“Just a flesh wound,” said the Black Knight.

The Peeps Ponzi

The PEEPS case is a tangle of litigation between the company (“Just Born Quality Confections”), its union and the multi-employer fund that currently manages pensions for the 250 or so union workers.

The core issue is that the company wants to phase out the defined-benefit pension plan by placing new employees in a 401(k) or defined-contribution type of plan, while current workers will keep their defined-benefit plan.

If you look through the smoke, it is clear that the issue is not the new employees. Union workers seldom give a damn about new employees, yet in this case they had gone out on strike in their support. Seemed unlikely, so I took a closer look. The key is the pension fund. The new employees, who are presumably young and not likely to claim pension for a long time, are needed to provide contributions, which will fund the pensions of the older workers. In other words, the pension fund has become a Ponzi (just like Social Security) where new money is required to fund withdrawals because investment income is insufficient. Of course, the young workers are unlikely to ever see a dime of the money they put in or the company puts in on their behalf.

So, if the company gets its way, this will set a precedent which others will likely follow, bringing down this and other multi-employers funds.

Ad Blocking?

I’m finding more and more sites are demanding that I turn off my “ad blocker” to view their content. This is disingenuous because I am not attempting to block advertisements. I am, however, blocking trackers which are attempting to capture my Internet activity and sell this personal information – doing exactly that for which Facebook is now in hot water.

I understand that many sites rely on advertising revenue to support themselves. Fair enough. Just show me ads, count the page views, but don’t track me and we’re good. Or just go subscription-only. But don’t lie to me that about ads when it is really the personal data that you want to steal. BTW, all I need to do is show harm and then all the elements of fraud are present.


The PhD Standard

James Grant (Grant’s Interest Rate Observer) in 2011:

“The 2007-2009 real estate debacle is the monetary equivalent of a chain reaction on a foggy California freeway. The trouble with our monetary mandarins is they [the Fed] believe impossible things. They have persuaded themselves that the central bank can pick the interest rate that will cause the GDP to grow, payrolls to expand, and prices to levitate by just two percent a year, as they measure it. It is impossible as experience and common sense attest. Yet, they hold it to be true.

… William F. Buckley famously and persuasively said that he would rather be governed by the first 400 names in the Boston phone directory than by the faculty of Harvard. Unaccountably, this Congress has entrusted the value of the dollar that we own, that we transact to an independent committee dominated by monetary scholars. In one short generation we have moved to the PhD standard from the gold standard.”

The insanity continues.

Artificial Intelligence

What nonsense. Supposedly we are to cower in fear because AI robots will first of all take all our jobs and then rule us. While I don’t want to take away from the skill and expertise of the developers, the sophisticated software that is driving cars around is no more intelligent than this toaster. It can recognize properly cooked toast.

The novel technology that has enabled so-called AI in recent years is neural network based pattern recognition. Often called “deep learning,” it allows, for example, vision systems to recognize objects and audio systems to recognize speech. Powerful and useful stuff indeed, and a true breakthrough, but the resemblance to human intelligence stops there. Then the programmer must take over.

The reality of this is well explained in this article, which describes the approaches taken to win Amazon’s Alexa Prize, a $1 million competition to build a chatbot capable of carrying on a 20 minute conversation. The point is not the failure, but that the approaches taken were basically text manipulation, not understanding. Intelligence requires semantics, not just syntax.

Autopilots and flight management systems (FMS) have been safely navigating aircraft from takeoff to roll-out for years. Yes, ATC keeps them clear of traffic although they do warn of potential conflicts. The real enhancement that enables this kind of technology to be extended to the highway is the ability to recognize objects in the car’s environment. The car’s response to identified conflicts, though, has to be programmed case-by-case in the old-fashioned way.

If your work requires intelligence, you have nothing to worry about. Perhaps more breakthroughs will be made. However, Sir Roger Penrose has speculated that the brain is actually a quantum computer. In which case you probably don’t have to worry for quite a long time.


From messaging records dating from when Mark Zuckerberg was 19, first leaked to the media in 2010.

Zuckerberg: Yea so if you ever need info about anyone at Harvard, just ask. ‘i have over 4000 emails, pictures, addresses, sms

Friend: what!? how’d you manage that one?

Zuckerberg: people just submitted it. i don’t know why. they “trust me”. dumb f***s.

Credit Impulse

The credit impulse isn’t the sudden urge to borrow – it is the additional income and concomitant spending that results from an increase in aggregate debt. Spending capacity = net income + credit impulse. Credit impulse (annual) = current debt amount – year ago debt amount. Not complicated.

The credit impulse is how easy money creates economic expansion as economic entities – households, corporations, governments, etc. are able to spend more than they earn.

The downside is that, sooner or later, the entities reach the limit of their ability to borrow. The credit impulse disappears and the economy shrivels. Incomes diminish and defaults begin as entities can no longer service their debt. Credit becomes very difficult to obtain, lenders fail as capital losses mount and the economy accelerates downhill as the credit impulse goes negative as borrowers are unable to roll over their debt.

Let’er Rip, Potato Chip

Larry Kudlow, newly minted economic advisor, was on CNBC last night, advising that the Fed should “Let the economy rip.”

Larry, if you want to see what happens when a country monetizes its deficits, look south.

Oh Dear

Apparently President Trump has chosen Larry Kudlow as his top economic advisor. All I can say is ROFLOL.

If he wanted a TV personality, the least he could have done is choose one with brains, for example Kathleen Hays. Even Maria Bartiromo would have been a better choice. I can’t believe I wrote that, even if it is true.


Stephen Hawking died peacefully last night, aged 76. Considering that he suffered from ALS and, at age 21, he was given two years to live, not bad. His children wrote:

“We are deeply saddened that our beloved father passed away today. He was a great scientist and an extraordinary man whose work and legacy will live on for many years. His courage and persistence with his brilliance and humour inspired people across the world. He once said, ‘It would not be much of a universe if it wasn’t home to the people you love.’ We will miss him forever.”