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Bruce Bartlett notes in "Maybe too Little, Always too Late" that a good way to figure out when a recession is ending is that this is when Washington lines up a relief plan.
For the 8 out of 10 postwar recessions in which Washington has enacted a stimulus plan (14 of them in total), only one has ever been passed before the trough of the business cycle.
Read the whole thing - it's about as short and sweet as you can get.
I needed help on HTML code. I searched for a site.
I found one where the author was punchy. Scroll down to "Nested Ordered Lists - Results".
Maybe it was just because I was plugging away really good today, but that one made me laugh.
From the home page at the SUU library.
More disinformation from Palestinian supporters:
Note how an absurd and impossible "statistic" has made its way up the media feeding chain. It begins in an Egyptian newspaper, is cycled through a Palestinian activist, is submitted under the shared byline of a Harvard "research scholar," and finally appears in the Boston Globe, whose editors apparently can't do basic math. Now, in a viral contagion, this spreads across the Internet, where that "reduction of 99 percent" becomes a well-attested fact.
The fact in question is that Israel must have cut imports of flour into Gaza by 99% because Gaza requires 680,000 tons of flour per day. That's over 900 pounds per day for every man, woman and child. Yeah right ... and monkeys might fly out of my butt.
Of course, inflating this figure allows Israel to be vilified even though they allow 90 tons of flour to cross into Gaza each day in exchange for random rocket fire.
From Sandbox. Read the whole thing.
FWIW: In case you haven't noticed, a society in which reporters can't do math is not on a good path.
Here's one more to the ongoing list of what makes macroeconomics so hard. This one is appropriate for the current situation: an excessive focus on price data.
Business cycles are fundamentally about quantity variables: unemployment, industrial production, housing starts, and so on. Yes, we're concerned about real income, and yes that can be reduced by inflation, but it is just a proxy for our ability to buy quantities of stuff and it is primarily based on the quantity of work we perform for others.
We may or may not be in a recession right now, but most of the talk we hear in the legacy media is useless for assessing this.
Think about it: they focus on interest rates, stock market indices, exchange rates, and so on. What we have there is a price of borrowed money, a price of equity, and a price of currency. Even mortgage write-downs are just the restatement of balance sheet items derived from prices.
The problem with prices is that if they benefit anyone, they also hurt someone. The assertion that they are informative about business cycles relies on an assumption that there is a right price, and that deviations from that can tip the cost/benefit scale. This isn't usually the case.
This week the Fed lowered interest rates, and we are now seeing the blizzard of opinions about whether this is good or bad. But, this is just an intermediate target. What the Fed really wants is for that to translate into purchases of quantities of stuff made by quantities of hours worked by real people in industries that are elastic with respect to interest rates. Figuring out if that took place isn't as immediate as reporting on the interest rate change, and considerably more time consuming.
A similar argument can be made for stock prices. Yes, people who are losing money on the stock market may reduce their real purchases. But, those are just the sellers. Every transaction has a buyer, and they are laughing all the way to the bank, and likely to purchase more real stuff because of their new found wealth.
Lastly, let's look at the mortgage crisis. What's going on here is a transfer of wealth. The houses are still there. They are a real thing, and somebody owns them. The crisis is about whether the paper wealth matches up with the real wealth. If it doesn't, again there is a winner and a loser. The uncertainty associated with that has definitely created a macroeconomic coordination problem between builders, financers, and buyers. But, that the real problem: coordination, as pointed out by New Keynesian theorists 20 years ago.
None of this is intended to minimize current problems, or the risks in the near future.
But ... let me stand up and state clearly that recessions are about quantities, and there's precious little evidence that the pundits are as focused on those quantities as they should be. If you pay attention, I'm not the only one making this point (here's one example).
This idea from John Tierney needs to go on the list. The context is bad news about the weather, but it could just as easily be bad news about the economy:
Today’s interpreters of the weather are what social scientists call availability entrepreneurs: the activists, journalists and publicity-savvy scientists who selectively monitor the globe looking for newsworthy evidence of a new form of sinfulness, burning fossil fuels.
When judging risks, we often go wrong by using what’s called the availability heuristic: we gauge a danger according to how many examples of it are readily available in our minds. Thus we overestimate the odds of dying in a terrorist attack or a plane crash because we’ve seen such dramatic deaths so often on television; we underestimate the risks of dying from a stroke because we don’t have so many vivid images readily available.
The thing we need to remember about the interpretation of the world that is pushed out to us (instead of the one we pull in to us) is that it is in their self-interest to be entrepreneurial in finding things to push.
Via Cafe Hayek.
I've used this example for years, and I didn't know the source of this was Gordon Tullock:
...The best way for government to reduce the number of traffic fatalities is for it to mandate that a sharp steel dagger be mounted on the steering column of each vehicle and pointed directly at each driver's heart.
Coyote Blog on the difference in lifestyle between being middle class today and "rich" 130 years ago.
Please click through, because there's a picture that is part of the story.
From Sand In the Gears:
On the Democratic side of things, Obama isn't such a bad guy, if we can get him to renounce terrorism and stop-fathering crack babies, which you didn't hear from the Hillary camp. Clinton, meanwhile, is being perhaps a little too feminine on the campaign trail, what with the cleavage and the crying, though his wife remains the shrill, cast-iron harpy we've all come to loathe and fear. John Edwards is dragging his poor sick wife across the country in a quest to improve health care. He stands on principle against any hedge fund of which he's not a partner. The rest of the Democratic field is a collection of sissies, malcontents, and nutjobs.
On the Republican side, meanwhile, Giuliani is a polygamist. No wait, that's McCain. Sorry, I meant Fred Thompson. Mitt Romney? No, he's a hard-working, family-oriented husband of one wife who stands for everything that made America great, except that he's in a Satanic cult. The one-time darling of the Libertarians, Ron Paul, used to own slaves. Mike Huckabee, meanwhile, seems to drive Peggy Noonan apoplectic, which is reason enough to recommend him. Someone just needs to stop him from channeling Herbert Hoover. The rest of the Republican field is a collection of conspiracy theorists, isolationists, and psychopaths.
As for policy positions, as best I can tell, the Democrats want to give most of the southwest U.S. to Mexico, and invite Muslim terrorists to publicly behead everyone making more than a million dollars a year, except for Steven Spielberg and George Soros. Republicans, meanwhile, want to kick anyone with a Mexican-sounding name out of the U.S., and conquer the entire Middle East so that Halliburton will have work after it kills all the porpoises while drilling for oil off the U.S. coast, which will soon be just east of Kansas City, as a result of the Bush-Reagan-Hitler global warming conspiracy.
Both parties are convinced that government is exceptionally skilled at doing things they want more of, and entirely incompetent when it comes to things they don't like. Every candidate is a candidate for change, using the failed ideas of the past ...
Links to the top 10 sites for debunking urban myths. Via TechRepublic.
This was a good time to debunk the giant alligator e-mail that a colleague down the hall forwarded to me this week. Interestingly, most of the e-mail was true.
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