Archive for the ‘Economics’ Category


Keynes and Hayek, the Great Debate (Part 1): Nicholas Wapshott – Bloomberg

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Drunken Ben Bernanke Tells Everyone At Neighborhood Bar How Screwed U.S. Economy Really Is

AUGUST 3, 2011 | ISSUE 47•31
The intoxicated Federal Reserve chairman informs bar patrons of the dangers of reckless spending.
SEWARD, NE—Claiming he wasn’t afraid to let everyone in attendance know about “the real mess we’re in,” Federal Reserve chairman Ben Bernanke reportedly got drunk Tuesday and told everyone at Elwood’s Corner Tavern about how absolutely fucked the U.S. economy actually is.
Bernanke, who sources confirmed was “totally sloshed,” arrived at the drinking establishment at approximately 5:30 p.m., ensconced himself upon a bar stool, and consumed several bottles of Miller High Life and a half-dozen shots of whiskey while loudly proclaiming to any patron who would listen that the economic outlook was “pretty goddamned awful if you want the God’s honest truth.”
“Look, they don’t want anyone except for the Washington, D.C. bigwigs to know how bad shit really is,” said Bernanke, slurring his words as he spoke. “Mounting debt exacerbated—and not relieved—by unchecked consumption, spiraling interest rates, and the grim realities of an inevitable worldwide energy crisis are projected to leave our entire economy in the shitter for, like, a generation, man, I’m telling you.”
Enlarge ImageA drunken Bernanke attempts to find the Aerosmith song “Back In The Saddle” on the bar jukebox.
“And hell, as long as we’re being honest, I might as well tell you that a truer estimate of the U.S. unemployment rate is actually up around 16 percent, with a 0.7 percent annual rate of economic growth if we’re lucky—if we’relucky,” continued Bernanke, nearly knocking a full beer over while gesturing with his hands. “Of course, if everybody knew that, it would likely cripple financial markets across the entire fucking globe, even in various emerging economies with self- sustaining growth.”
After launching into an extended 45-minute diatribe about shortsighted moves by “those bastards in Congress” that could potentially exacerbate the nation’s already deeply troublesome budget imbalance, the Federal Reserve chairman reportedly bought a round of tequila shots for two customers he had just met who were seated on either side of him, announcing, “I love these guys.”
Numerous bar patrons slowly nodded in agreement as Bernanke went on to suggest the United States could pass three or four more stimulus packages and “it wouldn’t even matter.”
“You think that’s going to create long-term economic growth, let alone promote job creation?” Bernanke said. “We’re way beyond that, my friend. There are no jobs, okay? There’s nothing. I think that calls for another drink, don’t you?”
While using beer bottles and pretzel sticks in an attempt to explain to the bartender the importance of infusing $650 billion into the bond market, the inebriated Fed chairman nearly fell off his stool and had to be held up by the patron sitting next to him.
Another bargoer confirmed Bernanke stood about 2 inches from her face and sprayed her with saliva, claiming inflation was going to “totally screw” consumer confidence and then asking if he could bum a smoke.
“Sure, we could hold down long-term interest rates and pursue a program of quantitative easing, but c’mon, we all know that’s not going to make the slightest bit of difference when it comes to output, demand, or employment,” Bernanke said before being told to “try to keep [his] voice down” by the bartender. “And trust me, with the value of the U.S. dollar in the toilet, import costs going through the roof, and numerous world governments unprepared for their own substantial debt burdens, shit’s not looking too good for us abroad, either.”
“God, I’m so wasted,” added Bernanke, resting his head on the bar.
Later in the evening, Richard Kampman, a truck driver who was laid off in 2010, said Bernanke approached him in the men’s restroom and attempted to strike up a conversation about various factors contributing to the current financial crisis.
“He stumbled up to the urinal and started mumbling on about the depressed housing sector or something,” said Kampman, who claimed Bernanke had to use both hands on the wall to steady himself. “Then after a while he just sort of stopped and I couldn’t tell if he was laughing or crying.”
“Then he puked all over the sink and the mirror,” Kampman added.
Customers at the bar told reporters the “shitfaced” and disruptive Bernanke refused to pay for his drinks with U.S. currency, claiming it was “worthless.” Witnesses also confirmed that near the end of the evening, Bernanke put money into the jukebox and selected Dire Straits’ “Money For Nothing” to play five times in a row.
“This is what it’s all about,” said Bernanke, who reportedly danced alone in the middle of the dark tavern. “Fucking love this song.”

The Onion (@TheOnion)
8/3/11 4:05 PM
Drunken Ben Bernanke Tells Everyone At Neighborhood Bar How Screwed U.S. Economy Really Is http://onion.com/qxG6as

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Ollanta wins in Peru

hope for the best, but prepare for the worst…

Who’s who on Humala’s economics team

1:55pm EDT
(Reuters) – Left-wing former army officer Ollanta Humala has claimed victory in Peru’s presidential election and sought to reassure investors he has shed his radical past and will adhere to responsible economic policies.
He has surrounded himself with experienced technocrats who are more moderate than his earlier advisers.
Still, critics say some of his advisers came of age in the 1970s and favor a strong state that rejects some tenets of a neoliberal model implemented in Peru in the 1990s, which emphasized deregulation, little or no public subsidies, privatizing state-run companies, and free trade.
Below is a rundown of some of his key advisers. Some of them may get named to top policy posts or Humala may try to generate a “shock of confidence” by picking someone with deep experience in banking and markets.
The timing of an announcement has not been made clear but appointments will be hugely important to signal to markets how Humala will manage the economy.
FELIX JIMENEZ
A professor at Lima’s Catholic University, Jimenez authored Humala’s campaign platform, which was later modified several times over criticism it was too radical. Jimenez has a doctorate in economics from the New School in New York, which is known as a contrarian department skeptical about the monetarism and neoliberalism taught at most major universities in the United States. A former director in the finance ministry’s debt department, Jimenez teaches courses on monetary policy.
OSCAR DANCOURT
Also a professor at Lima’s Catholic University, Dancourt has been a director and president of Peru’s central bank. He has been mentioned as a possible replacement for Julio Velarde as central bank chief. Velarde is widely viewed as Peru’s most successful central banker ever, having slain hyperinflation and averted deflation in two different mandates.
KURT BURNEO
An economics professor at the San Ignacio de Loyola University, Burneo has a doctorate in business administration. He has served as vice finance minister, a central bank director, and president of state-run Banco de la Nacion. He previously worked for the campaign of former President Alejandro Toledo. He has been mentioned as possibly being named the next finance minister.
DANIEL SCHYDLOWSKY
A former chief of Peru’s development bank Cofide and central bank director, Schydlowsky has a doctorate in economics from Harvard University. He was an aide to Toledo’s government.
SANTIAGO ROCA
A professor at the ESAN business school in Lima, Roca has a doctorate in economics from Cornell University. He was president of Indecopi, Peru’s anti-trust regulator, during the Toledo government.
(Reporting by Terry Wade, Teresa Cespedes, Patricia Velez and Caroline Stauffer; Editing by Andrew Hay)
© Thomson Reuters 2011. All rights reserved.

Factbox: Who’s who on Peru Humala’s economics team | Reuters

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Qualifications that still count

By Tim Harford
Published: March 11 2011 22:23 | Last updated: March 11 2011 22:23

The Guardian’s highly respected “Bad Science” columnist, Ben Goldacre, is a doctor and a medical researcher. But The Guardian’s highly respected economics editor, Larry Elliott, has a degree in history. What does this tell us about the state of economics journalism – or about the state of economics?
Elliott is not alone in writing about economics without the obvious academic qualification. The Guardian’s economics leader writer, Aditya Chakrabortty, also has a degree in history. James Surowiecki of The New Yorker has a degree in history too, and studied for some time for a PhD. David Leonhardt, economics columnist at The New York Times, breaks the pattern: his degree is in mathematics. (His Nobel-garlanded colleague Paul Krugman has a greater claim to academic excellence in economics.)
Some financial journalists do have obviously relevant qualifications. Greg Ip of The Economist has a degree in economics and journalism; Neil Irwin of the Washington Post has an MBA. Stephanie Flanders and Evan Davis of the BBC both worked for the Institute for Fiscal Studies. The Financial Times practically has an economics faculty (I have a master’s degree in the dismal science).
Perhaps such educations are a disadvantage. When I had the temerity to raise the subject on Twitter, many replies claimed that formal training in economics was simply brainwashing us into docility. According to this view, the perfect economics commentator should have been carefully protected from academic economics until old enough to see through the nonsense. One celebrated economics columnist told me, off the record, that he sympathised with this view. Larry Elliott was kind enough to dismiss it out of hand. “It would be stretching the point a bit to say an economics degree is an impediment to writing about economics,” he said.
That seems like good sense, but the fact that anyone thinks otherwise should make economists nervous about the sudden diminution in status of their subject. Science journalism provides an interesting contrast: while there are some respected science journalists who lack science degrees, few people would regard that lack as a badge of honour.
Perhaps good journalism has nothing to do with formal academic achievement. “The thing that divides people is not background knowledge, it’s motivation,” says Ben Goldacre. Academic experience can be helpful in reporting a subject, he argues, but if reporters can be bothered to think and do their homework, they’ll do a good job. If not, they won’t.
The challenge for economics journalism, then, is not to send the top journalists back to school for reprogramming; it is to raise the basic economic literacy of generalist reporters who don’t ask the right follow-up question of a politician who spouts some absurdity, or who swallow and regurgitate a dubious press release without carefully chewing over the contents.
“The level of ignorance in the press corps about economics is just enormous,” says Gabriel Kahn, a professor of journalism at the University of Southern California and former Wall Street Journal bureau chief. David Leonhardt goes further: “We need more numerate journalists,” he told me, in an e-mail, “people who aren’t afraid of numbers but who understand their factual power.”
As for the reputation of academic economics, the pendulum swings back and forth. At the height of the Freakonomics boom, merely being an economist conveyed an air of genius, and newspapers were hungry for new tales of economic derring-do. Today, the working assumption is that economics is in crisis and its theories are absurd. Perhaps if academic economists simply wait, they will find themselves fashionable again in due course.
Tim Harford’s latest book is ‘Dear Undercover Economist’ (Little, Brown)
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Venezuela Inflation reading via The Devils Excrement:

Island Canuck inflation Index closes at 59.7% in 2010The MasterBlog

Island Canuck inflation Index closes at 59.7% in 2010

moctavio | January 23, 2011 at 9:26 am | Categories: Uncategorized | URL: http://wp.me/ppwPU-35e

Our friend and reader Island Canuck sent me a while back his final numbers for inflation in 2010. Recall that at the end of June the expat sent us his numbers and inflation was running at a 30% clip for the first half of the year. Well, despite the fact that there was no devaluation in the second half of 2010, his food and beverage index essentially doubled in 2010 as you can see in the table below. Note that most vegetables had triple digit increases in the year (They are mostly produced locally). Note also that things that are not available had small increases. Any insights by readers are welcome.


weOctober 03 2010 7:47 AM GMT
Big Mac index gives more than a taste of true worth

By Steve Johnson

Intervention has kept some emerging market currencies artificially weak, at the same time many have raised interest rates to stem inflation. It is only a matter of time before some allow their currencies to appreciate
Read the full article at: http://www.ft.com/cms/s/0/2736d936-cd89-11df-9c82-00144feab49a.html?ftcamp=rss

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By Albert Edwards, Société Générale, London 

The current situation reminds me of mid 2007. Investors then were content to stick their heads into very deep sand and ignore the fact that The Great Unwind had clearly begun. But in August and September 2007, even though the wheels were clearly falling off the global economy, the S&P still managed to rally 15%! The recent reaction to data suggests the market is in a similar deluded state of mind. Yet again, equity investors refuse to accept they are now locked in a Vulcan death grip and are about to fall unconscious.

The notion that the equity market predicts anything has always struck me as ludicrous. In the 25 years I have been following the markets it seems clear to me that the equity market reacts to events rather than pre-empting them. We know from the Japanese Ice Age and indeed from the US 1930’s experience, that in a post-bubble world the equity market merely follows the economic cycle. So to steal a march on the market, one should follow the leading indicators closely. These are variously pointing either to a hard landing or, at best, a decisive slowdown. In my view we are poised to slide back into another global recession: the data is slowing sharply but, just like Japan in its Ice Age, most still touchingly believe we are soft-landing. But before driving off a cliff to a hard (crash?) landing we might feel reassured when we pass a sign that reads Soft Landing and we can kid ourselves all is well

Read the rest of the story here  >  > >

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