Ragging on Ritchie

But the consequence was that the US stock markets, which were still open at the time that the announcement was made, rose by approximately 9%, although they did not recover all the losses that Trump inflicted upon them despite doing so.
….
All these factors should have complicated and reduced market euphoria last night. It appears that they did not. For anyone who claims that markets are efficient and take all factors into account when pricing because they are possessed of a large amount of information about future actions, all of which they can accurately price, yesterday was the clearest indication that such an idea is complete and utter nonsense. Markets did no such thing. They took one piece of information and reacted to it without ever seeking to contextualise what might be happening.

The efficient markets hyupothesis says that generally known information is already in market prices. Stronger versions say that privately known information is already in market prices. Therefore it is new information that moves market prices.

EMH doesn’t say market prices are *right*. It says market prices invclude all the information folk have and what they think about it.

So, new information moves market prices is not a disproof of the EMH. It’s rather a proof of it….

The figures show a stark regional divide when it comes to child poverty, with the 20 worst affected areas all in the North of England and Birmingham. Just 1% of children in Godalming Holloway in Waverley and Oatlands and Burwood Park in Elmbridge were living in poverty last year.

Child poverty is relative poverty – under 60% of median household income adjusted for size of household and before or after housing costs to taste.

But it is *national* median household income. Which means that it grossly overstates poverty in low living cost areas of the country and grossly understates it in high living cost/high wage.

But expecting a political economist to understand the politics of economics is too much, no?

So asks the Elyian Tuberosum. His answer is no. Instead, at a time that inflation is above target we should just print more money and spend it.Which is wrong even by MMT standards which is impressive.

The world has reacted to Trump’s deliberate act of massive risk creation by sending the message that it will not buy US debt. The result is that the price of that debt is falling, and so the effective interest rate on it is rising very rapidly.

This is the exact opposite of what Trump says he wants. He says he wants the US interest rate to fall by a lot. In bond markets, you cannot achieve that by alienating the people who might buy your debt, and that is what he is doing.

So, long term interest rates are not, in fact, under the control of democracy or of politics. They are, in fact, market controlled. So doesn’t that blow a hole in the formerly Tre Professore’s pronouncements?

Of course Trump is also missing a point here. Which is that, by definition, if you have a trade deficit then you’ll have a capital surplus. And if you’ve not trade deficit – the thing he wants to achieve – then you’ll not have a capital surplus. That line of foreigners willing to lend you money disappears.

We got all types of wrong here, both Country and Western.

I don’t know if you’re a fascist but I can see you promoting false narratives.

This from the man who insists that banks do not actually need to have deposits in them.

Many people might think that this will help offset the inflation that Trump appears intent on creating, and to an extent, that is true if this price is sustained, as it would seem that traders think it might be.

There is, however, another quite surprising consequence. At $62 per barrel, shale oil production in the USA is not economic. Donald Trump might have said “Drill, baby, drill”, but no one is going to in the economy that he is creating.

I cannot help but be just a little bit pleased about that. A world without excessive oil consumption is a better place.

Every cloud has to have a silver lining, somewhere.

Oh, right.

The economic price for shale oil in the US, or the breakeven price needed for profitable drilling, varies but generally falls within a range of $35 to $50 per barrel, with some areas like the Permian Basin having even lower breakeven prices.

Now, yes, we know that AI is more than a nit dodgy especially the Google version. But which of the two do we think is hallucinating here. AI or Spud?

Government debt is very simply the difference between the total cumulative spending by government into the economy to date less the total cumulative taxation claimed by the government to date.

It isn’t a figure that has arisen in one year. That’s the deficit. It is a cumulative total that has arisen over a period of more than 325 years now. And the consequence of that debt is that we have outstanding at this point of time, something in excess of 2 trillion pounds of net difference between total government spending to date and total government taxation to date, meaning that overall we have been undertaxed by more than 2 trillion pounds as a result, which most people would probably think is quite good news.

This is from the man who insists that there is a positive multiplier from government spending. Even, that government spending pays for itself because wages to nurses are taxed, nurses spend the remainder which is then taxed and. Then he comes up with the proof that the multiplier doesn’t exist.

As is also very clear from my opinion expressed here over the years, I have long thought that stock markets are substantially overpriced because they are little better than Ponzi schemes, with financial markets having been engineered so that a steady inward flow of funds from pension contributions, in particular, will ensure that the price of a limited supply shares tends to move ever upwards until a fundamental market correction happens.

Except there’s a constant outward flow of funds as people eat the capital in their pensions in their retirement.

He just isn’t capable of grasping the most basic thing about pensions, is he?

I did so because, in my opinion, Trump is trying to create either a technocratic autocracy or a white, male, Christian in name only (Chino)

Naming a dystopia after a type of trousers might not catch on you know.

Despite Lieutenant Blouse and his desire to emulate General Cardigan.

I have yet to see any comment in the media about one vital dimension to the new tariffs that Trump is imposing on many countries in the global south, including India, Bangladesh, Vietnam, South Africa, Lesotho and others.

A common feature of almost every country in the global south is that their debt is denominated in US dollars. This is partly because commercial banks impose this upon them. It is also because the World Bank has done so as well. The result is that these countries have to heavily promote their export activities to earn the dollars to make repayment of their loans, and the interest due on them. It is, as a consequence, inevitable that they must run trade deficits with the USA.

Nope. Not in the slightest.

It might be true that they have a trade surplus with the USA but it’s not necessary in the slightest. You can ship goods to other people, take the money you get from them, exchange that money for dollars and repay your loans that way.

Qatar runs a very large trade surplus, in $, from its natural gas exports. None of which – and haven’t been since 2016 – is to the US.

Again. Murph is presented with this barn door of a target and yet still misses.

I have already noted this morning that we need to be rid of neoliberalism if we are to have politics that cares about the well-being of people in this world.

Donald Trump’s tariff policy is an example of how things can go horribly wrong when somebody builds their worldview upon the assumptions implicit within neoliberal economics, which are intimately related to neoliberal politics.

An interesting observation. Interesting in that sense of antagonistic to reality.

There is an assumption, often repeated in neoliberal economic papers published in leading peer-reviewed journals, that policy changes created as a consequence of the imposition of neoliberal ideas have an instantaneous effect.

Erm, no, not really. That’s rather more the New Classicals. But even there it’s a modelling exercise, a jump to the new equlibrium, rather than a supposition that that’s the way reality works.

And yes, you’re right, the man’s obviously ignorant:

So, it would be assumed that if Donald Trump created a tariff that increased the cost of car imports into the USA, meaning that the cost of European, Mexican, Japanese and Korean cars rise in that country, then US car manufacturing can increase its capacity instantaneously to meet the new demand that there will be for their products as a consequence of their prices now being relatively lower.

This assumption is very obviously completely absurd. It takes years to increase the capacity for car manufacturing in the USA, but neoliberal economists assume that this is not the case.

Gosh, really?

Capacity Utilization:
The capacity utilization rate for the automobile and light-duty motor vehicle sector (NAICS = 33611) was 65.2599% in Q4 2024.

Ho Hum:

I have news for these people. That is not how the world works. You might get into a major economic journal making such a stupid mistake, but in reality, it will take years for Ford, General Motors, and others to up their production to meet demand for US manufactured vehicles,

What’s truly interesting here is that Spud’s been offered a barn door to shoot at and he still misses. That’s impressive…..cars are the very thing where the US currently has substantial spare capacity.

And talking of interest, UK banks are believed to have had total interest income of around £200 billion in 2024. This is around 7 per cent of UK GDP.

That’s net interest. I’s also not comparable to GDP.

The percentage figures I note may not be completely additive for all sorts of reasons – not least because GDP itself is a dubious number – but they imply that more than twenty per cent of UK GDP is represented by rents extracted in the form of interest and rents, both of which are heavily overstated as a result of the excessive rates set by the Bank of England.

But he then compares it.

GDP is calculated as production, or consumption, or income. Bank interest margins are none of those three. Therefore they aren’t counted as any of those three.

Sigh.

Advertising makes you unhappy.

Let’s be clear what I mean. The advertising industry is the only one in the world that sets out to deliberately make you unhappy to achieve its goals.

How does it do that? Well, very simply and very straightforwardly, what the advertising industry tries to do is persuade you that you are inadequate.

What it says  is that whatever you have right now that is being used by you to fulfill your needs, or maybe your wants, is not good enough. You need something else, which is whatever it is, of course, that the advertising industry is trying to promote. And so, they try to make you feel as though you’re unattractive, you’re a failure, you’re unsexy, whatever it might be.

Other than having to have Phil Collins as the soundtrack this does not make me unhappy:

Man’s ignorant of course.

Tariffs are regressive taxation – so no wonder Trump likes them
Posted on April 2 2025

Tariffs are regressive taxes.

Regressive taxes are those where the tax rate decreases as the taxpayer’s income increases. In other words, people with lower incomes pay a higher percentage of their income in taxes compared to those with higher incomes.

Of course, when considering the EU’s tariff barriers this will not be a conclusion….

The UK economy is stagnant, as the data shows.

If we want it to grow, we have to do one thing, and that is to redistribute the wealth of those who live in our society. In my opinion, that is about as close to a statement of economic fact as anyone can offer, because there are no such things as economic facts, but the likelihood that such a policy will work is so high that I can almost call it one.

This is toss.

So, the rich save some of their income, the poor spend all of it. Thus if we move money from rich to poor we increase demand. True. About 15% of the sum moved, that sort of range (rich folk savings rates might be 15% of income, poor 0).

OK.

But more demand only creates growth when there are spare resources in the economy. If we’ve not spare resources then more demand just causes inflation – this is in MMT so, obviously it must be true. We have inflation already, therefore we’ve not a deficiency of demand nor spare resources. Thus growth will not be the effect of stoking demand, inflation will be.

What we actually require is an expansion of supply and that means investment. Which is financed by savings which means that, acshully, we want to take money off the poor, give it to the rich who will save and then invest it.

So, you know…..

Spud:

Second, indisputably, AI is going to disrupt many processes. It already is my own. I find it useful. But I question Gates’ observation. It presumes that answers are required within a paradigm. AI is programmed to find answers within such frameworks, and will always have problems working outside them. So, it can, for example, most likely work out a course of treatment for type 2 diabetes within the existing framework of thinking on that issue. But given that those treating this disease do not usually point out that it is entirely reversible in most cases – as it, as a matter of fact, is – because to prevent this disease would deny big pharma and the medical profession the massive gravy train of income that this form of diabetes currently provides to them, don’t expect AI to disrupt the status quo any time soon. It will not be programmed to do that.

So AI won’t tell us about diabetes II and diet. OK. Grock:

is type II diabetes curable through diet

Type 2 diabetes is not “curable” in the traditional sense, but it can often be effectively managed or even put into remission through diet and lifestyle changes. The key is to improve insulin sensitivity and regulate blood sugar levels, which can sometimes reduce or eliminate the need for medication.
Research shows that a low-calorie diet, particularly one that leads to significant weight loss, can help reverse type 2 diabetes in many cases. For example, a landmark study called the DiRECT trial (Diabetes Remission Clinical Trial) found that about 46% of participants who followed an intensive low-calorie diet (around 850 calories per day) achieved remission after one year, meaning their blood sugar levels returned to non-diabetic levels without medication. Remission rates were even higher—over 70%—for those who lost 15 kg (33 lbs) or more.

Etc, etc….

So, that assertion didn’t last long then.

Spud:

And they might then do something useful, like suggest people fundamentally change their diets, which is the answer to type 2 diabetes in a great many cases,

And what is it Grok has just said?

The NGOs have, however, been successful over the last few years, getting many of the world’s poorest countries to vote in the UN for this shift in power, even though it will almost certainly deliver results that may be worse for their tax wellbeing because tax havens will ensure that this is the case.

The consequence has been deadlock, which is precisely what these NGOs want, because as a consequence they can now campaign to their heart’s content for decades to come, knowing that they have secure employment whilst doing nothing whatsoever to solve the tax haven problem that does still persist in the world, although not nearly so badly as when John and I first worked on the issue. These campaigners have destroyed a viable solution, to which they no longer had the competence to contribute, and abandoned a solution-focused approach to tax justice campaigning and adopted a process-focused approach instead, which ensures that they have jobs for life.

So even the bureaucracies which Spud himself created have done what C Northcote said happens to all bureaucracies and they’ve done it in only two decades.

Therefore more of life must be run by bureaucracies.

Somewhere in there there’s a failure of logic.

I also stress that I know that there are exceptions to the general observations I make, but in this case, the generality is crucial because it is that generality which is defining what these organisations do, and what their funders appear to expect of them.

The conclusion, for those who do not have time to read all that follows, is that you would be wise to presume very few of these think-tanks have almost anything helpful to say at present on any of the significant problems that we face.

Again, I can offer exceptions, like Common Weal in Scotland, but they are notable precisely for this reason and because they have a conviction that overrides the generality that I note.

My conclusion is one that I have felt for a long time. If we are to get change, it is independent thinkers who are going to provide it. Gary is one of them. I suggest I am another.

That’s because there is no way on earth that these councils have financial problems due to meeting the cost of providing an appropriate education for children with non-standard educational requirements. They have financial problems because they have been inadequately funded by central government and a council tax system that is clearly not working appropriately, especially with regard to more expensive properties.

In other words, I am suggesting that the framing of this story and headline, which appears to imply children and their parents or guardians who stand up and demand what those in their care need, is wrong because it appears to blame those children for a financial situation for which they have no responsibility at all.

The answer is MOAR TAX rather than even the mildest suggestion that we – say – move to the short bus solution.

His first sentence is true. It can even be argued, in the very short term, that his second sentence is true. A static economy is ‘zero-sum’. But the consequences of redistribution from those with wealth to those who lack it are not static, and so his ‘truth’ only holds in the very short term. Thereafter, such a redistribution is bound to promote growth, because the redistribution comes from money that has been saved, and which is therefore not in use in the economy, into money that will be spent, thereby generating growth.

The conclusion Wolf offers is, therefore, wrong, with one caveat. Redistribution shatters ‘zero-sum’ economics because the marginal propensity to consume of those with money in the economy changes beneficially.

If the economy is – largely – at capacity then increased demand turns up as inflation, not more growth. Given that we’ve got inflation we can back-conclude that we at or around capacity.

Therefore, to gain growth we’ve got to increase capacity. Which means investment. Which is financed by savings, not by demand.

No, don;t give us all buggery bollocks about cash savings not financing investment – something that’s untrue anyway. Investment is, by definition, deferred consumption.

Sigh.