Archive for October 2011
High on Hopium
Q3 GDP came in at 2.5%; best performance since Q4 ’10. But, after looking at the economic entrails the number is weaker than it looks. Consumer spending on utilities and healthcare is what drove spending, not discretionary items. Worse, spending rose only because savings rates fell from 5% to 4%. Savings is falling because personal…
Read MoreEthics for Economists
The Friday File: US academic economists (but not econ bloggers) are adopting a code of ethics requiring them to disclose conflicts of interest by reporting research-funding sources and material financial relationships. This is partly motivated by the documentary “Inside Job” winner of an Academy Award that highlighted the undisclosed consulting relationships of several very influential…
Read MorePlaying Footsie with the FTSE 100
Britain’s FTSE 100 (like the S&P 500) is a measure of blue-chip respectability signaling good governance, and so on. Now, some businessmen have figured out how to break into this index without a solid record. First, they buy a firm that’s already public, then they convert shares in their shady firm into shares of the…
Read MoreBrother Can you Spare a Job?
While some are unemployed by choice and some due to a lack of necessary skills, I do not think it’s that many. Here’s why. There are 14 million unemployed and 3.1 million job openings, or 4.6 jobless workers per opening. Prior to the recession the ratio was about 1.5. In only a few industries do…
Read MoreRoads for Nobody
China has 46K miles of highways; we have barely 47K. China plans to build out to 112.5K miles by ’30 yet there are just one-third as many cars in China as here, and worse, Chinese highways have high tolls, to pay for the roads, which strongly discourage use. Unless auto ownership booms and drivers can…
Read MoreA Snorkel Perhaps?
Obama’s latest effort to help underwater homeowners, who are current, refinance at lower rates will help, but, it’s no panacea. Estimates are that a million households will take advantage of this plan and will, on average, save $2,500/year. If all $25 billion gets spent it will boost our economy by 0.16% of GDP. Of course…
Read MoreReverse Engineering
The Friday File: The US economy has lost manufacturing jobs as foreigners can often make things more cheaply than we can. What manufacturing remains is increasingly high end; it’s less easily outsourced. But, there are exceptions. In Americus, GA 50 people make 2 million pairs of chopsticks/day bound for. . . .China! Turns out poplars,…
Read MoreFree Trade Will Help
Earlier this week, the Congress passed free trade agreements with Columbia, Panama and South Korea. Passage may be hailed as a political achievement for promoting principals of free trade and for shoring up allies. Unfortunately, it will not do much to help our economy. This is because these three countries are quite small and Columbia…
Read MoreThe Volcker Rule
Big bank stocks are all down but shares of Goldman Sachs and Morgan Stanley especially so. Regulatory changes like the Volcker Rule prohibiting proprietary trading hurt all big banks but especially GS and MS as they rely more heavily on it. Brad Hintz has estimated that due to the VR fixed-income business could see pretax…
Read MoreSlot Swap
Delta and USAir are swapping slots at Washington’s Reagan and New York’s LaGauardia. In exchange the FAA is requiring that both airlines free up 8 slots at Reagan and 16 at LaGuardia. The slots will then be auctioned off by the FAA in bundles to allow discount airlines with limited or no access to those…
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