April links

Always more on Russia investigation. Now conservative media is pretending the Papadopoulus contact was a CIA asset trying to entrap him. Long WaPo article about adminstration action against Russian hacking before and immediately after the election. Also covering that period, and answering the snarky question 'What did Obama do to stop it?' Even more, though it sounds like maybe Steele gave his dossier to British intelligence and their heads exploded.

FBI scandal. I skimmed the Inspector General report on the Hillary investigation. Strzok looks bad in his handling of the Weiner laptop. Lawfare review of it.

Peace deal failure. Someday I need to write a long piece about why the Israeli-Palestinian peace talks failed. What next for Israelis in their outlook.

Gitmo holding camp. Military tribunals have failed. Slow, questionable decisions, not a firm legal basis.

2020 Election. This is BIG, and worth watching if the trend continues. A poll in Texas has Trump even with two Democratic candidates. These are named candidates, not a generic one. The rich will support Trump in 2020. Not because they like him or respect him, but because the Dems want to raise their taxes.

Midwest flooding. A long article about the Missouri River, and how our relationship to it and adjacent land use should change. Move further away, don't try to manage for navigation because it doesn't carry a lot of navigation.

Japan's economy. Japan is doing pretty well. Not a lost decade.

Trump non-news. Trump's tweeting is becoming unhinged. Is this new and repeat?

Stuff I want to remember

(Clues to my interests.)

Understanding quantitative easing. A good article, very readable, that gives an easy-to-understand analysis of QE. It asked good questions, but I ask even better questions. It tells how QE inflates the value of certain bonds. In rolling back QE, demand is lower and the bonds are worth less. True, except that QE is done with demand is especially soft and needs the boost. QE is rolled back when demand is stronger. Still, I think I have more work to do to understand the workings. QE also shelters borrowers from surges in interest rates, right? Prevents lenders from demanding higher returns.

Extreme crazy conspiracy site. The crazy flat-earth lady gets her news here. Oh, the imagination involved in spinning these tales. Microwaves are needing to cook food grown with fertilizer, but it destroys the nutrients. Ummm, wow.

Gun info database. Save the link to check. Country by coountry information.

Image: bloomberg.com

Why the medicine stopped working

Our economic woes haven't been solved with supply-side tax cuts or Keynesian stimulus, but why? Both cures depend on redirecting money, but lack of money isn't the root of our economic problems. People have buckets of money to invest. Our stock market sloshes around $69 billion every single day. People (including me) have poured $11.8 trillion into mutual funds. Money sloshes into oil futures, CDOs, ETFs, REITs, hedge funds, etc. Everyone is trying to get good return on their bucket of money. Sometimes people are being enticed with slightly higher returns or considerably higher returns to invest with Bernie Madoff or in offshore Icelandic banks or in well-rated but not-so-solid American mortgage-backed securities.

OK, that isn't happening today. But it was happening in the 2000's until about 2008. Some of that money (including some of mine) vaporized in 2008-2009. But much of it was replaced somehow, maybe with quantitative easing (QE) cash, maybe with money we had shipped to China, maybe with money that was sitting on the sidelines. I don't know where all that replacement money came from, but the Dow soared from a low of 6626 in 2009 to a high of 12810 in 2011.

I may not know where all the money came from, but I can guess what it means. Our economy, and economies around the world, are going to be unusually susceptible to financial bubbles. Since around the mid-1990's, we've had a tech bubble, a housing bubble, and an oil bubble. Maybe there's a stock bubble right now. Maybe there's a gold bubble.

With all the available money, why isn't there more investment and growth? Because there aren't strong new ventures to invest in or expansion opportunities, particularly in the US, but also elsewhere in the world where bubbles have popped. Demand is strongly depressed in the US, where people and business are belatedly paying down debt instead of spending and investing. It's not wrong for people and business to do this, because there was too much debt burden. But how can our economy start growing again?

I wish I knew, or wish that old cures (supply-side or Keynesian stimulus) showed signs of working. We might be in for Japan-style economic drift. The only hope I have is that better fiscal management of the federal budget will encourage optimism and new investment. I'd love to see some manufacturing return to the US, new manufacturing that starts small and local with potential to grow, and export-oriented manufacturing based on our natural resources like farming and forests.

To me, this seems like the kind of organic growth that can work... if the environment is right. That means regulation that is light enough to both protect and encourage. We also need taxation rates that don't unduly add to the risk or subtract too much from the reward. However, decreases in taxation need to be measured against the loss of the revenue. Perhaps easing regulation is the more fruitful approach.

Conservatives are saying "Duh!" but that's OK, because this is more a message for liberals. If you want a stronger economy with more jobs available, get over your instinctive distrust of business. What suffocates business suffocates our economy and suffocates our country. The purpose of regulation isn't to tie business up in knots, but to keep people safe. Use it for that purpose only! Abusive regulation is no one's friend.