Michael Kevane

I have little idea of the technicalities here, but I thought that any paragraph starting with “bitter irony” should be highlighted.

The bitter irony of the noncumulation provision is that an insured will now be able to designate the tower on a particular policy year to absorb the responsibility for a covered loss that spans multiple years or even decades. That is a grim forecast for the insurer adjusting a loss that took place outside its policy period, and seems especially harsh in light of the Massachusetts Supreme Court’s conclusion that no “reasonable” insured could ever have expected a single insurance year to cover an entire multiyear loss (subject to policy terms). [9] The exposure resulting from Viking Pump will impact underwriting since it is completely different from pro rata. Premiums may be reassessed, which would only reinforce the disincentive for insureds to procure comprehensive coverage — the opposite, and salutary effect of the pro rata approach. [10] In the alternative, a potential revision to the noncumulation clause that responds to Viking Pump is not inconceivable, such as referring to an injury “as may be initially allocated” or deleting any sugges – tion of the indivisibility of the injury, to bolster the method used in Olin III.

Source: VikingPumpRebels_Kevane_Law360_5-18-16.pdf

Today, that changes thanks to the work of Andrew Reagan at the Computational Story Lab at the University of Vermont in Burlington and a few pals. These guys have used sentiment analysis to map the emotional arcs of over 1,700 stories and then used data-mining techniques to reveal the most common arcs. “We find a set of six core trajectories which form the building blocks of complex narratives,” they say.Their method is straightforward. The idea behind sentiment analysis is that words have a positive or negative emotional impact. So words can be a measure of the emotional valence of the text and how it changes from moment to moment. So measuring the shape of the story arc is simply a question of assessing the emotional polarity of a story at each instant and how it changes.Reagan and co do this by analyzing the emotional polarity of “word windows” and sliding these windows through the text to build up a picture of how the emotional valence changes. They performed this task on over 1,700 English works of fiction that had each been downloaded from the Project Gutenberg website more than 150 times.

Source: Data Mining Reveals the Six Basic Emotional Arcs of Storytelling

The poem always gives me the shivers.  Especially the stanza I had to learn by heart for Mrs. Kramer’s third grade class in English language arts.  We had to stand in front of the class.  Yes, she was an odd teacher.  Drove around in a VW minibus.  Anyway, I can still write it out by heart.

I was brought up by dear bizarre Aunt Maud,
A poet and a painter with a taste
For realistic objects interlaced
With grotesque growths and images of doom.
She lived to hear the next babe cry. Her room
We’ve kept intact. Its trivia create
A still life in her style: the paperweight
Of convex glass enclosing a lagoon,
The verse open at the Index (Moon,
Moonrise, Moor, Moral), the forlorn guitar
The human skull; and from the local Star
A curio: Red Sox Beat Yanks 5-4
On Chapman’s Homer, thumbtacked to the door

In those days we had no idea of the profound meaning embedded in the stanza.  Maybe Mrs. Kramer knew that, and enjoyed hearing the voices of the innocent recite the terrifying lines?  Could any child now, able to look up Chapman’s Homer on the Internet, not hear in their head the sound of cracking skulls?

I strongly recommend Humans.  Imagine Never Let Me Go made as a TV series.  The synths are complex, their interactions amongst themselves and with humans are complex, the human families are complex.  This is not one of those ridiculous sci-fi dramas (you know: interplanetary intrigue for control of “the spice” threatens to destroy everything, but a hidden princess/prince might, just might, rise to her/his destiny… if only the dark one doesn’t get there first).  The themes are extremely adult.

The obligatory chase scenes and plot twists are done professionally and take a back seat to character development.  Every episode ends with a little cliffhanger.  John Hurt is wonderful and gets some fantastic lines.  At first many characters are annoying.  Because they actually are.  The show doesn’t make it easy on the viewer.  Great writing.  Sukie and I have been watching it one episode per day.  Don’t waste it by binging.  Anticipating, savoring, regretting not being able to move on immediately to the next episode… reinforce the quality.

And this is where things begin to get interesting. Over a month ago, an anonymous post appeared at Economics Job Market Rumors (EJMR), a popular internet forum frequented (I am guessing) by many young economists. This post noted that Family Ruptures resembled a paper already published in the medical journal Psychosomatic Medicine (the two papers apparently used much of the same data to address similar questions). I am not familiar enough with the medical literature to make an informed evaluation on the originality or methodological contribution of Family Ruptures, but that’s not the source of the scandal anyway.

Source: A Rant on Peer Review – LaborEcon

They shouted angrily about “colonialism” and called for a Prexit, or Puerto Rican exit, from the United States. They denounced the “junta” — or federal control board — that will soon direct this island’s failing governance and finances. Late Thursday afternoon, even Gov. Alejandro García Padilla seemed to be joining in the protest, declaring a moratorium on paying the island’s debts just one day before a big payment was due — even as President Obama was signing a new law that precludes the governor from making such a move. But beneath the defiant rhetoric — on the Puerto Rican talk shows, at labor rallies and at an “Occupy” vigil at the federal courthouse here — there was also resignation: an awareness that Puerto Rico’s own elected officials had let the island slip into a death spiral, and that the passage by the United States Senate on Wednesday of a bill meant to assert federal authority was really the only available solution.

Source: Puerto Rico Debt Relief Law Stirs Colonial Resentment – The New York Times

Since I am teaching MBA macroeconomics this summer, here is Brexit in the standard AD-AS model.  It ignores the zero lower bound, which complicates things, and also assumes that the short run negative effects we have seen this week persist. Bernanke posted what is probably the mainstream consensus about the theory of what is likely to happen.  James Hamilton at Econbrowser says much the same thing.  It may well be the case that two weeks from now nobody remembers what Brexit was or why it mattered, and there are no long term effects.  Anything can happen… British people suddenly feel an amazing spirit of can-do inventiveness and multicultural openness and an invigorated thriving economy emerges from the vote, why not?  But absent pink ponies, here is the standard analysis.

In the European Economic Review. Jack and Alex are going to have to use polite words to work out their differences.  I am not a macroeconomist, so I am not going to spend too much time figuring out for myself whether their differences are semantic, empirical, theoretical, or ideological.  But I do feel like I could make a modest contribution in painting an extreme version maybe of what Jack is arguing, namely that “mainstream” economists underestimate the role of financial markets in changing how we should understand macroeconomic theory.

This is what Jack writes:

The new financial structure and the diversion has rendered interest rates and their real determinants increasingly ineffective in generating real investment and growth. Given the new evolved global financial structure of institutions, markets, securities and agents, financial asset investment has proven to be simply more profitable in the short run than real investment. Both risk and uncertainty is less in financial asset investing than in real asset investing. Interest rates may lower to zero, and even negative, but the liquidity that is borrowed those rates will still flow primarily into financial investments.

Financial assets and real assets are in some sense the same.  Each is a claim to some future value.  When I own a financial asset, I have a claim to some other financial asset in the future (e.g. money) and also a claim to be able to sell the financial asset in the future.  When I own a real asset, I have a claim to sell the productive services of that asset and a claim to sell the asset.  Both are vulnerable, in their value, to events.  The value of my real asset might decline precipitously when the forest I own burns up.  The financial asset I own (a bond) may become worthless when the forestry company that issued the bond no longer has a viable forest to harvest.

How can financial assets as a class be less risky and more profitable than real assets, as Jack asserts.  Aren’t financial assets ultimately tied to some real return? (Like the forest company bond is tied to the forest company earnings?)  I think Jack may be arguing, “Not necessarily.”  In a Ponzi scheme, the value of the asset (a place high up the ladder of the scheme) is tied to how many future generations join the Ponzi scheme.  Maybe our current financial markets are like the beginning of a giant, global Ponzi scheme.  Maybe a major set of participants are Central Banks.  (Are they like the proverbial “suckers” born every minute?)  Maybe this can go on for quite some time.  Maybe it will all come crashing down, but for now participants think that is far off, and so joining the scheme is perceived as being safe and profitable, compared with real investment.  That all sounds perfectly plausible.  I don’t know whether mainstream economists necessarily rule this possibility out.

Alex notes (in his earlier review of Jack’s book):

So we lack a clearly worked out story of how an increased volume of financial transactions slows the rate of physical capital accumulation.

If the increased volume makes the Ponzi scheme more attractive to others, then surely diversion of financial funds from real investment to new financial assets might take place.

The question for Jack and the mainstreamers is, how would we tell if this was indeed the case?

It’s nice to see a randomized trial of three different techniques for planting tree seedlings.  The locally developed Zaï technique did not fare well.  A similar study is available here.  Time for farmers to change?

In the Sahel of Africa, where 90 % of the population depends on natural resources for their livelihood, a large part of the soils are structurally unstable, prone to crusting and hard setting, and have low water holding capacity, which hamper vegetation establishment. The effect of soil restoration techniques on survival and growth of seedlings of Acacia nilotica, Acacia tortilis and Jatropha curcas was tested in completely barren, degraded land in a Sahelian ecosystem in Burkina Faso. A total of 522 seedlings (174 plants of each plant species) were planted in a randomized complete block design with three replicates combining three soil preparation techniques: half-moon, zaï and standard plantation. Survival and growth rates evaluated over 20 months were significantly higher using the half-moon technique compared with the other two techniques. Survival rates of plant species planted using half-moon technique were 62.5, 28.57 and 10.71 % for A. nilotica, A. tortilis and J. curcas respectively, but in zaï and standard planting, seedling survival was zero. The low survival rate of J. curcas using the half-moon technique may indicate that J. curcas is unsuitable for barren and degraded land, whereas A. nilotica and A. tortilis appear to be promising tree species for rehabilitation of degraded land.

Source: Success of three soil restoration techniques on seedling survival and growth of three plant species in the Sahel of Burkina Faso (West Africa) – Springer

Que risque le général Zida ? Il risque deux choses, du point de vue redévabilité de la comptabilité publique il risque d’être poursuivi mise en accusation comme le demande il n’y a longtemps les citoyens. Je pense que si le conseil des ministres avait instruit l’Autorité Supérieure du Control de l’Etat et de la Lutte contre la Corruption (ASCE-LC) d’engager les procédures qui conviennent et enfin du point de vue militaire la question de la désertion pourra entrainer des procédures judiciaires.

Que pouvez-vous tirer comme leçon de cette affaire ? Je trouve qu’elle est malheureuse, parce que c’est lié aussi à la personnalité qui est mise en cause c’est-à-dire que c’est une personne extrêmement complexe qui a posé un certain nombre d’actes tout au long de sa gouvernance et qui, aujourd’hui refuse de rendre compte. Cela pose énormément de problèmes. Et donc qu’il se comporte en cela pour essayer d’irriter une certaine opinion et provoquer. C’est toute la problématique du personnage Zida. Je crois que ce qui serait le mieux, c’est qu’on en finisse le plus possible tôt.

Source: « Les faits qui sont reprochés à Isaac Zida sont attestés, il n’y a aucun doute la dessus » (Ahmed Newton Barry, éditorialiste) – RADIO OMEGA

West African Resources issued a press release saying they had found gold at 175m… their share price quadrupled… from .05 to .20…. wish I were an expert in gold mining press releases and knew what to make of it.

Interesting question in the first day of macro.  Maybe a Trump-effect?  First off, immigrants who are legally permitted to work are eligible for unemployment insurance.  Second, the Bureau of Labor Statistics does report unemployment numbers for the total population regardless of their immigration status.  Thus, a release of May 2016 notes that foreign-born unemployment is lower than for native-born (the survey cannot tell whether documented or undocumented):

The unemployment rate for foreign-born persons in the United States was 4.9 percent in 2015, down from 5.6 percent in 2014, the U.S. Bureau of Labor  Statistics reported today. The jobless rate of native-born persons fell to 5.4 percent from 6.3 percent in the prior year.  Data on nativity are collected as part of the Current Population Survey (CPS), a monthly sample survey of approximately 60,000 households. The foreign born are persons who reside in the United States but who were born outside the country or one of its outlying areas to parents who were not U.S. citizens. The foreign born include legally-admitted immigrants, refugees, temporary residents such as students and temporary workers, and undocumented immigrants. The survey data, however, do not separately identify the numbers of persons in these categories. Highlights from the 2015 data:

-In 2015, there were 26.3 million foreign-born persons in the U.S. labor force,  comprising 16.7 percent of the total.

-Hispanics accounted for 48.8 percent of the foreign-born labor force in 2015 and Asians accounted for 24.1 percent.

-The median usual weekly earnings of foreign-born full-time wage and salary  workers were $681 in 2015, compared with $837 for their native-born  counterparts.

Luther Blissett is an Italian quartet who co-wrote Q in 1999.  I saw a reference somewhere when doing some background reading on Ada Palmer’s Too Like the Lightning.  Maybe an interview with here somewhere, like this one.  Anyway, Q is a big sprawling novel of ideas, in this case the Anabaptists and the related religious upheavals of the early 1500s.  The English translation is not so good… at some point someone takes money out of a wallet… a wallet? In 1530?  But the silver lining of uneven writing is that you can skip!  So 800 pages can be read in just 4 days.  It’s a good historical novel, in that you feel like you take away a lot of good history (easily verified and reinforced with Wikipedia).

It has a similar theme to Too Like the Lightning: some big boys are playing a grand game, and we are but pawns. Or less.  Collateral damage.  I’ve never really thought that much of the world or history worked that way.  So I find myself not so convinced.  But makes for a good read.  I guess I prefer Braudel when it comes to how to understand history.

Following the Executive Board’s discussion today, Mr. Min Zhu, Deputy Managing Director and Acting Chair issued the following statement: “Despite challenging internal and external circumstances, Burkina Faso’s performance under the Fund-supported program has remained satisfactory. Although the terrorist attacks posed some setback to economic recovery, growth should regain momentum in 2016-17, underpinned by robust mining activity, improved energy supply and enhanced public investment execution. The main risks to this favorable outlook relate to the fragile security situation, the challenges of meeting pent-up social and investment demands, and the impact of further declines in commodity prices. The authorities’ main objective for 2016 is to create adequate fiscal space for priority social and infrastructure spending, including implementation of their new development plan. To this effect, they are undertaking a broad package of tax and customs administration measures aimed at regaining the ground lost in domestic revenue mobilization. Continued efforts to contain recurrent spending, including the public wage bill and to address bottlenecks in project execution will be needed to allow public investment to recover quickly toward pre-crisis levels. The authorities are also seizing the opportunity of the oil price decline to address longstanding structural deficiencies in the energy sector. Full implementation of these measures will contribute to reducing state subsidies and contingent liabilities to the sector and support higher investments in electricity production. Going forward, it will also be important to take action to diversify the agriculture sector and provide a supportive environment to boost credit for the private sector.”

Source: IMF Executive Board Completes Fourth and Fifth ECF Reviews for Burkina Faso and Approves US$26.2 Million Disbursement

Last week the Supreme Court insulted Puerto Rico by saying its people aren’t sovereign. This week the court added injury to the insult, denying Puerto Rico access to federal bankruptcy laws that would have created a path to recovery for its struggling utilities. The decision on Monday passed the ball to Congress to change the law or arrange a bailout. At the same time, it underscored the outrageousness of Puerto Rico’s distinct legal status as a quasi-colony: the Commonwealth will have to lobby a Congress in which its residents, U.S. citizens all, have no representation. The underlying legal situation always posed a high hurdle for Puerto Rico, which in 2014 passed a Recovery Act to enable municipalities and utilities associated with the Commonwealth to declare bankruptcy. A federal district court and then the U.S. Court of Appeals for the First Circuit both struck down the Puerto Rico law as invalid under the federal bankruptcy code. Federal bankruptcy is available to municipalities within the 50 states. Puerto Rico had the same capacity between 1933 and 1984. But that year, Congress amended the law to exclude Puerto Rico from using chapter 9, part of the code that authorizes states to let their municipalities go bankrupt.

Source: Supreme Court Affirms That Puerto Rico Is Really a U.S. Colony – Bloomberg View