Dakryn's Batshit Theory of the Week

[Dak]

Don't buy for a moment that oil is "never going up again". Even if demand flatlined or continued to dip, countries like Saudi Arabia can turn off the faucet. As far as different types of energy, oil price declines hurt alternative energy, as ROEI is (currently) higher for alternative energy. If you remember, we had an explosion in subsidies and investment into alternative energy in response to 4-5$ per gallon gas.

Edit: I love the whole ridiculous mess surrounding "inflation/deflation". The first premise submitted is that deflation is a bad thing and that is followed usually by declarations we don't have enough inflation (if any!). Both of these are false. Not only is general inflation far above current official levels, the official level combines prices of a lot of non-essentials with some essential things - not exactly giving an accurate picture no matter how you slice it.

http://www.shadowstats.com/alternate_data/inflation-charts

http://www.zerohedge.com/news/2015-01-17/there-no-inflation-unless-you-eat-food-use-water-live-house-get-sick-go-school-or-do

I buy the same foods all the time, and as we buy a fair amount of meat, eggs, milk, butter, and fruit/veggies, it's been pretty obvious watching the price increases. Then you look at eating out, where now to get a decently sized combo is usually pushing closer to 10$ than 5$, or at mid level dining, where the tab for a family (with kids, not with teens) is inching closer and closer to 50$ once the tip is added.

 

[Einherjar86]

I'm not qualified to comment on this issue, but I can't imagine that it would have an impact on green energy sources. I have to think that the cost of shifting wholesale toward cleaner energy far exceeds the price of certain measures that oil companies can take toward forcing the prices back up.

 

[Dak]

I'm not qualified to comment on this issue, but I can't imagine that it would have an impact on green energy sources. I have to think that the cost of shifting wholesale toward cleaner energy far exceeds the price of certain measures that oil companies can take toward forcing the prices back up.

Well it doesn't happen overnight. Also, I don't think you are considering the outsized effects changes at the margins can have.

http://www.zerohedge.com/news/2015-01-20/whiplash-death-last-industrialist

The stuff specifically regarding oil prices, the geopolitical play and the effects and the market aspect, are pretty much spot on with my thoughts on the whole thing (except for that "last industrialist" bit of hyperbole at the very end).

 

[zabu of nΩd]

Moving this over from the "what are you doing" thread:

http://www.zerohedge.com/news/2015-01-16/about-strong-dollar

I think debt to GDP is important to consider:

From that perspective we've seen worse, and come back from it. It's not that hard to grow our way out of a ~100%-of-GDP debt. Also, a big part of the debt is health care spending, which has recently been absurdly high in the US relative to other developed countries. Give Obamacare a few years for the effects to surface, and we'll see how debt is trending by then.

http://www.zerohedge.com/news/2013-12-12/200-years-dollar-debasement

I actually just listened to an NPR podcast series on the gold standard. We went off of it because it led to massive outflows of gold from the banking system, which reduced the supply of money that could be paid to workers.

Here's a timeline of countries leaving the gold standard vs. when their per capita income started to improve:

It annoys me that people get shocked by graphs of the value of the dollar over 100 years, while completely ignoring things like productivity gains and increases in life expectancy over the same period. Inflation hasn't "bankrupted" America.

 

[Dak]

I don't think debt-to-GDP is a very good metric when you consider GDP factors in debt spending by the government. Currently it is somewhere between 30%-40% iirc. Another way to look at this, is that every additional dollar in debt also bumps up the GDP. Due to interest, this is not sustainable, but has been pursued because of a misbegotten faith in an elusive "multiplier", which has not surfaced despite all this QE. Secondly, the only reason WWII looks like a spike rather than a mountain is because of
A. A return to a nominal gold standard (Bretton Woods)
B. The industrial capacity of the developed world had been bombed to bits, except the US.
C. The US took advantage of its position in the Bretton Woods agreement to break it and export inflation. The game was up via the Nixon shock.

PCI in general isn't much good either. It doesn't take into effect massive wealth disparities, does not have to take inflation into account, etc.

I do think it's interesting that the effects even by this metrix are pretty mixed outside of the US and GB, and the world was pretty happy to go back to at least a nominal gold standard for a while.

"Real wages" metrics are a much better indicator of the effects of monetary policy, and real wages have been stagnant pretty much since the Nixon shock - even with consistently "massaged" inflation statistics. If we use more legitimate measures of inflation, real wages for ~95% of America is negative.

 

[Einherjar86]

Well it doesn't happen overnight. Also, I don't think you are considering the outsized effects changes at the margins can have.

Well, the comment seemed to be considering the short-term, which was what I was responding to. To be totally honest, I thought I was actually agreeing with you.

Another way to look at this, is that every additional dollar in debt also bumps up the GDP. Due to interest, this is not sustainable, but has been pursued because of a misbegotten faith in an elusive "multiplier", which has not surfaced despite all this QE.

Can you say more about this?

 

[Dak]

Well, the comment seemed to be considering the short-term, which was what I was responding to. To be totally honest, I thought I was actually agreeing with you.

Gotcha. Yeah, I don't think this drop is going to last long enough to have a specific significant downward pressure on alternative energy. However, customers had adapted to some degree to ~$3pgal prices and together with "subprime auto loans" etc, were buying trucks and large SUVs again.

I think this is a terrible move, and even Honda executives have decried the "infinite" loan lengths being made to move cars - loans which are increasingly in default.

http://www.zerohedge.com/news/2015-01-20/honda-us-sales-chief-fears-stupid-auto-loans-vicious-cycle

Just wait until gas spikes again and all those people rush to trade in for more fuel efficient vehicles - and have negative equity.

Can you say more about this?

Which part? The multiplier motivation behind QE (not the only one, but a large part), or that adding debt increases GDP figures? Or both?

 

[Einherjar86]

Both, I guess. There didn't seem to be a good place, contextually, to break up that sequence; so I quoted the whole thing.

 

[Dak]

Well the more debt = higher GDP (at least on the government spending end) is pretty simple. The government borrows to spend. Government spending is part of the calculation for gdp. However, there are diminishing returns as interest begins to consume larger chunks of the budget.
http://en.wikipedia.org/wiki/Gross_domestic_product

While I think the Austrian criticism is on point in one aspect, I think this quote actually gets more to the point. "Running down assets" works as a nice euphemism for money printing btw:

The UK's Natural Capital Committee highlighted the shortcomings of GDP in its advice to the UK Government in 2013, pointing out that GDP "focusses on flows, not stocks. As a result an economy can run down its assets yet, at the same time, record high levels of GDP growth, until a point is reached where the depleted assets act as a check on future growth". They then went on to say that "it is apparent that the recorded GDP growth rate overstates the sustainable growth rate. Broader measures of wellbeing and wealth are needed for this and there is a danger that short-term decisions based solely on what is currently measured by national accounts may prove to be costly in the long-term".

Addressing the "multiplier":

http://en.wikipedia.org/wiki/Keynesian_economics

First, there is the "Keynesian multiplier", first developed by Richard F. Kahn in 1931. Exogenous increases in spending, such as an increase in government outlays, increases total spending by a multiple of that increase. A government could stimulate a great deal of new production with a modest outlay if:

The people who receive this money then spend most on consumption goods and save the rest.
This extra spending allows businesses to hire more people and pay them, which in turn allows a further increase in consumer spending.
This process continues. At each step, the increase in spending is smaller than in the previous step, so that the multiplier process tapers off and allows the attainment of an equilibrium. This story is modified and moderated if we move beyond a "closed economy" and bring in the role of taxation: The rise in imports and tax payments at each step reduces the amount of induced consumer spending and the size of the multiplier effect.

I guess I can see where something like a multiplier effect could exist in a "real" money scenario. But as far as I can tell, debt-funding "infusions" cancels out the theoretical multiplier either entirely, or at some point after the diminishing returns have been exhausted.

 

[Dak]

http://aeon.co/magazine/culture/welcome-to-the-scarcity-games/

Going to leave this here, don't have time to comment on it at the moment, but I do have thoughts.

Jesper Juul, associate professor in the School of Design at the Royal Danish Academy of Fine Arts in Copenhagen, calls ‘the paradox of failure’, arguably the central mystery at the heart of computer games as a medium. The paradox has three parts:
1. We generally avoid failure.
2. We experience failure when playing games.
3. We seek out games, although we will experience something that we normally avoid.

This paradox doesn’t apply just to games: many kinds of art, particularly tragic literature and drama, expose us to painful emotions that we seek to avoid in everyday life. ‘The paradox is not simply that games or tragedies contain something unpleasant,’ Juul writes in The Art of Failure (2013), ‘but that we appear to want this unpleasantness to be there, even if we seem to dislike it.’

Indeed, this unpleasantness must be present in games: players want games to be challenging and will not return to one that is too easy. And in games we are not just vicariously experiencing the failures of a fictional protagonist – a Hamlet or an Anna Karenina – but our very own failures. It is, after all, our own skills that come up short. On these grounds, Juul calls video games ‘the art of failure’ – the singular art form that sets us up for failure and allows us to experience and experiment with it.

So it’s not constant failure on the part of the player that sets Banished apart. What is different about it is its persistent atmosphere of scarcity, and the sweat and toil that must continuously go into avoiding shortages – shortages that can never be entirely eliminated.

This is particularly unusual for a god game. While the genre often involves minor shortages of this or that, these are usually present simply in order to give playable variation to an overall environment of plenty. Scarcity, in the classic god game, is merely a temporary condition to be overcome; the game is resource management, not desperately eking out resources, or watching them dwindle without replenishment. And yet Banished is far from being the only new game that seems to make a virtue of such hard necessity. In fact, across a range of new titles, austerity abounds. Why?

 

[Einherjar86]

I read this earlier today too, and this was the passage that I zeroed in on. I taught Jesper Juul last semester in my course on simulation. He wrote a book called Half-Real on the way video games effectively simulate various real-life functions without imitating those functions; instead, such functions are encoded within a specific sequence of buttons (e.g. to power attack, click "B" and push the joystick forward).

The self-evident explanation is that failure in a video game effects no consequences other than failing the game - i.e. dying in a video game is not actually dying, getting shot isn't actually getting shot, etc. However, this doesn't attend to the nuance of "failure." One might say that one hasn't actually failed a mission since one is only playing a game; but then one cannot fail a mission because one isn't actually going on a mission, in which case the possibility of failure disappears entirely. But obviously this isn't the case, since failure does occur at the level of gameplay.

Juul is correct that players want failure to be there; the game constructs an atmosphere that encourages us to make a cognitive leap that allows us to perceive the failure as corresponding to something beyond the game. There's an excitement to be hunted or dying in a video game, although this can eventually lead to frustration. The obscurity lies somewhere in between the diegetic action (or what happens in the game) and the player's perception of the action. I'd go so far as to say that games even invite their players to repeatedly fail since games create a "safe space" within which one can do so without consequence.

This points to another issue; as Žižek says about The Matrix, we have to try and observe the reality within illusion itself. The way we play games tells us less about what we're afraid we might be and more about what we actually are: organisms always directed toward failure, and aware of it. All we can do is "try again, fail again, fail better."

 

[Dak]

Although I do/have played video games, I prefer to see things from the perspective of board games, particularly since there is a certain non-distanced social aspect to the failure that video games can only approach in maybe head to head play on the same screen.

That is, unless I am playing some sort of solitaire variant to a board or card game, my failure is socially relative. Even if it is a cooperative game, and the players lose as a group, the failure is still social even if not relative.

There is a niche of board games that play towards scarcity to a sense where many find them not fun at all, and even the people who like them will admit to frequent frustration, even when you win. In the board game Agricola, you have a sort of analogue of this video game Banished. You have some sort of rude structure for housing and some cleared land to start with, and some people. You only have a handful of turns to balance increasing your people, growing/harvesting food, increasing the size of your structure, and building fences to add animals. Oh, and most of what you grow/add will be eaten to sustain the people. More people give you more productivity, but then they consume more also.

This game and others add on an additional crunch to the scarcity in setting a hard limit to the game. You will *always* run out of time before you can do as much as you want - everyone will. So then it's a matter of who managed to do the best job in the time allotted. But even the winner is sitting there going "man, one more turn and I could have upgraded the house" or "one more turn and I would have been able to get cows" etc.

Despite the common failure and or frustration, Agricola was still a top 5-10 game for years, and I think has only recently fallen out of favor due to the sheer number of newer games out - and maybe the frustration with that finally getting to be too much when there are more similar but less frustrating games out. But it isn't failure that people don't like, but rather frustration at not "being able to finish".

Turning to the scarcity and starkness aspect of games with rising popularity, I think this may speak to either an underlying desire for some sort of "anchoring" in the face of modern perceived abundance and disconnect from the "sources" of things/reducing the complexity of modernity back down to the simple plant-grow-eat days, and/or potentially an attempt to educate ourselves in an entertaining way as it were in preparation for a feared future.

 

[Dak]

This is more at zabu:

http://www.zerohedge.com/news/2015-01-22/now-begins-greatest-heist-bernanke-bailed-out-wall-street-september-2008

This is just headshakingly hypocritical. We're talking Al Goreish:

http://www.zerohedge.com/news/2015-01-22/billionaire-lectures-serfs-davos-americas-lifestyle-expectations-are-far-too-high

 

[zabu of nΩd]

It makes me sad that you still read so many zerohedge rants, but I probably won't have the energy to deal with you for another few weeks - sorry.

 

[Dak]

David Stockman is a "zerohedge ranter".

I read everything from CNN to Foreign Policy. But FP is behind a paywall and mostly everything else just pushes the same old bullshit. Ya'll go out and buy an extended Chevy Tahoe, the IMF says low gas is here to stay!

After some thought, I don't think you can apply Hanlon's razor to those with decision making power. Even if they are inept/ignorant, they are malicious for grabbing power - particularly if inept.

 

[Einherjar86]

Even if they are inept/ignorant, they are malicious for grabbing power - particularly if inept.

This is the most asinine claim, it lies at the heart of your personal philosophy, and I still do not understand how you can make it seriously. There are so many variables and contingencies that it is virtually impossible to equate the pursuit of political office with malicious intent. It's simply a ridiculous comment. Prove it to me.

 

[Dak]

This is the most asinine claim, it lies at the heart of your personal philosophy, and I still do not understand how you can make it seriously. There are so many variables and contingencies that it is virtually impossible to equate the pursuit of political office with malicious intent. It's simply a ridiculous comment. Prove it to me.

It is in fact those variables and contingencies that strengthen the statement! Politics is structured in every country to sift out any decent person even thinking of trying to even make negative changes (that is, merely reducing control rather than enhancing), and this has been the case for thousands of years if not from the very beginning (most likely the latter). If a random person walked up to you and said "let me run your life to x degree" you might report him, or laugh at him and move away quickly at the least. But when someone says "Vote for me!", it's the same thing, and people go into a flagwaving frenzy.

I was just reading an article about alcoholism, and how researchers are starting to look at the connections between certain professions and high rates of alcohol consumption, and wondering which is influencing which the most. That is, rather than the environment requiring it, maybe alcoholics are seeking these professions out. If not having caused the environment to begin with, it at least maybe creates a positive feedback loop. Sounds like politics.

Plato/Socrates were wrong about a lot, but they weren't wrong about the type of person you don't want in charge, and I add that there is little effective difference between the powermonger and the well-meaning accident-waiting-to-happen.

It's possible to be in charge without power grabbing, but not in most systems with any scale of serious consequence.

Edit: I specifically brought that thought up btw because of that statement from the IMF. Either an organization that exists completely for macroeconomic management purposes is completely fucking clueless, or is malicious. Which do you think is most likely in this case?

http://www.ft.com/cms/s/0/a763aeba-a0b9-11e4-9aee-00144feab7de.html#axzz3Pepwxu39

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/a763aeba-a0b9-11e4-9aee-00144feab7de.html#ixzz3PeqJ89i7

The International Monetary Fund has sliced economic growth forecasts for the oil-exporting Gulf states by 1 percentage point to 3.4 per cent this year, saying oil exporters should “prudently treat the oil price decline as largely permanent”.

Right with that is the tweet from Davos saying "We need a Central Bank of Oil" (from an energy company CEO of course). I mean, the shit goes to script practically every time.

 

[Einherjar86]

If a random person walked up to you and said "let me run your life to x degree" you might report him, or laugh at him and move away quickly at the least. But when someone says "Vote for me!", it's the same thing, and people go into a flagwaving frenzy.

A. It isn't the same thing. It's structurally different; it's mediated differently; it's organized differently. These are all important apparatuses that have qualitative effects on the occurring phenomenon.

B. You assume that people don't want others running their lives to x degree.

 

[Dak]

A. Burying the core structure under a obscuring layers doesn't change it in the qualitative sense you are suggesting.

B. I know there are many people who do prefer being taken care of to a degree - but more broadly it is about forcing others to conform to their comfort zone. People generally advocate for laws (of the domestic/social variety) that force others to do what the advocates already do, so there's not the same sense of "being ruled". There's no difference between the SJW and the religious right screeching about the social acceptability of homosex from this perspective. People living other than as [you] do/thinking other than as you do - for most people - introduces a level of discomfort they would rather squash. This creates the interest groups all trying to beat each other over the head with the "law".

 

[Einherjar86]

I consider us on healthy terms, so I won't hold back (not like I do anyway):

A. Burying the core structure under a obscuring layers doesn't change it in the qualitative sense you are suggesting.

Yes it does. It's naive to think otherwise. You're isolating some kind of ideal, absolute core of a relationship under the impression that the dynamic of the relation itself doesn't alter the effect you're looking at. It most certainly does; you're just choosing to hypostatize it because of a specific set of values that you're imposing on a specific political situation.

B. I know there are many people who do prefer being taken care of to a degree - but more broadly it is about forcing others to conform to their comfort zone.

You cannot reduce it to this; but you continue to do so, over and over again, because you're not happy with the current state. And many people aren't; but you shouldn't confuse political proceedings and legal applications with some bogeyman elite out to make you do what they want. You can't draw a clear or clean line between politics and people. You just can't.

You've proven nothing, by the way, because there's nothing material here to prove. Your delusion fantasy of near-total dismantling is unactionable and entirely impractical.