LouieK

What if World Governments Had Washed Their Hands of the Financial Crisis?

To continue my comments regarding DeLong's predictions, I found one by him in Aug'2008 which says the recession may start soon. Well, the recession already started around Dec'07, one which Nouriel Roubini predicted. So we were well into the recession, but DeLong missed it and by a wide margin. I am not trying to say it is not worthwhile to listen to and read DeLong, just that a reader should always think about these guys with more skepticism and attention to their track records in making predictions.

What if World Governments Had Washed Their Hands of the Financial Crisis?

When Brad DeLong can make a set of predictions about the future and then have those predictions compared to that of other economists and financial analysts, then we can see just how smart Dr. DeLong is. Writing smart critiques looking backwards can fool some people, but not all people. From his piece written here, I am of the impression he is a Liberal ideologue masquarading as an economist. Did he predict the housing bubble? He showed how a housing bubble could be in play in 2004 (I looked this up), but as far as I can tell, made no predictions. And if he would have predicted that a housing bubble would pop in 2004, or, say in the following three years, then we would have lost money by following his advice. If we ask our economists to actually predict events; that is, to make predictions from which we will either make money or lose money, then we can give credit or discredit where it is due. The real test is the ability of an economist to make predictions about the future that are correct and consistently correct. Otherwise, all their intellectual meanderings are just so much blowhearted pop.

Distinction Between Positive and Normative Economics Misses the Point

I haven't bothered to read all the comments, so excuse me if I cover already covered ideas.

I understand the distinction made between positive and normative, but economics is different methodologically speaking from physics. One way to know this is just to see the power of prediction in either case.

Economics is based on human choice and scarcity, and that goes to a psychological level which demands rigid structuralization of assumptions to come out with anything meaningful.

The point: anything positive in the field of Economics is just not comparative to physics and hence presents a problem of definition before one even gets to the question of the difference between positive and normative.

Humans build economic systems, G-d builds physics. So the positive question about the working of the economic system is dependent on the normative construction side of things. Or perhaps better stated, interdependent.

Construct a fiat money system with a Federal Reserve and this affects the postive nature of eonomic workings one would find without such institutions.

Market Cycles: A Look at the Historical Evidence

The author David Van Knapp asks for a definition of a bull and bear market. Good question, and one I too have seen no one adequately define. Here is my take: There is some level of economic value to the economy and some trajectory it is following toward the future value. This is objective to the markets subjective assessment of that value and trajectory now. When markets subjectively underassess this objective value, then we are in a bull market and when markets subjectively overassess this objective value, then we are in a bear market. Concurrently, there is an interplay between the subjective assessments and the objective values and trajectory, so each of them affects the other and complicates the actual future outcome of the economy. Equity markets do not simply follow economics, they also have an impact on the economy (and its trajectory).

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

What we are talking about is the marginal boost in the economy due to a government program: the marginal boost is 22,000 vehicles and the cost of that boost is $20K to $45K per vehicle to the government. AND, those 22,000 vehicles would have been replaced over a period of time anyway. I have a 1999 Windstar that is past its prime because we are out of our soccer mom phase, so the program just subsidizes what I would have done soon anyway. And when they destroy the Windstar, those going into that phase will be faced with a higher price for used mini-vans, forcing more people to pay more precious, personal resources for their family needs on a mini-van. Even if they buy a new van, the increasing price of the old ones will dampen their ability as consumers to negotiate with the auto dealerships for lower prices on the new ones. So the program helps me and hurts the new families. Those incoming families probably voted for Obama, the saps.

Animal Spirits, by Shiller and Akerlof: Questioning Economic Motives

"Irrational behavior" is not well defined unless it means all behavior outside of "rational behavior," which in turn means behavior in conformity to public information at a minimum and insider information at a maximum. So how is this not accounted for in economic theory accept in the sense that it is not accounted for explicitly in some study or econometric model. Mostly it is. Price and quantity are the arbiters of economic process and so long as markets are allowed to proceed, then such "animal spirits" are included. This is not really new, but simply elaborated upon.

And also why are governments less prone to "animal spirits." I would say they are more prone to them. The argument touted, as I see it, is that we need more government to fix the problems that government has created. There may be some sense in that, but I would desire as a goal to create markets that are not regulated and only use government to get there. In other words, if you fix the locus of the problem in "animal spirits" then you make the case for government intervention, and if you posit the problem as one of government intervention, then you decrease the role of the government.

Housing Recovery: Where Will Demand Come From?

markg

How about costs such as depreciation on that home? Figure 1% to 3% on average depending on age. And just because you give yourself the job of managing the home doesn't mean there exists no cost to you for doing it. Rents are almost always lower than the costs of ownership. It is the appreciation that the homeowner looks to gain from ownership for the most part.

What Keynesian Actions Should the Government Take?

By the way, a tax-cut would be a Keynesian stimulus too. But it would be a supply side stimulus.

What Keynesian Actions Should the Government Take?

How do you add $400 million to the space shuttle program and thereby sop up the unemployment in retail now? Such spending employs engineers and technicians over a period of time (say, 10 years), but does nothing for the unemployed now. This is the problem with Obama's spending plans in the stimulus bill recently passed. That bill was, it seems to me, more designed to pay off constituents who helped him get re-elected than designed to stimulate the economy in a Keynesian strategy. If you don't understand that point, then maybe you are the "poodle."

The Bubble of Uncertainty Is About to Burst

g.pincheot writes about,

"the rise of "Ineptomania" personified by Rush Limbaugh - the pied piper of the uninformed."

I listen to Rush Limbaugh from time to time. Do you? My guess is you don't listen to him very often, if at all.

In any case, I would rather have my brain than your brain any day, even it is older.

The Bubble of Uncertainty Is About to Burst

The markets are reacting to the uncertainty surrounding Obama (which remains an uncertainty---just how ideologically motivated is this guy), to the policy prescriptions so far (why did they spend approx 900 billion for fiscal stimulus on a plan which seems overtly not meant to be stimulating and will hamper the economy in the long term--doesn't this make one suspicious of the ideological agenda; and what economic theory supports this spending?), and to the changes in the investment climate. And yes, markets can go lower because they are assessing day by day the new evidence for and the risks to earnings.

Rick Santelli: The Best Five Minutes in CNBC History

To steveowinlow: To the extent any of these so-called socialist countries moved closer to capitalism, they prospered, and to the extent they moved toward socialism they withered. Israel is a good example: Netanyahu's earlier government whereby he reformed Israel, moving from socialist structures and practices to capitalist ones saw inspiring economic progress there.

WSJ Weighs in on Peter Schiff

I was referring in the above comment about Elaine Supkis.....

WSJ Weighs in on Peter Schiff

I went to the website offered as backup to her predictions: emsnews.wordpress.com/ and this is the type of information I found on the site:


"In Europe, it is illegal to talk about the awful close similarity of Naziism with Zionism. But luckily for me, right now I have some freedom of speech. So I can deduce the obvious. More proof comes in every day, that the Jews in Israel are going insane and are very tempted to have a Final Solution. Obama and his new envoy will struggle to tame this beast but we shall see. Will AIPAC pull strings? Will the US media begin hammering Obama mercilessly? If he is fair, he is a dead man walking."

I am not sure, even after searching the site, if she is writing this stuff, or it belongs to others, but she is using the site as evidence in her favor so I start there. I couldn't even find anything particularly about her and her views, so I am not sure the site supports her at all. However, again, she cites it, so I am assuming it comports with her views. Maybe not, and she would do well to explain that connection.

But the use of this site by her at all says something to me about her state of mind and presents a question of credibility in the first place.

It's a Mad, Mad, Mad Madoff World

Ettu: You may be a banana, but we're not even close to being a banana republic. The current economic problems all didn't happen under Bush, but goes back to the Carter CRA, Clinton's strong-arming the banks into lending sup-prime, and the liberal culture that attacked anyone who called attention to the problem of sub-prime lending. Look, as I see it, the states with the most problems like California and Michigan had the greatest problems with deficit spending while the more conservative states such as South Carolina are doing much better comparatively.