Business Cycle Indicators, December 9th

[Inflation adjusted] Personal income excluding transfers and industrial production are falling in October, even as employment rises in November.

Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2019M01=0.  Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (10/28 release), and author’s calculations.

Interestingly, while employment is rising strongly in November, it still lags the 2016-18 trend.

Figure 2: Nonfarm payroll employment (blue), forecast from ARIMA(0,1,0) estimated over 2016-18 (red), and 95% prediction interval (gray lines), all in 000’s, s.a. Source. BLS, and author’s calculations.


67 thoughts on “Business Cycle Indicators, December 9th

  1. Willie

    I remain convinced that we are at the top of the cycle. We will have a downturn in 2020. It will not be a deep downturn, but more like 1991 or 2001. Those didn’t do some of us any favors, and a slowdown of any kind won’t do most people any big favors. For that reason, I sure hope it’s a mild one or that we dodge a bullet. What strikes me this time is that the Fed seems to be managing things better this cycle than they usually do. They haven’t overtightened, but we don’t have roaring inflation, either. We do have some inflation, based on my observations. It’s not onerous yet, though.

    Maybe 2020 is just flat. That’s bad enough with a growing population. And, there’s got to be a story behind growing employment but lower personal income. Lousy jobs? Serfdom? What?

    1. baffling

      “It will not be a deep downturn, but more like 1991 or 2001. ”
      probably right here. i do believe the stock market is overvalued, and so a correction or bust will most likely occur. but i don’t think the fundamentals of the economy are quite so bad. we have had the president implement tax cuts that went to the market, and his bullying of the fed to lower rates has resulted in an increased market. i don’t think the market would have risen to current levels without these influences. but i don’t think we have the same underlying problems that led to the great recession either. there are some issues with a variety of debt instruments, but it does not seem to be the same level as the fraud we saw a decade ago.

      “And, there’s got to be a story behind growing employment but lower personal income. Lousy jobs? Serfdom? What?”
      a growing problem around the nation is noncompete employment clauses. it slows wage growth for employees.
      this has increased the friction for an employee to quit their current job and take a new one. personally i think these should be outlawed, as they are used to bully employees into not quitting. why should a company have any power over what my next job is? you want me to stay, treat me fairly and equitably. i own my experiences and education, and an employer should not be allowed to threaten my future value with a noncompete. i understand this may be appropriate for an executive, but it should only apply to about 5% of the workforce. nobody from middle management and below should be subjected to a noncompete clause.

      1. Willie

        Noncompete employment clauses – so, serfdom, then. I would also argue that health insurance contributes to this, but the link is probably less now than it was prior to Obamacare.


    Trade Balance has improved significantly from a year ago.

    Real Median Weekly Earnings have improved significantly from 2 years ago.

    Employment is up ~5 million jobs from 2 years ago.

    Federal budget deficit as % of GDP has increased steadily since 2015.

    Botttom line: Demand is still strong and increasing. Unless there is a black swan lurking, no recession in sight.

    1. The Rage

      Trade imbalance has not improved, that is showing slowing future consumption. Up until August, it was not good do to the rise in consumption.
      Median weekly earnings are a lagging indicator. Basically the who cares of the business cycle at this point.
      Employment up 5 million. Nope. That has been and will continue to be revised down. Total household employment in 2019 will only be half of what it was in the “last boom year” 1999. Even population growth can’t explain that. Just weaker growth. Considerably.
      Demand is collapsing. The subprime default rate for consumer loans which has inflated consumption has popped. Its doubled in 3 years much like mortgages did. Now consumption will stop growing until the debt is purged. Corporate debt will deleverage and recession it will be.

        1. The Rage

          No its not. Subprime defaults are surging which means it is collapsing. Considering you can’t even tell that, that is a shame. You can’t borrow against nothing forever. Consumer debt servicing is very high, in subprime consumer lending. Sadly, you can’t even get that. It has underwritten the expansion, created a corporate debt bubble and financial bubble. It will pop, recession will come and you will whine about it.

          1. pgl

            “Considering you can’t even tell that, that is a shame.”

            Maybe if you presented a link to some reliable data for once in your pathetic trolling, we could all see WTF you are babbling about.

    2. pgl

      “Trade Balance has improved significantly from a year ago.”

      Yea but from January 2017 to “a year ago”, the trade deficit widened. The trade deficit as of October 2019 was about where it was as of January 2017. Since when is noise interpreted as improvement?

  3. Steven Kopits

    The only visible peak is industrial production, and that is in Dec 2018, which exactly corresponds to the peak rig count (and which has been declining since).

    1. pgl

      What is it with a few commenters here in their total inability to source a lick of data? Stevie pooh – you pretend to be a consultant but you are one the worst in terms of this incompetency. I guess you never heard of FRED!

      BTW – the latest from FRED on the Industrial Production Index shows it has fallen by almost 2 percent over this year. Now if you had sourced the actual data you could have noted this important point. But as usual you didn’t.

      I guess your level of total incompetency when it comes to the most basic research skills is the reason that the only people calling you are the lying morons on Fox and Friends.

          1. baffling

            i am not sure what the issue is? would you prefer her to sit at home and collect welfare? or work? are you upset because as a lawyer she had the ability to make a good living? part of her success as an academic was field experience. or would you rather she be all theory and no practice? bernie sanders has limited work experience. most of his career has been as an elected government official, or running for office. is that experience superior to working as a practicing lawyer?

          2. Moses Herzog

            @ baffling
            My “beef” is not a “beef”, I laid out the facts and the links for you to judge on your own. But I would point out that clearing a 6 figure salary is not “struggling”, and it’s debatably not even “middle class”. She could argue “upper middle class” if she wants and get away with that. But when she keeps implying she’s “struggling” or “fighting for the working man” while she taking large paychecks from corporate America, it tends to ring as true as someone who dresses white, acts white, whose family acted white, who congregates in white social circles with <2% Native American blood claiming Native American heritage on job applications and occupational forms. It shows a pattern of lying about ones background to create a false narrative or alternative to reality.

            That is why the last sentence I typed was "you decide". If you're buying that fits Warren's "struggling Mom" storyline, then I have nothing bad to say about you. That is your own personal call when judging the candidates. I presented the information as she has it on her owned damned website. Which by the way, I applaud her for putting that on her website. But the obvious question MIGHT be, why did Buttigieg (of all people) have to bully her into finally disclosing that.

            I don’t expect the woman to tell us when she stole extra creams, sugars, and napkins from Starbucks—only that she not portray herself as a Saint, she might find herself coming across as much more genuine to voters instead of the caricature she has turned herself into.

          3. baffling

            moses, she certainly did not live the good life prior to the late 1980’s. At that point she became an ivy league law professor, so of course her income would rise. that is the whole point. she began a working career as “the middle class”, and worked her way up. you seem to want to hold that against her, that she simply should have stayed middle class with low wages. how silly is that expectation. you have somebody who did work their way up through the socio-economic ladder, and you seem to hold that against them. like somehow their knowledge of the middle and working class is less because they became MORE successful over time. in the 1970’s, it is almost unheard of for the average woman to be able to stay at home to raise two kids, then go back to law school and eventually become one of the top law academics in the nation. it is tough enough, today, for a woman to take time away from her professional career to raise children and then return to a successful professional career. imagine the difficulties in the 1970’s, unless you have something the rest of them do not have. she apparently has that extra something. you are focusing on the wrong narrative moses. in this case, it appears that trump is influencing your narrative. but as you said, that is your choice-we each make our own. i am just pointing out some facts.

      1. Barkley Rosser

        Accoriding to Market Watch, US industrial production seasonally adjusted peaked in October, 2018, not December. I am not able to pin down precise months on that FRED chart. In any case, while they may be sort of correlated, I do not thing IP is that closely tied to rig counts, and if you are right on them, SK, (Ihave not checked) that peak may not have coincided with the IP peak, although this may be a matter of different sources with different metthodologies. I for one am not all that keen about getting as far as others into the deep weeds of how some of these data are estimate by different sources, although clearly there are cases where different sources provide quite different stories and it is thus important to understand these matters.

  4. 2slugbaits

    Today’s announcement to green light NAFTA 1.01 doesn’t seem to have moved the markets all that much. For the supposedly greatest trade deal in all of recorded human history you could be forgiven for expecting a stronger response.

    1. pgl

      From the NPR story:

      House Democrats and organized labor have thrown their support behind an updated trade agreement between the U.S., Mexico and Canada. The announcement came on the same day Democrats unveiled articles of impeachment against President Trump. “This is a day we’ve all been working to,” declared House Speaker Nancy Pelosi. “There is no question, of course, that this trade agreement is much better than NAFTA. But in terms of our work here, it is infinitely better than what was initially proposed by the administration.” Democrats endorsed the trade deal after winning stronger enforcement of labor and environmental provisions, and stripping a measure that would have locked in long-term patent protection for certain pharmaceutical products. “It’s an agreement that Democrats shaped,” said Rep. Richard Neal, D-Mass., chairman of the House Ways and Means Committee.

      NAFTA 1.01 was originally a modest change from NAFTA – which Trump declared to be the worst trade deal ever. Any improvements in NAFTA 1.01 came only at the insistence of House Democrats.

      1. Barkley Rosser

        Generally agree, pgl. Of course in the end 90 % of it, if not more, is just old NAFTA continued, but with some needed improvemwents and some items not so good or very politically driven, such as the dairy stuff aimed at Wisconsin, although indeed Canada’s dairy industry has been way too protected and in a bizarrely complicated way.

        Some are unhappy that Pelosi and the House Dems are giving Trump this “win” just as they are about to impeach him, possibly a sign of “senility” as claimed by our regular here who has problems with powerful older women. But others note that this is a clear response to the GOP charge that the House Dems are “doing nothing” except for trying to impeach Trump. Of course those making such claims ignore the over 200 bills the House has passed that McConnell in the Senate has simply refused even to consider, much less take them up and vote them down as would be the GOP predilection for many of them. But some of those are things that supposedly GOP supports, such as increased aid for veterans. In any case, this shows that the House can impeach and also govern responsible on mattters where there is sufficient bipartisan agreement and also agreement with Trump.

  5. 2slugbaits


    Interestingly, while employment is rising strongly in November, it still lags the 2016-18 trend.

    I don’t think you can say it quite that way because the most recent employment growth numbers are still within the 95% CI of the naïve forecast. OTOH, you can easily improve the naïve forecast with an ARIMA (0,1,1) model, and while even here the most recent numbers are (just barely) within the 95% CI, they do fall outside the 90% CI. So I think you’d be on firmer ground if you said the November number lags the 2016-2018 ARIMA(0,1,1) trend at the 90% CI.

  6. Barkley Rosser

    Actually Menzie’s chart here has industrial production clearly peaking just prior to the end of 2018, and although months are not precisely labeled, it looks to be a bit before December, 2018, the IP peak.

  7. AS

    Related to nonfarm payroll (FRED: PAYEMS) Y/Y% and real personal income excluding current transfer payments (FRED: W875RX1), I notice the following for the period 2012m1 to 2019m10.

    Nonfarm Payroll 2012m1 to 2019m10
    PAYEMS: Mean Y/Y % change 1.74%
    PAYEMS: Max Y/Y % change 2.27%
    PAYEMS: Min Y/Y% change 1.39%

    Real Personal Income Excluding Current Transfer Receipts 2012m1 to 2019m10
    W875RX1: Mean Y/Y % change 2.97%
    W875RX1: Max Y/Y % change 8.03%
    W875RX1: Min Y/Y % change -3.99%

    The Y/Y percent change is PAYEMS has been much less volatile than the Y/Y % change in W875RX1.
    The minimum % change in W875RX1 occurred in 2013m12 at -3.99%, which was the lowest Y/Y % change since the Great Recession and seemed to indicate a current recession as of 2013m12 with a probability of 74% using a probit model. The Y/Y percent change for PAYEMS for 2013m12 was 1.70%.

    1. Julian Silk

      Dear AS,

      You are right, but you might check something. There appears to be a break in both Menzie’s nonfarm payroll employment growth rates in February 2019. Can you see if this statistically significant?


      1. AS

        Hi Julian,
        Using log data, I get the same output as Professor Chinn in Figure 2 and do not see a break that is statistically significant. Same conclusion for real personal income excluding current transfer receipts. It seems to me that it is ok to use log data for the analysis instead of looking at normalized data, since the normalized data is the log ratio which divides log data by a constant.

  8. ooe

    you forgot to mention the ISM manufacturing index has been in contraction for 4 months. that led to the bankruptcies for services that depend on manufacturing I e transportation. Celadon in bankruptcy which lead to mass firings.

    1. Willie

      Unemployment claims are up now. One week isn’t a whole lot of proof of anything, but it’s been a while since claims were close to 250K, let along above that.

  9. Moses Herzog

    You know something fascinating to me?? I’ve made clear my support of Tulsi Gabbard. She’s not my first choice, but probably in my top 2 choices for president. I’ve had some small annoyances with who she grants interviews to—for example, I about went through the roof when I saw her on Mike Huckabee’s show as I was flipping the remote control past the TBN station. So I hate Huckabee, and that one kind of bothers me. But at the same time, when MSNBC and CNN keep stabbing Miss Gabbard in the back and randomly smearing her I think to myself “What is she supposed to do??” In other words….. if the stations which one would rationally assume would give her air-time, become slaves or water carriers for the Corporations behind the DNC, then at that point Gabbard has to break-off from “the machine” and take airtime to reasonable offers that aren’t just setting her up to be gun-range fodder. So even the Huckabee thing, it makes me grimace, but I can begrudgingly accept that she needs that to promote herself and give her campaign lifeblood.

    But here is the deal now that I have made a short story into a long one—we have the Afghanistan Papers that were released by WaPo, correct?? Now in the last 36–48 hours these Afghanistan Papers have been big news right?? But has one single person mention this is the chorus that Tulsi Gabbard has been chanting for months now—and that the Afghanistan Papers fit Gabbard’s description and campaign message she has been giving for several consecutive months now?? Now some people here say I’m a “sexist”. That’s a label I can happily accept from certain parties. But what I would ask those same people, if a man had said the same thing Miss Gabbard has been saying for months now, and the Afghanistan Papers verified everything he had been saying up to now, would you be hailing that male Presidential candidate as some kind of genius right now?? Why does this “sexist” (me) have to point that one out to you??

    just ponder that in your head 4-5 minutes and be honest with yourself what you would have thought/said about Gabbard if Gabbard was a male Presidential candidate after the Afghanistan Papers came out and then see if you can draw any inward looking conclusions there.

      1. Moses Herzog

        @ Menzie
        That’s a very fair and logical point. But do you think trump’s underlying reasons are the same as Gabbard’s?? I think she has spelled out her case pretty damned well (she hasn’t always done that on other issues, but she has made it exponentially clear on military matters). And I think her articulate case on her military stance is one made by a combat veteran, and not by one who took multiple deferments like Cheney and donald trump.

        When a candidate (or any person) takes a stance, it’s not enough for me to check off a box. I want to know the underlying reasons and logic. She talked to Assad. Does anyone in their right mind who has taken the time to understand her and her background believe she “supports Assad”?? She is taking a pragmatic view to the best options. BTW, being on certain Congressional Committees might make it her duty to interact with amoral foreign leaders, just as Clinton and Gore went to North Korea in 2009. I don’t think that was a holiday trip packed with belly-laughs for Clinton and Gore. Diplomacy means looking for the most utilitarian or optimal end results. So a female leader does that, and what do those calling themselves “broad-minded” say?? If I’m Hillary Clinton and I sit back on my a$$ in the State Dept. while Richard Holbrooke goes out and does my bidding with terrorists, vs Gabbard making the trip herself—do you want to tell me what is the difference there that makes Hillary “the better person”?? Is Hillary like Saint Ronny Reagan now, “the Great Delegator” in Chief??

        There’s ways to get out of places, not like trump and America did to the lionhearted and valiant Kurds. I think Gabbard would diligently search out the better exit points and better exit methods.

      2. Moses Herzog

        @ Menzie
        OK Menzie, you need to know this is better than my usual Youtube nonsense ok?? Maybe watch it during the Christmas winter break or after you got your finals hassles out of the way if your days are very compressed and busy right now. But you wanna go ahead and fast forward or scroll to the 25 minute mark is where you wanna start listening in relation to Afghanistan. In my opinion it’s worth it:

        i.e I’m not putting the link up for the NAFTA stuff, I’m putting it up for the lady who discusses Afghanistan. She strikes me as being an exceedingly sharp-minded woman.

    1. Barkley Rosser

      I see that Gabbard has not made the cut for the Dec. 19 debate. Awwwwww.

      She claims to oppose “regime change wars” repeatedly. But the messed up war in Afghanistan is not a regime change war, although it was originally. It has for a very long time been a “regime defense war.”

      1. Moses Herzog

        @ Barkley Rosser
        The DNC chooses which polls count towards qualification, The relationship between the DNC and Tulsi Gabbard has been well documented, and the DNC is still comprised of many Hillary Clinton cronies. Happily, Andrew Yang has qualified for the debate. I hope Mr. Yang (why do I just want to call him Andrew?? Like he is my neighbor or something) will say a couple kind words for Gabbard around debate time, as he has been known to do in the past, when the debate time is imminent. I think it is a very classy move by Mr. Yang to mention those excluded from the debate, and I suspect many other voters feel that way also.

      2. Willie

        It was a dumb move at the outset. Afghanistan has been where empires go to die, since Alexander the Great. The fact that a variety of people have figured it out shouldn’t be shocking. And, as you point out, it’s in support of a regime that’s been there since the original regime change war. Those who are ignorant of history are doomed to repeat it. Has there ever been and outside power that had any success in taming Afghanistan? Not that I’m aware of. There are a number of powers that got mired there and then left without making any progress in the end. The beginning of our adventure there was bungled completely. Getting in and getting back out is the only logical way to deal with Afghanistan. Don’t try to change things, because you will fail and only make them worse.

        1. Barkley Rosser

          Actually it was not at all a dumb move “at the outset.” Over 90% of the US population supported overthrowing the Taliban regime that was housing the bin Laden-led al Qaeda group that killed nearly 3000 American on 9/11, and we succeeded in overthrowing them pretty quickly, although bin Laden managed to escape into the caves in the mountains that he had overseen the building of. If we had gotten out shortly thereafter, having seen the initial setting up of the initial successor regime, it would have been a success. But we did not.

          As it was, Bush stupidly invaded Iraq while leaving troops in Afghanistan and basically forgetting about them. The result is the mess we have today.

          Of course the homophobic liar who goes on and on about opposing “regime change wars” seems not to realize that if we had gotten out after we won on that one, it would have been a successful regime change war. I do not know whether her failure to know this is a matter of stupidity or ignorance, but her military experience does not seem to have helped her understand the basic facts of this situation.

          1. Moses Herzog

            Thank you General Barkley Junior. What exact date did you have it signified the Taliban was destroyed and overthrown?? I was late to your military strategy class today and none of my neighboring classmates have it in their notes. Are the legends true about your heroism under Dick Cheney at the Battle of Laramie?? His combat exploits there are the stuff of legend we all hope to emulate.




            General Junior, Sir, good luck on your next tour of duty in the Middle East region and as the Brits used to say “Keep the home fires burning”.

          2. Willie

            The fact that 90% of the American public was for overthrowing the Talbian does not make it a good idea. Historically, it has been proven over and over again to be a place you do not want to spend time as an outside power. 90% of Americans responded exactly how you respond when punched in the nose. You get angry and ready for a fight. The response the Bush administration should have made was to go in, find Bin Ladin, deal with him, and let the chips fall where they may. Iraq was a compounding mistake. At the time, I was fairly convinced that Bush must have been a double agent working for the Iranians, since they were the only ones who could have benefited from our invasion of Iraq. I also thought he had a pretty good opening to work with Iran in Afghanistan, and then saddle them with the problem. They were not fans of the Taliban at all, and probably could have been sucked in, given the right opportunity. But, Bush rebuffed them and failed to pursue options for working with them there. Another blunder.

            The fact that the orange guppy claims to have some special insight is irrelevant. His record about Afghanistan is ambiguous at best.

          3. Barkley Rosser


            All of these links are about the recent situation. By late 2001 the Taliban was ousted from power and held almost none of this. They regained it later. We could have gotten out then with a win, but as I noted, Bush got all excited about invading Iraq and our troops simply got left there in Afghanistan.

            You are completely misrepresenting things and as is often the case apparently unaware of the historical facts.

    2. ilsm

      War is the pentagon’s business. Released documents on Afghanistan reflect the pentagon has not changed since the 1960’s when it comes to doing “anything”, with no moral limits, to keep the “war profits ball up in the air”. Much like Daniel Ellsberg’s releases and the lesser covered misinformation that lead to Mar 2003 invading Iraq.

      I find it discouraging that press coverage of the pentagon is less investigative and less critical than I can recall in the 20 odd years I have followed weapon system issues and the wars of choice..

      Conference passed the FY 2020 National Defense Authorization Act (NDAA), it is moving forward; it “authorizes” $735B as the basis for the several pentagon appropriations bills. Somewhere near record nominal funds for the pentagon.

      Still relevant are Eisenhower 1961 observations about the power of the military industry complex.

  10. Jan P Perlwitz

    Over the course of the year 2008, the economic and financial world was still wondering whether a recession would be coming, while later its start was actually dated for December 2007. It shows how difficult it is to infer from current data what is really going on.

  11. spencer

    Isn’t that real personal income excluding transfers. It is a component of the concurrent indicator.
    You do not make that point clear.

    Industrial production peaked in December at 110.6 and is now 108.7 (SAAR).

    Manufacturing also peaked in December at 106.4 and is now 104.0 (SAAR)

        1. spencer

          OK, i see you legend to Chart 2. I had not read that before.

          But I still think you should note that it is real in the text.

        2. Menzie Chinn Post author

          spencer: Agreed – in the legend to Figure 1, it says “…personal income excluding transfers in Ch.2012$ (green), … all log normalized to 2019M01=0”.

  12. Moses Herzog

    If anyone wants to watch the impeachment proceedings and doesn’t have cable (I don’t have cable) one good way is looking around on Youtube. You can go there on the left hand side menu they have one category of channels called “Live” click on that. Some impeachment choice should immediately pop up, if they don’t you can click in the search box and type in C-Span and look on Youtube’s C-span channel. You can also look for the “Judiciary Committee” Youtube channel. NBC news Youtube channel also has it. You can go to C-Span’s web page, but unless you have cable you can only listen to the audio, they won’t let you see the video without a cable subscription. Here are two links, the first for the C-Span Youtube video, the 2nd link for the C-span webpage Audio. You have to click on the play button after the link jump and make sure your sound/volume is on:

    Every American (whether you have paid subscription to cable or not) who wants to watch should have the option to watch or listen. God bless

  13. joseph

    Perhaps someone with a better background in history could tell me if there has ever before been a sitting U.S. president who has paid a $2 million fine for stealing money … from a charity.

    1. Moses Herzog

      What donald trump was doing was morally wrong, either way you look at it, but even I have to admit that apparently I had gotten this wrong, and that’s not any easy concession for me. I even hesitated to make this comment. He was using the charity as a campaign event. But I think we still have to value objective facts:

      I think two of “the VSG’s” children also had to attend obligatory classes on how charities are to function by court order, but someone can correct me if I am remembering this wrong.

    1. pgl

      “Regional banks are struggling to move away from the troubled London interbank offered rate, saying alternatives to the key benchmark for variable-rate debt could hurt their ability to make new loans.”

      There is a ton of literature on the “demise of LIBOR”. Much of it seems to be written by clueless lawyers and strikes me as Much Ado About Nothing to quote Shakespeare. Why did we need LIBOR in the first place? We could use Treasury bills as the base for floating rate loans. Let’s explain by an example where on the day of the loan, 3-month LIBOR rates were 2% while 3-month T’bill rates were 1.75% so the infamous TED spread = 0.25%. Uncle Moses wants to take out a $10 million loan to buy his dream house and his bank says “look with you credit score we need to charge you’re a 1% loan margin” on top of the 3-month LIBOR. Assuming you wanted a floating rate loan (if you wanted a long-term fixed rate loan none of this matters), you have just agreed to have the bank impose on you a credit spread = 1.25% (loan margin + TED spread). But suppose Uncle Moses protested to having a LIBOR based loan. Mr. Banker could offer Uncle Moses a floating rate loan set at the 3-month Treasury bill rate plus 1.25% margin. Exactly the same deal with the LIBOR crooks completely cut out of the deal.

      BTW – this Secured Overnight Financing Rate (SOFR) discussion is weird at so many levels, which I noted here:

      1. Moses Herzog

        @ pgl
        It’s not just about Uncle Moses or Poor Sap X going to get a mortgage loan. And I think most sophisticated observers get that, and understand why the “voluminous” discussion has ensued.

        When we are sold on “efficient markets” and then told a “market rate” or bid has been pulled out from a trader’s or bookmaker’s lower intestinal cavity, people have a right to know and be angry about what was going on. It’s not just “an academic question” or even “just” a lawyer trying to figure out how to get bankers and broker/dealers a get out of jail free card. It also is related to the “fragility” (yes, shockingly, a word commonly used long before Barkley’s near homo-erotic fascination with Nicholas Taleb) of financial markets.

        1. pgl

          I agree that the LIBOR scandal was GD awful. My only point is that no one should lament over the demise of this damn statistic.

        2. Barkley Rosser

          Yes, Moses, “fragility” has been used in the corporate finance lit for many decades. I do not think Taleb ever claimed to have coined it, and I certainly never said he did, and why you feel the need to drag him into this in an insulting way is basically a mystery. Looks like you are the one with a “fascination” with him of whatever sort, not me.

    2. pgl

      SOFR and the Transition from LIBOR by Michael Held (from Brooklyn) ala 2/26/2019:

      “What keeps you up at night?” Of course, at the top of my own list is whether my daughter is going to get into a good kindergarten in Brooklyn. But not far below that is reference rate reform.”

      Well that’s nice. But I hate it when guys say “what keeps me up at night”? Unless it was a great roll in bad with a hot chick!

  14. joseph

    Moses: “What donald trump was doing was morally wrong, either way you look at it, but even I have to admit that apparently I had gotten this wrong.”

    You seem to have gotten a lot wrong. Trump was illegally stealing money from his own charity, the Trump Foundation.

    The first thing you need to understand is that there are two types of 501(c)(3) charities recognized by the IRS. The first is a Public Charity. A public charity is like the Clinton Foundation. This is a charity that solicits money from the public and uses if for charitable uses.

    The second type is a Private Foundation, of which the Trump Foundation is one.

    The two types of charities operate under different rules. Most importantly, a private foundation like Trump’s is supposed to be funded privately, usually by donations from family members. Private foundations are not allowed to solicit donors in most states without registration in each state. Of course, Trump’s private foundation is not registered for donations.

    So the first illegal act is that Trump solicited money for his foundation while on the campaign trail and received over $2 million.

    In fact, Trump has not put a dime into his own private foundation in over 10 years. All of the money is there is solicited, which is illegal. Some during the campaign but earlier from people he was doing business with, which itself is illegal.

    Trump then used this money, not for charitable purposes but to advance his political campaign. Foundations are supposed to disburse money according to instruction from the foundation directors. But instead, Trump simply handed the money over to his campaign manager and told him to spread it around where ever it would best benefit his campaign. This is illegal self-dealing from a charity. So even if some of that money did end up in veterans hands, it did not end up there legally.

    But Trump has been self-dealing from his foundation for many years. For example he was sued in a case in which Trump tried to screw a golfer out of a $1 million hole-in-one prize during a tournament. The man sued Trump and eventually Trump was forced to pay the $1 million as a settlement. But Trump paid it out of his foundation, not out of his own pocket. Again, Trump was illegally using charity funds to pay his personal obligations.

    In another case, Trump was fined $1000 per day in Florida for having an over-sized flag at his golf club in Mar-A-Lago. It was a violation of a long standing zoning ordinance. The fine built up to over $100,000. Trump sued but instead in a settlement he agreed to reduce the size and pay the $100,000 fine. But he paid the fine out of his charity instead of his own pocket. He was again was paying his business debts out of his charity.

    There are many more examples, but Trump was basically using his charity money as his personal slush fund. He was stealing money from his own charity and that is why he had to pay $2 million fine.

    And this wasn’t one of those cases in which you pay the fine but do not admit guilt. In this case Trump had to admit that he was executing illegal transactions as part of the plea agreement.

    The guy is a crook. He stole $2 million from charity.

  15. joseph

    Oh, and Trump also bought hundreds of thousands of dollars of stuff like portraits of himself using his charity money. That’s just plain old theft.

    And he also illegally wrote a check from his charity for $15,000 to the campaign fund of Pam Bondi, former attorney general of Florida who miraculously dismissed the Trump University fraud case a few days later. This was a slam dunk case that Bondi just terminated while other states like New York and California collected $25 million from Trump in fines. It was a bribe, using charity money from his slush fund.

    But here’s the kicker. The so-called billionaire went to the trouble to write out a $7.00 special check from his foundation in 1989 to pay for his son Donny Junior’s membership in the Boy Scouts. Introducing his son to the family crime syndicate at an early age. He’s a criminal and he’s incredibly cheap. What kind of person goes to all that trouble cheat $7?

    1. sammy


      you need to turn your $7 eye to the Clinton Foundation, or the billionaire Al Gore, or Hunter Biden or Uranium One, or even Cattlegate, where Hillary turned $1000 into a $100,000…..

  16. ooe

    the economy is already in recession evidenced by the ISM manufacturing index which as been sub-50 for 4 months. I will mention again. the BLS wiped away 25 % of the job creation in 2018 when the economy grew at 2.50%. Now, the economy is growing less in 2019, the jobs figures will less than reported.
    Also, you are now getting signs of rising unemployment evidenced by the first time jobless claims rising to + 250000.00
    Companies are starting to fire peoples.
    Also, Trump capitulated to the Chinese on his Tariffs. He knows the score.

    1. Willie

      Still mixed signals. I don’t think we are in a recession yet. Builder confidence is high, which is very much a non-recessionary indication. Boeing is going to shut down 737 MAX production until recertification sometime in February or March. That will cause layoffs not just around here but anywhere with an aerospace economic component. Unemployment was only up one week. It could be a fluke or it could be an omen. One week isn’t a trend. Growth has been revised down, and predictions are for anemic growth at best. My take is we are seeing a slowdown now, but not shrinkage instead of growth.

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