Morning Reading
Good morning. Hope you had a good weekend. A few things to get the week rolling:
Bernanke doesn’t know what he’s talking about (Forbes)
Ben Bernanke is a walking economic fallacy. Rather than further empowering the Federal Reserve, which helped create our present economic difficulties, it’s time for individuals to challenge his inane assumptions while greatly reducing the Fed’s role in the national and world economy.
Krugman is still calling for more stimulus (New York Times)
What I keep hearing from Washington is one of two arguments: either (1) the stimulus has failed, unemployment is still rising, so we shouldn’t do any more, or (2) the stimulus has succeeded, G.D.P. is growing, so we don’t need to do any more. The truth, which is that the stimulus was too little of a good thing — that it helped, but it wasn’t big enough — seems to be too complicated for an era of sound-bite politics.
But can we afford to do more? We can’t afford not to.
Supreme Court considers mutual fund fees (NPR)
The case prompted an amazing debate between two distinguished conservative judges. Judge Frank Easterbrook, writing for the majority, said that there is plenty of competition in the mutual fund industry so there is no need for intervention from the courts because the markets will police the industry. In short, people can vote with their feet.
But in dissent, Judge Richard Posner, who usually leads the pack in deferring to market forces, said the time had come to re-examine some of those assumptions. Posner said that since the high fees charged by mutual fund advisers are industry-wide, measuring Harris’ fees against the norm doesn’t tell you much. In other words, if everyone is charging higher fees to mutual funds, most investors in these funds can’t vote with their feet.
Ford made a profit! (Clusterstock)
Homes for one dollar don’t even sell (NBC Chicago)
- Nov 2, 2009 5:53 AM — Scott Jagow
- 2 comments
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Comments (2)
November 2, 2009 11:13 AM PT
The forbes article seems pretty bad to me. Talk about fallacies. The author latches on to absolutes like it’s going out of style. A few of them:
Demand is infinite - technically, but there are are some pretty strong non-linearities at the high ends that make it behave very much like finite demand in the short term.
Money can’t be lost - this one comes up when he’s talking about the trade deficit, and yes dollars will eventually have to be spent here in the US, they don’t disappear, but they do take a vacation. Dollars that sit for any amount of time outside the US does impact the amount of available money at any given point in time. Also, the method by which the dollars come back (through a single entity, by buying treasury notes) is certainly fought with inefficiencies.
Countries do not trade - well, sure, but then neither to people. Countries are made of people, people are made of cells, yada yada yada. At all levels we can have a useful abstraction. Take a tariff for example. We can have useful expectations about what tariffs would do to a country, we could also get more specific about how that would change the decisions of individuals, or even how that would effect decision centers in the brain, we could then build forward on our knowledge of all 300 million individuals or their brains, and say ‘see, everything is a micro econ problem’ or ‘everything is neuroscience’ but the problem is that the new, more small grained model will be orders of magnitude more complex, without really telling us anything new. Occasionally those fine grained models are better than the old macro model, but then they can usually be simplified into a new macro model.
November 2, 2009 1:11 PM PT
forbes article is nonsensical drible