Archive for the 'Economics' Category


atlanta, georgia

Photo taken in Atlanta, Georgia, via MR.


did we have it right after all?

A great column discussing how the so called slacker generation may hold the key to a more sustainable economic future. Not recession proof, but recession-resilient.

WE MOVED to San Francisco and Brooklyn and Mission Hill. We jumped from job to job. Put off marriage. Never bought a place. And we never heard the end of it. We were drifters, they said. Layabouts. No respect for work and real estate or the value of a good pair of cufflinks.

You see, while Alan Greenspan and Countrywide Financial were creating a capitalism of disastrous excess, we were busy working on a more workable model. We brought you the Internet, worked on green technology, and filled the ranks of Teach for America. We crossed the color line, ate local produce, and bought secondhand clothing. We lived in smaller spaces, drove smaller cars, and took the subway to work.

As we begin to rebuild our tattered economy it may be time well spent studying how the  slacker generation managed to live within their means. Read on via Boston Globe.

Penelope Trunk’s 5 emerging trends..I’ve already begun to notice the increasing backlash against baby boomers.


Migration controls are the new apartheid

As technologies advance and more efficient transportation methods develop, we can only assume migration controls would only begin to weaken. The idea of abolishing national boarders isn’t as far-fetched as one may believe. Europe’s Schengen Agreement, which allows residents of participating countries to travel more easily through their borders, is just one example of how free-market forces have begun to dissolve national boundaries.

It has always struck me as odd that we are so keen to allow the flow of cash and goods across borders without let or hindrance, but try so hard to deny the same rights to people. That is both unfair and a denial of the free-market theories on which much of the world’s economy is built. Surely if free trade and the free movement of capital is so good for an efficient global economy, then the same should apply to the free movement of labour?

Continue reading Fred Pearce’s article Migration controls are the new apartheid, via New Scientist.


Ride the real estate roller coster

Vodpod videos no longer available.


Tullock, Blagojevich, and rent-seeking public officials

Eminent economist, Gordon Tullock, takes on the topic of Gov. Blagojevich and the rent-seeking behavior of elected officials. Tullock has a deep understanding of the systematic actions politicians harbor and how they ultimately effect us in a negative fashion.

The income derived from possessing a special privilege is called “rent” (which, by the way, has nothing to do with the monthly payments that tenants make to landlords). Rents themselves are just a transfer of value from some people to others.

Such lobbying can reap advantages worth millions. So it’s understandable that companies spend considerable effort courting politicians who can bestow such privileges. That’s wasteful. Time, energy, and other materials that could be used to expand the output or improve the quality of goods and services are instead used to lobby government for narrow benefits that may harm society at large. And the larger the potential gain from being granted such a privilege – that is, the larger the rents – the more intense will be rent-seekers’ incentives to chase after them. That puts tremendous pressure on – and gives tremendous leverage to – politicians.

Read Donald Boudreaux’s Op-Ed here.

Donald J. Boudreaux, a professor of economics at George Mason University, is the author of “Globalization.”


Printing…just a figure of speech

With Obama’s looming titanic fiscal disaster which path will the Fed decide to take? Central banking or central planning?  The Fed has announced that it will continue to print notes in order to trim its funds rate, if need be, all the way to zero. All bodies in Washington seem to think the wholesale printing of money is the answer to the nation’s economic woes.

Yes, today’s policy makers allow, there are risks to “creating” a trillion or so of new currency every few months, but that is tomorrow’s worry. On today’s agenda is a deflationary abyss. Frostbite victims tend not to dwell on the summertime perils of heatstroke.

Our troubles, over which we will certainly prevail, stem from a basic contradiction. The dollar is the world’s currency, yet the Fed is America’s central bank. In the boom, a superabundance of mispriced debt led countless people down innumerable blind investment alleys. E-Z credit financed bubbles in real estate, commodities, mortgage-backed securities and a myriad of other assets. It punished saving and encouraged speculation. Imagine a man at the top of a stepladder. He is up on his toes reaching for something. Call that something “yield.” Call the stepladder “leverage.” Now kick the ladder away. The man falls, pieces of debt crashing to the floor around him.

One final question for which Mr. Bernanke will have to put himself into the shoes of a foreign depositer:

“Tell us, Mr. Bernanke, if you had the choice, would you hold dollars? And may I remind you, Mr. Chairman, that you are under oath?”

Sink your chops in here, via WSJ.


Paradox of thrift

Barely a year ago cash was considered dangerous to accumulate: investors urging board members for returns in dividends or reinvestment. We have thus seen a reversal of public opinion in recent months as companies are off in a mad scramble for any available operating cash.

No longer. For many big American companies, the day of reckoning came two months ago when the deepening financial crisis brought about the abrupt closure of the overnight commercial-paper market. This briefly sent even the most solid companies into a desperate scramble to find money to meet such basic obligations as paying their staff. Since then, the guiding principle for managers everywhere has been to gather up whatever cash they can find, and then do their damnedest to keep as much of it as possible for as long as possible.

This cash squeeze is a huge problem for the world economy, because as firms cut discretionary spending wherever they can, the result is likely to be a corporate version of what John Maynard Keynes called the “paradox of thrift”. Every firm does what is prudent for itself, but by cutting its spending it slows down the economy still further and thus hurts everybody, including itself. This will only reinforce the need for expansionary monetary and fiscal policy (see article) to boost demand; and also for more direct support in credit markets, such as the Federal Reserve’s prop for the commercial-paper market (already tapped by some large American firms).

This is only the tip of the iceberg. Read the article in its entirety via Economist.

January 2020
« Mar    
Crowdsourcing Crisis Information