Tuesday, February 21, 2017

My Gedmatch Jewish Roots Force AntiIsrael Stance: Palestinian DNA

My Gedmatch Jewish roots are verified. It wasn't like I didn't already know. But when you are adopted, you want something concrete to back you up. I will list some charts below, but first, I want to tell you two things about Israel.

First, the African 9 test towards the end of this article shows that I am Yemeni Jewish and Ethiopian Jewish. Both of these groups made their way in recent times to Israel. Turns out they were mistreated. The Ethiopian Jews were mistreated by the racism they faced and still face in Israel. The Yemeni Jews had their babies stolen by a cruel nation.

Second, Israel, a colonial power, took away Palestinian land. But as you get into DNA, you realize that the Zionists stole the land from their biological brothers. Many Palestinians have ancient Hebrew DNA. It is true that they are not practicing Judaism, but neither do I. I am a New Covenant Christian.

And did you know that the Zionists who founded Israel were self avowed atheists? They didn't practice Judaism either! Israel Shahak verified this truth about the founders of Israel.

I reject Israeli racism and bigotry. All people with half a conscience must do so. Israel must give these people, the Ethiopian Jews, the Yemeni Jews, and the Palestinians due justice that has been denied them for decades.

Look, the nation of Spain is welcoming back Jewish Spaniards banished in the Inquisition. Spain is wanting to grant dual citizenship to Sephardic Jews. The list includes 5000 names!

So, back to my DNA. I am adopted, so it isn't easy finding birth parents, but it is easy to find your ancestry. The descendants of Jacob are physical descendants. There is a blood tie even if no religious tie. I believe in tolerance of all religions and races, so all of this DNA stuff fascinates me and should make all this info about who is inferior or superior to whom, totally irrelevant.

So, I took a few Gedmatch tests. How it works is that you test at 23 and Me, or Ancestry, or FamilyTreeDNA and you upload your results to Gedmatch. It is easy. I did both autosomal Family Finder and Y tests at Family Tree. I recommend Family Finder or Ancestry basic test if you only want to do one to see how things go. As far as I know, Y testing won't upload to Gedmatch. But Y tests are good for projects you can join on FamilyTreeDNA.

BTW, if you are Hispanic, and your people came to America from Cuba or Mexico or Spain or Azores or Canary Islands or Portugal, you may be Jewish too. Just FYI!

The fulfillment of prophesy made by the Apostle Paul regarding physical descendants of Jacob is discussed at my other blog.

So, here are a few of my Gedmatch findings:

MDLP Test1:

Using 3 populations approximation:
1 50% Norwegian_West +25% Spanish_Canarias_IBS +25% Turk_Jew @ 3.673624

Using 4 populations approximation:
1 Finn + Romanian_Jew + Spanish_Aragon_IBS + Spanish_Canarias_IBS @ 3.111652
2 Finn_West + French + Maltese + Spanish_Canarias_IBS @ 3.114812
3 Finn + Romanian_Jew + Spanish_Canarias_IBS + Spanish_Cantabria_IBS @ 3.118867
4 Ashkenazi + Finn_East + Spanish_Canarias_IBS + Spanish_Cantabria_IBS @ 3.168548
5 Finnish_FIN + Romanian_Jew + Spanish_Canarias_IBS + Spanish_Cantabria_IBS @ 3.175266
6 Ashkenazi + Finn_East + Spanish_Canarias_IBS + Spanish_Valencia_IBS @ 3.179708
7 Finn + Romanian_Jew + Spanish_Canarias_IBS + Spanish_Valencia_IBS @ 3.182451
8 Finnish_FIN + Romanian_Jew + Spanish_Aragon_IBS + Spanish_Canarias_IBS @ 3.185632
9 Ashkenazi + Finn + Spanish_Canarias_IBS + Spanish_Valencia_IBS @ 3.190630
10 Ashkenazi + Finn + Spanish_Aragon_IBS + Spanish_Canarias_IBS @ 3.191257
11 Ashkenazi + Finn_East + Spanish_Canarias_IBS + Spanish_Galicia_IBS @ 3.202255
12 Ashkenazi + Finnish-East + Spanish_Canarias_IBS + Spanish_Galicia_IBS @ 3.208241
13 Ashkenazi + Finn_East + Spanish_Aragon_IBS + Spanish_Canarias_IBS @ 3.213579
14 Ashkenazi + Finnish-East + Spanish_Canarias_IBS + Spanish_Valencia_IBS @ 3.218565
15 Finn_East + Romanian_Jew + Spanish_Canarias_IBS + Spanish_Cantabria_IBS @ 3.220945
16 Ashkenazi + Finnish_FIN + Spanish_Aragon_IBS + Spanish_Canarias_IBS @ 3.222368
17 Ashkenazi + Finn_East + Spanish_Canarias_IBS + Spanish_Cataluna_IBS @ 3.224052
18 Ashkenazi + Finn + Spanish_Canarias_IBS + Spanish_Cantabria_IBS @ 3.224282
19 Finn_East + Italian_Tuscan + Portugese + Spanish_Canarias_IBS @ 3.228782
20 Italian_Piedmont + Portugese + Russian-Ural + Spanish_Canarias_IBS @ 3.230893

And the second MDLP Test:

Using 3 populations approximation:
1 50% n-european +25% sephardic-jew +25% spain-basc @ 3.416632

Using 4 populations approximation:
1 morocco-jew + n-european + n-european + spain-basc @ 2.904685
2 morocco-jew + n-european + spain-basc + utahn-white @ 3.046352
3 basque + morocco-jew + n-european + n-european @ 3.112451
4 morocco-jew + n-european + spain-basc + utahn-white @ 3.252414
5 morocco-jew + spain-basc + utahn-white + utahn-white @ 3.270380
6 basque + morocco-jew + n-european + utahn-white @ 3.289033
7 morocco-jew + n-european + orcadian + spain-basc @ 3.367745
8 british + morocco-jew + n-european + spain-basc @ 3.381293
9 morocco-jew + orcadian + slovenian + spain-basc @ 3.406312
10 n-european + n-european + sephardic-jew + spain-basc @ 3.416632
11 basque + morocco-jew + orcadian + slovenian @ 3.425118
12 n-european + sephardic-jew + spain-basc + utahn-white @ 3.450739
13 n-european + orcadian + sephardic-jew + spain-basc @ 3.473914
14 lebanese + lithuanian + spain-basc + spain-basc @ 3.478182
15 lithuanian + morocco-jew + spain-basc + spaniard @ 3.480666
16 morocco-jew + spain-basc + utahn-white + utahn-white @ 3.491871
17 lithuanian + morocco-jew + spain-basc + spaniard @ 3.504484
18 basque + lebanese + lithuanian + spain-basc @ 3.534094
19 basque + n-european + n-european + sephardic-jew @ 3.535562
20 basque + morocco-jew + utahn-white + utahn-white @ 3.538383

And the Africa 9 Test:

Using 3 populations approximation:
1 50% French_Basque +25% Morocco_N +25% Yemen_Jews @ 2.005640

Using 4 populations approximation:
1 French_Basque + Morocco_Jews + North_African + Tuscan @ 1.283478
2 French_Basque + North_African + North_African_Jews + North_Italian @ 1.295459
3 Algeria + North_Italian + North_Italian + North_Italian @ 1.773581
4 North_African + North_Italian + North_Italian + North_Italian @ 1.865874
5 French_Basque + French_Basque + Morocco_N + Yemen_Jews @ 2.005640
6 French_Basque + North_African + North_African_Jews + Tuscan @ 2.092220
7 Algeria + French_Basque + French_Basque + Yemen_Jews @ 2.196563
8 French_Basque + French_Basque + Morocco_N + Saudis @ 2.307416
9 French_Basque + Morocco_Jews + North_African + North_Italian @ 2.344756
10 Bedouin + French_Basque + French_Basque + North_African @ 2.349786
11 Druze + French_Basque + Morocco_N + North_Italian @ 2.540855
12 French_Basque + French_Basque + North_African + Yemen_Jews @ 2.653674
13 Algeria + French_Basque + North_African_Jews + North_Italian @ 2.671610
14 Algeria + French_Basque + Morocco_Jews + Tuscan @ 2.674284
15 Morocco_N + North_Italian + North_Italian + Tuscan @ 2.679471
16 Morocco_N + North_Italian + North_Italian + North_Italian @ 2.799208
17 Algeria + North_Italian + North_Italian + Tuscan @ 2.911060
18 North_African + North_Italian + North_Italian + Tuscan @ 2.929565
19 Algeria + Bedouin + French_Basque + French_Basque @ 2.941865
20 Algeria + French_Basque + North_African_Jews + Tuscan @ 3.163008

And the J Test from Eurogenes. Click to enlarge:

Friday, February 17, 2017

Trumponomics: Increase Exports, Slow Imports, Bludgeon the New Normal

This was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/trumponomics-increase-exports-slow-imports-bludgeon-the-new-normal?post=112404&uid=4798

Trumponomics is further explained by a paper issued by the Donald's economic advisers. While I leave it to others to hammer out the nuts and bolts of the VAT tax debate, a simple analysis of the trade deficit based on common sense is in order. Targeted nations in this Trumpean effort to reduce the trade include Canada, China, Germany, Japan, Mexico and South Korea, accounting for 1/2 the trade deficit.

In a nutshell, these advisers appear to have no real understanding of the New Normal at all. They want well over 3 percent growth per year (with the inflation that accompanies that), when the Fed is seemingly powerless to raise interest rates 1/4 point! In spite of the new normal and the structured finance that drives it, Trump wants to increase exports and limit imports from the targeted nations. Those two partners do not dance that well together! This is probably the least realistic madness of this whole Trumponomics plan. And it is the central point of the plan!

And the Trump advisers say they want lower energy cost, but seek to balance the trade deficit by exporting energy.

These authors, Peter Navarro and billionaire Wilbur Ross, believe that the New Normal is just a political device, created by liberals. They believe it is not permanent:

Most recently, the 2012 South Korea trade deal was negotiated by Secretary of State Hillary Clinton – she called it “cutting edge.” It was sold to the American public by President Obama with the promise it would create 70,000 jobs. Instead, it has led to the loss of 95,000 jobs and roughly doubled America’s trade deficit with South Korea. Corporate America does not oppose these deals. They both allow and encourage corporations to put their factories anywhere. However, Mr. and Ms. America are left back home without high-paying jobs. There is nothing inevitable about poorly negotiated trade deals, over-regulation, and an excessive tax burden – this is a politician-made malaise. Therefore, nothing about the “new normal” is permanent. [Emphasis mine]

This is the only mention of the new normal in the entire article. The authors make no attempt to describe the pitfalls of trying to bludgeon the new normal.  Donald Trump wants an inflation/reflation component to his policy through both the trade war and also through infrastructure spending not covered by this report. While we all want to pick ourselves up off the zero lower bound, doing so too quickly will bust open a Pandora's box of dislocations, in my view. Even Jamie Dimon agrees with this assessment.

There is a permanent aspect to the new normal. If you break the conundrum, the nation will pay a heavy price in a credit crisis of monumental proportions.  Is Trumponomics prepared to allow all the collateral in the derivatives markets and systemically essential clearing houses to go bad, in order to get past the new normal? Trumponomics has nothing to say about that. That is totally irresponsible to just say the new normal is not permanent and then not comment on the conundrum, the foundation of structured finance.

It is true that hitting main street America hard with economic malaise, when main street carried the world on its shoulders with its purchasing power, was not such a smart policy on the part of big business. Most everyone acknowledges this is a big problem. So the authors of Trumponomics believe in the necessity of structural reforms. But those reforms are certain to start a trade war. The isolation of America could occur if these so called reforms are implemented. These reforms are wanted even as companies are starting to return to America to find workers. And the Donald seeks to apply these reforms as the business cycle is coming to a close. Bad idea. Helicopter money done right is a much more fiscally responsible idea.

And Trumponomics wants us to compete in industries where our wages are generally higher than other nations' wages, specifically in China and Mexico. We have not earned the right to complete in those industries. Unless we are prepared to cut wages and cut housing costs and the cost of living to the bone, it makes no sense for us to try to make things that others can make more cheaply. Trump wants to introduce lack of competitiveness into the world economy and also he wants to raise wages at home in industries where we do compete at a technological advantage. We could price ourselves out of the world markets in multiple ways. We would have to subsidize industries that couldn't make it on their own.

And the environment will suffer in doing so. Dirty coal is polluting southern Indiana, home to Mike Pence, at alarming rates. So the Trump energy plan is devised:

To attack those regulations that “inhibit hiring,” the Trump plan will target, among others: (1) The Environmental Protection Agency’s Clean Power Plan, which forces investment in renewable energy at the expense of coal and natural gas, thereby raising electricity rates; and (2) The Department of Interior’s moratorium on coal mining permits, which put tens of thousands of coal miners out of work. Trump would also accelerate the approval process for the exportation of oil and natural gas, thereby helping to also reduce the trade deficit. Numerous other low-level rules that are individually insignificant but important in the aggregate will also be reviewed. 
Trump's report does show that one important base of growth, the manufacturing sector, would benefit from deregulation:

More than any other sector, manufacturers bear the highest share of the cost of regulatory compliance. … Manufacturers spend an estimated $192 billion annually to abide by economic, environmental and workplace safety regulations and ensure tax compliance—equivalent to an 11 percent “regulatory compliance tax.”
Unfortunately, manufacturing regulations do happen to protect people. Manufacturing is important in creating 4 jobs for every 1 job created in production, but at what cost? And Trump's desire to lift all restrictions on energy production could result in efforts to drill along the pristine Northern California Coast, endangering tourism and jobs and the exceptional beauty of this area.

Exporting energy, especially oil, will keep us weak and bound by the hip to the Middle East, attendant with all the pipeline wars and turmoil that that policy brought us, unless we diminish our known reserves which are not unlimited, with the gimmick of overproduction.

Trumponomics doesn't look at it that way. Increasing the supply of oil could make prices decline according to the report. But if Trump wants to please Vlad Putin, prices would have to go up, not down.

Trumponomics seeks American production of low cost products, and expects the world, which will no longer be able to dent American markets, to have the prosperity to buy an even more exports from America than they do now. I think it is madness.

About this inflation/reflation push by the Trumpeans, Edward Lambert told me by email:

Truly I see strong headwinds to inflation. But if the new government insists upon pushing for strong fiscal stimulus, then the model in my post describes what will happen. High inflation potential and high interest rate potential.  It is wiser to go slowly with the fiscal stimulus when this close to the end of the business cycle. I assume Alan Greenspan sees something similar.
Dr Lambert was referring to Alan Greenspan's worry about stagflation. Here is the post he made for reference. It is worth reading and the Fed should be ready for what may happen with Donald Trump as president, as Professor Lambert projects a Fed rate path.

Business Cycle Ending Based on Effective Demand (Green Line)

Sunday, February 12, 2017

Bizarre Collateral in Securities Lending Exposed by Bank of Mellon

This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/bizarre-collateral-in-securities-lending-exposed-by-bank-of-mellon?post=112318&uid=4798

There is a bizarre use of collateral these days, and it is exposed by Bank of Mellon. First of, the banks are being advised by certain bankers to hoard bonds.  And counterparties are encouraged to bolster their stock and securities positions by using stocks as collateral! The securities lending market often is used for short positions in the stock market.

Here is a definition of securities lending from Investopedia:

Securities lending is the act of loaning a stock, derivative or other security to an investor or firm. Securities lending requires the borrower to put up collateral, whether cash, security or a letter of credit. When a security is loaned, the title and the ownership are also transferred to the borrower.

Peter Venkman once said in Ghostbusters something to the effect that we have dogs and cats, and mass hysteria. I think that in securities lending, defined below, we  are finding out we have exactly that.

Based on data from the four main tri-party service providers in Europe (BNY Mellon, Clearstream, Euroclear and JP Morgan) – which collectively hold the vast majority of non-cash collateral received by lenders – 57% of securities held in tri-party were equities at the end of June 2015, up from 53% six months earlier. Clearly, post-crisis regulatory and macro-economic trends have turned conventional wisdom in the securities lending market (i.e., where asset owners historically lent out equities in return for government bonds as collateral) on its head! [emphasis mine]
Tri-party acts as a clearing house, a third party that holds the collateral for the securities lending market. Mutual funds, ETF's, insurance companies, and pension funds are often the main lenders and hedge funds are the primary borrowers.

Hedge funds appear to be taking advantage of this arrangement, as the collateral in a downturn would be worth far less than the original loan amounts which would seem to breach fiduciary requirements of pension funds and insurance companies. Other dangers and disadvantages are shown at this second Investopedia article.  However, the tri-party market may increase the safety of this market.

Offsetting that safety is the use of non cash collateral. Even the author of the above quote, Steve Kiely, EMEA Head of Securities Finance New Business Development BNY Mellon Markets Group, appears to be astonished at the amount of non cash collateral, ie stocks being used as collateral. Because of this change, banks are being encouraged to hoard treasury bonds (as if there was not already enough demand for bonds):

Although low interest rates and the very real possibility of downgrades for OECD government bonds have played their part, Basel III’s Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) are the key reasons for this switch. These ratios encourage banks to hoard high-quality liquid assets (HQLAs) – largely government  bonds, while other aspects of the Basel capital and liquidity framework (which is being rolled out by national regulators up to 2019) punish balance sheet holdings of equity securities. Moreover, lenders that are naturally long on equities can experience operational and cost efficiencies in accepting equities as collateral, even when lending out equities.
Needless to say, this is risky business as Mr Keily goes on to say. And hoarding of bonds in this theater is sort of Japan-like, and hoarding in general is, well, a reason why yields are low, not only in this area, but also throughout structured finance.

The new ISLA report has stocks used as collateral standing at 48 percent of all collateral in tri-party as of June, 2016. That is a pretty large drop from 57 percent the year before. Does this mean that banks are getting nervous about equities as collateral? They certainly have deleveraged and have used more bonds as collateral in 2016. That will further increase demand for bonds.

Perhaps equity collateral makes less sense if a potential crash is considered, forcing margin calls and putting institutions who loaned out the money at great risk of violating their fiduciary responsibilities. If the Bank of Mellon is concerned about the risk in this market, perhaps individual investors, pensioners, and those insured by insurance companies should be as well. 

Friday, February 10, 2017

Reflation Cannot Save Tantrum Trump from a Painful Recession

This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/reflation-cannot-save-trump-from-a-painful-recession?post=112162&uid=4798

Donald Trump is a real estate guy. He knows American real estate skates on thin ice. His contract with Wall Street is to try to supply more bonds through deficit spending to Wall Street. But the senate will likely not be behind this deficit spending as it relates to infrastructure. Trump has indicated that he wants to cut corporate taxes from 35 to 15 percent, and spend more on military and infrastructure.

The reflation trade that we are seeing is a tantrum against the bond market. Long bond yields are up to over 2 percent. But what is the reflation trade and what can it accomplish? Investopedia has a precise definition of reflation as government sponsored business expansion:
Although almost every government tries in some form or another to avoid the collapse of an economy after a recent boom, none have ever succeeded in being able to avoid the contraction phase of the business cycle
The question then is, are we in the middle of a boom or at the end of it? If we are at the end of this boom, reflation will only make things worse, and the recession deeper. Who will take it the hardest?

Likely those who will incur the most pain will be the working class supporters of Trump, along with the rest of main street. Who will benefit most from the reflation before the crash? Well, try investors in real estate of course. Here is a chart from Dr. Edward Lambert that proves we are at the end of the business cycle:

Here is my explanation of this chart in a recent article:

So basically, the chart shows two things. The red is the traditional CBO measure of the output gap, which is real GDP minus potential GDP. The green is Edward Lambert's measurement of the effective demand limit caused by labor's share of income being low. He is saying the growth cycle has already passed and the green line indicates the road to recession. He says the Fed missed the interest rate cycle already!

So then, my personal opinion is that Trump is doing what he knows and what will benefit him. If he is prospering, by the reflation of real estate, then in his mind, that nation is prospering. I remain skeptical, because this reflation could make the inevitable recession even worse for the guy on the street. The investors will leave early, having bought low. They will sell high.

But the average people may seek to tap HELOCs, or spend to improve their houses, and then when they are ready to sell, the recession could already be upon them and hurt them.

As far as interest rates are concerned in the treasury tantrum, I believe that there is massive demand for long bonds, so that I disagree with one article on partner site Seeking Alpha. The author, Harry Kourouklis, says there are multiple attacks upon long bonds, that are in the works. First is Trump's reflation. Second is China's explosive inflationary growth, which the author also notes in another article. 

It is difficult to measure the demand for long bonds, other than getting hints from people who see the demand from the inside. Rick Rieder said there is monumental demand. Monumental is a pretty strong word. Needing more bonds in a margin call at your derivatives account if collateral declines in value too quickly, is a sure sign of bond strength. It would seem that there can be agreement with Marc Faber that buying into the selloff of bonds makes sense above 2 percent yield on the 10 year.

Reflation is here, for awhile. Reality will set in if Dr. Lambert's predictions of recession hold. Math don't lie, so investors should assess his views seriously.

Wednesday, February 1, 2017

Edward Lambert on Bond Demand, the Coming Recession, and New Normal

This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/edward-lambert-on-bond-demand-the-coming-recession-and-new-normal?post=111806&uid=4798

Edward Lambert is the blogger at Effective Demand Research. He is a noted economist, having shared his work at Angry Bear Blog, where he is an active contributor, and elsewhere. He has come up with an equation to measure effective demand and predict recessions. His calculations indicate we are on the path to recession already. I will address that aspect of his work with his charts down the page, but what has excited me most about his theories is that he agrees with me about monetary theory.

He is the only economist I know of who has come right out and said that monetary theory is dead, a point which I have been trying to share with economists to no avail until I ran across his comments.  Many economists simply refuse to speak about bond demand, like many Market Monetarists I have tried to engage.  Dr. Lambert explained it to me this way in an email:

I agree with you. Money theory, as it applies to bonds, is dead. Basically
because the models of economists cannot grasp the new normal. That is where my
effective demand is making sense of so many things. 
Krugman is waiting for the whites of inflation's eyes, but with after-tax
corporate profit rates at never before seen record highs, there is no price
pressure, too many firms are still able to undercut any price rise. So the
only thing that will bring on inflation is a substantial fall in after-tax
profit rates, which brings on a recession. So when Krugman gets his inflation,
a recession will already be happening. [Emphasis Mine]
Dr Lambert read some of my articles on Talkmarkets regarding these subjects, and the email he sent spoke to Effective Demand and to fiscal stimulus as an economic tool:

Economic theories have not grasped how the economy has changed. For me,
getting a working model for effective demand has made the difference. My
models are describing cycles that existing models cannot do...
About fiscal stimulus, I do not think it will work. Any money injected into
the circular flow of the economy will just flow into high corporate profit
rates and low labor share. Effective demand will stay weak. And with
unemployment low, and some marginal firms unable to pay the rising wages,
there will be internal decay in the business cycle leading to a contraction.
The contraction will want to clean out marginally unproductive firms. It is
long overdue with these low interest rates that we have had for years.

The pressure will build for wage increases. So the pressure on marginal firms
will build too. That cascades into a contraction.
More economists are expecting a recession in a few years, like Larry Summers.
But a recession is closer than they think because they still have one foot in
the camp that thinks there is still lots of slack. Yet as Keynes described it,
weak effective demand will keep the economy from reaching normal full
employment. The slack we see now will not be used due to weak effective
demand. So the recession will come on earlier than they think. [Emphasis mine]

For more on the concept of Effective Demand, Dr Lambert has put together a Synopsis of Effective Demand on his blog. The effective demand limit has an equation that he created that can tell us that:

In 2015, capacity utilization fell while the utilization of labor increased (unemployment fell). The equation predicted this.

Dr Lambert's conclusion is that:
Unlike capital, labor never reaches its optimum utilization since it never reaches zero in the graph. Capital comes first in capitalism. And since the 1990's, the utilization of labor has been getting worse as seen by the plot steadily trending upward. The increasingly unmet potential of labor utilization coupled with lower labor share is a problem. The US is becoming over-capitalized in relation to the labor force. Supply-side economics can be partly blamed for this?

The chart he refers to is at the Synopsis. Dr Lambert went on to say in separate emails:

When labor share declines, so does the optimization level of capacity utilization.

In other words, profit rates increase, but the maximum utilization level of capital declines. As such potential GDP declines too.
When the decline in production due to lowered optimization of capital is not factored in, one cannot see that potential GDP has declined. My model saw that potential GDP declined in real time as the crisis appeared. The CBO and Fed have been very slow in realizing this. They still haven't. 

In essence, they missed the biz cycle. Real GDP has already gone positive and is now falling relative to potential.
and the definition of effective demand limit, a new economic concept:

It is a limit placed on the utilization of labor and capital by the percentage of labor share of income. It has always been there in every business cycle. It determines such things as potential GDP and the profit rate cycle. [Emphasis mine]

I believe that Dr Lambert is essentially saying that labor's share of income is low, and GDP simply will not grow and that it may take a recession to fix the problems and we are headed there. Dr Lambert likes the Scott Sumner idea of NGDP Targeting but the key of any stimulus is to increase potential GDP. Also at his synopsis page he offers this FRED chart:

So basically, the chart shows two things. The red is the traditional CBO measure of the output gap, which is real GDP minus potential GDP. The green is Edward Lambert's measurement of the effective demand limit caused by labor's share of income being low. He is saying the growth cycle has already passed and the green line indicates the road to recession. He says the Fed missed the interest rate cycle already!

Dr Lambert encourages those of us who are not economists to actively attempt to understand how the economy works. Probably his work at Atlantic International University as a tutor has given him the patience to attempt to convey important economic concepts to non economists. The lack of understanding of the New Normal by economists and non economists alike is limiting the advancement of the discipline. Economists are often too remote to bother with non economists. And they are often stuck in their schools and cannot see other and more contemporary concepts. 

We can only observe the outworking of his efforts, to see if he has a better measurement of the growth cycle going forward. He sees no problem with derivatives as they exist and believes that massive bond demand will not get in the way of efforts to raise rates when needed in a modest but way. That timeliness has not been utilized. He does not think rates need to plunge into the negative, but will have be range bound due to demand for bonds.