Posts Tagged ‘Economics

03
Mar
09

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.

08
Jan
09

Ride the real estate roller coster

Vodpod videos no longer available.

04
Jan
09

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.”

21
Dec
08

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.

27
Nov
08

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.

23
Nov
08

The Buccaneer Stops Here

Headlines (hat tip Justin):
*SOMALI PIRATES APPLY TO BECOME BANK TO ACCESS TARP
*PAULSON: TARP PIRATE EQUITY IS AN `INVESTMENT,’ WILL PAY OFF
*KASHKARI SAYS `SOMALI PIRATES ARE ‘FUNDAMENTALLY SOUND’ ‘
*Moody’s upgrade Somali Pirates to AAA
*HUD SAYS SOMALI DHOW FORECLOSURE PROGRAM HAD `VERY LOW’ PARTICIPATION
*SOMALI PIRATES IN DISCUSSION TO ACQUIRE CITIBANK
*FED OFFICIALS: AGGRESSIVE EASING WOULD CUT SOMALI PIRATE RISK
*FED AGREED OCT. 29 TO TAKE `WHATEVER STEPS’ NEEDED FOR SOMALI PIRATES

Our romantic vision of pirates, and I’m not talking Jonny Depp here, seems to make great humor amongst news pundits.

Watch the Daily Show clip, via Calculated Risk.

22
Nov
08

Wealth Report

It’s nice to see that even in these tough economic times even the upper-crust playboys are having to scale back their activities.

According to a new survey by Prince & Assoc., more than 80% of multimillionaires who had extra-marital lovers planned to cut back on their gifts and allowances. Still, only 12% of the multimillionaire cheaters said they plan to give up on their lovers altogether for financial reasons.

It makes me wonder if I’m doing enough in curtailing my unnecessary expenditures?

Women were far more generous to their paramours in the face of financial crises. Less than 20% planned to lower allowances, gifts and perks, while more than half planned to raise them.

The survey doesn’t mean to suggest that all, most or even a large minority of rich men and women have affairs. It simply is a snapshot of a certain sample at a certain time. Yet it suggests that in a time of financial crisis, it is better to be a kept man than a compensated woman.

Read the entire report via WSJ.




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