economics
mikethemadbiologist | November 29, 2008Like driftglass, I'm getting tired of hearing that we should just let industry die because we don't make anything anymore. That's simply not true:
Those 13.4 million people are doing something.
mikethemadbiologist | November 28, 2008Jeffrey Leonard, an environmentally friendly businessman (no, really, he is), makes an interesting case for jumpstarting the economy and Detroit by offering massive government-based rebates for their cars, including the gas guzzlers (italics mine):
Skeptics will have two major objections. The first is economic, and the second is environmental. Those who object on economic grounds would argue that Detroit has gotten into trouble because it produces poor cars at high cost, and that handing billions to the industry to help it sell more cars would simply reward a failed business model. Those who…
mikethemadbiologist | November 24, 2008From Bloomberg News:
Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
When I read this, a line from a movie* kept running through my head:
With a lie this big, we can get away with anything.
Seriously, we have no conceptual means to grasp something of this magnitude. And tell me why we can't lend Detroit $25 billion? That is one three-thousandthhundredth of the package to…
mikethemadbiologist | November 19, 2008I haven't a clue as to how to proceed about the potential auto industry bailout, and anyone who can say with confidence about how the largest industrial bailout in U.S. history will play out is kidding themselves. My instinct is not to lose U.S. controlled industrial capacity on national security grounds. But to follow on something driftglass discussed, there seems to be one group of people who aren't getting blamed.
-link to driftglass
-list as questions the three fuckups
Are salaries and benefits relatively 'high' for auto workers?
Sure (although nobody cares to comment on the 'high'…
purepedantry | November 10, 2008I agreed (reluctantly) with the need to bailout banks because they constitute a special case in the financial system -- the overall health of banks is linked to the overall health of the economy. I am not against bailouts per se, but the devil is in the details. There are a lot of ways that they can make recessions worse by putting inefficient companies on life support. This view of recessions is explained well on Economist Democracy in America blog:
A dialectic model of the business cycle suggests that in prosperity, inefficiencies are allowed to build up alongside innovations until the…
mikethemadbiologist | November 7, 2008I agree with ScienceBloglings Orac and Mike Dunford: Robert Kennedy Jr. shouldn't be in an Obama cabinet.
As far I'm concerned, Kennedy's bullshit about thimerisol is every bit as ridiculous as creationism, except that it's far more murderous. While I don't think that would be an issue that he would deal with at Interior (but might be at EPA), irrationalism has no place in a Democratic administration. Could we wait a few months before we cede the intellectual highground? Related to this, Mike has a good suggestion:
If we want to effectively oppose this nomination, we need to bring in the…
mikethemadbiologist | November 3, 2008I finally figured out what the underlying philosophy for the banking bailout is (other than TEH STOOPID): it's supply-side/trickle down economics. First, the latest insult by way of Chris in Paris (italics mine):
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/29/AR20081…
U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years.
The government said it was giving banks more money so they could make more loans. Dollars paid to…
mikethemadbiologist | November 2, 2008I think this quote by Nell Minow sums up what most people feel about bonuses for employees at bailout-receiving investment banks:
"I'm just flabbergasted that the financial community has failed to show any sense of leadership on this issue and doesn't seem to understand how angry people are at them,'' said Nell Minow, editor of Corporate Library, a Portland, Maine-based corporate-governance research firm. "They are just a bonus away from having the villagers come after them with torches.''
Actually, I think some people would like to skip the 'bonus away' and go straight to the torches…
purepedantry | October 21, 2008I have been a bit lax on the blogging, but here is what I have been reading on the economy.
Tyler Cowen attributes the financial bubble to three main causes:
The current financial crisis comes from a conjunction of three major trends, common to many countries and to a wide variety of financial institutions.
The first trend was a positive one: an enormous growth in wealth that needed to be moved into investments. Before he became chairman of the Federal Reserve, Ben S. Bernanke wrote of a "global savings glut," particularly from Asia. Furthermore, over the last 20 years, many countries have…
stoat | October 13, 2008REM, of course. Or perhaps more appropriately, Its the end of the world as we know it (and I feel fine). I won't elaborate on the I-feel-fine for the sake of not tempting fate, not that I'm superstitious mind you.
Where was I? Oh yes, commenting on CIPs vision of our government as competent. No prophet has honour in his own city, of course. I thought Broon was largely copying Buffett.
While I'm here, hat tip to Quark Soup for digging up this space oddity from Krugman. Nice to see that economists have a sense of humour, though his physics isn't so good and, though he hides it well, relativity…
kcontreary | October 13, 2008The 2008 Nobel Prize in Economics goes to Paul Krugman "for his analysis of trade patterns and location of economic activity".
I think this will come as a surprise to many, particularly since he's winning it alone. Most economists guessed he would win it someday, but assumed he would share it with one of his redoubtable co-authors. Helpman, perhaps. Given his political bent and coming on the heels of Gore's win last year, you can count on renewed suspicion of the Nobel committee's "impartiality". Stay tuned...
mikethemadbiologist | October 9, 2008Since it's election season, it's pretty much guaranteed that the price of medical drugs will come up. While I'm on vacation, this post from the archives is pretty interesting. Keep in mind, the person making this claim is a former CEO of Pfizer, so he might know what he's talking about...
This is a headline from the June 1st, 2005 edition of ScripNews (subscription only; so I'm a little behind in my reading-what scientist isn't?). Here's the punchline for lazy stupids that don't like to read: the head of Pfizer has admitted that the cost of making a drug has nothing to do with how much drug…
stoat | October 7, 2008Just a minor addition to the vast streams of pap being written and spoken about the current crisis (what crisis?). Inspired by watching financial TV in my hotel room.
Iceland seems to have sold itself to the Russians "We have not received the kind of support that we were requesting from our friends," said Geir Haarde, prime minister. "So in a situation like that one has to ask one's enemies look for new friends." Your friendly local Icelander has some comments. At least I didn't put any of my savings into Iceland, which now looks distinctly unwise. They were offering desperation rates.…
scientificactivist | October 5, 2008Recent polls have shown that voters trust Obama over McCain in addressing the economy by a margin of about 10-15%. But, what do the experts think?
The Economist conducted its own poll of economists (appropriately), and found that they agreed that Obama is the stronger candidate when it comes to the economy--but by a much wider margin. Eighty percent respondents agreed that Obama has a better grasp of economics (versus 8% for McCain), and 81% believed that Obama would pick the better economic team (versus 14% for McCain). On a scale of 1-5, respondents gave Obama's economic plan a 3.3 and…
mikethemadbiologist | October 5, 2008(from here)
Well, the bailout bill passed, and we'll have to see if it actually does anything. What's gone missing in the discussion surrounding this bill (among other things) is any discussion of the assumptions underlying this legislation. Ian Welsh spells them out:
If you believe any of:
1) That the paper will not return high enough [profits] to recoup losses, since Treasury will be buying it at above market value;
2) That this is the beginning of more than a normal recession;
3) That Paulson in particular and Treasury in general will not make getting the money back a priority, but…
mikethemadbiologist | October 3, 2008If brilliant economists can't invest wisely, what chance do the rest of us have? A while ago, I finished reading High Wire: The Precarious Financial Lives of American Families. One of the interesting points of the book was how the emphasis on 'investor choice' has led to increased financial risk because most people don't invest wisely (italics mine):
Even more disconcerting, recent research suggests that many people don't behave anything like the economically savvy men and women that the on-your-own, free-market system requires in order for them to succeed. They shut down in the face of…
mikethemadbiologist | September 25, 2008It's not great, and I would like to see more things in it that can be negotiated away, but it still hits most of the points I raised. Outsourced to Ian Welsh:
So yeah, the Dodd plan. Good plan. Buying up mortgages for 15% less than the current market value of the house, then reissuing a clean mortgage to homeowners helps the banks while still giving them a slight haircut (but only slight, odds are home prices will drop more than 15% before the slide is over.) It helps homeowners stay in their houses. It sets a market price so that banks know what mortgages are worth and thus what the…
mikethemadbiologist | September 22, 2008Before I get to the letter I sent to my Congressional delegation, I want to discuss why the proposed bailout matters if you consider yourself a friend of science.
It's very simple: if we sink $700 billion or more into propping up brokers you can kiss any science-related initiatives goodbye. No increases in certain basic research areas. No increases for public health. No research and development of green technologies. None of the things that a bunch of ScienceBloglings are talking about here. Instead, it all disappears down the porcelain crapper.
There is no science fairy: the most…
purepedantry | September 18, 2008Here is a clever idea for making sure you never have to search for a parking space: congestion pricing. San Francisco is trying out a system based on this principle:
The SFpark project will begin early in 2009 with a new network of pavement sensors in 6,000 of San Francisco's metered parking spaces and 11,500 of its off-street car parks and garages. These sensors will detect when a space is taken and relay that information to a central database. From there, information about vacant parking spots will pass to drivers in several ways. The most basic will be through a network of road signs that…
purepedantry | September 18, 2008As we witness the self-destruction of portions of our financial institutions, many of us have been ask ourselves: what the hell is going on?
University of Chicago economists, Doug Diamond and Anil Kashyap, have a Q&A at the Freakonomics blog to answer some questions. One important question is why the Fed chose to bail out Bear Stearns but not Lehman Brother:
When Bear was rescued, the Fed created a new lending facility to help provide bridge financing to other investment banks. The new lending arrangement was proposed precisely because there were concerns that Lehman and other banks…