KPC Pal Amar Bhide has an interesting op-ed with Edmund Phelps.
Worth reading.
@mattyglesias tweeted (a double):
1. New political crisis desperately needed to stimulate blog sector during august doldrums.
2. Euro collapse should be crisis enough but US blog audience refuses to follow foreign news.
It's true. Whenever I try to bring up Eurozone, reporters stick fingers in ears and start singing "LALALALALA!"
Thursday, August 04, 2011
The Guy's First Name is "Lord"?
The Keynes-Hayek debate was again debated.
George Selgin on the side of the angels. (Really? That's what we've got?) A podcast for background.
And on the other side a guy whose first name is "Lord." Russ Roberts schools "Lord", whose qualifications appear to be a cool accent and a desire to canonize Keynes, in this video.
(Nod to Anonyman)
George Selgin on the side of the angels. (Really? That's what we've got?) A podcast for background.
And on the other side a guy whose first name is "Lord." Russ Roberts schools "Lord", whose qualifications appear to be a cool accent and a desire to canonize Keynes, in this video.
(Nod to Anonyman)
Wednesday, August 03, 2011
croquet and baked alaskas
Wow. I just got reminded of one of my favorite songs, "Indian Summer". Originally written and performed by Calvin Johnson & Beat Happening, it's been covered by Luna and by Captain America (Eugene Kelly).
Here are all three versions in my order of loving them:
What say you all?
Here are all three versions in my order of loving them:
What say you all?
Okies: Behold your Governor
Mary Fallin has a plan for ending Oklahoma's drought:
“I encourage Oklahomans of all faiths to join me this Sunday in offering their prayers for rain,” Fallin said. “For the safety of our firefighters and our communities and the well-being of our crops and livestock, this state needs the current drought to come to an end. The power of prayer is a wonderful thing, and I would ask every Oklahoman to look to a greater power this weekend and ask for rain.”
Wow. Wouldn't you be praying to the same God who SENT THE DROUGHT TO BEGIN WITH? Aren't you asking the Deity to admit his/her mistake and change course? How exactly to you phrase a prayer like that? Do you have to promise to quit doing the bad stuff you did to have the drought come your way? Aren't you just supposed to pray for the strength to deal with the path the Deity in his/her wisdom has put you on? Doesn't Fallin run the risk of getting us all turned into pillars of salt or something for our impudence?
Wow. Wouldn't you be praying to the same God who SENT THE DROUGHT TO BEGIN WITH? Aren't you asking the Deity to admit his/her mistake and change course? How exactly to you phrase a prayer like that? Do you have to promise to quit doing the bad stuff you did to have the drought come your way? Aren't you just supposed to pray for the strength to deal with the path the Deity in his/her wisdom has put you on? Doesn't Fallin run the risk of getting us all turned into pillars of salt or something for our impudence?
If this doesn't work, what's next, rain dances?
The dog who killed Bin Laden
"The dog has an outstanding record of military service, is almost certainly against cutting defense spending, and could not be trusted to keep from biting Obama? Is it just us or would this dog make a terrific Republican congressional candidate?"
More here.
Are You Kidding?
Ken Rogoff is a very serious man, so I know he is NOT kidding. But what he is proposing is theft, pure and simple.
"...the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation."
So, he proposes that "we" (meaning borrowers; you creditors can go screw!) simply inflate by 4%-6% a year until we have destroyed the value of the outstanding debt.
Remember, there is a huge amount of US sovereign and corporate debt, with fixed coupon rates, in the hands of foreign banks and governments. HUGE. Foreigners "own" nearly $5 trillion in US sovereign debt. I use the scare quotes because if we do the "Full Rogoff" then it turns out they don't own what they thought they owned, after all, which was a promise to pay back the loan.
Let's do an example. Suppose inflation is 2%, the "real cost of funds" is 2% (just say, okay, for simplicity) and has been for a while.
A bond with a par value of $1,000, a coupon rate of 4% (about what US Treasuries are going for) with a maturity 20 years from now, would then be worth its par value of $1,000 (inflation 2% plus cost of funds 2% = 4% current market rate = 4% coupon rate, and again just let me simplify it this way). (A calculator, if you want to try this at home)
Now...we go to 6% inflation, not anticipated but introduced overnight and everyone knows it, it's intentional and it is not going away anytime soon. And say real cost of funds is still 2%.
What is the bond worth now?
That would be $601.49.* $400 of the bondholder's wealth has been destroyed. Well, not destroyed, exactly: stolen. Because the debtors are now paying back in inflated, less valuable dollars.
That is Rogoff's solution? Kill the rich? Abuse the idiots who loaned us money? It's impressive how soon the rule of law dies when the wealthy elites of a nation find it to be in their interest.
To be fair, Dr. Rogoff does recognize the problem: "Of course, inflation is an unfair and arbitrary transfer of income from savers to debtors. But, at the end of the day, such a transfer is the most direct approach to faster recovery. Eventually, it will take place one way or another, anyway, as Europe is painfully learning."
That's a truly remarkable statement. This action, if consciously taken by the monetary authorities, would have the effect of saying that all debtors, ALL DEBTORS regardless of size, are "too big to fail."
Wow. Remember, Dr. Rogoff is the former chief econo-shaman at the IMF. The same IMF that tells poor countries they have to pay back 100% of THEIR debts.
**************************************
*Yes, that's assuming that the 2% cost of funds, 6% inflation are the new steady values. Rogoff wants 6% inflation to be temporary. But it would change expectations in a way that would make it hard to readjust very quickly. When the inflation (QE3? QE7?) ends, it would not work to say, "Okay, now we want to borrow at 4% again! We promise never to do that whole inflation thing again. That was only a one time thing."
"...the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation."
So, he proposes that "we" (meaning borrowers; you creditors can go screw!) simply inflate by 4%-6% a year until we have destroyed the value of the outstanding debt.
Remember, there is a huge amount of US sovereign and corporate debt, with fixed coupon rates, in the hands of foreign banks and governments. HUGE. Foreigners "own" nearly $5 trillion in US sovereign debt. I use the scare quotes because if we do the "Full Rogoff" then it turns out they don't own what they thought they owned, after all, which was a promise to pay back the loan.
Let's do an example. Suppose inflation is 2%, the "real cost of funds" is 2% (just say, okay, for simplicity) and has been for a while.
A bond with a par value of $1,000, a coupon rate of 4% (about what US Treasuries are going for) with a maturity 20 years from now, would then be worth its par value of $1,000 (inflation 2% plus cost of funds 2% = 4% current market rate = 4% coupon rate, and again just let me simplify it this way). (A calculator, if you want to try this at home)
Now...we go to 6% inflation, not anticipated but introduced overnight and everyone knows it, it's intentional and it is not going away anytime soon. And say real cost of funds is still 2%.
What is the bond worth now?
That would be $601.49.* $400 of the bondholder's wealth has been destroyed. Well, not destroyed, exactly: stolen. Because the debtors are now paying back in inflated, less valuable dollars.
That is Rogoff's solution? Kill the rich? Abuse the idiots who loaned us money? It's impressive how soon the rule of law dies when the wealthy elites of a nation find it to be in their interest.
To be fair, Dr. Rogoff does recognize the problem: "Of course, inflation is an unfair and arbitrary transfer of income from savers to debtors. But, at the end of the day, such a transfer is the most direct approach to faster recovery. Eventually, it will take place one way or another, anyway, as Europe is painfully learning."
That's a truly remarkable statement. This action, if consciously taken by the monetary authorities, would have the effect of saying that all debtors, ALL DEBTORS regardless of size, are "too big to fail."
Wow. Remember, Dr. Rogoff is the former chief econo-shaman at the IMF. The same IMF that tells poor countries they have to pay back 100% of THEIR debts.
**************************************
*Yes, that's assuming that the 2% cost of funds, 6% inflation are the new steady values. Rogoff wants 6% inflation to be temporary. But it would change expectations in a way that would make it hard to readjust very quickly. When the inflation (QE3? QE7?) ends, it would not work to say, "Okay, now we want to borrow at 4% again! We promise never to do that whole inflation thing again. That was only a one time thing."
Tuesday, August 02, 2011
Recognize the Author?
Ever seen this?
Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution. In this very minute, a child is being born to an American family and another child, equally valued by God, is being born to a family in India. The resources of all kinds that will be at the disposal of this new American will be on the order of 15 times the resources available to his Indian brother. This seems to us a terrible wrong, justifying direct corrective action, and perhaps some actions of this kind can and should be taken. But of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.
That would be Robert Lucas, The Industrial Revolution: Past and Future, 2004. (Nod to Neanderbill for the cite).
I just finished reading Joyce Appleby's The Relentless Revolution, a history of capitalism. After the first 100 pages, I thought it was one of the best books I had ever seen on the subject. After 150 pages, and from then on, I wanted to through it against the wall. Prof. Appleby has some overt Marxist assumptions, with some stubborn libertarianism underneath them. So she firmly believes that capitalism is necessary for wealth to develop. But then she favors statism and powerful labor unions.
She really makes an effort to be "fair" to statist regimes. For example, on p. 267, Prof. Appleby says, "The USSR startled the world [in the Revolution]. During the seventy-two years, of its existence, the USSR repeatedly affronted the Western world with its flaunting of its indifference to property rights and free enterprise."
Um...Ma'am, excuse me, but the USSR also affronted the Western world with its murder of millions of its citizens and the denial of basic human rights and political freedoms to the wretched population of an area that was nearly 1/5 of the entire habitable land surface of the world.
Still, an interesting book. Her discussion of the direction of China and India are both detailed and insightful, though again she shies away from any kind of critique of the repressive anti-labor policies of the Chinese, after having bludgeoned (with some cause, of course) the repressive anti-union thuggery of the US in the first half of the 20th century.
Worth reading.
Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution. In this very minute, a child is being born to an American family and another child, equally valued by God, is being born to a family in India. The resources of all kinds that will be at the disposal of this new American will be on the order of 15 times the resources available to his Indian brother. This seems to us a terrible wrong, justifying direct corrective action, and perhaps some actions of this kind can and should be taken. But of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.
That would be Robert Lucas, The Industrial Revolution: Past and Future, 2004. (Nod to Neanderbill for the cite).
I just finished reading Joyce Appleby's The Relentless Revolution, a history of capitalism. After the first 100 pages, I thought it was one of the best books I had ever seen on the subject. After 150 pages, and from then on, I wanted to through it against the wall. Prof. Appleby has some overt Marxist assumptions, with some stubborn libertarianism underneath them. So she firmly believes that capitalism is necessary for wealth to develop. But then she favors statism and powerful labor unions.
She really makes an effort to be "fair" to statist regimes. For example, on p. 267, Prof. Appleby says, "The USSR startled the world [in the Revolution]. During the seventy-two years, of its existence, the USSR repeatedly affronted the Western world with its flaunting of its indifference to property rights and free enterprise."
Um...Ma'am, excuse me, but the USSR also affronted the Western world with its murder of millions of its citizens and the denial of basic human rights and political freedoms to the wretched population of an area that was nearly 1/5 of the entire habitable land surface of the world.
Still, an interesting book. Her discussion of the direction of China and India are both detailed and insightful, though again she shies away from any kind of critique of the repressive anti-labor policies of the Chinese, after having bludgeoned (with some cause, of course) the repressive anti-union thuggery of the US in the first half of the 20th century.
Worth reading.
Lithuanian Mayor Deals With Illegal Parking
Visit msnbc.com for breaking news, world news, and news about the economy
Ya know, if the Bishop had had a big snow sled like this, he might have done the same thing in Providence, UT.
Mr. Gov: Do you mind if I work, please?
Only one in 20 workers needed the government's permission to pursue their chosen occupation in the 1950s, notes University of Minnesota Prof. Morris Kleiner. Today that figure is nearly one in three...To work as a manicurist requires only about 12 hours worth of training in Alaska and 40 in Iowa, but 600 hours in Oregon and 700 in Alabama. Does anyone believe consumers in Oregon and Alabama are in need of that much more protection from unsafe manicurists? Or that there is much difference as far as consumer complaints are concerned? Mr. Kleiner compared consumer complaints between Minnesota and Wisconsin in certain health-care occupations and found no differences in the number of complaints between tightly regulated Wisconsin and less-regulated Minnesota. [Chip Mellor & Dick Carpenter, WSJ op-ed]
Damon Root elaborates...
(Nod to Kevin Lewis)
Damon Root elaborates...
(Nod to Kevin Lewis)
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