Brazilians

A long time ago, I ran across the moanings of some white racist whose name I have long forgotten. Such moaning amounted to: 'if all this inter-racial marrying keeps going on, we'll all look like Brazilians!' It was not said, as you might expect, with warm and fuzzy expectation. While racial harmony may not be (or could be; I've not researched it) the case in Brazil, reporting today described just that in the great state of Hawaii. It's well worth reading.

Some highlights of the reporting:

Hawaii also had the highest percentage of mixed-race people by a long shot in the country.

Forty percent marry someone outside their own group.

It also probably helped that Hawaii never had any laws against miscegenation.

If you think that resources are limitless and that you don't really need other people to survive -- that they're disposable because the bounty is endless -- you may be inclined to treat people as things.

To quote Donne: "No man is an island entire of itself". But realizing that this blue planet makes rather a large difference. It bears remembering that (nearly?) all wars have been fought over religion and access to natural resources.

Sleep With The Fishes

So, one might ask, what is the defining characteristic of Mob Bidnezz? Extortion? Yo, you'll get your trash hauled by Vinny? And so forth. As discussed more than once in these endeavors, the primary reason for having a Damn Gummint (beyond the basic security issues) is for it to do that which the private sector won't or can't. Mostly, one might argue, this amounts to extracting from bidnezz the costs of externalities from the few and protecting the many.

The Sherman Antitrust act was, by most accounts, the first attempt to rein in bad bidnezz behavior. Here's a quote from the wiki, itself a quote from a Supreme Court ruling:

The purpose of the [Sherman] Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself.

I expect that the increasing right-tilt will find a way to deny that obvious conclusion.

Well, today brings us another example of out of tune fiddling by The Manchurian President (Donnie fiddles while ...). Methinks the unintended consequences were intentional. After all, he made his money (however much it really is) by flummoxing local gummint.

And surprise, suprise there's a body of research showing that collusion in the open is cheaper, easier, and titularly legal:

The scholarship suggests that more transparency in health care could backfire, causing prices to rise instead of fall.
The Danish study in particular comes up a lot.
[here]

The punch line, from the reporting:

They could collude with the sort of direct communication that would make such behavior illegal.

Naturally, if your health care is from an HMO, you, as patient, have no say in who or how you get your care. Unless, naturally, you're willing to pay the vig of going 'out of network'.

Here's some data:

In a report released by the Health Care Payment Learning and Action Network (LAN), 43 percent of payments to health systems came from traditional fee-for-service (FFS) payment models in 2016, down from 62 percent the year before, while alternative payment models' (APMs) share increased from 23 percent to 29 percent.

All of the network based models coerce the patient into the organization's chosen providers. Period. And thus 'transparency' will lead to open collusion. A method familiar to The Manchurian President, of course. "Russia if you're listening..."

My Name is Bonds, Worthless Bonds

Today gives us an advert (the whole pg. A5 in my dead trees version) in the name of Morgan Stanley's Vishy Tirupattur. The gist of the advert is that corporate bonds are still really, really good.

Over the last 10 years, interest rates have been unusually low, spurring companies to borrow heavily and investors to load up on those bonds.
...
That doesn't mean corporate bonds are too risky -- it means investors have to be smarter than ever...

What is missing from the advert: how have corporations used all that moolah. Aye, matey, thar's the rub. One report describing where the moolah went.

Since 2010, thanks to the policies of low interest rates practised by the Central Banks of the most industrialised countries (Federal Reserve (The Fed) in the US, European Central Bank(ECB), Bank of England, Bank of Japan, Swiss National Bank, among others), the big Corporations have become massively more indebted. In the U.S. for example, corporate debt increased by $7,800 billion between 2010 and mid-2017.

What have they done with the money? Have they invested in research and development, in production, in the ecological transition, in creating descent jobs, warding off climate change? Not at all!

If you squint, at least I had to, you can see that 'capital expenditures' went from 40% of cash to 20%. The beauty of financial engineering.

I Bet You Thought It Was Over

Yeah, I bet you thought so. The rush to gain large gains from real estate. There've been occasional reports about the large cash holders scarfing up houses during the Great Recession, and turning them around at large premiums. Today brings yet another. Atlanta, a real estate hotbed for some time, this time. It runs more than two pages.

At first, the flood of capital seemed like a one-time opportunity arising from the collapse of the residential real estate market. Once the bargains dried up, the investors were expected to stop buying.

Except they didn't stop. Last year, investors bought about one in five starter homes in the United States (defined as priced in the bottom third of the local market), according to CoreLogic. That was even higher than in the early years after the Great Recession and about double the level of two decades ago.

So, here we go again. The Manchurian President must be in love with this sort of thing. And may well be why he's been pounding on Powell: real estate is largely non-capital capital. That is, it isn't productive in the real productivity sense of a steel mill or auto plant. The only way to make money on real estate, especially residential, is for the buyer to have enough income to pay the nut. We got The Great Recession just because mortgage companies, thence banks, fiddled the numbers to increase the prices of houses. Thanks to Blythe Masters and her CDS fiddle (yes, a 10 year old piece, but at least as relevant today), the conflagration couldn't be contained. Not that anyone involved understood the endemic nature of what they were doing. The triumph of micro-anaylysis over macro. And further proof that a free market disappeared with the barter system.

Without a compliant financial regulatory authority, some or all of that capital would end up being used to build steel mills and auto plants. But, naturally, The Manchurian President and his ilk would rather engage in financial engineering than building infrastructure. Why is this surprising?

Another Lightbulb Shines

Somehow or another, I've gotten the O'Reilly Data Newsletter (email version). This latest issue includes this:

The central idea behind multiverse databases is to push the data access and privacy rules into the database itself. The database takes on responsibility for authorization and transformation, and the application retains responsibility only for authentication and correct delegation of the authenticated principal on a database call. Such a design rules out an entire class of application errors, protecting private data from accidentally leaking.
[my emphasis]

What's surprising, even I may say shocking, is that Codd's RM from nearly the beginning was designed to implement just that: data integrity co-located with said data; such a deal. For some decades now, coders have subverted the RDBMS into just a conveniently backed-up file store, whilst keeping data integrity firmly moated in client code.

I can't say that I'd choose MySql as the engine, though.

Please God, Make It Look Like the Good One

Bob Muenchen has been keeping track of Point-Click veneers to R. These are not RStudio alternates, but attempts to behave like SPSS. This is, I guess, support for my notion that the principle strength of R is its bevy of built-in (including contributions) commands, rather than as a programming platform. We'll see.

Figures Don't Lie, But Liars Figure

Prodded, in significant measure, by the inane behavior of The Manchurian President, I grow ever closer to believing in the NYT rather econometric models for the purpose of 'predicting' the future.

I do not think that the currently popular DSGE models pass the smell test. ... The advocates no doubt believe what they say, but they seem to have stopped sniffing or to have lost their sense of smell altogether.
-- Robert Solow/2010

Of course, DSGE has been the Flavor-of-the-Month within the data driven economic prognostication cabal for some time. Solow's experience notwithstanding.

Which situation leads me to consider another mode of analysis: game theory. There's the famous book, co-written by an economist. If one views non-Mother-Nature-based data driven analysis as on the razor's edge of credibility, as is macro-analysis, then one's analytical method must needs be event based. Thus reliance on the NYT, and history, to guide the way.

All of which led me to a recent (as in, a few years rather than decades) post delving into the problem.

The problem, Boumans explains, is that Morgenstern's benchmark was observations in the natural sciences, which were planned, designed, and guided by theory. Errors were the unsystematic result of human mistake, for nature "doesn't lie deliberately." But economic agents do, Morgenstern lamented, which adds to the lack of designed experiments, errors from questionnaires and instruments, and lack of definition.

Sound a bit familiar? So, yes, mine is not a new or unique observation, just independently arrived at. Why is it that the mainstream pundits remain befuddled by the continuing rush to Treasuries, and the resultant dive in long term interest rates? Apparently, such behavior is not amenable to analysis from existing time series. Who woulda thunk it?

Or, in varying syntax, it is said: 'econometrics has predicted 9 of the last 5 recessions'.