I do not see the threat. Only 10% of the debt holders have debt larger than 50,000.
Given the current level of interest rates this is more manageable than my debt on graduation.
Graph of the Day: Student Debt, the Trillion Dollar Threat to the American Middle Class - Blog of the Century
Saturday, March 31, 2012
Friday, March 30, 2012
Willful Ignorance
This is one of the key differences between Dems and Repubs. Republicans believe that the playing ground is already fair.
Willful Ignorance
Willful Ignorance
Quote of the day.
Noahpinion: Thursday Roundup (3/29/2012):
"He fails to mention, however, the hypothesis that the old Confederacy lives on as a cancerous tumor within our body politic that has metastasized during a moment when America's immune system was weak, and that this is what is strangling our institutions..."
"He fails to mention, however, the hypothesis that the old Confederacy lives on as a cancerous tumor within our body politic that has metastasized during a moment when America's immune system was weak, and that this is what is strangling our institutions..."
Skills Mismatch, Construction Workers, and the Labor Market
There is no structural unemployment. The problem is cyclical.
Skills Mismatch, Construction Workers, and the Labor Market - Liberty Street Economics
Skills Mismatch, Construction Workers, and the Labor Market - Liberty Street Economics
There’s more to life than money
Rich or poor, it’s always nice to have money”
There’s more to life than money (for some) | vox - Research-based policy analysis and commentary from leading economists:
There’s more to life than money (for some) | vox - Research-based policy analysis and commentary from leading economists:
We offer three hypotheses:
Hypothesis 1: People with relatively low financial wellbeing have relatively low risk-aversion.
Hypothesis 2: People with relatively low financial wellbeing have relatively low loss-aversion.
Hypothesis 3: Competitive and status-seeking people are less risk-averse and less loss-averse than people who are less competitive and less status-seeking.
Wednesday, March 28, 2012
Brad DeLong: Quote of the Day: March 28, 1942
Brad DeLong: Quote of the Day: March 28, 1942: "
Once people commit to a belief, the smarter they are the better they are at rationalizing those beliefs. Thus: smart people believe weird things because they are skilled at defending beliefs they arrived at for nonsmart reasons."
Once people commit to a belief, the smarter they are the better they are at rationalizing those beliefs. Thus: smart people believe weird things because they are skilled at defending beliefs they arrived at for nonsmart reasons."
Afghan villagers live in fear of another massacre
Meanwhile the Pentagon reports that night raids do no harm.
Afghan villagers live in fear of another massacre | Asia | DW.DE | 23.03.2012
Afghan villagers live in fear of another massacre | Asia | DW.DE | 23.03.2012
No, Greg Mankiw, We're Not, and You Know It
It is always sad when you see people that you respect lie in public.
Twenty-Cent Paradigms: No, Greg Mankiw, We're Not, and You Know It
Twenty-Cent Paradigms: No, Greg Mankiw, We're Not, and You Know It
Tuesday, March 27, 2012
"China’s Stability Gambit"
"The first principle that I learned when I started focusing on China in the late 1990’s is that nothing is more important to the Chinese than stability – whether economic, social, or political."
"China’s Stability Gambit" by Stephen S. Roach | Project Syndicate
"China’s Stability Gambit" by Stephen S. Roach | Project Syndicate
Monday, March 26, 2012
Sunday, March 25, 2012
Saturday, March 24, 2012
Worldly Philosophers in 30 words or less
Two alternative views of big names in economics
Adam Davidson's 'Why Some Countries Go Bust' Needs A Rewrite | Politics And Regulation | Minyanville.com
Adam Davidson's 'Why Some Countries Go Bust' Needs A Rewrite | Politics And Regulation | Minyanville.com
All the difference in the world
All the difference in the world - MIT News Office:
Twin experiment shows that it is not about geography nor culture, growth is about institutions.
Take North and South Korea, two countries with a common history, culture, climate and natural resources. Since their split in 1948, North Korea has become one of the poorest countries in the world, while South Korea is rich; there is now a tenfold gap in wealth between the states. Why? Because South Korea, Acemoglu and Robinson assert, despite political turmoil of its own, has evolved into an inclusive political system. The Korean peninsula, Acemoglu says, is a classic example of “two countries with very different institutions, but not because the people wanted it. That gives you a window into the long-term consequences of an institutional divergence.”
Twin experiment shows that it is not about geography nor culture, growth is about institutions.
Take North and South Korea, two countries with a common history, culture, climate and natural resources. Since their split in 1948, North Korea has become one of the poorest countries in the world, while South Korea is rich; there is now a tenfold gap in wealth between the states. Why? Because South Korea, Acemoglu and Robinson assert, despite political turmoil of its own, has evolved into an inclusive political system. The Korean peninsula, Acemoglu says, is a classic example of “two countries with very different institutions, but not because the people wanted it. That gives you a window into the long-term consequences of an institutional divergence.”
Friday, March 23, 2012
The Power of Plutocratic Pettiness
It mystifies me why the rich, hedge fund guys and corporate CEO's really seem to dislike Obama. And dislike is not a strong enough word. Here is Krugman's theory:
The Power of Plutocratic Pettiness - NYTimes.com
The Power of Plutocratic Pettiness - NYTimes.com
Thursday, March 22, 2012
Making 9 Million Jobless Vanish
Unemployment number is higher than U3. At least the U6 number is more representative.
Making 9 Million Jobless Vanish: How The Government Manipulates Unemployment Statistics
Making 9 Million Jobless Vanish: How The Government Manipulates Unemployment Statistics
Saturday, March 17, 2012
Friday, March 16, 2012
Share the Wealth?
When Do Humans <i>Want</i> to Share the Wealth? | Angry Bear - Financial and Economic Commentary:
Very insightful reason about why there is no agreement on tax rates or expenditures.
The losers know the game is rigged, so their innate intution tells them that the winners should share.
The winners refuse to know that the game is rigged — deny it vehemently — so they think the losers are unreasonable in their expectations of sharing.
Very insightful reason about why there is no agreement on tax rates or expenditures.
The losers know the game is rigged, so their innate intution tells them that the winners should share.
The winners refuse to know that the game is rigged — deny it vehemently — so they think the losers are unreasonable in their expectations of sharing.
Sunk Cost in War
Sunk Cost in War, David Henderson | EconLog | Library of Economics and Liberty:
"But then all that blood and treasure would be wasted." Peters answered, "But you can't get it back by spending more blood and treasure."
"But then all that blood and treasure would be wasted." Peters answered, "But you can't get it back by spending more blood and treasure."
What Happened to Goldman Sachs?
What Happened to Goldman Sachs? - Justin Fox - Harvard Business Review:
Nothing happened to GS:
"...Goldman (and other Wall Street firms) were always about ripping customers off."
Nothing happened to GS:
"...Goldman (and other Wall Street firms) were always about ripping customers off."
Wednesday, March 14, 2012
Innovation: Institutions and the new new thing
Innovation: Institutions and the new new thing | The Economist:
Companies and businessmen, like politicians (or anyone, really) aren't angels. If a society wants to channel their energies in useful ways, it must be diligent in making sure that the incentives created by the economy's institutions are right. Recklessly throwing around goodies for the already rich and powerful is probably not a good way to proceed.
Companies and businessmen, like politicians (or anyone, really) aren't angels. If a society wants to channel their energies in useful ways, it must be diligent in making sure that the incentives created by the economy's institutions are right. Recklessly throwing around goodies for the already rich and powerful is probably not a good way to proceed.
Safety: Blow-ups happen
Safety: Blow-ups happen | The Economist:
The below quote highlights the issue with models and stated probabilities.
Modelling based on experience with previous plants suggests that the risk of a significant radiation leak from generation I reactors was between one in 1,000 and one in 10,000 per reactor year. For generation II it is between one in 10,000 and one in 1m. For generation III it should be between one in 1m and one in 100m. These calculations do not reflect the absolute risks as experienced in the real world; there have been five major releases of radioactivity (Three Mile Island, Chernobyl and the three reactors at Fukushima) in only 14,000 reactor years of operation. But the trend towards safety seems to be real.
The below quote highlights the issue with models and stated probabilities.
Modelling based on experience with previous plants suggests that the risk of a significant radiation leak from generation I reactors was between one in 1,000 and one in 10,000 per reactor year. For generation II it is between one in 10,000 and one in 1m. For generation III it should be between one in 1m and one in 100m. These calculations do not reflect the absolute risks as experienced in the real world; there have been five major releases of radioactivity (Three Mile Island, Chernobyl and the three reactors at Fukushima) in only 14,000 reactor years of operation. But the trend towards safety seems to be real.
“Spending” isn’t consumption
TheMoneyIllusion � “Spending” isn’t consumption:
Why does everyone else get this wrong?� Perhaps it’s nothing more than confusing the terms ’spending’ with ‘consumption.’� One can spend on either consumer or investment goods.� When you spend on investment goods, it’s called saving.
Why does everyone else get this wrong?� Perhaps it’s nothing more than confusing the terms ’spending’ with ‘consumption.’� One can spend on either consumer or investment goods.� When you spend on investment goods, it’s called saving.
Who’s a Freeloader?
"Entitlements" are really insurance or pensions. The debate would be different if the semantics were more correct.
Who’s a Freeloader? | The Baseline Scenario
Who’s a Freeloader? | The Baseline Scenario
How the Tractor Explains the Middle Class Crisis
The tractor does not explain the middle class crisis. The tractor actually explains why the middle class got richer, much richer since 1910. Increased productivity is good for workers if their wages are increased proportionally. The problem is that wages have been capped by management due to the weakness of unions.
How the Tractor (Yes, the Tractor) Explains the Middle Class Crisis - Derek Thompson - Business - The Atlantic
How the Tractor (Yes, the Tractor) Explains the Middle Class Crisis - Derek Thompson - Business - The Atlantic
Tuesday, March 13, 2012
Monday, March 12, 2012
6 Things Rich People Need to Stop Saying
Ken Griffin should have read this before writing his article.
6 Things Rich People Need to Stop Saying | Cracked.com
6 Things Rich People Need to Stop Saying | Cracked.com
Sterilized quantitative easing
Econbrowser: Sterilized quantitative easing:
More fundamentally, one might ask what good does it do for the Fed to borrow short and lend long? The net effect should be to put downward pressure on long-term rates in the hopes that this might boost home purchases, help households strengthen their balance sheets with refinancing, and encourage investment and net exports. A realistic assessment I think would say that the effects of borrowing short and lending long are likely to be pretty modest, particularly given that the U.S. Treasury has been issuing long-term debt faster than the Fed can buy it. My conclusion is that measures such as QE2, insofar as they had an effect, operated primarily as a tool the Fed can use to punctuate its declarations of near- and longer-term policy objectives.
More fundamentally, one might ask what good does it do for the Fed to borrow short and lend long? The net effect should be to put downward pressure on long-term rates in the hopes that this might boost home purchases, help households strengthen their balance sheets with refinancing, and encourage investment and net exports. A realistic assessment I think would say that the effects of borrowing short and lending long are likely to be pretty modest, particularly given that the U.S. Treasury has been issuing long-term debt faster than the Fed can buy it. My conclusion is that measures such as QE2, insofar as they had an effect, operated primarily as a tool the Fed can use to punctuate its declarations of near- and longer-term policy objectives.
Sunday, March 11, 2012
The proper tax rate on capital income is zero
Sumner and Mankiw are lost in their models.
Accountants are much more practical and clever than these two profs. If the rates of taxation of different forms of income are dramatically different, there will be lots of money and time spent on tax arbitrage.
The wealthy will have incentives to convert all income to capital income.
Sumner even admits this in his essay, but then goes on to say we should do it anyway and adds a push for a one time wealth tax. Who thinks that any republican would accept a wealth tax in return for zero tax on capital gains?
Economics: The proper tax rate on capital income is zero
Accountants are much more practical and clever than these two profs. If the rates of taxation of different forms of income are dramatically different, there will be lots of money and time spent on tax arbitrage.
The wealthy will have incentives to convert all income to capital income.
Sumner even admits this in his essay, but then goes on to say we should do it anyway and adds a push for a one time wealth tax. Who thinks that any republican would accept a wealth tax in return for zero tax on capital gains?
Economics: The proper tax rate on capital income is zero
Saturday, March 10, 2012
Lunch with the FT: Charles Murray
“OK, let’s try this,” he said. “If you get a rising economy, for example, if Barack Obama could say we are going to bring on seven years of incredibly low unemployment, then he would argue that this would do a lot of good to the working class, wouldn’t he?” I agree. “But we already had that in the 1990s, and yet the dropout from the labour force continued to go up, people on social disability went up. Divorce went up. We have no evidence that a robust economy has much to do with these problems at all.”
Lunch with the FT: Charles Murray - FT.com
Nuclear Disaster in Japan Was Avoidable
Nuclear Disaster in Japan Was Avoidable, Critics Say - NYTimes.com:
Very similar to the US financial crisis:
"Mr. Shimazaki and others say the fault lay not in outright corruption, but rather complicity among like-minded insiders who prospered for decades by scratching one another’s backs. They describe a structure in which elite career bureaucrats controlled rubber-stamp academic policy-making committees, while at the same time leaving it to industry to essentially regulate itself."
Very similar to the US financial crisis:
"Mr. Shimazaki and others say the fault lay not in outright corruption, but rather complicity among like-minded insiders who prospered for decades by scratching one another’s backs. They describe a structure in which elite career bureaucrats controlled rubber-stamp academic policy-making committees, while at the same time leaving it to industry to essentially regulate itself."
Wednesday, March 07, 2012
Tax Rates
The problem is not tax rates. The problem is definition and enforcement.
Tuesday, March 06, 2012
Team Romney Rallies Around Carried Interest
Brad DeLong: Alec MacGillis: Team Romney Rallies Around Carried Interest:
Mankiw needs to read his own blogs. He came out in the Sunday NYT defending carried interest. In 2007, he had this to say:
" Deferred compensation, even risky compensation, is still compensation, and it should be taxed as such. Paul Krugman hit the nail on the head with this question: ‘why does Henry Kravis pay a lower tax rate on his management fees than I pay on my book royalties?’ The analogy is a good one. In both cases, a person (investment manager, author) is putting in effort today for a risky return at some point in the future. The tax treatment should be the same in the two cases."
Under $2 a Day in America, Part 1
Mitt Romney " I am not worried about the poor"
Try overshooting for once
Why are we worried about inflation when unemployment is 8% and growth is 3%?
Large Courses Open to All, Topple Campus Walls
I might be able to get through this one.
Preschool Cavities Prompts Anesthesia
Murray may be right...
“I had a lot on my mind, and brushing his teeth was an extra thing I didn’t think about at night,”
There is little government can do to address dumb behavior.
Monday, March 05, 2012
Why buy insurance for the little, predictable stuff?
Why buy insurance for the little, predictable stuff? | The Incidental Economist:
"Buying coverage for routine care is like prepaying for access to lower prices."
Sunday, March 04, 2012
Capital Gains vs. Ordinary Income
The real lesson is that there should be no difference in the taxation of ordinary income and capital gains. Smarter accountants than Mankiw will always figure out how to arbitrage different tax rates.
Adam Smith on Charles Murray
"All economics is either footnotes to Smith or Ricardo, or wrong."
Friday, March 02, 2012
"In defence of Dodd-Frank"
Letter to the Editor: "In defence of Dodd-Frank":
Treasury summarizes capital market reforms:
"...they have already brought about a fundamental change in capital requirements, the most important source of vulnerability in any financial system. They establish comprehensive oversight and transparency of the $600 trillion derivatives markets. They provide a form of bankruptcy to unwind large banks that mismanage themselves into peril. And they consolidate consumer protection into one agency with stronger authority to extend those protections beyond banks, so that we can better prevent fraud and predatory practices at a range of consumer-finance companies. These reforms won’t solve all our problems, but if they had been in place earlier this crisis would have been much less damaging to the United States and to the world."
The End in Afghanistan?
"The Afghan War shouldn’t be the world’s most complicated subject to deal with.� After all, the message is clear enough.� Eleven years in, if your forces are still burning Korans in a deeply religious Muslim country, it’s way too late and you should go.�"
Thursday, March 01, 2012
In The Words of Bastiat
"When plunder has become the livelihood of an agglomeration of men united by social ties, they soon make a law that condones it, and a morality that glorifies it."
Chinese Women Demand More Public Toilets
The author should point out that the US has very few public toilets male or female compared to China.
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