Monday, September 17, 2012

Well, it has been more than a year . . .

And, what is wrong with economics is still wrong. And, what is wrong with our politics is still wrong. We've had a global financial crisis, and five years later, instead of effective reform, we are looking at . . . a global financial crisis. What's wrong with this picture?

Monday, June 13, 2011

Larry Summers Speaks

I have a fantasy, where I am at a conference, where the featured event is a Q&A with Larry Summers, and I get to ask the last question.

My question, I explain, is really to the audience, but I will direct it to Professor Summers:  "Why the hell are you up there, you stupid, failed fat f***?!?"

This morning the Financial Times inaugurates a series of commentaries, it calls the A-List, with a column by Larry Summers, former Treasury Secretary in the Clinton Administration and former economics adviser to the Obama Administration, on the topic, "How to avoid our own lost decade", arguing for Keynesian remedies for our current economic malaise.

Larry Summers was one of the chief architects of the Global Financial Crisis of 2008, and the chief architect of the Obama Administration's response.  He's responsible.  He did this to us.

Larry Summers is what is wrong with economics.

Monday, April 25, 2011

no coherent picture whatsoever

Discussions like this really disturb me; they indicate that there are a lot of people with Ph.D.s in economics who can throw around a lot of jargon, but when push comes to shove, have no coherent picture whatsoever of how the pieces fit together.
Welcome to my world, Paul.
Do economists, generally, have any clue as to how "the pieces fit together"?  If they do, they disguise it pretty effectively behind that jargon.  More on that in future posts, no doubt.  To the matter at hand . . .

Wednesday, March 30, 2011

The Maestro Speaks!

Alan Greenspan:
 "Today’s competitive markets, whether we seek to recognise it or not, are driven by an international version of Adam Smith’s 'invisible hand' that is unredeemably opaque. With notably rare exceptions (2008, for example), the global 'invisible hand' has created relatively stable exchange rates, interest rates, prices, and wage rates."
unredeemably opaque?  notably rare exceptions?

Monday, March 21, 2011

What Atrios Said

Atrios, recovering economist, says, ". . . the ignorant bullies took over the profession . . ."

Monday, February 7, 2011

The Moral of the Story

Man is a story-telling animal, and what matters most to humans, is the meaning of the story.

If you wonder why someone tells a particular story, it will generally be because that person is invested in the particular meaning that the story conveys. "The dog ate my homework," is valuable to the teller, for casting the teller of the tale, as blameless victim.

Economists tell tales, and, sometimes, they tell us why their favorite story is their favorite story.

Saturday, January 29, 2011

Marginal Tax Rates & Effort

Reducing the marginal rate of income tax from 70% to as low as 15% for capital gains was going to release creativity and effort.  Consider this quoted from Bloomberg News (no link available). 

Wall Street firms’ soaring pay pushed traders to disregard risk and limited regulators’ ability to lure top talent to police banks, according to a panel probing the origins of the financial crisis. . . .
Stock-option bonuses motivated financial firms to use leverage to boost returns, and traders were given “aggressive incentives” to dissuade them from defecting, the Financial Crisis Inquiry Commission wrote in a 545-page book outlining its findings. Regulators had difficulty recruiting financial professionals, who could earn more working in the private sector, said the panel . . .
Pay at financial firms started to outpace other industries in 1980, when investment banks began converting from partnerships into publicly owned companies “trading with shareholders’ money,” the FCIC said. Total compensation at U.S. banks and securities firms had climbed to $137 billion by 2007.
. . .
Stock options and other incentives tied to a company’s performance encouraged risk-taking because gains for the employees were much greater than the workers’ potential losses, the FCIC said.
“These pay structures had the unintended consequence of creating incentives to increase both risk and leverage, which could lead to larger jumps in a company’s stock price,” the FCIC said in its report.
Should economic analysis have suggested the possibility of such perverse results?

I think, yes.