voluntaryXchange

Bailout Bile

Doctor Memory at Blah, Blah, Blog explains the bailout:

In a sane world, this would be the beginning of an epochal re-alignment in American party politics. Everyone who voted "no" on this monstrosity would immediately join a new party, let's call it for the sake of argument the "For The Love Of God Don't Do Completely Insane Shit" party. Everyone else would be in the "OMG FREE PONIES!!!11" party. Except that's too depressing a thought to contemplate, since based on the roll call, the Ponytarians have at least a 2-to-1 advantage. And by the way, whatever happens on November 4th, one of them is going to be President.

Read the whole thing.

Technorati Tags: bailout,bile

Some GDP Perspective

Recent growth looks a lot like ... 1996. Don't believe me?

Of course, third quarter real GDP comes out tomorrow, and everyone knows it will be low - I'd go so far as to say there are a lot of folks who have their heart set on it making the world look like it's 1932 all over again.

More importantly, it will be used by everyone to justify increased centralization of decision-making ... even though the world spent most of the last century learning that centralized decision-making always ends up being reactionary, inefficient, and ossifying.

Tomorrow's number will change things for the worse, so it is worthwhile to point out now that the last time the economy looked liked this was July of 1996.

You read that correctly. Don't believe me? Check the data at the source - second link from the top.

You are also correct to recall that the sky wasn't falling then.

So, let's look at the numbers. The nice thing about them is that they don't lie, and the most comprehensive measure - GDP - has as many bugs worked out of it as possible.

Right now the most recent data we have on the economy is from 2008 II. Our current credit crisis is approaching 15 months old. So, we only have data on 3 quarters completely within the crisis. Let's add another to cover the start of the crisis, and one more for good measure.

Over those 15 months, going back to 20 months ago, the U.S. economy grew by 3.2%. That's anemic, and nothing to crow about. But ... it's still there ... $370 billion dollars that we didn't have before, and which we can't lose through a decline in asset values.

But ... while growth has been very low, it has been growth instead of decline. You don't hear that from our overheated bi-coastal media, or our Chicken Little control freaks on the campaign trail.

The last time we had 5 consecutive quarters of growth that was so weak was in 1995-6. From 1995 I through 1996 I we had 2.7% growth, and the economy only created $220 billion we could call our own. Four months after the end of that quarter was the last week of July 1996.

You remember July 1996, don't you?

Clinton was close to a lock on a second term. He had no opposition from within his own party.

The Republicans has pretty much thrown in the towel by nominating that oldest guy that was still standing in line to be nominated - my heck, he'd been waiting around since he was Ford's running mate in 1976.

So ... I'm on the record. I'll be returning to remind you of this post over the next few years.

Technorati Tags: real,GDP,growth,2008,1996

Naked Archaeology

They've found King Solomon's mine.

Technorati Tags: bible,solomon,mine

New Sunspot

We finally have the first sunspot of the upswing phase of cycle 24. It is several months late.

As posted on vX earlier, low sunspot activity is correlated with global cooling ... which we've seen over the last few years.

Technorati Tags: sunspot,cycle,24,global,warming

Krugman Wins the Nobel

Well ... wrong again.

But, no matter what I said the other day, Krugman is a great selection. I think everyone has known since the mid-80's that he was a lock to get the prize ... someday (he was on the list that I put together in 2002 and posted to the original MacroBlog, as well as this one from voluntaryXchange in 2005, this one from 2006, and my A list from last year).

I'm glad they didn't dilute his award by making it joint with someone else. It's arguable that he did less work than some others in the area for which he is getting the award, but I personally think the stuff he did was more pathbreaking.

What Krugman did was put together a fourth explanation for trade. Up to that time there were three: 1) you have a unique resource that others have to trade for, 2) you have a comparative advantage (this idea goes back to Ricardo), or 3) you have a concentration of a factor of production that helps you make things that require that factor more cheaply than others (this theory is associated with 1977 laureate Bertil Ohlin). Adding something to that list is really, really, fundamental.

Krugman's theory relies on increasing-returns-to-scale - this is when getting bigger makes you more profitable. Krugman's insight was that this gives you an incentive to trade more widely. This explains a lot of things, but most fundamentally, why parties will trade the same thing with each other (like Ford and Mercedes selling cars in each others countries).

The only thing that bugs me about this award is that I'm having a hard time figuring out how the Nobel committee decides to bypass older economists for younger ones one year, and then to revisit the old ones the next year. This seems kind of arbitrary to me. There's been a shortage of awards lately for those born between 1935 and 1950 (and only 1 of the last 16 was born between 1935 and 1940). Did those folks do something wrong I don't know about?

Technorati Tags: nobel,prize,2008,economics,krugman

This Year's Peace Prize

I was right a year ago. The odds were that the deserving people in the previous post would not get the prize.

Not that this year's award is too bad ... but it's just another U.N. bureaucrat.

Tell me again why a group whose agents can't engage in conflict is more deserving than someone who can choose to avoid engaging in conflict?

Technorati Tags: nobel,peace,prize,2008

Who Should Win the Nobel Peace Prize?

I wonder if the people who choose the Nobel Peace Prize have been paying attention - here are some suggestions for worthy recipients:

...The Burmese monks whose defiance against, and brutalization at the hands of, the country's military junta in recent weeks captured the attention of the Free World.

... Morgan Tsvangirai, Arthur Mutambara and other Zimbabwe opposition leaders who were arrested and in some cases beaten by police earlier this year while protesting peacefully against dictator Robert Mugabe.

... Father Nguyen Van Ly, a Catholic priest in Vietnam arrested this year and sentenced to eight years in prison for helping the pro-democracy group Block 8406.

... Wajeha al-Huwaider and Fawzia al-Uyyouni, co-founders of the League of Demanders of Women's Right to Drive Cars in Saudi Arabia, who are waging a modest struggle with grand ambitions to secure basic rights for women in that Muslim country.

... Colombian President Álvaro Uribe, who has fought tirelessly to end the violence wrought by left-wing terrorists and drug lords in his country.

... Garry Kasparov and the several hundred Russians who were arrested in April, and are continually harassed, for resisting President Vladimir Putin's slide toward authoritarian rule.

... The people of Iraq, who bravely work to rebuild and reunite their country amid constant threats to themselves and their families from terrorists who deliberately target civilians.

... Presidents Viktor Yushchenko and Mikheil Saakashvili who, despite the efforts of the Kremlin to undermine their young states, stayed true to the spirit of the peaceful "color" revolutions they led in Ukraine and Georgia and showed that democracy can put down deep roots in Russia's backyard.

... Britain's Tony Blair, Ireland's Bertie Ahern and the voters of Northern Ireland, who in March were able to set aside decades of hatred to establish joint Catholic-Protestant rule in Northern Ireland.

... Thousands of Chinese bloggers who run the risk of arrest by trying to bring uncensored information to their countrymen.

... Scholar and activist Saad Eddin Ibrahim, jailed presidential candidate Ayman Nour and other democracy campaigners in Egypt.

Or, posthumously, to lawmakers Walid Eido, Pierre Gemayel, Antoine Ghanem, Rafik Hariri, George Hawi and Gibran Tueni; journalist Samir Kassir; and other Lebanese citizens who've been assassinated since 2005 for their efforts to free their country from Syrian control.

Or to the Reverend Phillip Buck; Pastor Chun Ki Won and his organization, Durihana; Tim Peters and his Helping Hands Korea; and Liberty in North Korea, who help North Korean refugees escape to safety in free nations.

These men and women put their own lives and livelihoods at risk by working to rid the world of violence and oppression. Let us hope they survive the coming year so that the Nobel Prize Committee might consider them for the 2008 award.

This is drawn from The Wall Street Journal in the wake of the non-sensical award of 2007.

I put the odds at 50/50 that the Nobel committee will ignore everyone on this list in 2008.

2008 Nobel Prize Predictions

Time to look foolish again.*

The announcement will be made in a few days.

I still think Jagdish Bhagwati is the top person without an award in an underrepresented field (trade).

There's a lot of talk about Sargent this year. I think I rank him even higher than most other folks. I don't think he'd win alone though. He could be paired with Barro (for new classical macro), with Sims (for dressing down simultaneous equation modeling), or with Hansen (for developing GMM). Frankly, I think any of those 4 could get it on their own if they live long enough.

There's also been a lot of talk about Martin Feldstein. Not this year - because of his association with AIG. Personally, I think he's overrated anyway - he has a huge cheering section from his former students. They've made enormous contributions on their own, but they don't give Nobel's for mentoring.

In the past, I've also expressed a soft spot for Dale Jorgenson.

There's also the really old guys who deserve it and might not be here next year: Arnold Harberger, or Armen Alchian and Harold Demsetz, or David Cass, Peter Diamond, Karl Shell, and Hirofumi Uzawa.

Here's a dark horse whose work might be recognized this year because it is fundamental to understanding financial bubbles: Philip Cagan.

Then there are some old standards: Fama and French,  Dickey and Fuller, Johansen, Chow, Dixit and Helpman, and Romer.

Well ... I must sound like a Marxist ... covered most of the possibilities but didn't commit to any of them.

* There have been 4 awards since I started making predictions. Prescott and Kydland won in 2004 - I thought they would win eventually, but not while still so young. Aumann and Schelling won in 2005, and were not on my radar screen. Phelps won in 2006, and he was always high on my list but I thought the committee had passed him by. Last year, I had also given up on Hurwicz, but I had no clue that Maskin and Myerson were that big a deal.

Technorati Tags: economics,nobel,prize,2008,predictions