Daniel Goldman

Archives for July 2017

Right Wing Priorities: Liev Schreiber Outrage

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Liev Shrieber allowed his son to dress as Harley Quinn at Comic-Con. The “conservative” right of course was outraged. Really?! Why were they outraged? It is because he allowed his son to “cross dress.”

Seriously, get over it. So the kid put on a woman’s outfit for the day. Admittedly Quinn is somewhat sexualized in media. However, women are simply very often sexualized. But even that concern was secondary for most people it seems. Consider this tweet by Ashley Rae.

As you can see, she did realize that she should be outraged by something more than a boy dressing as a girl. But it was only an after thought. Now, if there was anything to be outraged at it is not the fact that Quinn is a woman, but the fact that Quinn is a mentally unstable criminal who is clearly suffering from Stockholm syndrome. But you do not see the right mentioning that or being concerned about that. Nope. It is simply a matter of the boy wearing a dress. Oh wait. It’s not even a dress. It is a shirt and shorts.

So grow up people. It is Comic-Con. It is COSPLAY. And even if it were simply how the kid wanted to dress, then whatever. If you have no issue with a female wearing that outfit, then you should not have an issue with a male wearing it.

The post Right Wing Priorities: Liev Schreiber Outrage appeared first on Politicoid.

Morning Snapshot 7/24/17

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This is a very quick analysis based on last week’s closing signals. First, (SPY) is not showing all that much direction, at least on the daily time scale. It could go either way. The Russell 2000 (IWM) is signaling a strong downward movement. Friday’s candlestick sets up a new resistance level at 1452. Look for confirmation of a downward trend today.

The S&P 500 is showing continued positive movement on the weekly time scale, but last week’s candlestick was much weaker than the prior week’s. The Russell 2000 finished last week off fairly weak. I would not call it a traditional shooting star doji, but it is close. At the very least it is showing increased consolidation.

Risk appetite is still fairly strong, based on the extended risk appetite index. However, both gold (GLD) and usd/jpy (FXY) is on the downtrend, with the yen reaching a ten handle last night. However, VIX is still near record low, which is signaling limited expectation of volatility in the short term.

Market Snapshot Image

Watching

There’s a fair amount of information coming out this week. One that everyone will be watching is the GDP estimate for Q2. The Atlanta Fed’s GDP Now estimate has been declining, more or less consistently, since the first estimate for Q2 was released. It is now holding at around 2.5%. Consumer confidence data is going to be released on Tuesday, although the perception of the economy and how it is actually doing seem to be fairly disconnected right now. We also have the FOMC announcement on Wednesday, even though it is not expected that there will be any change in rate policy.

The post Morning Snapshot 7/24/17 appeared first on Trading Politics.

Understanding Taxation of Religious Organizations

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There is a not of misinformation regarding the taxation of religious organizations. I assume most of it is unintentional and simply due to ignorance, but it must be addressed.

First off, religious institutions are not tax exempt. 501(c)(3) not profit charities are tax exempt. Many, but not all religious institutions qualify for that tax exempt status and do not have to pay taxes on revenue which is related to their charitable activities. They still have to pay taxes on other revenue, which means that not all revenue to religious institutions, even tax exempt ones, is untaxed. However, the common rhetoric by institutions like American Atheists and Atheist Republic are that churches are being subsidized by the government. It’s true that in some limited cases religious institutions receive some government funding. This is true for grants to church run food pantries, but again, they are grants towards running food pantries, not religious activities. The rest of what they call “subsidies” is really nothing more than religious institutions paying less in taxes.

A subsidy is payment to reduce the expense of something. Refusing to take a certain amount from someone or something is not a subsidy. They are a world apart. Without the outside institution giving a subsidy, the cost would be higher. Without the outside institution taxing, expenses would be lower. Furthermore, these anti-religious organizations often cite a very flawed study on the topic. “Research Report: How Secular Humanists (and Everyone Else) Subsidize Religion in the United States” by Ryan T. Cragun, Stephanie Yeager, and Desmond Vega shows either a complete lack of understanding of corporate finance and taxation or a complete disregard for it.

And yet this study is repeatedly cited as a way to attack religious institutions. As just one example of the flawed methodology, the study claims a $35B federal tax subsidy. Ignoring that tax breaks are not subsidies (otherwise every time you mark down a deduction on your tax return you would be getting a subsidy), the figure simply takes the total estimated revenue for the church and multiplies it by the top marginal tax rate. There are a few issues here. The study at least admits that it is assuming that using the top marginal tax bracket is reasonable, although it does little to justify that claim. Second, corporate taxes are graduated, just like personal income tax. Corporations do not pay the highest corporate tax rate multiplied by the total revenue. This brings us to the next flaw. Corporations are not taxed on revenue. They are taxed on profit. In other words, it would also be necessary to calculate how much of the revenue goes to payroll, resources for charitable activities, etc.

Finally, the study fails to take into account how a shift in taxation status of these institutions would impact contributions and charitable activities. Likely many religious institutions would cease to exist. That would mean a lot of new unemployed people who would have to either find new jobs in an already depressed job market or live off of welfare, thus defeating a lot of the purpose of eliminating the tax advantaged status.

Of course, the whole argument is a bit hypocritical, as American Atheists and many other institutions take advantage of the same tax breaks, falling into the 501(c)(3) non profit organization group. What these groups really want is to have religious organizations excluded from the exemptions, even though that would be discrimination based on religiosity.

Government Funding

Other arguments relating to this topic include claims that if religious organizations were taxed, it would have a significant impact on the government’s ability to function. In 2012, total government expenditures amounted to roughly $6T. Even if I were to accept the $100B tax loss calculation that the aforementioned study claims exists, that would account for roughly 2% of total government spending. Additionally, a good chunk of tax revenue goes to funding illegal wars and committing outright acts of terror. Perhaps before seeking additional ways to fund the government, Atheist Republic et. al. should be seeking to change how government spends the money it already has.

Further Reading

 

The post Understanding Taxation of Religious Organizations appeared first on Politicoid.

The Johnson Amendment

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The Johnson Amendment is seen as a legal tool for limiting religion. But it is actually not specific to religious institutions at all. Yet it is often applied disproportionately, especially when it comes to cases with ambiguity such as NPR’s indirect politicking.

Constitutionality

There are a few issues with the Johnson Amendment. The first is that it was poorly conceived in the first place. It was a reaction to a non profit organization badmouthing Lyndon B. Johnson while he was running for his senate position. The second issue is that it is unconstitutional. It creates a conflict between the First Amendment and the Sixteenth Amendment. Conflicts between amendments must be dealt with in the least restrictive way. This is the general practice when dealing with conflicts in contracts (Stack Exchange). The least restrictive way of dealing with the conflict would be to eliminate the legislative act creating the conflict. This is reasonable because legislative acts always take lower priority than a provision in the constitution.

Hypocrisy

Another minor issue is the one that I have with institutions like American Atheists. It is clear that their issue is with religion, and not with upholding the Johnson Amendment. For one thing, many of their followers think that the law prevents all religious institutions from engaging in politicking. This often coincides with the incorrect belief that no religious institutions pay taxes. That is not true. Only 501(c)(3) non profit organizations are prevented from politicking and it is that status which protects many churches from paying taxes. But that also means that every other 501(c)(3) non profit entity should be blocked from politicking.

But NPR has generally been immune from this restriction. Part of this immunity derives from the ambiguity regarding what constitutes politicking. Direct support or opposition of a candidate, engaging in activities to help fundraising for a candidate, etc are clearly politicking. NPR does not engage in any of these activities. However, it goes well beyond simple reporting. It editorializes candidates and parties. There is a clear track record of being critical of Republican candidates and politicians.

There is a distinction reporting and editorializing. If a candidate’s actions, positions, etc are editorialized in a positive or negative way, this should reasonably be considered politicking. There is no difference between repeatedly editorializing a candidate in a positive way and endorsing that candidate. If an institution said “candidate X will be great for this country, everything we ever wanted will come true” that is an endorsement if candidate X, even if they never come out directly and say “vote for candidate X.” I pushed Atheist Republic on this issue after a tweet on the topic, but the admin of the Twitter account went silent.

Further Reading

 

The post The Johnson Amendment appeared first on Politicoid.

Market Snapshot 7/14/2017

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Market snapshot for 7/14/2017: SPX hitting resistance while risk appetite and perception are potentially nearing a reversal.

Sometimes it helps to look at more than one metric when analyzing future market direction. It is still hard to make any short term predictions, but SPX does seem to be hitting resistance. This trend could go either way, but VIX and my extended risk appetite index seem to be doing a u-turn. This could suggest at least a short term decline in SPX.

The post Market Snapshot 7/14/2017 appeared first on Trading Politics.

Deflationary Cryptoassets

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Cryptoassets are an emerging class of assets with a lot significant potential for wealth generation and preservation. Involvement in the “Cryptocurrency Ecosystem” requires a fair amount of knowledge about underlying block-chain technology, but it also requires significant understanding of monetary theory. $BTC, $LTC, $ETH, and many other cryptoassets have a hard cap. Once reached, no new coins are created. This drives the already speculative asset class towards even higher rates of deflation.

Asset Comparison

This natural deflation makes “cryptoassets” like $BTC interesting speculative vehicles, but it is problematic if the desired goal is widespread adoption of the asset as a currency. Consider the following thought experiment. Suppose we have two assets, A and B, where A holds its value at a roughly constant level and B is deflationary.

Given the option, a rational person would spend A first. A week from now, a unit of A will still be worth the same. A unit of B will be worth more, on average, and so if a person spent B instead of A, there would be an economic loss. This means that consumers, businesses, etc, while probably having little issue with accepting B, will not be willing to use B for purchases, payroll, and other expenses.

This drives B out of circulation as hoarding increases. That further drives up the market price of B as the available supply continues to decrease. Of course, while someone might prefer to be paid in units of B, very few would say no to money and so A will be the asset that is actually traded around. To be a form of currency, an asset must be used as an intermediate item of exchange. In the thought experiment, B is driven away from being a currency while A is pushed through circulation.

Consequences

Therefore deflationary assets make poor currency. They are at best investments, and at worst, high risk speculative vehicles. That is the case for the major cryptoassets. The risk stems from the fact that miners are needed to maintain the security and stability of the underlying block-chain. Right now, miners are making their money through payments for generating new coins, but once the hard cap is reached, the only source of revenue will be transaction fees.

Transaction Decline

Transaction fees are more or less capped. A person will not pay significant more for a transaction just because the asset is worth more. If a person is willing to pay 1% for a transaction now, they will not pay 10% just because the asset has increased in value. They are still spending more value. Therefore a declining number of transactions resulting from the deflationary nature of the asset class will result in declining transaction revenue. This will push miners out of the market and make transactions more difficult, while also creating voluntaries in the block-chain. At best, this will mean that it will be difficult and expensive to make transactions. At worst, this will result in a collapse of the block-chain itself.

Investment Strategy

For the time being, hard capped cryptoassets will likely continue to be reasonable speculative vehicles. But there is likely to be fluctuations in which assets are popular and it is unlikely that any of these assets will become used as a broadly accepted currency. For long term investments, seek out stable cryptoassets without a hard cap or ones that have hard caps that are so large that they will not be reached any time soon. $LTC is further away from the hard cap than $BTC, but not by much. $DOGE is a fun cryptoasset without a cap and it is being used on a day to day basis by its fans, but past scams related to the currency have driven down widespread acceptance. I personally am still looking for the best solution.

Further Reading

Donations always accepted: Donations

The post Deflationary Cryptoassets appeared first on Trading Politics.

Kickstarter Defends Net Neutrality

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Rendering of a Social Network

Kickstarter recently started a campaign to defend net neutrality. Maybe they do not understand what net neutrality is or they simply do not care.

I have written about net neutrality in the past. I will keep this discussion short. It is not something which protects free speech. Especially when combined with other regulations can actually restrict free speech by giving the government exceptional control over the flow of information online. But two components of net neutrality can be analyzed through an analogy regarding Kickstater itself. The two components are the fee model restrictions and the restrictions on editorial authority.

Kickstarter charges a percentage of the total revenue generated from a campaign. Currently it charges 5%. So if a campaign only receives $1,000 Kickstarter will receive $50. If a campaign receives $1M then Kickstarter will charge $50,000. In other words, the more the service is used, the more Kickstarter charges. Net neutrality restricts the ability of an internet service provider to charge more for heavier use, even though heavier use actually reduces the ability of others to use the service.

The other main component of net neutrality is a limitation on the ability of an internet service provider to restrict content. An ISP is a content facilitator. While everyone has a right to free speech, nobody has a right to have that speech facilitated by someone else. Similarly, Kickstarter reviews every single campaign. It uses a number of factors to decide whether or not to approve the campaign. Some of these are related to legality. Others are related to the ability of the campaign to succeed. While there is nothing wrong with this process, it is actually fairly restrictive, in comparison to other crowd funding sites like Indiegogo. But if Kickstarter were treated like an ISP under net neutrality, they would lose the say of what campaigns to allow. They would have to approve all campaigns.

Now, if Kickstarter is willing to change to a flat fee model and is willing to eliminate the review process so that any and all campaigns are allowed on the system, then perhaps they can talk about net neutrality. Until then, Kickstarter is just being ignorant and hypocritical.

The post Kickstarter Defends Net Neutrality appeared first on Politicoid.

Watching S&P 500 Financials

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I am still concerned about the financial sector in the long run. As I mentioned in “Breaking Down Bank Earnings,” a lot of the movement in the S&P 500 has come from the financial sector (XLF), and profits for the financial sector have been coming from this inflated bull market. This, along with the interconnectedness that (XLF) has with the broader market, largely through (SPY) constitutes a lot of systemic risk.

However, while there is a lot of risk, especially in the long run, the financial sector is bordering on another move higher. It depends on whether or not it can break through a key resistance level. If it does move higher, it could take the rest of the market with it.

As you can see, the $SP500#40 has been moving sideways, within a channel between roughly 380 and 420 for quite some time now. I am waiting to see if there is a significant break above 420.

The post Watching S&P 500 Financials appeared first on Trading Politics.

Robustness of a Theory

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I have written a few articles on the misrepresentation of scientific theory. I have pointed out that theories are not “fact.” They are not known to be true. In the past, I have used the word “consistent” rather than “true” in order to address a theory, but consistency is not really enough to describe how “good” a theory is. For this, “robustness” is needed. While this short discussion does not generate an actual metric for robustness, I use the term enough that I should at least explain what I mean, in general, when I say that a theory is or is not robust.

The core issue with calling a theory “true” is that we really have no idea if a theory is true or not. We do not know how many different models exist which are consistent with a given body of theory and evidence, and we therefore cannot use induction unless we make a large number of limiting assumptions, which in most cases would be unjustified. However, it is still useful to compare different theories in order to make a selection. First and foremost, a theory must be falsifiable. If it is not falsifiable, then it is not useful to us. A robust theory is one which is consistent with existing evidence and other theories,  is able to explain a large number of observations, has survived extensive attempts to falsify, and has a large number of other theories which would become false if the theory in question were false.

Evolution is a prime example. The theory of evolution, or really the collection of theories on evolution, are consistent with various other theories in biology and paleontology. It is consistent with the current body of evidence available to us. Part of epidemiology is dependent on our theories of evolution, as is a lot of psychological theory. If evolution were untrue, then it would throw much of our body of scientific theory on its head. It has also been tested numerous times over the last few hundred years. For this reason, evolution is robust.

One final point is that due to the idea that falsifiability is at the core of our theory selection process, it is not necessarily the “simplest” explanation that is the one we select, but rather the one which is most easily falsified. It does not make sense to select a theory which would require a large amount of time and money to produce experiments capable of falsifying it when there are theories which require fewer resources. This however is a little different from “robustness.”

 

The post Robustness of a Theory appeared first on The Spiritual Anthropologist.