is what I was hoping for a few years ago when I had my band - The Social Service - still on the road - (in Italy only).

Right now I have no valid passport, but if I get it renewed in time I'll try to make it to one of your European gigs. Hey, will you be wearing that great "You cant' handle the truth" T-shirt you printed out - with "septemberclues.org" on the back? I'm wearing one right now as I write, btw!

What passport ??? Haven't you heard of Schengen Treaty Simon ? All you need is an ID and this only when cops stop you for some reason .

ATT ,

I travel quite frequently to Germany so I might actually pop in and say hi . It would be an experience to see another CFer with my own eyes

Congrats on your European tour !

[simonshack]

What passport ??? Haven't you heard of Schengen Treaty Simon ? All you need is an ID and this only when cops stop you for some reason .

Are you sure? The smallprint on the back of my fresh Italian ID card(released by my little town of residence) says "Not valid for travel". But hey, dear BTO - I do hope you're right !

Woah - I just LOVE Cluesforum. A really cool source of - all sorts of - useful information!

************************
EDIT: Gosh, you ARE right, BTO! What a nerd I am!
http://europa.eu/youreurope/citizens/tr ... dex_it.htm

I was still stuck with the need for a passport since last time I planned to travel abroad was to Ireland - which is NOT part of the Schengen treaty... So let me know if you're going to one of ATT's gigs - I might well join you guys if I can find a cheap flight!

[bostonterrierowner]

What passport ??? Haven't you heard of Schengen Treaty Simon ? All you need is an ID and this only when cops stop you for some reason .

Are you sure? The smallprint on the back of my fresh Italian ID card(released by my little town of residence) says "Not valid for travel". But hey, dear BTO - I do hope you're right !

Woah - I just LOVE Cluesforum. A really cool source of - all sorts of - useful information!

Dear Simon ,

In Poland we have to carry Dowód Osobisty/Personal Proof( to the letter translation ) and this thing is all we need to travel within Shengen Area . There must be an Italian or Norwegian or Swedish equivalent of Dowód Osobisty .

Or you can do what I usually do when driving within Shengen Area meaning just putting your driver's license in your wallet and travel . All cops can do is give you a ticket

I haven't seen my passport in 2 years .

Do not let this small obstacle ( actually not an obstacle at all ) of not having a passport stop you from leaving Italy

p.s .

Simon , I will try to see ATT in Berlin , this option is also the best for you , it will be easy to find a cheap connection from Rome . For me it is only 5 hour drive . Worth considering

[Lazlo]

All the best thuggy - sounds good! I'm trying to extract about e500 from "she who must be obeyed" for the latest PodHD500x, so a trip to Wien to see you is out I'm afraid.

Yes, all the best ATT ! I'm red with envy - a European Tour is what I was hoping for a few years ago when I had my band - The Social Service - still on the road - (in Italy only).

Right now I have no valid passport, but if I get it renewed in time I'll try to make it to one of your European gigs. Hey, will you be wearing that great "You cant' handle the truth" T-shirt you printed out - with "septemberclues.org" on the back? I'm wearing one right now as I write, btw!

What passport ??? Haven't you heard of Schengen Treaty Simon ? All you need is an ID and this only when cops stop you for some reason .

ATT ,

I travel quite frequently to Germany so I might actually pop in and say hi . It would be an experience to see another CFer with my own eyes

Congrats on your European tour !

fresh Italian ID card(released by my little town of residence)

The concept of a residential ID is fascinating to me. Could you say a little more about it, please? I am familiar with the concept from studying French in U.S. schools. Because the study is so dry, Je suis, te es, il est, etc, they would often have little side bars in the text books explaining unique aspects of French culture like food, housing, history etc. These cultural gems would often appear under a little rubric, in French, like "Tranches de Vie" (A Slice of Life). The one that fascinated me was the Carte nationale d'identité. According to my text and if memory serves, one would have to go to the local precinct and declare a stay of over, say two weeks, and register with the police. I found this a fussy little practice from a country with Liberté, égalité, fraternité as a motto and especially one that claimed to have defeated fascism. This was also an introduction to the force of a gendarmerie which at the time was basically unheard of in the U.S.

[Heiwa]

The concept of a residential ID is fascinating to me. Could you say a little more about it, please? I am familiar with the concept from studying French in U.S. schools. Because the study is so dry, Je suis, te es, il est, etc, they would often have little side bars in the text books explaining unique aspects of French culture like food, housing, history etc. These cultural gems would often appear under a little rubric, in French, like "Tranches de Vie" (A Slice of Life). The one that fascinated me was the Carte nationale d'identité. According to my text and if memory serves, one would have to go to the local precinct and declare a stay of over, say two weeks, and register with the police. I found this a fussy little practice from a country with Liberté, égalité, fraternité as a motto and especially one that claimed to have defeated fascism. This was also an introduction to the force of a gendarmerie which at the time was basically unheard of in the U.S.

C'est trés simple. French citizens were treated like trash everywhere, register here, there, wait, be insulted, etc, so foreigners in France were politely asked to register at the police ... in the past. Now it only applies to certain foreigners while most EU citizens, incl. Simon, can move around freely in EU. Gypsies from Bulgaria, Slovakia, Rumania that just build camps anywhere in France without registering are today kicked out by the socialist government and asked to build their camps at home. Including illegal visitors from Kosovo (non EU), etc, etc. If things get complicated la gendarmerie is asked to solve the problem.

[AmongTheThugs]

Well if any of you travel to a gig let me know and I'll make sure you're on the guest list. In Paris we are playing with one of my favorite Italian bands, Giuda.

full link: http://www.youtube.com/watch?v=28wL4Jvq2k4

[dblitz]

This video is fake!
His lips don't sync with the words at 0:42

Don't you know what this forum is all about?