Saturday, October 16, 2010

LeBron James is a metrosexual!

And here's the proof:




I guess he thinks he's Sonny Crockett now??




China loves Federer

Let me just let Roger tell it:

“[Fans are] very creative here in this country giving gifts,” Federer said Thursday. “Obviously many think of my twin girls. Many think of Switzerland, maybe give me a cow or something like that. Others create great books about me and my career, places where they've been, pictures they've taken with me, souvenirs that I've signed for them, they've taken pictures of it. It's very nice.

"It's very different, to be honest. Not everywhere do I get such nice and creative gifts. I always need to pack in the extra suitcase to take all the gifts back. That's the only small problem, but it's a good problem to have, so I'm happy about it.”


Holy crap, people. Has China gotten so far ahead of us that they've made a cow that fits in a suitcase? Like the giraffe in the DirectTV commercial? Thomas Friedman will have a heart attack when he hears about this!

Friday, October 15, 2010

My old Macro professor goes Medieval on Modern Macro

Larry Meyer:

"There’s also another tradition that began to build up in the late seventies to early eighties—the real business cycle or neoclassical models. It’s what’s taught in graduate schools. It’s the only kind of paper that can be published in journals. It is called “modern macroeconomics.”The question is, what’s it good for? Well, it’s good for getting articles published in journals. It’s a good way to apply very sophisticated computational skills. But the question is, do those models have anything to do with reality? Models are always a caricature—but is this a caricature that’s so silly that you wouldn’t want to get close to it if you were a policymaker?

My views would be considered outrageous in the academic community, but I feel very strongly about them. Those models are a diversion. They haven’t been helpful at all at understanding anything that would be relevant to a monetary policymaker or fiscal policymaker. So we’d better come back to, and begin with as our base, these classic macro-econometric models. We don’t need a revolution. We know the basic stories of optimizing behavior and consumers and businesses that are embedded in these models. We need to go back to the founding fathers, appreciate how smart they were, and build on that."


Full interview is here.

Obviously many Central Bankers disagree with Larry as the Fed and the ECB and the Central Bank of Canada are heavily invested in DSGE modeling.


Mungos a'coming


People I am happy to announce that K.G. Mungowitz will be in Oklahoma later this month:



(click on the pic for a more glorious image).

Thanks to Jacque B. for the cool poster.




Won't you help us?


Us Okies are phlegmatic about tornadoes but we are terrified of snow, and now I've discovered we are terrified of earthquakes too. People were going absolutely nuts over our mini-quake (people I was on the third floor and it didn't even knock me off my foam roller) even though it basically did zero damage.



(click on the pic for a more glorious image)

Thursday, October 14, 2010

Serendipity

Mrs. Angus and I are going to see Blonde Redhead in Dallas next month. I googled the opening act,Ólöf Arnalds, and holy moly, she/they are tremendous!

Here is a video:

Ólöf Arnalds - Innundir skinni from One Little Indian Records on Vimeo.



Here is another:




Here is the myspace page.

It's like if Justin Vernon were a woman!

Why is it so hard to stay a good guy?

Or, why is it so hard to give up power.

Look at the Castro Brothers, they were once heroes of the revolution (I mean that sincerely) and now they are just the worst.

Look at Robert Mugabe, hero of Zimbabwe's independence, now reduced to destroying his own country to stay in power well into his 80s.

Look at Chavez. It's hard to remember now that he too was a hero.

In Africa, Museveni of Uganda helped depose Amin but has stayed in power now for 24 years and counting.

Sadly, Paul Kagame appears to be the latest case. He was a post-genocide hero, but most recently won re-election with 93% of the vote after vigorously suppressing opposition parties. Now the NY Times reports that Rwanda's leading opposition figure was just arrested today. Of course Paul has a long way to go to reach Mugabe longevity; he's only got 10+ years on the job at this point.

Are these all manifestations of the same personality type? Does fighting for a cause somehow delude you into thinking you are indispensable?

I find these cases simultaneously baffling and heartbreaking.

Pity poor Connecticut

There is an old joke in economics:

"I pity the poor econometrician who must use a dummy for sex and a proxy for risk".

Porfirio Diaz once said:

"Poor Mexico, so far from God but so close to the United States"

People, I pity the poor Connecticut voter, who has as her Senate candidates Vince McMahon's wife and one Richard Blumenthal, who repeatedly lied about his military service and, in response to a debate question asking how his lawsuits against Connecticut companies affected job creation said:

"Our lawsuits, our legal actions, actually create jobs".

So you have a creepy showman's consort or an uber-creepy serial fabulist.

Good luck to the Nutmeg State voters, they'll need it.

Wednesday, October 13, 2010

Is Macroeconomics just looking under the streetlamp?

A fascinating new paper by Ricardo Caballero basically says yes:

"In this paper I argue that the current core of macroeconomics—by which I mainly mean the so-called dynamic stochastic general equilibrium approach—has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one. This is dangerous for both methodological and policy reasons. On the methodology front, macroeconomic research has been in “fine-tuning” mode within the local-maximum of the dynamic stochastic general equilibrium world, when we should be in “broad-exploration” mode. We are too far from absolute truth to be so specialized and to make the kind of confident quantitative claims that often emerge from the core. On the policy front, this confused precision creates the illusion that a minor adjustment in the standard policy framework will prevent future crises, and by doing so it leaves us overly exposed to the new and unexpected."

The piece is well worth reading both for its own arguments and the list of interesting "periphery" papers mentioned and cited.

A touching homecoming

It would have been Agent Zero's first game back in DC since he got popped for packing heat in the Wizards' locker room.

He celebrated by faking an injury, sitting out the whole game, and then telling people he had done so after the game was over.

Really.

Washington should keep him so far away from John Wall. If they can't get anything at all for him in a trade, they should just cut him.

Ball Don't Lie has more.

My third earthquake!

People, Oklahoma gots earthquakes! I've been in tornadoes in Ohio (Xenia 1973), earthquakes in Pasadena and Mexico City, repeatedly threatened by hurricanes in New Orleans and now experienced a smallish (4.5 on the Richter scale) earthquake in Normatopia while doing Pilates (really)!

When the 4 horsemen of the apocalypse arrive, will I even notice?

What is going on in North Carolina?

The locals here in Angusland are buzzing over how Portfolio.com has ranked OKC as the 7th best area in some index of income growth out of 100 ranked areas.

Me being me, I was immediately attracted to the bottom 10.

Grand Rapids MI, Phoenix AZ, Toledo OH, Detroit MI, Riverside CA, sure they make sense.

But then there's Raleigh, Greensboro, & Charlotte. Three NC cities in the bottom 10?

Ouch.

Y'all really should have elected Mungowitz!

Tuesday, October 12, 2010

The men were here to get your Belgian things

This is a great story (hat tip to Interfluidity).

From Euro Intelligence (I know, I know):

"The political situation in Belgium is becoming increasingly dramatic. After negotiations have broke down twice, the king asked for a new round of consultations to find a compromise over institutional reforms, possibly the last chance before organising new elections. Many expect that new elections would nothing but radicalise the positions, Le Monde reports. According to polls, the separatist NVA would get more than 30% of the votes in Flanders. French-speaking socialists now evoked a plan B, where Wallonia and Brussels would form a new Belgium. The Flemish response was that if they want to keep the heritage they can also keep the whole of the Belgian debt."


So Bolivia has managed to hold together but Belgium might not?

How fast could Evo learn Flemish?

Equal time: Breastfeeding Leave for Men

Men get to take "breast-feeding" leave, after baby is born.

Even if the mother of the baby is not employed, and is staying home.

No, really. In Spain.

Why is it that these arguments about equity seem to be most powerful when some bunch of whiny MEN think they have been denied something? I mean, it's true that if the man were staying home, and the woman were working, the woman would get an hour paid leave to go breastfeed. But, at the risk of pointing out the obvious, there is a difference in equipment we're talking about here. (And, vive la difference, by the way!)

And how long is it before Europe just closes completely? These people are batshit crazy.

(UPDATE: Could this be a way of subsidizing babies? Spain's birth native born birth rate is very low, 1.32 children per woman, only Greece is lower...That would be clever, right? ....Nah, can't be)

(Nod to the Ward Boss)

Flight of the Bumblebee

DC police cordoned off a street so that "Transformers 3" could be filmed. LOTS of cash paid for this service.

But then DC police let a DC police car come through the set, during filming. And the cop car causes Bumblebee to have an accident.

They cover the Bumblebee to keep people from taking pix. But, too late.

Thank goodness the DC police are around to protect us all. Idiots.

(Nod to Anonyman)

France is Closed

Riots by French "workers."

Bastiat described the French state perfectly: "The State is the great fiction through which everybody endeavors to live at the expense of everybody else."

All those jumpin' Frogs want to have free retirement. Let someone else pay! I've worked hard for fifteen years...or something like that.

But I have to ask...how do you tell if a French worker is retired? I can't imagine anyone doing less work than they do when they are "working." I guess it means they can do nothing sitting on their ass at home smokin' cigs instead of sitting on their ass at some fake job smokin' cigs.

You better watch out for the police...


I've been ranting about the abuse of accounting identities recently so I read with interest an article by Dean Baker about the importance of accounting identities.

However, Dean merely takes the trade deficit = capital account surplus identity and uses it to start on a strange journey to Nutbush. So let's queue up the Bob Seger and follow along:

The basic logical problem stems from the simple accounting identity that national savings is equal to the broadly measured trade surplus. A country with a large trade surplus will also have large national savings. Conversely, a country with a large trade deficit will have negative national savings. These relationships are accounting identities -- there is no way around them.

So far so good, Dean, I'm totally with you. We are far away from the Nutbush city limits. Not sure who exactly denies this identity but....

This brings us to the next part of the story: where trade deficits come from. At a given level of GDP, the main determinant of the trade deficit is the value of the dollar in international currency markets. This is very basic supply and demand. If the dollar is higher in value relative to other currencies then our exports will cost more to people living in Germany, Japan and China.

If a car sells for $20,000 in the United States then the price of this car to people living in other countries will depend on how much of their own currency (euros, yen, or yuan) they must pay to get a dollar. The higher the dollar relative to these other currencies, the more expensive the car is to foreigners. And, the more expensive it is to foreigners, the fewer U.S.-made cars they will buy. This means our exports will fall.

The story works in reverse on the import side. If the dollar is high and therefore buys lots of foreign currency, then imports are cheap. This means that we will buy lots of imports.


Hold on there partner. Not so fast. It is far from clear that the "main determinant" of trade deficits is the nominal exchange rate. There are a lot of countries whose currency is cheap in dollar terms with which we don't have large deficits. Further, the correct measure would be the real exchange rate and there are a bunch of other factors involved as well. Also not too sure what this has to do with accounting identities.

Still I will grant you that an overvalued real exchange rate would work to reduce exports and increase imports, other factors held constant. Not sure who denies this either though....

This brings us back to the budget deficit part of the story. If the United States has a large trade deficit, then it means that net national savings are negative. That is definitional. For net national savings to be negative then we must have either negative private savings or negative public savings (i.e. a budget deficit).

The budget deficit follows from the fact that we have a trade deficit, which is in turn the result of the overvalued dollar. This brings us to the strangely paradoxical behavior of the Washington policy elite.


Ok, now I see what you did there. You made a u-turn, floored the accelerator, and flew right into downtown Nutbush.

Rather than abusing an identity, Dean is abusing logic and economics.

People, there is a huge theoretical and empirical literature about the so called "twin deficits", and the bottom line is there is little consistent empirical evidence that trade deficits cause budget deficits and certainly it is in no way inevitable that they will.

In fact, in the literature I mention above, most authors argue that it's our budget deficit that is causing the trade deficit, and not as Dean Baker is arguing here with no evidence anywhere in sight that the trade deficit causes the budget deficit!


"if one wants to get the budget deficit down, then it is necessary to reduce the trade deficit."

This is way beyond Nutbush and just plain ridiculous.

If we cut spending and increased taxes we could balance the budget next year no matter how large the trade deficit might be. It just wouldn't be a factor.

Dean Baker has graduate level training in economics so, at some level, he himself must know that he's full of it here.

The bottom line, people, is that contra Dean, the value of the dollar has been falling as our budget deficit has been rising. Here's a graph from Mark Perry on the dollar; I don't guess you need a graph to know what's happened to the budget deficit over that same period.


Our huge budget deficit is NOT due to foreign currency manipulation. It's due to the recession and the explosion of spending over the last four years. No amount of identity theft can change that.


Yuan Me, We Gotta Talk....

Interesting article by Israel O., at Heritage, on yuan kerfuffle.

Woods on the Non-Depression of 1920

I did not much like "Meltdown." It's just too tendentious and selective in its use of evidence, though I agree with many of its conclusions.

But this T. Woods talk is pretty entertaining. Earlier he had written this, which is interesting and useful. (Hard to believe that this 50 minute talk followed a dinner, though. That's a long after dinner talk. Yikes.)

Monday, October 11, 2010

Just in case you were wondering how awesome the 2010 Nobel Peace is

Hugo Chavez doesn't like it!

So that makes it *extra* awesome.

Breaking down the Econ Nobel

Overall, I like the choices. Search theory and unemployment. My personal choice was Paul Romer and will be until he gets it, but this is a deserving group.

As usual, LeBron is all over this story and has done it better than I ever could.

Here are his post on Mortensen, on Pissarides, on Diamond, and his personal take on the relevance and meaning of this year's prize.

Kudos to Tyler for excellent and incredibly rapid coverage of this year's economics Nobel. Given that these guys were far from the front-runners, he must have produced all of this on the run this morning.

Nobel Prize!

Nobel Prize in Econ! (Yes, I know it was hours ago, but there is no point trying to beat Tyler, anyway...)

Those wacky swedes.... (Yes, they are so wacky they are Norwegian)

(UPDATE: Lots of good stuff on background of winners at MR...)

(UPDATE II: Nice predictions, oddsmakers...)

Power and People Who Suck

Do powerful people suck?

Or are sucky people those who seek power?

Some experiments with answers.

(Nod to Angry Alex, who doesn't want power)

Markets in Everything: Tex-Mex fusion edition

Fiction Writer P-Kroog

Two NYT articles.

First, a sensible one, with good examples, by G. Mankiw.

Second, a remarkable one, truly remarkable, by fiction writer P-Kroog. The second paragraph...how does he get paid to make s**t like this up?

(nod to Angry Alex)

Sunday, October 10, 2010

Mystery of the Disappearing Streetcar

Actually, not a mystery at all, as our good friends at "Market Urbanism" show. An interesting story.

Why Was YouTube Invented?

This is why, though no one knew it at the time.


CNN story.... The guy is not homeless, but he is trying to advertise homelessness.

(Lagniappe: Note that Kermit on the Left Hand clears his throat at 2:15. Opened mouth at wrong time. Had to cover....)

(Nod to Anonyman, who knew it)

Born in the USA

On my scorecard there is one justified and awesome China bash and one confused and unjustified China bash.

Giving the Peace Price to Liu Xiaobo is the J&A bash. That was inspired. The Obama administration's insipid response was a bit less inspiring, but double kudos to the Norwegians here.

The currency war meme is the C&U bash. It's hard to even know where to begin here.

First, tons of countries have fixed their exchange rates for long periods of time. It is fairly unprecedented to call it "protectionism". The whole US philosophy for the Bretton Woods era was free trade and fixed exchange rates! Read Eichengreen's excellent "Globalizing Capital".

Second, lots of countries that nominally are "floaters" actually closely manage their exchange rates. This has been well documented in Calvo, G., and Reinhart, C. (2002). "Fear of Floating." Quarterly Journal of Economics, and Levy-Yeyati, E. and F. Sturzenegger (2004). "Classifying Exchange Rate Regimes: Deeds vs. Words." European Economic Review.

Third, to the extent that China's currency is undervalued (and let me stress that there is no true objective measuring stick for that determination), it is costly to them. Their consumers face higher prices for imported goods and the country faces inflationary pressure.

Fourth, the notion that Chinese exports are stealing jobs from the USA is most likely incorrect on at least two dimensions. (A) If Chinese exports to the US fell, those products would likely be replaced by exports from another developing country. (B) The fact that a product is produced in another country and for sale here does NOT imply that domestic workers have been pushed into unemployment. Jobs are not on the periodic table. There is not a fixed supply in the world. Even if a US manufacturer "outsources" production to another country, the domestic employees are not doomed to a life of unemployment. Even in our hideously bad current economy hundreds of thousands of jobs are being created every month (gross, not net, sadly).

People, our true problem with China is (or should be) that it is a totalitarian state that oppresses its citizens and supports other totalitarian states that directly or indirectly threaten us. Our economic problems are not imported from China. They are "Made in the USA".