Thursday, 27 February 2014

Around the Traps 28/2/14

It is time for Around the Traps again.

more cracker articles. updating on Sunday

Northern America

Andrew Gelman ( Statistics guru)
Dave Giles ( Econometric genius)
Dianne Coyle ( Quirky + Book Reviews)

Wednesday, 26 February 2014

Drought Assistance

The policy of drought assistance is absurd.

Why do farmers get assistance and GMH, Toyota ,SPC et al do not?
I was going to write on this subject BUT David Walker and Harry Clarke have already done so.

Tuesday, 25 February 2014

Climate change: you decide

Here are two different articles on climate change on a very similar topic.

Firstly here is Tamino on  global-temperature-the-post-1998-surprise and then cherry-p  ( that is a bonus).

Now read Sinclair Davidson on maybe-voters-just-dont-care.

Now as an absolute bonus here is  Good Stats Bad Stats on settled science ,climate change and..

I do like this paragraph from Good Stats Bad Stats 'The rest of the opinion piece goes on with bad science and poor logic to say the least. He talks about a “pause” in global temperature rise over the last 15 years. Do a simple search on “up the down staircase” and you will see that any increase comes in fits and starts. When temperatures have be rising for 100 year looking at any 15 year period is ill advised. That is Statistics 101.'

gosh what people do that I wonder!!!

Monday, 24 February 2014

I can't work out Joe Hockey. Update

Joe Hockey made some really stupid comments on the weekend.

He claimed the government would have to rein in expenditure on pensions over time if the budget was ever going to get into the black.

I have been reading papers from Retirement incomes division ( and its various name changes ever since Phil Gallagher was in charge there.
I have yet to read a paper saying pension expenditures will be a problem for future Governments.

I have read many an article entailing health expenditures will be a mounting problem for governments in the future but that is an entirely different topic.

Joe Hockey has the best department in the Public Service working for him. He also has excellent personal staff so there is no reason for these really stupid comments.
Indeed the only reason he could be making these comments is that he is goebbelising!

As for what he has to do at present. Matt Cowgill showed some time ago the problems of the structural deficit is all revenue and not expenditure based.

Saturday, 22 February 2014

Maria Callas

Maria Callas was one of the great singers of opera.

Here she is at her best doing Carmen.

Thursday, 20 February 2014

Around the Traps 21/2/14

It is time for Around the Traps again.
As you can see it is  a bit smaller than usual. Plenty of good stuff though

Northern America

Andrew Gelman ( Stats man!)
Dave Giles ( Econometrics
Dianne Coyle ( Quirky + book Reviews)

Wednesday, 19 February 2014

the US Stimulus

It is the anniversary of the US stimulus so here are a few people commenting on it.

Some-one disagrees

Tuesday, 18 February 2014

A few great articles on Climate Change

I was reading around getting material for Around the Traps when I realised there were a number of varied but very interesting articles on Climate change.

Here they are:


update this is a quote from Menzie's article
The climatologists publishing on climate change tend to be the most convinced of anthropogenic climate change (97.4%, which in my book is pretty overwhelming).

Sunday, 16 February 2014

The Labour Market

When people talk about the labour market being re-regulated under Labor they never present any evidence.

You would see it in three areas.
First wage increases would be higher in a re-regulated labour market.
So here is a graph of wage inflation in Australia from the latest IMF report courtesy of ricardian ambivalence. ( You should be reading him he is very good.)

Do you notice any  difference?

No neither does the RBA otherwise they would be raising rates !

this is from their latest Statement on Monetary Policy
'Wage growth slowed further in the September quarter. The wage price index increased by 2.7  per cent in year-ended terms, which is around 1  percentage point below its average of the past decade. The  pronounced slowing in wage growth over the past year reflects the effect of spare capacity 
in the labour market, combined with relatively low consumer and union inflation expectations and 
continuing pressures on firms and public sector  employers to contain costs'

We would also see in in higher than usual unemployment given where we are at in the business cycle.
This is related to the above graph and as yet no-one but no-one has shown this to be the case.

We would also see it in higher industrial disputation and again there is nothing to see.

Lastly I do find it highly ironic people try to argue two things simultaneously.
Trade unions have lost a lot of members and therefore  power yet they can somehow artificially raise wages beyond where they should be given the business cycle.

Thursday, 13 February 2014

Around the Traps Actual Valentine's Day Edition 14/2/14

It is time for Around the Traps. and it is Valentines Day today!!

updates on Sunday as I am busy all day with Cricket on Saturday

Related articles in bold!

Northern America
Andrew Gelman (Stats Guru)
Dave Giles (The genial econometrics man)
Dianne Coyle (Quirky + book reviews)

Tuesday, 11 February 2014

No more Car Manufacturing In Australia

Toyota has now joined GMH and ford and will not manufacture cars any more in Australia.

THIS article is really good at showing what occurred and what is occurring in Australia.

I do not agree with all of this but it is a great read and will boost those brain cells as you cogitate on it.

Wages has very little to do with the decline as anyone with the most basic mathematical ability could discern.

Here is Ross Gittins and Malcolm Maiden.

Monday, 10 February 2014

Griffith By-Election

Anything you need top know about the Griffith by-election can be gained by reading Kevin Bonham!


Mumble on griffith_booth_scatter_graphs

Sunday, 9 February 2014

What will happen to interest rates?

The big question is whether the RBA will raise interest rates  soon?

In one corner is the Kouk.

In the other is Ricardian Ambivalence.

I am with Ricardian Ambivalence for all the reasons he states. I think fears about inflation are overblown for the reasons RA outlines.

Where I digress with RA is with fiscal policy. He thinks it should be tightened. Given Nominal GDP growth is forecast to be 3% both this fiscal year and next ( and this is less than half its trend rate of growth) then I would wait for Nominal GDP growth to get to trend and then tighten.

Just remember the only reason for tightening  is because of the income tax cuts given by Costello and then Swan as well as  the changes to the excise duties on oil!

Thursday, 6 February 2014

Around the Traps 14/2/14 Valentine's day Edition no 7/2/14 actually!

It is time for the Valentine's days edition of Around the traps.
Ricardian Ambivalence is back, Noah Smith is in fine form and Genial Dave Giles is apparently still on strike!! He is back at work. hooray. Andrew Gelman has one fascinating piece!

do not read this until your sweethearts have a rose or you have received one!!

Northern America

Andrew Gelman( King/Prez? of the P values)
Dave Giles ( Econometrics guru)
Dianne Coyle (Quirky + Book Reviews)

Wednesday, 5 February 2014

Hypocrisy at work

look at this.
now take a look at any of the other topics and read what is said.

Yeah that's right they are all class!

They simply have no shame at all!

Tuesday, 4 February 2014

Current Account Surpluses: The Norm for Australia?

Michael Blythe the Chief Economist at CBA Economic research has  this hypothesis for the future for Australia.

Current account surplus – or banana republic no more?
Australia may be at the start of an era of current account surpluses.
Funding flows, trade flows and income flows are evolving in a way favouring a shift to surplus.
Countries that run current account surpluses typically have strong currencies – the AUD could trade well above parity with the USD again.

Current account deficits are the norm in Australia.  Deficits have been recorded in 128 of the past 150 or so years.  The relatively rare surplus is typically associated with extreme economic events.  Wars and recessions seem quite effective in producing surpluses!  The historical experience has conditioned expectations and large current account deficits are expected to persist.  But we see a significant probability that surpluses emerge over the medium term. 
Current account deficits, like budget deficits, are widely seen as a problem.  They need to be funded and they lead to an accumulation of debt over time.  We need to tap into the savings of the rest of the world, leaving us exposed to the whims of global financial markets.  From this financing perspective, the current account deficit reflects a shortfall of domestic savings relative to domestic investment.  The gap reflects high investment rather than low savings.  By running current account deficits we have been able to sustain a higher investment rate than otherwise.  Economic growth rates and living standards are higher than otherwise as a result. 
Looking ahead, the flow‑of‑funds will evolve in a way that could produce a current account surplus (or net lending to the rest of the world).  Households will remain significant net lenders.  The change in household behaviour was underway before the financial crisis hit.  The pickup in household savings and reduction in borrowing appetite looks permanent.  Business net borrowing is set to decline.  The mining construction boom that drove business funding requirements to exceptionally high levels is ending.  Government net borrowing should decline.  The recent mid‑year review shows the Commonwealth budget deficit slowly declining.  We suspect, however, that the government will proceed further and faster than the baseline projections suggest. 
These shifts will narrow the gap between domestic savings and investment and reduce net borrowing from the rest of the world.  We may be generating small current account surpluses within five years. 
From a real world perspective, the move to current account surplus requires a shift to trade surpluses and a narrowing in the net income deficit.  A sharp rise in resource export volumes and a marked reduction in resource‑related capital goods imports as the mining construction boom winds down will drive the move into trade surplus.  The expanding middle income population in Asia should lift demand for Australian services exports as well.  On the income side, the broad macro backdrop suggests foreign liabilities should grow reasonably slowly.  But the expansion of Australian superannuation funds will boost foreign assets by more.  The net income deficit should narrow as a result.
Countries that run current account surpluses typically have strong currencies.  Examples include Switzerland, Japan and Singapore.  The argument is reinforced from the deficit perspective.  The fears about global capital flows generated by the Fed tapering debate in 2013 had a bigger negative impact on those emerging economy currencies with large current account deficits.  As a result, we would expect the AUD to strengthen should a persistent current account surplus emerge.  Abstracting from USD‑specific influences, the combination of a AAA rating and a current account surplus would likely see the AUD again trade well above parity to the USD.
Another feature of current‑account‑surplus countries is that average interest rates are lower than otherwise.  There are two reasons.  By definition, surplus economies have national savings running ahead of national investment.  They do not need higher interest rates to attract capital.  And the lack of reliance on global funding sources means surplus economies are often seen as safe havens and have lower risk premiums.'

 very very interesting.

Monday, 3 February 2014

Paul Krugman - The Moderate

no I am not saying that. Noah Smith is.

If you always wanted to know how Krugman thinks etc this article is a real ball-tearer.

It is also pretty good to understand where the economics profession is at present and has been.It has plenty of links as well.

All round a really good read

Sunday, 2 February 2014

Sinclair Davidson. He is an expert on Mistakes

Here is Sinclair Davidson opining on ABC  mistakes.

Well he is an expert on mistakes.


Just remember your taxpaying dollars are paying for his mistakes!!!

Wow. Judith Sloan is now getting into the act. She of the NBN is not on the the balance sheet fame. Except it was and has been ever since its inception right there in the budget papers!

A pity no-one fact checks her statements!

Global Temperature. The post 1998 Surprise

Sorry this is not original.

It is in fact the title of one of the best posts in Around the Traps from Friday.

Tamino wrote  it here.

This is a gist
'It’s clear that if we expected a pause, we would expect most of the following years’ temperatures to be below the red forecast line, but about half above and half below the blue forecast line. On the other hand, if we expected continued warming, we would expect most of the following years’ temperatures to be above the blue forecast line, but about half above and half below the red forecast line.
So … how did it turn out? Were subsequent years about half above and half below the red (warming) forecast, or the blue (no warming) forecast? The answer is: neither.
What actually happened is that, according to the HadCRUT4 data, most of the data are above both forecasts. Twelve of sixteen were hotter than expected even according to the still-warming prediction, and all sixteen were above the no-warming prediction:'
Now go back and read this again.