Monthly Archives: June 2016

Conspiracy Theories

Not much going on…same as usual. The media is like stack of megaphones placed in front a buzzing insect, amplifying the noise until it’s defending, working everyone into a frenzy. Tuning out the sensationalist media hype is the easiest way to not make investing mistakes, as well as live a happier life.

There are some conspiracies surrounding the Orlando nightclub shooting: what if the gunman didn’t act alone?

For some reason everyone gets worked up over conspiracy theories. ‘What if we’re all being lied to?’ What if? Then what. Usually there’s a pause, because, ultimately, it doesn’t matter. Are you going to stop going to work because 911 may have been an ‘inside job’. Does it affect your life in any material way, besides the nagging doubts over what your read and see from the media. Are people suddenly going to wake from their metabolic induced stupors and raise hell. No.

Were there multiple shooters? Doubt it. Otherwise there would be a manhunt. Given that there were 400 people in the nightclub, it would have been impossible for there to have been a second shooter without witnesses providing at least a facial composite. There is only one instance in recent history of a mass murder being unsolved, the Las Cruces bowling alley massacre, which amazingly 25 years later is still cold.

Related: Second shooter involved in Orlando massacre theories debunked

FOMC Stupidity

Form the Reformed Broker: This is a low-flying panic attack

There are too many people who believe that just because they have a blog and opinions, they can also pretend to be fed chairman, because obviously the fed is doing it all wrong, and it’s up to the lowly blogger to ‘set them strait’.

The FOMC meeting is on Wednesday, so as expected there is a lot of Thursday morning quarterbacking by said bloggers about how the fed is ‘holding back the economy’ by not raising rates.

Josh writes:

I’m not a Fed critic, but this is just getting pathetic now. You think you’re protecting the economy with NIRP and ZIRP but at a certain point, you’re really just threatening it.

Prima facie, this logic is flawed. There is no evidence arbitrary raising rates and or setting a high inflation target will spontaneously boost real growth; if it did, they would have done it already. Japan would have done it. Europe…everyone! lol Really, think about it. I’m sure they (the fed) have considered all the options, with PHDs perusing hundreds of studies, eventually setting on low interest rates as the best form of policy. The odds of a financial planner blogger who moonlights as an economist suddenly finding something the fed has ‘missed’, is zero.

f you’re trying to produce confidence, then jeopardizing the ability to earn profits among the largest banks in the world is probably not the way to do it. And that’s exactly what these policies are doing, globally. Look at the European banks right now!

Hmm….last time I checked major banks like JP Morgan, bank of America, Citigroup, and Goldman Sachs are reporting record profits and have record high balance sheets. There is, again, no evidence they are being hurt by low interest rates. Why would they? Think about it. They make money from the differential (what they charge to lend vs. the base rate), so it doesn’t matter. If they are lending money at 10% and risk-free is .25%, that is a damn good deal for them. And all those overdraft fees, too. Also, high interest rates in 2005-2006 didn’t stop the financial sector from melting down in 2008. Europe’s banks are weak because Europe’s economy is also weak, not because of low interest rates.

Employment is growing, but probably toward its limit. Wage growth, despite the headline miss on jobs last month, is sticking. Employers are reporting open positions they need to fill and difficulty finding candidates. “Transitory” commodity weakness has been ameliorated somewhat by the rebound in crude. Housing is solid. Retail sales are not as bad as expected.

In spite of firming data, raising rates is unnecessary due to reserve currency status and the insatiable demand for low-yielding US debt, attributable the ‘flight to safety’ trade, which has really picked up since 2014 as Europe and emerging markets have faltered. Also, raising rates may tip the economy in a recession, like in the early 80′s after Volker embarked on his massive rate hike campaign. Unlike the 70′s though, there is scant evidence of inflation as measured by the CPI, although inflation exits elsewhere like rent, healthcare, and tuition.

Another common argument is ‘the fed is losing credibility’. Yaaawn. Been hearing that since 2009, and the market has since rallied 200%, and inflation is low and the dollar is high. Had you listed to those doomsayers you would have missed on one of the greatest stock rallies in history. Because they are not an elected office, the fed doesn’t care what you think, anyway.

The Physics Police

This article went viral: Dear Dr B: Why not string theory?

This article is a casebook example of the the modus operandi of liberalism, which is to try to ‘save’ people from perceived evils as determined by said liberal, whether it be big corporations, ‘greedy’ capitalists, ‘predatory’ lenders, genetically modified food, ‘institutional racism’ (a favorite), an so on. Or how liberals try to intervene in the marketplace, because they think they know what is ‘best’.

In this article, it’s about ‘saving’ scientists from wasting time on string theory, because Sabine Hossenfelder has apparently taken it upon herself to be the arbiter of what is worthwhile or not, for the ‘good’ of the physics community.

Because we might be wasting time and money and, ultimately, risk that progress stalls entirely.

Some days I side with Polchinski and Gross and don’t think it makes that much of a difference. It really is an interesting topic and it’s promising. On other days I think we’ve wasted 30 years studying bizarre aspects of a theory that doesn’t bring us any closer to understanding quantum gravity, and it’s nothing but an empty bubble of disappointed expectations. Most days I have to admit I just don’t know.

New theories take not just decades, but centuries to develop. There was at least a three-hundred year gap between the development of Newtonian gravity and general relativity. Much of string theory is only a couple decades old. If physicists and mathematicians decide that string theory is untenable, they will gradually abandon it, similar to how in capitalism products become obsoleted in favor of newer, better ones. There is no need for someone to determine which theories are worth pursuing or or not; the ‘marketplace’ of ideas does that automatically, gradually nudging the natural progression of research towards better ideas as old ones are discarded or modified. For example, 120 years ago aether theories were conjectured the propagation of light and gravitation, but these theories were later were supplanted by special relativity.

Preventing Bad Policy

The general consensus by economists and policy makers is that the 2016 United Kingdom European Union membership referendum (brexit) will have negative consequences:

IMF says Brexit ‘pretty bad to very, very bad’

The Brexit delusion

Brexit is a needless complication, an attempt to fix something, that while flawed (especially about immigration), isn’t yet sufficiency broken to justify such drastic measures, especially at a time when Europe’s economy is already weak. The effects of Brexit are manifested in decreased business confidence, falling real estate prices, flight to safety (government bond yields fall and private debt yields rise), and increased volatility both in equities and currencies. Because the economic consequences of Brexit are so unpredictable, banks have become very skittish, and lending activity has slowed and cash reserves have surged. The total indirect consequences beyond the initial shock to the stock market and economy may total a trillion dollars over many years, until the entire thing is sorted out.

Brexit is what I would call ‘bad policy’, designed to fan populist appeal but bad for the economy. A government needs systems in place, or at least some what to dissuade, potentially disastrous populist policies.

One solution is to put the super-rich in power, who have the most to lose socioeconomically if things go wrong and thus in self-preservation will try to enact’ good policy’ that is stabilizing, not populist policy that is potential destabilizing. Less wealthy politicians have less to lose as a consequence of their actions and hence are more inclined to appeal to the whims of the masses for easy votes. For example, a 90% tax on the rich may win the support of Britain’s bottom 50%, but it may hurt the economy significantly by encouraging divestment and slowing business activity. As in the case of Trump, populism can work well if the desires of the people happen to be aligned with the best interests of the economy and state, an example being the large near-unanimous public support for the war on terror following 911, but no assurances can be made that the public will know what is best, and as Bryan Caplan has shown voters tend to be irrational and ill-informed of issues. Eliminating commonwealths, constitutions, parliaments, and other forms of democracy, replacing it with some type of autocracy or oligarchy, is another solution, in order to immediately veto bad ideas like Brexit. The nice thing about a constitutional republic, vs a direct democracy, is it makes sweeping referendums much more difficult to pass. Only congress can make drastic changes to the law and decisions, such as constitutional amendments and impeachments, not average voters.

How about stock options tied to performance, not just for private companies but for high-ranking government officials, giving policy makers a financial incentive to enact ‘good policy’. Generally, the S&P 500 is a good proxy for the heath of the US economy, although it is vulnerable to large gyrations due to speculation. But the obvious problem with this is it may encourage ‘short-termism’ – creating inflation to boost the stock index past the performance threshold at the expense of the longer-term health of the economy. To bypass this the threshold may be adjusted for abnormally high inflation. For example, if the S&P 500 is at 2000 and the 4-year performance threshold is set at 2200, if the CPI is 5% per-annum (3% higher than the long-term average), the threshold becomes 2320. Having richer politicians may also reduce corruption, for much the same reason cheating is so rare among professional athletes, who are well-paid, compared to college athletes who are not.

Religion of Peace Strikes Again

Suspected Orlando gunman identified, has ‘some connection to ISIS’

Mass shootings and other acts of domestic terrorism have surged under Obama:

Possible reasons include the exceptionally polarizing nature of the Obama administration, which provokes extremists. Also, Obama’s softness on terrorism and affinity to Islam.

As I alluded to yesterday, Islamic terrorism is the greatest threat to civilization right now, not global warming or other natural disasters.

As for 2016 predictions, ‘another mass shooting’ can be checked off. It certainty won’t be the last.

Maybe those on the ‘alt right’ (yes Vox Day) should not be so quick to dismiss Dawkins, Pinker, and Harris, who are right about Islam. Atheist vs. Christian ideological wars are meaningless when Islamic terrorism seeks to destroy all.

Measuring the Influence of NRx Bloggers

The great ‘news drought’ continues…the news and blogging cycle has become moribund as of late, with many bloggers not posting as much, if at all. Then you have the usual hype, and journalists spinning their wheels about small matters, trying to evoke reactions out of readers to boost pageviews. I’d really hate to be a columnist because you’re still contractually required to write even when there’s nothing going on. There’s a story about Trump and some supposedly ‘racist’ comments he made about judge (read Ann Coulter’s take). Paul Ryan is virtue signaling by denouncing Trump, but Ryan has no clout anymore anyway. This is Trump’s show. And then there is the ‘brexit’, which for months Wall St. ignored until only last week when the European markets took a dive on growing concerns that ‘exit’ would win. It’s weird how no one seemed to care that much until only last week.

One question I have pondered is how can the influence, more specifically the intellectual influence, of a blogger be measured? A common way is traffic, but this is hard to determine because such stats are often only available to the blogger. However, the number of comments can give some clue to as to the amount of traffic. Second, another estimate is the number of links, blogroll, and or link-roundup mentions for said blogger. But the problem is this is only a snapshot, and far from the full picture. The number of bloggers is substantially smaller than the total number of people who read and comment about NRx/alt-right topics. A more accurate system is needed, to take into account this large readership.

One idea is to look at comment mentions – whether on social media, forums, and other blogs – for references of ideas pertaining to specific bloggers. If a blogger’s ideas are influential, we would expect a lot of mentions of such ideas on these discussion communities.

Moldbug, who stopped blogging a couple years, is still clearly is number one in this regard; his ideas and posts are frequently cited in forums and discussions, some of his most popular posts being Gentle Introduction, How Dawkins Got Pwned, and Sam Altman not a Blithering Idiot.

A very distant second is Nick Land. I occasionally see mentions of ‘accelerationism’ and ‘increasing entropy’, which are concepts he originated, as well as his 2010 opus The Dark Enlightenment.

An even more distant third is Foseti (who also stopped blogging), The Future Primeval (a highly pacifist take on NRx, run by Warg Franklin and Harold lee), ‘Jim’s blog’, and , I think, Spandrel (Bloody Shovel). But third place isn’t saying much though; I can count most citations with one hand and still sometimes have fingers left over.

Not sure if Scott should be included, since he’s not really a reactionary, but if he were he would fall somewhere around second place, as his hugely influential 2014 article I Can Tolerate Anything Except The Outgroup is still being cited.

Forth place is too insignificant to mention.

I estimate there are about fifty or so ‘alt-right/NRx’ blogs. By this new system of tracking comments and mentions, of these fifty, unfortunately, the depressing reality if very few have much influence. There are many brilliant bloggers (brilliant not only in an IQ sense, but also having a broad repertoires of knowledge) that I have yet to see cited. They write great posts and have great ideas, but I very seldom, if ever, see them mentioned in comments and general community discussion.

Also, it almost certainly helps to be early, as the most cited bloggers began writing about NRx in 2013, and that ‘early mover’ advantage carries through even many years later.

Another reason for this large disparity is because ideas, even great ones, are a dime a dozen. Despite the doom and gloom and hype about ‘dumbing down‘, the world, specifically America, is saturated with smart people and good ideas, and the internet has vastly enlarged the ‘marketplace’ of ideas, resulting in vastly more supply than demand can keep up, and hence unfortunately a lot of good ideas that don’t get as much attention as they deserve. Of the 200 million American adults, according to the normal distribution, 10 million have an IQ above 120, which is quite a lot of smart people – enough to fill 167 stadiums. Against ‘dumbing down’, there is also evidence High school was actually easier 60 years ago, and nowadays it seems everyone is taking AP courses and studying college-level work in high school.

Real World Risk Institute

In the mid 2000′s after a string of losses, Nassim Nicholas Tooleb closed his fund, Empirica Capital, to become a writer specializing in repacking otherwise prosaic ideas. Despite Taleb’s fame and all the media attention about ‘black swans’, Tooleb’s CV is unimpressive. All his papers are sparse, lacking in rigor, and published in low-impact journals or on pre-print archives, not top finance or economic journals.

As many are aware, his marketing strategy is create strawmen and misconstructions of experts and the literature on finance, and in tearing down these strawmen he makes himself look smarter in front of his followers, and thus can sell books and speaking engagements to those who take his word on his supposed expertise and foresight. Tearing down strawmen is a strategy also used by Neil Degrasse Tyson and Bill Nye, neither of whom will ever engage the leading scientists on global warming skepticism, because strawmen, by definition, don’t fight back.

Further capitalizing on his ‘black swan’ fame, in addition to books, speaking, and consultancy gigs, all over Twitter Tooleb is now promoting something called the “Real World Risk Institute, LLC” offering “MINI-CERTIFICATES IN REAL WORLD RISK RISK TAKING”. From the website (which looks like it was put together on Geocities):

2 risk takers, former full-time traders (with combined experience of more than half a century)
2 persons known to have an attitude problem
6 Phds (quant/math), 4 businessmen/quants/advisors to hedge funds, 2 owners of analytics firms (competing with one another)
2 UHNWI (Ultra High Net Worth Individuals)
4 persons who specialize in tail events in both theory and real-life practice
More than 25 books, and around 500 scholarly publications. We dominate the subject of fat tails in both theory and practice
4 are probabilists with deep enough a knowledge of probability to respect practice and explain things with concepts and pictures

This ‘certificate’ is only $7,000 for a 5-day course, which works out to around to around $1,400/day.

The obvious question is: If Tooleb’s ‘antifragile’ strategies are so effective, why are aren’t these quants, advisors, ‘risk takers’, and ‘former traders’ actually trading instead of giving lectures? If top traders can make tens of millions, even billions of dollars, to sell such information for $20 (a book) or $7,000 (a seminar) makes no economic sense – unless it doesn’t actually work. Second, as a consequence of promoting this method, if everyone starts buying volatility instead of selling it, it makes buying volatility less profitable because prices become too high – specifically, the skew becomes too steep, which has already happened dramatically since 2013. Although ‘antifragile’ strategies may have big payoffs, the long string off losses (amplified by the skew) often makes the expected value of the strategy negative. The reality is, Tooleb and his posse of traders, quants, and advisers can make far more money with books, consulting, super-expensive seminars than actually trading, and explains why Tooleb closed his fund.

From the FAQ page:’

Why do you call it “Mini” certificate?

A one week program delivers a mini-certificate. We plan a second week in the future, for a more technical certificate.

It’s little more than a very expensive receipt.

Mini is a good way to acquire insights without being overly taxed.

That’s a major reason why the certificate is worthless. An actual quant degree requires mathematical rigor, which this program lacks.

What are the requirements to enroll?

Simply, some experience with risk and, being a typical reader of, say, Antifragile or similar books.

The honest answer: your wallet, and little else. Unlike prestigious organizations (Harvard, Stanford, Singularity Institute, etc.) that screen applicants, the bar isn’t just low – it’s non-existent. A cadaver could get one of these certificates if it could provide the money.

What makes your program different?

Most risk “certification” are design to learn to comply with Basel and other regulations. We teach risk.

Methods taught by non-risk takers wouldn’t have helped with the latest banking crisis. Ours would.

See the two graphs below from Silent Risk

Spoiler alert: his whole strategy is to buy volatility, which has a negative expected value, save for a few instances like 2008.

(Look at VXX, a trading vehicle that is a proxy for going ‘long’ volatility, which has lost some 99.9% of its value since 2009. The reason for this is because one cannot simply ‘buy volatility’; you must buy volatility futures, which are overpriced relative to the spot price due to contango. An abundance of literature also shows that out of money put options are too expensive. The extrapolated distribution that underpins these put options overestimates the occurrence of large declines in stock prices.)

Q: I am considering a career switch. How will the certificate help me?

A: The Mini-certificate is priced at about 40% less than an executive MBA, and requires a tenth of the time and financial commitment, so we believe that the payoff will be quite generous. We certainly have the name recognition since we have more “impact” in the real world than all other people involved in risk combined. (For instance, to get an idea of the name recognition in business, just one of our books, The Black Swan has had many more public mentions than all other books on probability and randomness by all other authors combined.)

40% less and still worthless. An MBA, devalued as those are becoming, is still recognized by employers as a valid credential; a ‘mini certificate’ is not and never will be. You’d be better off just scribbling in crayon the words ‘mini certificate’ on a piece of paper – at least you’ll save $7,000.

Talk about the pot calling the kettle black…

Here is some environmentalism nonsense Tooleb re-tweeted in approval:

No mention of the floods of refugees into Paris, which is the real disaster.

Islamic terrorism is a bigger threat than than all of those. Trillions of particles of dust and asbestos kicked into the air as a consequence of the World Trade Center attack isn’t good for the environment, either. All the wars and suicide bombings due to Islam, causing much destruction and suffering.

Tyler Cowen: What is neo-reaction?

From Tyler Cowen of Marginal Revolution: What is neo-reaction?

The article stats are impressive : 525 comments, 287 Facebook shares, 2337 Tweets, and 162 Reddit ‘posts’, indicating a considerable amount of interest in this subject matter and further evidence NRx and the ‘alt right is going ‘mainstream’.

1. “Culturism” is in general correct, namely that some cultures are better than others. You want to make sure you are ruled by one of the better cultures. In any case, one is operating with a matrix of rule.

That’s pretty much straitforward. As measured by intellectual, creative, and economic output, as well as general well-being, some cultures are superior to others. By that measure, the cannibals of Papua New Guinea are an example of inferior culture compared to, say, the culture of Scandinavia or Great Britain. The Hutu and Tutsi, who are constantly killing each other, could be another example of an inferior culture. Not to single out technologically primitive cultures, SJW ‘culture’ may also be also inferior.

2. The historical ruling cultures for America and Western Europe — two very successful regions — have largely consisted of white men and have reflected the perspectives of white men. This rule and influence continues to work, however, because it is not based on either whiteness or maleness per se. There is a nominal openness to the current version of the system, which fosters competitive balance, yet at the end of the day it is still mostly about the perspectives of white men and one hopes this will continue. By the way, groups which “become white” in their outlooks can be allowed into the ruling circle.

This is related to #1…it just so happens that whites tend to produce more intellectual and economic output than other races, although East Asians are a close second. Racist? No, blame IQ, in which European and East Asian countries score the highest. That’s just biological reality. According to Wikipedia’s list of programmers by nationality, there is no mention of South America or Africa (except for one Nigerian, Kingsley Uyi Idehen). The overwhelming majority of programmers are of European or Russian descent. Same for mathematicians, chess champions, architects, inventors, and physicists.

3. Today there is a growing coalition against the power and influence of (some) white men, designed in part to lower their status and also to redistribute their wealth. This movement may not be directed against whiteness or maleness per se (in fact some of it can be interpreted as an internal coup d’etat within the world of white men), but still it is based on a kind of puking on what made the West successful. And part and parcel of this process is an ongoing increase in immigration to further build up and cement in the new coalition. Furthermore a cult of political correctness makes it very difficult to defend the nature of the old coalition without fear of being called racist; in today’s world the actual underlying principles of that coalition cannot be articulated too explicitly. Most of all, if this war against the previous ruling coalition is not stopped, it will do us in.

Many men in America are struggling to stay above water, weighed down by debt, bad job prospects, and a general economy, society, and culture that seems ‘anti-male’. ‘Outrage porn’, including sites like Gawker and Getting Racists Fired, predominantly hurts white people, who are the most frequent targets of the left (black lives matter and violent ‘rapefugees’ and anti-Trump protesters whose race shall not be mentioned by the media, doesn’t count as racism according to the left), and even white women are not safe from the digital lynch mob (as in the case of Justine Sacco).

4. It is necessary to deconstruct and break down the current dialogue on these issues, and to defeat the cult of political correctness, so that a) traditional rule can be restored, and/or b) a new and more successful form of that rule can be introduced and extended. Along the way, we must realize that calls for egalitarianism, or for that matter democracy, are typically a power play of one potential ruling coalition against another.

Egalitarianism is unworkable any free market and free society. Some will have more than others, and wealth inequality is an unavoidable byproduct of economic growth and technological progress. By virtue of biology, some are born ‘better’ than others, and this is manifested by socioeconomic outcomes. Maybe it sucks that some have more than others, but that just the way it is. One idea to help those falling behind is a basic income, although I’m skeptical it will work. Tighter work visa restrictions is another popular idea.

5. Neo-reaction is not in love with Christianity in the abstract, and in fact it fears its radical, redistributive, and egalitarian elements. Neo-reaction is often Darwinian at heart. Nonetheless Christianity-as-we-find-it-in-the-world often has been an important part of traditional ruling coalitions, and thus the thinkers of neo-reaction are often suspicious of the move toward a more secular America, which they view as a kind of phony tolerance.

As I discuss in NRx and Christianity, HBD and the rejection of egalitarianism may not be compatible with Christianity, which tends to preach an inclusive, economically liberal message. However, as I alluded to yesterday in my essay on Protestantism, the concept of predestination seems relevant in our economy, because by virtue of low IQs and or high time preference, not everyone can be ‘saved’ and many fail. ‘Personal responsibility’ is another characteristic of Protestantism, and many of those on the ‘left’ want to blame the ‘collective’ (society, governments, institutional racism, etc.) for their failures instead of blaming the ‘self’ (having a low IQ, majoring in a worthless subject, and or having a poor work ethic).

that’s enough for now…go ahead and read the rest

Consider Protestantism

Although NRx is ostensibly Catholic and seeks another ‘Restoration’, as a minimalist I tend to identify more with the simple, plain ascetic of Protestantism than the ostentatiousness of Catholicism.

…But first a synopsis to understated the origins of the acrimony between Catholicism and Protestantism, in the context of NRx. The ‘beef’ with Protestantism dates back half a millennia, beginning with The Protestant Reformation – a schism from the Roman Catholic Church initiated by Martin Luther and continued by other early Protestant Reformers in 16th-century Europe – largely inspired by Luther’s Ninety-Five Theses, a searing indictment of Catholicism. Oliver Cromwell, arch-nemesis of NRx, became a Puritan in the 1630s and was the ‘Lord Protector’ of the Commonwealth of England following the execution of King Charles I (in which he was signatory of Charles’ death warrant), until his death of natural causes in 1658. This is also related to the English Civil War (1642–1651), a series of armed conflicts and political machinations between Parliamentarians (“Roundheads”) and Royalists (“Cavaliers”). The Royalists returned to power in 1660, and Cromwell’s corpse was exhumed and beheaded. The Restoration would prove short-lived. The Glorious Revolution, which overthrew King James II of England, ended the era of absolute monarchism once and for all in England. The Glorious Revolution of 1688, followed by the 1689 Bill of Rights and the 1701 Act of Settlement, resulted in a constitutional monarchy that restricted the power of the English monarchy. NRx, in it’s opposition democracy, seeks to restore an absolutist Catholic monarchy.

But even absolute monarchies need to have some flexibility, such as in the case when there is severe mental illness that impairs the ability of the monarch to function, a notable example being Charles VI of France. Charles’ loss of power lead to chaos and conflict in France, eventually leading to the Armagnac-Burgundian Civil War, which lasted from 1407 until 1435, beyond Charles’ reign. This underscores the potential fragility of absolute monarchies, due to the lack of redundancy and difficulty of transfer of power.

But is it possible to have a secular-type monarch, or a monarchy with elements of Protestantism while at the same time rejecting 95% of democracy, save for a set of laws? In the history of Europe, Catholic monarchs outnumber Protestant monarchs by a 2-1 ratio. Past examples of Protestant monarchs include the kingdoms of Prussia, Denmark, the Netherlands, and Sweden.

Catholicism is the dominant religion of South Europe, which struggled with debt and recession since 2007. Same for South America. Russia, whose church is Eastern Orthodox, a denomination of Catholicism, like Brazil has fared poorly due to commodity dependence and falling energy prices. Spain, Portugal, Ireland, Greece, and Italy – all predominantly Catholic countries – suffered severe financial distress during the aftermath of the 2008 financial crisis, whereas the Nordic countries fared much better.

According to the Transparency International, Protestant Northern Europe ranks among the least corrupt. Catholic countries, such as East Europe and South America, rank higher.


To gain some perspective, let’s look at it globally: an outfit called Transparency International tracks corruption and perceptions of it world-wide and ranks them according to a uniform standard. The latest survey of 2012 puts the Philippines in the bottom half, at no. 105. (out of 174 countries ranked)

Now here’s where it gets interesting: when I was doing research for this paper, I noticed that very few Catholic-dominated countries could claim to have low levels of corruption, as per this index. Only Switzerland is in the top 10, and one can argue that it is a very secular state with divorce and reproductive health laws in place. Italy hovers near the bottom of the first half, at no. 72. Spain though, fares better at no. 30. But for countries who shared the same trajectory as the Philippines – conversion through colonization – the results are dismal; South and Central American countries land in the bottom half. Is there a correlation here? Is there a pattern?

Also, the so-called ‘Protestant Worth Ethic’, as described by Max Weber, may have also played a role in the success of Protestant countries (United States, Scandinavia, the Netherlands, Germany and Switzerland) relative to Catholic ones.

In spite of religion, a lot of these Catholic countries have signs of moral decay, which the church is powerless to control. Whereas in America pornography is still heavily regulated, and the media is heavily regulated by the FTC for ‘obscenity, indecency & profanity’, borderline-porn is not uncommon in Spain, Brazil and Italy, where it’s readily visible in newspapers and TV.

Weber traced the origins of the Protestant ethic to the Reformation, though he acknowledged some respect for secular everyday labor as early as the Middle Ages.[6]:28 The Roman Catholic Church assured salvation to individuals who accepted the church’s sacraments and submitted to the clerical authority. However, the Reformation had effectively removed such assurances. From a psychological viewpoint, the average person had difficulty adjusting to this new worldview, and only the most devout believers or “religious geniuses” within Protestantism, such as Martin Luther, were able to make this adjustment, according to Weber.

In the absence of such assurances from religious authority, Weber argued that Protestants began to look for other “signs” that they were saved. Calvin and his followers taught a doctrine of double predestination, in which from the beginning God chose some people for salvation and others for damnation. The inability to influence one’s own salvation presented a very difficult problem for Calvin’s followers. It became an absolute duty to believe that one was chosen for salvation, and to dispel any doubt about that: lack of self-confidence was evidence of insufficient faith and a sign of damnation. So, self-confidence took the place of priestly assurance of God’s grace.

Because Calvinism, unlike Catholicism, didn’t guarantee salvation for all, this created an incentive for people to find other ways to be ‘saved’, such such as by accumulating wealth. This could explain why the economies of Protestant countries tend to reward individualism, and why Protestant countries are more economically successful.

From Culture Matters: How Values Shape Human Progress, By Lawrence E. Harrison:

Part of the problem with Catholicism is the relative ease of absolving sins, which means that there is less accountability for malfeasance, whereas Protestantism is more punitive.

Brazil recently impeached former president Dilma Rousseff for corruption, but ironically anti-corruption minster Fabiano Silveira also resigned shortly after due to…corruption charges, and that seven of the new ministers have corruption charges on them. Not to single out Catholicism, Turkey, another low-IQ country like Brazil, is also a hotbed of graft and incompetence. In America, the Tea Pot Dome scandal and Watergate are still a big deal, to give you an idea of how rare corruption is compared to the everyday corruption in Brazil, Argentina, Venezuela, and Turkey, which fills volumes.

Additional sources:

Protestant v Catholic: which countries are more successful?
Why is Spain so corrupt?

The religion of bribes

There definitely is a corruption problem in Catholic countries that needs to be addressed.

Job Report: Much Ado About Nothing

The usual suspects are freaking out about the bad Friday jobs report, which showed unusually weak hiring (38,000 jobs created vs. estimates of 150k). However, as you can see below, every year for reasons unknown there are a couple unusually low prints, and then it rebounds.

In Jun 5, 2013, the number missed badly, yet it proved temporary. Same for early 2012.

Not much to lose sleep over.

Seeing the massive consecutive losses in 2008 helps put this recent miss in perspective.

For selfish reasons, I kinda hope it does get worse because I am long treasury bonds (which benefit from low interest rates) and it increases the odds of Trump winning.

Odds are the July number will be above 100,000 again, and no one will stop to ask why just a month ago everyone was losing their minds.

I decided to run a statistical analysis to see how abnormal or unexpected the bad job report really was. I downloaded BLS data dating back to Jan 2010 (78 months), which is close to when the recession ended, from from and uploaded it to, an online spreadsheet program. I calculated a mean of 136,000 jobs created per month and a standard deviation of 44,000. Calculating the z-score for 38,000 yields a probability of 1.4%.

The result is a binomial distribution of a population size of 78 with probability of 1.4% of a worse job number and 98.6% of it being better than 38,000. Now the probability that there will be zero occurrences within the 78 months of worse number than 38,000 is only .986^78 ~ 33%, so we were due for a bad number.