tag:blogger.com,1999:blog-4900303239154048192.post516902050841555964..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: Nonsense on Imported StiltsUnknownnoreply@blogger.comBlogger50125tag:blogger.com,1999:blog-4900303239154048192.post-48052141256611284182008-01-22T09:59:00.000-05:002008-01-22T09:59:00.000-05:00YNS,You see, that wasn't too difficult. A well org...YNS,<BR/>You see, that wasn't too difficult. A well organized review of the deficiencies inherent in the data collection and summarization processes and the difficulty of the analysis that follows. It would be helpful in any discussion of any social phenomenon, of which economics is one, if there were a more wide spread recognition of these short comings. I've not been saying not to do the research as it is. The preface in such studies is all too often woefully lacking in disclosure. Simply put, confession is good for the soul, or the argument, as the case may be.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-9956850160785205622008-01-21T21:59:00.000-05:002008-01-21T21:59:00.000-05:00Btw,Here's (one of) the Chan and Ravallion papers ...Btw,<BR/><BR/>Here's (one of) the Chan and Ravallion papers that the letter to the editor provided by anonymous (thanks for linking it) references:<BR/><BR/>http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2007/04/16/000016406_20070416104010/Rendered/PDF/wps4211.pdf<BR/><BR/>(yes, I just got my pdf capable computer back)<BR/><BR/>It should be noted that even with these numbers, the <I>incidence</I> of poverty has fallen although the absolute numbers have stayed constant or gone up somewhat in a world of positive population growth.<BR/><BR/>I'm not 100% clear on what accounts for the difference between these estimates and those of other researchers as the general methodology is actually in an older paper (2004) which I haven't been able to find online yet.<BR/><BR/>However, in general there's 3 issues, or 3 classes of issues here, when trying to come up with poverty measures (or for that matter, inequality, or any moment of the income distribution):<BR/><BR/>1. Estimating the general distribution of nominal income.<BR/><BR/>1a. What source to use? Household surveys or national income accounts, or yet some other source? Or is there some way to utilize all information. Both of these have their disadvantages and advantages. No free lunches here.<BR/><BR/>1b. Given that you've settled on a particular data source (or mix of them) what method to use to infer an overall distribution from the few, possibly non-random observations you got? Kernel estimation or nonlinear least square? What size bins to pick? Baysian methods? Etc. All methods have their disadvantages and advantages. No free lunches here.<BR/><BR/>2. Converting it all to numbers that are comparable across countries and time<BR/>2a. PPP adjustments<BR/>2b. What price index to use? It seems like at least part of the possible problem with the SiM #s is that he used a general price level (though, contra that letter I believe it was the CPI not the GDP deflator) rather than a price index specific to poor households. However it is notoriously hard to get both the prices of individual, disaggregated goods, as well as to figure out what a typical consumption basket of poor people in various countries actually is.<BR/><BR/>3. Conceptual issues - 'what is poverty'<BR/><BR/>3a. Jack (or was it juan) above mentioned basic needs. So a poverty line should reflect the inability to acquire these. And 2$/day may be too low for that. Actually I think the standard 1$ and 2$ benchmarks are generally used because they're round numbers and they underscore the seriousness of the problem. As long as the same consistent benchmark is used and it's not, I dunno, 100$ per day or something, then it should be fine.<BR/>3b. More problematically, should poverty be measured using consumption or income data? From a cursory reading this appears to be another source of divergence between the two numbers. I think you can make some arguments both ways here. <BR/><BR/>Ok that's it for now.YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-38159272370056515292008-01-21T21:49:00.000-05:002008-01-21T21:49:00.000-05:00YNS,"Its all empirics - estimating income distribu...YNS,<BR/>"Its all empirics - estimating income distributions..." <BR/><BR/>Estimating something is akin to educated guessing. The fact that those guesses are based on data that are subject to significant errors of measurement only makes the endeavor even less empirical. Putting a ruler to an object doesn't give us a measure of that object if the gradations on the ruler are inaccurate, except if you're a social scientist who can't recognize the limits of his data collection techniques or the inadequacy of the type of data to begin with. Simply wishing that your science is as accurate as physics doesn't make it so. Physicists know when they are stepping out over the line of empiricism and identify themselves then as theoretical physicists. They state with relative clarity that what they are engaged in is formulating reasonable hunches about the nature of the universe. There's nothing wrong with such a branch in economics so long as the participants know which branch they're hanging off of.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-22764331173025705902008-01-21T21:34:00.000-05:002008-01-21T21:34:00.000-05:00jack,But there's no 'theory' here. It's all empiri...jack,<BR/><BR/>But there's no 'theory' here. It's all empirics - estimating income distributions across countries and time. I don't know what you're talking about.<BR/><BR/>Brenda<BR/><BR/>"After all, if $2/day is good for those down South it must surely be good for everyone!"<BR/><BR/>This is you saying something like this, and insinuating/implying that I or someone else has said that. It's crap.<BR/><BR/>"Well, please clarify what you meant YNS. After all you did say:<BR/><BR/>"Poverty rate for Mexico (% of people living at less than 2$ per day in PPP terms):<BR/>1984 -- 40%<BR/>1992 -- 22%...""<BR/><BR/>Uhhhh... I don't know what is there to clarify here. In nineteen eighty four, forty percent of all Mexicans were living on less than two dollars per day per day in purchasing power parity terms. In <BR/>nineteen ninety two, twenty two percent of Mexicans were living on less than two dollars per day per day in purchasing power parity terms.<BR/><BR/>How in heck do you get the implication from that, that there is something good about people living on 2$ a day, or that that is enough?<BR/><BR/>"Is 'poverty rate' and 'poverty' two different things for you??"<BR/><BR/>Poverty is being poor. Poverty rate is number of people who are poor divided by total population.<BR/>Again, what is there to clarify?YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-48541954696561083492008-01-21T19:13:00.000-05:002008-01-21T19:13:00.000-05:00In response to:BR: ".. After all, if $2/day is go...In response to:<BR/><BR/>BR: ".. After all, if $2/day is good for those down South it must surely be good for everyone!"<BR/><BR/>YouNotSneaky said:<BR/>"<I>Don't be dumb. No one's coming even remotely to saying that living at 2$ is a good thing. I don't know what else to say. Just don't be dumb.</I>"<BR/><BR/>Well, please clarify what you meant YNS. After all you did say:<BR/><BR/>"<I>Poverty rate for Mexico (% of people living at less than 2$ per day in PPP terms):<BR/>1984 -- 40%<BR/>1992 -- 22%..."</I><BR/><BR/>Is 'poverty rate' and 'poverty' two different things for you??Myrtle Blackwoodhttps://www.blogger.com/profile/07427043367624101075noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-61893552284636785872008-01-21T14:54:00.000-05:002008-01-21T14:54:00.000-05:00There is a difference between developing a theoret...There is a difference between developing a theoretical construct then generating the testable hypothsis that extend from that theory and then actually testing that(those) hypothesis in an emperical fashion and, otherwise, going through steps one and two and then being satisfied to rest on the laurels of ones brilliance in the field of theoretical economics. Less than veridical data is insufficient to uphold hypothetical constructs in the social sciences. Theoretical economics is fine as an intellectual exercise. It doesn't cut the mustard when it comes to predictive validity.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-30884342618301419112008-01-21T13:54:00.000-05:002008-01-21T13:54:00.000-05:00"YNS, What's your opinion?"My opinion is that econ..."YNS, What's your opinion?"<BR/><BR/>My opinion is that economists generally try to use the best numbers out there, which can often still be pretty bad. Measuring people's incomes, not to mention various intagibles, is a difficult business. But rather than seeing this as a economists' ideological bias, this is usually just doing research in an imperfect world. If better, more convincing (i.e. constructed with better methodology) numbers become available usually people start using those (there's of course the usual dissemination and diffusion lags).<BR/>The ideological bias here is more with people who a priori reject any numbers that don't fit in with their preconceptions.<BR/><BR/>I plan on looking at the Chen and Ravillon numbers in more detail later this week. This doesn't appear like something you can just make up your mind about in a few minutes of internet browsing.YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-39415274565758333632008-01-21T13:50:00.000-05:002008-01-21T13:50:00.000-05:00"The figures from Sala-i-Martin & the WDI are wort..."The figures from Sala-i-Martin & the WDI are worthless:"<BR/><BR/>This looks like a potentially interesting criticism of the Sala-i-Martin numbers, it's not clear however how it relates to the WDI numbers since the revisions was produced by WB researchers as well.YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-19590803939785597342008-01-21T13:46:00.000-05:002008-01-21T13:46:00.000-05:00"If you want to live on $2/day 'younotsneaky' go a..."<BR/>If you want to live on $2/day 'younotsneaky' go ahead. Your commitment to such a level of income must surely also see you advocating the complete openness of the border between the United States and Mexico. After all, if $2/day is good for those down South it must surely be good for everyone!"<BR/><BR/>Don't be dumb. No one's coming even remotely to saying that living at 2$ is a good thing. I don't know what else to say. Just don't be dumb.YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-92134488172250550262008-01-21T11:38:00.000-05:002008-01-21T11:38:00.000-05:00THis is a long, productive and interesting lilst o...THis is a long, productive and interesting lilst of comments on a significant economic issue that seems to have been "measured" to death. Anon's citation, just above, brings everything back into the clarity of the light of day. Error of measurement x error of measurement x disputable assumptions = totally useless conclusions. That's not the worst part of it all. Apparently a great many economists don't find this phenomenon too disturbing and continue to base their arguments on such "research," if that's what it can be called. I'd call it ideological screed. <BR/><BR/>YNS, What's your opinion?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-74780842264826348772008-01-21T11:32:00.000-05:002008-01-21T11:32:00.000-05:00"a self-described "hardcore libertarian"Propertari...<I>"a self-described "hardcore libertarian"</I><BR/><BR/>Propertarian would be a better description -- they do, after all, have little in common with genuine libertarians like Emma Goldman. <BR/><BR/>Nor, for that matter, do they have any issues with the restrictions of freedom associated with capitalism and wage labour... Which is a strange position for someone who claims to favour liberty to take...<BR/><BR/>Iain<BR/><A HREF="http://www.anarchistfaq.org" REL="nofollow">An Anarchist FAQ</A>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-54794654246711431492008-01-21T08:19:00.000-05:002008-01-21T08:19:00.000-05:00The figures from Sala-i-Martin & the WDI are worth...The figures from Sala-i-Martin & the WDI are <A HREF="http://www.columbia.edu/~sr793/LettertoEconomist.pdf" REL="nofollow">worthless</A>:<BR/><BR/>http://www.columbia.edu/~sr793/LettertoEconomist.pdfAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-60962233136354748822008-01-19T22:19:00.000-05:002008-01-19T22:19:00.000-05:00NAFTA is not 'free trade' in that it represents a ...NAFTA is not 'free trade' in that it represents a set of international and domestic trading relationships - enforced by law - that protect the strong over the weak. Take away all the subsidies and protections for multi-national corporations and what do we have?<BR/><BR/>Free trade cannot be found where there is:<BR/><BR/>(i) heavy agricultural subsidies in the US that put downward pressure on Mexican (and other) farm prices.<BR/><BR/>(ii) Lack of recognition of humanity's 'ownership' the environment that sustains them. Pollution occurs because governments collude with big business and allow the latter to poison the environment of other people - without charge. without recognition that there has been no ownership rights to the biosphere given or traded away and therefore no right has been given to pollute or degrade it.<BR/><BR/>(iii) Free trade cannot exist where different participants in trade are taxed at differing rates.<BR/><BR/>And so on.<BR/><BR/>As for YNS' definition of 'poverty'. Hey! The loss of 3 million hectares of native forest and jungle per year in Mexico is not just Mexico's loss. It's our loss. <BR/><BR/>It's poverty. No fraudulent accounting system can cover that up.<BR/><BR/>If you want to live on $2/day 'younotsneaky' go ahead. Your commitment to such a level of income must surely also see you advocating the complete openness of the border between the United States and Mexico. After all, if $2/day is good for those down South it must surely be good for everyone!<BR/><BR/>"<I>“the most serious consequence of NAFTA has been its failure to protect the rights of workers as promised by its supporters. To attract investment to the maquiladoras, Mexican government authorities cooperated with investors and compliant official unions in maintaining low wages, reinforced with a system of labor control. According to Martha Ojeda, director of the Coalition for Justice in the Maquiladoras, the government-mandated minimum wage for workers on the border is about $4.20 a day, the same as 10 years ago. Ojeda estimates that a majority of maquiladora workers earn close to this wage. A study by the Center for Reflection, Education and Action, a religious research group, found that at the minimum wage, it took a maquiladora worker in Juarez almost an hour to earn enough money to buy a kilo (2.2 pounds) of rice. A gallon of milk, which costs $3 in a Tijuana supermarket, requires five to six hours of labor. To enforce this system, maquiladora workers are required to belong to unions that have no intention of raising low wages or ending dangerous working conditions. Throughout NAFTA's 10-year history, workers have organized independent unions, willing to fight for a larger share of the enormous wealth the factories produce. But these efforts have been met with firings, plant closures and even physical violence. Ten years of hearings held under NAFTA's labor side agreement have documented extensive violations of labor rights. In those few instances in which workers have successfully formed independent unions, as they did at Tijuana's Han Young plant in 1998-9, their strikes were broken, despite guarantees under Mexico's Constitution and federal labor law…” </I><BR/><BR/>NAFTA's Legacy -- Profits and Poverty, by David Bacon<BR/>Published on Wednesday, January 14, 2004 by the San Francisco Chronicle<BR/>http://www.commondreams.org/views04/0114-04.htmMyrtle Blackwoodhttps://www.blogger.com/profile/07427043367624101075noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-18816588562254961052008-01-19T21:07:00.000-05:002008-01-19T21:07:00.000-05:00The comment trail seems to have led to Mexico and ...The comment trail seems to have led to Mexico and its NAFTA experience. That's certainly worth debating, but all sides should be aware that this is not fundamentally about "free trade". NAFTA differs from pure trade liberalization in many respects, and Mexico's policy shifts are about more than just trade.<BR/><BR/>And one more reply to YNS: by trade balancing at the margin, I mean that a perturbation that, say, increases exports by a certain amount would also increase imports by the same amount. The use of marginal analysis here is the same as in economics generally -- changes in some magnitude rather than the magnitude itself. Hence, in calling for models in which trade does not balance at the margin, I am looking past models in which the aggregate trade balance is fixed (for instance by global portfolio preferences), and only the composition changes in response to micro factors. There would be no Keynesian feedback in such a world from trade to the volume of employment or national income.<BR/><BR/>I apologize for using economic jargon. It's easier for me to write but perhaps harder for many of you to read.Peter Dormanhttps://www.blogger.com/profile/00093399591393648071noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-67682356172317541972008-01-19T15:46:00.000-05:002008-01-19T15:46:00.000-05:00However, the numbers I posted above on poverty rat...<I>However, the numbers I posted above on poverty rates in Mexico are about as good as you're gonna get so if your numbers disagree the problem is with them.</I><BR/><BR/>No problems then with an income rather than basic needs approach? No problem using PPP which aggregates prices of all commodities?<BR/>No problem with reliance on limited often questionable national data sets?<BR/>No problem relying on data series (WDI) provided by an institution which has been in neoliberalism's vanguard?<BR/><BR/>Gee, next I'll hear that tens of millions in Lat Am have been anti-IMF, anti-WB because these institutions have helped them so much.<BR/><BR/>Does X. Sala i Martin still believe that world poverty has been essentially eliminated or has he come to some senses beyond the ideological?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-68421295906755807372008-01-19T14:58:00.000-05:002008-01-19T14:58:00.000-05:00YNS,Both links are PDFs, not just the second, and,...YNS,<BR/><BR/>Both links are PDFs, not just the second, and, having spent enough time in different parts of Mexico among different social classes from 1970s on, I put some trust not only in data but in 'my lying eyes' - neoliberalism has been a disaster and not only there. Why continue trying to justify evident failures or is a 'save the theory' sort of thing.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-25498965644088014952008-01-19T13:01:00.000-05:002008-01-19T13:01:00.000-05:00The figures are from WDI. They're PPP adjusted and...The figures are from WDI. They're PPP adjusted and yes they control for inflation. They do not adjust for cost of living differences between rural and urban areas but you could maybe find rural and urban price indices out there somewhere and adjust them.<BR/><BR/>And yes it would be interesting to consider various other poverty thresholds but for that you pretty much need data for an entire income distribution, or at least quintiles, which is harder to obtain (at least right off the bat). I doubt however that this would affect the NEGATIVE TREND in poverty rates in Mexico since mid 80's. <BR/><BR/>You can look at Sala i Martin's Kernel estimates of world, including Mexican, income distribution (derived from quintile data) by clicking the "Evolution of the World Distribution of Income" applet on his home page (http://www.columbia.edu/~xs23/Indexmuppet.htm)<BR/>These numbers have been critizied but it's not clear which direction the estimates might be off in.<BR/><BR/>Anyway taking those estimates at face value, for Mexico, you see the following:<BR/><BR/>early 1970's - Income distribution is triple peaked. That is there are actually 3 very distinct income classes. The poor, the middle class and the rich and these do not blend into each other.<BR/><BR/>mid 70's to 1980 - Left end of the income distribution moves right as the 'poor' catch up with the middle class. This is pre-liberalization. Poverty rate drops during this period.<BR/><BR/>early 80's to 90's - the entire income distribution stays in its place and just get higher (reflecting population growth). But the "top poor" keep moving left and merging with the "lower middle class" turning the distribution into more of a bi modal one. You also see some right ward movement at the left end of the distribution during the second half of the decade. This is the 'first wave of liberalization'<BR/><BR/>90's to 2000 - The left tail, and to some extent the middle class start moving right again, increasing their incomes, though not as fast as in the 70's. This period includes NAFTA and the second wave of liberalization.YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-66404759303874529762008-01-19T11:41:00.000-05:002008-01-19T11:41:00.000-05:00YNSThese statistics on Mexico you cite what exactl...YNS<BR/><BR/>These statistics on Mexico you cite what exactly are they the best measure of? Poverty rates or the percentage of people living below $2 a day (PPP adjusted)? If as a suspect it is the latter, what exactly does living on this income mean? What if you look at people earning $5 or less? Do these numbers take into account cost of living disparities between urban and rural areas? How is inflation, especially in foodstuffs, factored in? I ask because you don't cite your figures so I can't really check myself.Unknownhttps://www.blogger.com/profile/15696496979639362264noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-48920024605478892302008-01-18T22:44:00.000-05:002008-01-18T22:44:00.000-05:00juan the first link doesn't seem to work. And unfo...juan<BR/> <BR/>the first link doesn't seem to work. And unfortunately because I am traveling this weekend I can't open pdf files so I can't read the second one. However, the numbers I posted above on poverty rates in Mexico are about as good as you're gonna get so if your numbers disagree the problem is with them. Poverty in Mexico has been going down since the mid 80's or at the very least early 90's.<BR/><BR/>Peter,<BR/><BR/>I suspected you wanted something more. I gotta say I'm not sure what it means for trade to balance at the margin, as opposed to just balance, as in Value of Imports = Value of Exports. It sounds like you want a multi good, multi factor general eq. model of trade. Well, you're right there, that is hard and can go anywhere.<BR/><BR/>Also on Joan Robinson and the possibility of welfare improving, output raising, beggar thy neighbor tariffs in a situation where there is no full employment; ok fine. But then "now" - meaning essentially the past 15 years - is the wrong time to bring it up. During the Great Depression sure, during the 70's just maybe. But in the time of 4.5% unemployment?<BR/><BR/>I'm not sure if this comment's gonna be signed automatically so...<BR/><BR/>YNSYouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-25032560782933530992008-01-18T22:15:00.000-05:002008-01-18T22:15:00.000-05:00By the way. I note that Landsburg does not define ...By the way. I note that Landsburg does not define what 'free trade' is. One sure way to identify ideology over genuine intellectual thought is to challenge these folk to define their terms.<BR/><BR/>According to Wikipedia Landsburg is " a self-described "hardcore libertarian" who received his PhD at the University of Chicago in 1979. The University of Chicago is a private university founded by John D Rockefeller and is particularly reknown for its right-wing 'free market libertarian' ideologies promulgated by Milton Friedman. Half-thoughts put into effect by Paul Volcker in the early 1980s and in Chile in the early 1970s with disastrous effects.<BR/><BR/>The Wikipedia definition of 'free market' says: "A free market is a market in which prices of goods and services are arranged completely by the mutual consent of sellers and buyers. By definition, in a free market environment buyers and sellers do not coerce or mislead each other nor are they coerced by a third party.[1]"<BR/><BR/>All sounds well and good but one needs easy and unfettered access to the law courts to ensure a lack of coercion. The Chicago school of economics liked to pretend that that was the sort of world we actually have. Ideology all the way.<BR/><BR/>The Rockefeller funding of institutions doesn't tend to be free of pressure to come up with the 'right' theories, after all.Myrtle Blackwoodhttps://www.blogger.com/profile/07427043367624101075noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-17206269310559341142008-01-18T21:18:00.000-05:002008-01-18T21:18:00.000-05:00Note: the wording of some of these paragraphs com...Note: the wording of some of these paragraphs comes from various articles on the topic. For example Naked Capitalism, Financial Times, commenters on the Roubini blog and other sources.Myrtle Blackwoodhttps://www.blogger.com/profile/07427043367624101075noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-48410240955695827062008-01-18T21:06:00.000-05:002008-01-18T21:06:00.000-05:00Landsburg says: "Imagine what it would be like to...Landsburg says: "Imagine what it would be like to trade freely with your neighbours". Without any form of restriction or regulation.<BR/><BR/>Well I've been struggling to find an example of this 'free trade' in existence today. Fellow citizens in Tasmania can't hawk their wares in the main shopping centres or street to street. We can't bid for forest resources alongside the multinationals here. We can't grow certain crops and we're not allowed to build more than one house on our land titles (if we can build a house at all).<BR/><BR/>However I must qualify this by saying I have indeed found a truly excellent example of 'free trade' at work. In the world's financial markets. We can observe this wonderful mechanism in the credit-default-swap markets. Here's the summary I've compiled on this form of trade:<BR/><BR/>· Present accounting allows for the creation of imaginary capital on the global consolidated account (?) by derivative contracts.<BR/><BR/>· Present standard accounting practice and the regulatory methods of the Office of the Comptroller of the Currency (OCC) provide a shield of opacity allowing the problems to lie unrevealed for an extended period.<BR/><BR/>· Derivatives trade ‘over the counter’ (OTC).<BR/><BR/>· There exists the possibility to add more derivatives when cash flows prove a problem. Thus delaying the day of financial reckoning.<BR/><BR/>· There has been explosive growth in the market for derivatives.<BR/>In the most recent report of the OCC as of Q2 of 2007, the derivatives market was shown to have increased to more than $160 Trillion notional from less than $152 Trillion in the prior quarter for the top 25 US Holding Companies alone.<BR/><BR/>· Derivative contracts represent a stream of cash flows usually over a period of years.<BR/><BR/>· Derivative contracts are dependent for their valuations on the same sort of credit rating apparatus that has been called into question in the instance first of subprime mortgage securities, then of asset backed commercial paper, next of CDO's and other structured credit products. <BR/><BR/>· There is good reason to suspect that the creditworthiness of many counterparties to these transactions has been artificially raised in a way that will not withstand the actual sort of unfolding financial stress , which could be characterized simply as financial reality.<BR/><BR/>· It isn't clear how securities laws on fraud and insider trading would apply to credit-default swaps, because it's not clear in what way they are even securities; they are private contracts.<BR/><BR/>· Lack of jurisdiction. Of all the regulatory concerns, fraud and insider trading are low on the list. And the idea that the SEC and banking regulators had no reach is spurious. Had they taken a dislike to this market, they could have curtailed it by requiring imposing high regulatory capital be held, which would have rendered the business uneconomic. Similarly, there is a case to be made (and I am surprised no one has argued it) that this is an unregulated insurance market, but going down that avenue might have created massive turf wars between Federal banking and securities regulators versus state insurance authorities. The biggest problem with the lack of jurisdiction is that it isn't at all clear who if anybody has the authority to address any problems that occur.<BR/><BR/>· Modest revaluations – much more modest than those witnessed in the traded debt markets in July-November 2007 – may result in major losses of capital and real questions of solvency. This is due to the size of the market and the degree of leverage at all levels of business and government.<BR/><BR/>· Chain reaction defaults are on the cards, with untested consequences.<BR/><BR/>END<BR/>See what can be achieved when people with money to trade can do what they like!Myrtle Blackwoodhttps://www.blogger.com/profile/07427043367624101075noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-3851791154142884262008-01-18T20:10:00.000-05:002008-01-18T20:10:00.000-05:00Peter,Looking through "Wage Inequality in Post-Ref...Peter,<BR/><BR/>Looking through "Wage Inequality in Post-Reform Mexico", the authors' dependence upon INEGI data strikes me. That institution is very highly politicized with data series that are, lets say, not exactly comparable.<BR/><BR/>So far as changes in poverty in Mexico, I would put more faith in Tellez, Rinderman and Cruz, <I>LA ECONOMÍA MEXICANA DESPUÉS DE 10 AÑOS DEL TLCAN Y REFLEXIONES SOBRE LA AGRICULTURA: Lecciones de la Experiencia<BR/>del Consenso de Washington y del TLCA</I>,<BR/> http://www.chapingo.mx/ciestaam/pubpiai/TLCAN/LAECONOMIAMEXICANAENELDECIMOANIODELTLCAN.pdf<BR/><BR/>And<BR/><BR/>Boltvinik y Damián, <I>La pobreza ignorada. Evolución y características</I>, Universidad Autónoma del Estado de México, Centro de Investigación y Estudios avanzados de la Población, 2001, <BR/>http://redalyc.uaemex.mx/redalyc/pdf/112/11202903.pdf <BR/><BR/>The portion of Mexicans in poverty fell 1968-1981 but has risen dramatically since. If the Boltvinik paper included 2001-2002, numbers would be higher still, would be similar to my own observations of what transpired in the State of Chihuahua and other areas.<BR/><BR/>While you may not be advancing ideas that wage inequality stabilized because of the severe 1994-5 crisis, those who do may find basis in INEGI data but, given the extreme impact said crisis had upon tens of thousands of small businesses, are being just as fanciful as a Ministry of Finance conference call which I listened to in 1995.<BR/><BR/><BR/>YNS,<BR/><BR/>How does Stolper-Samuelson apply to transnational networks and intracorp 'trade', i.e. internal transfers which cross borders.<BR/><BR/>Would anyone care to list its primary assumptions?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-5873430788462723352008-01-18T15:23:00.000-05:002008-01-18T15:23:00.000-05:00Either it means something to be an American or it ...Either it means something to be an American or it doesn't. Montana may have different regulations that California, that doesn't mean a Montanan is for economic justice purposes to be placed in the same position as Mr. Zhou.<BR/><BR/>I find it interesting that National Borders are unifying when it comes to such things as national defense or immigration, on those issues we have clear lines of mutual interests. We don't distribute the protective benefits of the military unequally, it is in this case understood that equal protection is in the national interest, the same for policing (though God knows response times can vary). These are widely seen as public goods.<BR/><BR/>But while the wealthy are content enough to allow the poor and the middle class to risk their lives serving in the military or the police keeping them from bodily harm, when it comes to such things as distributing the benefits of trade in a similarly equitable fashion they freeze up.<BR/><BR/>Why as a nation do we freely subsidize such things as Public Health Agencies which give such things as low cost vaccinations and inspect kitchens but avoid paying for other routine preventive health care. And the cynic in me says the reason is pretty simple. Rich people are at risk from infectious poor people or infectious restaurant workers. Jose's Type 2 Diabetes becoming his problem, while Jose's Type B Hepatitis becoming a social problem to be addressed with tax money.<BR/><BR/>I see this as being pervasive and perhaps invisible to those within the bubble: social goods which benefit them are natural functions of government, social goods which don't are not. They dress it all up a lot but it really ends up looking that way.<BR/><BR/>Why aren't civil court litigants required to pick up 100% of the cost of having contracts enforced. Easy you just redefine 'government' to mean 'national defense and private property rights'. Well sorry while defense is relatively organic to government, a particular style of political economy is not.<BR/><BR/>The United States is a representative democracy where within constitutional limits the people can and occasionally do adopt policies of self-interest. A good reason for the beneficiaries of free trade to push for better distribution is that in the end we can structure a tax system in any number of ways.<BR/><BR/>Over the last 28 years the Economic Right has successfully sold a message to the democratic majority, that message is 'equity', whether expressed as 'trickle down' or 'rising tides' fair outcomes were supposed to be the natural outcomes. Well to a disturbing degree people are now coming out of the shadows and claiming they never meant a bit of it, they earned everything they have and they have no intention of honoring the implicit compact they made. They were lying, but what of it? That's just the way it is.<BR/><BR/>Well that is just the way it was. If the vast majority draws material benefits from higher levels of taxation at the cost of the wealthy minority we have the power to tax. Lets rewrite Landsburg a little bit:<BR/><BR/>"For four decades economic bullying has been a profitable occupation. All across America capitalist bullies have built up skills so they can take advantage of that opportunity. If we tough the bules to make bullying unprofitable, must we compensate the bullies?"<BR/><BR/>Well 'bullying' is a pretty good description of the tactics of the economic right in recent decades. You could sum up Landsburg whole piece as "Fuck you you hosing loser, what can you do about it" Well for starts we could tax capital at Reagan era rates. If they want to play rough we have legal political means to put them in their place. This simple 'I've got mine' dismissal might just backfire.Bruce Webbhttps://www.blogger.com/profile/13222670342780912788noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-87101384567604433422008-01-18T14:24:00.000-05:002008-01-18T14:24:00.000-05:00Anon,What is it that makes you think that Megan Mc...Anon,<BR/>What is it that makes you think that Megan McCardle's contribution to the discussion has any greater validity than any other? Still lots of suppositions thrown together with a few insulting innuendos. Very professional, to say nothing of its scientific certainty.Anonymousnoreply@blogger.com