Article Collection 9/9/13

A collection of [what wonks like myself find is] interesting stuff.

Macroeconomics 

List of Upcoming September Events

Roubini: Autumn’s Known Unknowns (Uncertainty about upcoming global events)

Robert “Bob” Shiller (of Case-Shiller Index fame) says in a video interview on the housing recovery, “None of this is Real […] the housing market has become very speculative.”

Hyman: The Original Subprime Crisis. History has plenty to tell you about the future if you’re willing to listen to it.

Calculated Risk: The Future is still Bright! A concise but data driven argument for a strong(er) economic recovery to come. My own expectations are less of ‘strong acceleration’ and more of ‘limping along acceleration’ in the short-run to long-run, and some very big problems in the long-long-run (in ~20 years).

The Atlantic: The Derp and Fall of Inflation Fear Mongers. So in 2007-2008 several people predicted inevitable and immediate hyperinflation in the economy due to the government’s response. They were absolutely wrong, the problem in 2008 was deflation, not inflation fears. In the long-long-run (~20+ years) heavy or hyperinflation (an implicit default) becomes much more likely if the national debt remains high and growing.

Brad DeLong: Whose Central Bank?

Reuters: The other big question at Jackson Hole. Talking about the future of post-Bernanke Fed policy when either Summers or Yellen is at the head; particular focus is on tapering QE.

Washington Post: The crisis is over. The challenges for central bankers are only beginning.This article is similar to the above by Reuters, but perhaps more accessible.

Rogoff: Are Emerging Markets Submerging?

Mahoney (of Moody’s): US Equity Prices are Attractive; I disagree, we’ll see what happens when the Fed begins to taper QE.

Mahoney (of Moody’s): Is The Dollar’s Reserve Currency Status At Risk? I’d agree here; I think the risks are in the long-run, not short-run.

VOX: What is shadow banking? In macro we will cover this in some detail, but this overview is very good.

OECD: EU employment projections are in a word, terrible, through at least 2014. As per usual in countries with rigid labor markets, unemployment is highest with young and lower skilled workers.

Friedman: China’s American Bailout? A discussion of China’s current problems, and how the Fed might help.

WSJ: China’s shadow banking system. (The video provides a decent but quick overview of shadow banking.)

A more comprehensive overview of China’s slowdown.

A nice overview of China’s real estate bubble, and another covering the ensuing credit bubble. There’s the full panoply of speculation, massive growth in leverage and loans outstanding, and creative lending practices in order to funnel credit to subprime borrowers, just like the US in 2007 and Japan in the late 1980s.

The Guardian: India’s Economic Downturn

Microeconomics

Tim Hartford: Trial, error and the God complex. A video Ted Talk explaining the role of evolution (trial and error) in economics and life in general.

Healthcare Policy: House Bid to Undo Dialysis Cuts Shows Lobbyists’ Muscle. One of interesting (depressing?) facts of US Healthcare Policy is that it has long been driven substantially by lobbying power. The End Stage Renal Disease Program initiated in 1972 is a great example, it provides Americans with chronic kidney disease coverage under Medicare. What’s odd about this is why CKD, why not some other disease? (Well for one the kidney dialysis lobbyists paraded a person attached to their kidney dialysis machine on the floor to give testimony; pandering to emotions at its best.) This is simply selective socialism by lobbyists, the privatization of profits and socialization of costs. 

Rauh: Public Sector Pensions Are a National Issue and Cochrane: The value of Public Sector Pensions. Many state and municipal governments are simply not going to be able to pay their pension obligations, as a result expect many more San Bernadinos and Detroits. I’ve touched on this several times before. A longer audio interview with Josh Rauh is available here; it’s excellent and really merges the fields of economics, actuaries, accountants and financiers.

Matt Taibbi: Ripping Off Young America: The College-Loan Scandal. Matt is an outstanding financial journalist with many excellent comprehensive articles to his name. This one is also pretty good.

Modeled Behavior: Doubling McDonald’s Salaries A Great Way to Get Workers Replaced By Machines. You know, just like Wawa’s touchscreen ordering system. Capital replacing labor in this area is inevitable, but not necessarily bad; it’s normal economic evolution, Schumpeter’s creative destruction.

Food Inflation: McDonald’s testing revamped “dollar” menu. This has an obvious relationship to the above article by Modeled Behavior.

99-Year-Old-Man Works for Minimum Wage For Over 30 Years. This amazing guy retires with a pension in his 60s, moves to the US, gets a jobs as a janitor and then works for another 33 years.

SBA: Impact of Regulatory Costs on Small Firms (only a few of the bullet points are applicable here). This is an area I find interesting, calculating the “unseen” costs to small businesses of regulation, accountancy, etc. that larger firms often have in-house staff to deal with. Small firms must contract these services out, which can be quite expensive. It is worth noting however, the SBA is a lobbying group, so just be aware they have incentives here.

Cato: A Microeconomic Look at Regulatory Overkill. A better and more informative resource than the above SBA link.

An article about a commission of famous policymakers examining the Drug War. (You mean the Drug War isn’t working? Now who’d have thunk, considering how “successful” alcohol prohibition was.)

Art Carden: The Drug War: What is It Good For?

Art Carden: “Underpants Gnomes” Political Economy. Now I will do an entire post devoted to this concept, and it’s actually something I’ve used as an example in class before. It’s great at showing the flaw in the logic when policy is examined haphazardly by ignoring 2nd and 3rd order effects (there is often a political motive to oversimplify cause and effect) . This is the “law of unintended consequences” and is intimately related to Bastiat’s “broken window fallacy.”

Criminologists Kates and Mauser examine “Would Banning Firearms Reduce Murder and Suicide?” in the Harvard Journal of Law & Public Policy (a 46 page professional article, hosted on scribd but downloadable as a pdf)

Other

Poll: Majority of Americans Approve of Sending Congress To Syria (The Onion)

Washington Post: 9 questions about Syria you were too embarrassed to ask, a halfway decent overview of what is going on in Syria and why; it also appears to be honest about how little we can do about it. I’m tempted to link the Team America: World Police theme song here.

Here’s How to Track the Pentagon’s Airborne Command Posts Over the Internet. The idea being we’d have at least one of these near Syria before launching any strikes; if you were a hedge fund, this is an example of information you’d likely use to trade on.

Eric X Li: A tale of two political systems. A Chinese take on Chinese versus Western concepts of economic and political development. Interesting, although it’s usually best to take Ted Talks with a grain of salt.

Using Metadata to Find Paul Revere. This is one of the most awesome things I’ve ever read, while technically quantitative sociology, there is significant overlap to microeconomic analysis. Summary: What if the British were using very simple network analysis (like the NSA does) in 1776? In the footnote at the bottom the author links another pretty cool paper on Paul Revere and network analysis.

WSJ: The Science of Winning Poker. This whole article is about the application of game theory to poker; we will cover some basic game theory in class.

Rajan: The Paranoid Style in Economics (I’d have titled this “Why professional economists making oodles of money still argue with one another and throw tantrums like children.”)

Interesting: Third century A.D. Chinese explorer/diplomat writing about visiting the Roman Empire.

Most Surprising Things About America, According to An Indian International Student – It’s always intriguing to hear what others think of us.

How should two lost people find each other? If you and a friend are lost in the woods and trying to find one another, does being drunk help? You might be surprised.

Syrian Army Hacks US Marine Core Website

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This entry was posted in Capitalism, Economic Development, Economic Growth, Economic Theory, Finance, Incentives, Inflation, Labor Market, Macroeconomy, Microeconomics, Monetary Policy, Moral Hazard, Political Economy, Public Finance, Rent seeking, Technology. Bookmark the permalink.

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