What’s Wrong With Economics?

What’s Wrong With Economics?

• Just about everything. But we already knew that. Good post for the uninformed.

What’s At Stake With Bailing Out Bankers: Money as Debt

• Watch this video. It could be the most important 47 minutes of your life.

It’s the macroeconomy, stupid!

It’s the macroeconomy, stupid.
Fri Oct 03, 2008 at 09:33:30 AM PDT

Tell me again how borrowing 10B/wk from China to fight the war in Iraq, with money on the ground in Iraq, was a good idea? With the world facing credit swaps in the high trillions, and no liquidity, banks and agencies globally are addressing the problems of It’s a Mad, Mad World.

Okay, so who tripped the light switch?

Just who was it that forced Lehman Brothers hand at just this point in time, Floyd Norris of the NYT, (no less) asks in Point 10 of his article, causing the immediate squawk for a “bailout plan” right before the debates:

This might not have been needed, at least not now, if the Fed and Treasury had stuck to their own game plan in Bear Stearns, to bail out creditors but not shareholders. We need to learn who pressed to force Lehman to fail completely. That decision led directly to the run on money market funds and to panicked trading conditions for credit default swaps at other brokerage firms.

This has all the “earmarks” of a trigger, a ploy to precipitate political expediency. EIther that or it’s synchronized swimming at it’s finest.

Flash Mob Psychology

Flash Mob Psychology

• Looks like there’s an awful lot of grassroots opposition to the whole bailout thing.
• There also seems to be a growing number of economists who believe that the Wall Street bailout proposal (with or without liberal amendments) is unnecessary corporate welfare and that companies that can’t save themselves should be allowed to fail — from Paul Krugman on the left to Allan Meltzer on the right. See this article by Peter S. Goodman of The New York Times.
• Some argue that we live in a plutocracy masquerading as a democracy. I worry that they might well be right.

The Great American Yard Sale

The Great American Yard Sale

• So, maybe most of these acquisitions have been speculating on the future strengthening of the dollar. Then again, maybe not — and it sounds more like wishful thinking from an American point of view. Why would Italians, Swiss and Saudis expect their own currencies to weaken against the dollar?
• Back when Americans and American companies still had the wherewithal to acquire foreign companies, were they doing so because they expected the foreign currency to strengthen and the dollar to weaken?
• Foreign ownership of US companies is really cool because the new investment from overseas provides jobs in the US? Well, that’s true only as long as the foreign owners choose to leave the company where they found it. As they have more and more difficulty finding employees with triple-digit IQ’s in this country, they’re likely to move their operations elsewhere.
• Then the US can go back to being a nice, laid-back agrarian economy and leave the rest of the world alone.

Sustainability, Entropy and Thermoeconomics

Mainstream economics exposes itself frequently as a futile enterprise: The emperor has no clothes.

One of the important evolutions our future holds in store for us is a transition from the antiquated and useless neoclassical synthesis of mainstream economics to something called thermoeconomics.

US economy shrinks for first time since 2001

US economy shrinks for first time since 2001

• So, I was looking at the Twitter feed from the Phoenix lander on Mars earlier today. Allowing for the obvious limitation of the speed of light, that feed is very nearly instantaneous. (Okay, i admit that the Twitter feed might be coming from ground control and not really from Mars. In that case, insert your favorite example of tech savvy here.)
• It seems odd that we’re only today seeing the econometric summary for the fourth quarter 2007. We can communicate instantaneously with a robot researcher on Mars, but it takes six months to calculate the quarterly GDP?
• Could we consider putting NASA in charge of monitoring the national economy?