Tuesday, November 18, 2008

7th Art: Star Trek (2009) Trailer

Heading to Rio

Until Sunday I'll be attending the LACEA/LAMES conference in Rio. It'll be interesting to learn how Brazil and other Latin-American countries are dealing with the economic crisis.

Stuff I've Read Today

WSJ: Democrats defend handouts for Detroit automakers, Republicans react.
WSJ: Paulson says new bailouts are unlikely.
WSJ: SEC charges Mark Cuban with insider trading.
WSJ: Citi job cuts.
NYT: no BlackBerry for Obama (HT McArdle).
Kling's metaphors for financial reform.
Cowen on the solution to a liquidity trap.
Sorman on the two Latin Americas (in French).

Bringing the Automakers Up to Speed

KAL's cartoon from magazine The Economist:

Monday, November 17, 2008

7th Art: The Zombie Movie Index

Freakonomics has an article on the correlation between social upheaval and the Zombie Movie Index. Here's the graph:

My Automaker Bailout Proposal

Since the government appears to have got knee-deep in the business of bailing out failed companies (and let me make it clear that I'm against it), then I want to make two suggestions. Before we give taxpayers' money to Detroit automakers and their unions, let's try the following:

(1) Create a voluntary fund. Everyone that thinks that Detroit should be helped would be able to commit by providing cash or signing in as a loan guarantor. No handout through coercive government power. It's a truth-revealing mechanism: whoever thinks that this is the correct way to do it please be the first in line.

(2) If coercion is to be used, then give the money to anyone willing to buy new cars instead of giving it directly to Detroit, let's say, someone like me. After all, I'd not mind having one of these in my garage...

PS: Becker explains why bailing out Detroit is a bad idea (HT Mankiw). See also this comment by Perry (HT Mankiw).

The Onion: Is It Time for the Government to Close the National Money Hole?

An Onion News Network special (HT Perry):

In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

7th Art: Blade Runner (1982)

One of the best films ever, directed by Ridley Scott and based on the novel "Do Androids Dream of Electric Sheep?" by Philip K. Dick. Arguably the best sci-fi movie of all times. Never gets old.

This time I watched the "Final Cut" version of 2007, which is however not very different from the "Director's Cut" version of 1992.

Here's one of the most magnificent scenes in the history of cinema: "tears in rain."

Stuff I've Read Today

WSJ on think tanks.
WSJ on Obama and the Detroit bailout.
WSJ: Chinese President warns agaisnt protectionism.
Becker and Posner on bailing out Detroit.
Perry on the pitfalls of concepts such as "fair" and "fairness."

7th Art: Red River (1948)

My grandfather loved John Wayne movies. Every time I watch a classic western, I can easily understand why. "Red River" (1948) is among the best. Directed by Howard Hawks and starring the Duke, it pays homage to the adventuring spirit of pioneers from all latitudes.

The movie explores the economic challenges of cattle herders living in South Texas and the importance of the Chisholm Trail, which connected most of South Texas to the north of the US, and therefore was essential for the economic development of the region.

The movie appeals to me on a personal level. I once lived in the region where the story takes place, and hauled my belongings from the very beginning of I-35 to its very end in Northern Minnesota, having covered therefore a good part of the Chisholm Trail on my way north.

Here are some of the best moments in the movie. Yeehaw!

Sunday, November 16, 2008

Government Failure: Should the Taxpayer Pay for Automakers' Excesses?

This graph from Perry explains it all (HT Mankiw). Should we the taxpayers be helping large companies, powerful politically engaged unions, and overpaid workers and executives, or should it be the other way around? The President-elect gives his answer.

Stuff I've Read Today

The Economist on the China's stimulus plan.
The Economist on the Republican Party.
The Economist: more trouble for Obama.
The Economist on the Senate seats still up for grabs.
The Economist on the bailout plan changes.
The Economist on the European recession.
The Economist on the Obama's government transition.
FOX: Putin's "kind" comments on the President of Georgia.
Forbes on China's trade surplus (HT Oliver).
Hamermesh on the economic obscurantism of incentive haters.
Roberts on the credit crunch.
Banaian on falling wine prices.
Le Monde: France does better than its neighbors during this crisis (in French).
Sorman: anxiety is rising in the Chinese Communist Party (in French).

Government Failure: Crisis Feeds on Uncertainty Created by Governments

Here's an excellent article written by Roberts on how governments exacerbate economic crises by changing the rules of the game (economic incentives) frequently and awkwardly, or, in other words, by acting as a bad referee or as if it's one of the players:

When no one knows how the rules of the game are going to change — and they seem to change from week to week — who wants to take a risk? Who wants to borrow money? Who wants to invest? Business and consumers are hunkering down, waiting for the storm of change to pass.

The problem isn't liquidity.

It's uncertainty.

[Treasury Secretary] Paulson doesn't realize that his erratic attempts at creating liquidity are creating the uncertainty that makes liquidity meaningless. ...

As the TARP spreads, the cost will keep rising. Remember the talk about how the government might even profit from its $700 billion "investment?" (Insert hollow laugh here.) ...

And who's going to pay for all of this? Those who lived within their means, who went with the smaller house, who waited a few more years to get that new car, who took a part-time job rather than borrowing even more money to pay for college. Suckers. You missed out on the thrills and now you're going to be paying the bills. The prudent will be paying for the imprudent for a long time.

Government Failure: When Competence Takes Back Seat

If you think that the President-elect should use competence as the main criterion when appointing government officers, then you won't be happy with what the WSJ has to report. Here's a worrisome extract concerning the Treasury Department:

Perhaps no potential nominee is taking more heat than Harvard University economist Lawrence Summers, a potential pick as Treasury secretary. Mr. Summers served in that post for President Clinton and has moved to a position of prominence in Mr. Obama's economic team. Women's groups are particularly distressed about his possible appointment, recalling comments he made as Harvard president that innate characteristics may prevent women from achieving more prominence in science.

"The American electorate has changed the course of history by demonstrating that an African-American can do anything. We hope that the messages of the Obama presidency will be broader than that -- that any American can do anything. That includes women," said an anti-Summers broadside from the Rosalind Franklin Society, an honors group for women in biosciences.

Labor groups and liberal economists are suspicious of Mr. Summers's free-market principles, which helped guide a deregulation of the financial-services industry at the end of the Clinton era.

"It would be a really bad start to his administration if President Obama picked a Treasury secretary who shares a substantial part of the blame for the bubble economy and the financial crisis," liberal economist Dean Baker recently wrote.

But Andy Stern, president of the Service Employees International Union, took a swipe at Mr. Summers's chief rival for the post, New York Federal Reserve Bank President Timothy Geithner, who, he made clear, is an unknown quantity to labor.

"I always worry about somebody who has spent his whole life at the Federal Reserve," Mr. Stern said, plugging a new name for consideration, New Jersey governor and former Goldman Sachs chairman Jon Corzine.

Friday, November 14, 2008

7th Art: Good Will Hunting (1997)

Finally found time to watch "Good Will Hunting" directed by Gus Van Sant and starring Robin Williams, Matt Damon and Ben Affleck. I expected a lot from this movie, based on good reviews and recommendations by friends that watched it back in 1997.

Well... the movie is watchable, and had the potential to be great, but it's pretentious, unbelievable and even boring, especially when the dialogues try to be political and end up sounding like ivory tower paranoid drivel.

Matt Damon has done a great job in the "Bourne" movies, but here he appears to be over-coached. His depiction of raw genius is not convincing: I couldn't see passion in his handling of knowledge. Great minds, no matter how eccentric and marginal, cannot exist without the fire that props up the search for understanding.

The bar scene below is supposed to be one of the greatest in the movie. For me however it's a perfect example of the problems that I described above.

Government Failure: When the Government Disallows Competition

Heavy-handed federal regulation and red tape makes a victim in Duluth: the government itself, in the form of the US Postal Service. Here is an article (gated) by the Duluth News Tribune on the hopefully temporary wasteful ordeal of USPS managers:

A day after a News Tribune story reported that E-85 gas prices at a Duluth station was 69 cents higher than other stations — and U.S. Postal Service workers were locked into filling their cars there — nothing has changed. ...

“It’s not an option to send them to another route,” he said. “It eats up substantial time, which: A) cuts into the savings of getting cheaper gas, or B) they’re not spending time delivering mail.”

Why not allow carriers to fuel up on regular gas? Nowacky said the Energy Act prevents them from buying regular fuel unless the post office files for a waiver. But Nowacky said by the time it would take to compile the information and data needed to file the waiver, the station probably would have gotten another shipment of E-85 and lowered its prices.

E-85 is a mix of 85 percent corn-based ethanol and 15 percent gasoline. The price of E-85 is normally lower than for unleaded gasoline. The manager of the Interstate Spur said his station’s high price reflects the amount they paid for the fuel.

Stuff I've Read Today

WSJ: Mischief in Minnesota?
WSJ on more bailout foolhardy.
WSJ: finally, some resist to bailout foolhardy.
WSJ: a confusing bailout plan.
WSJ: not so much change after all.
WSJ: Rove thinks history favors the GOP in 2010.
Mankiw gives advices to Obama.
Mankiw: time to buy stocks.
Becker and Posner on depressions.
Guardian on the strange language of the Pirahãs in the Brazilian Amazon.

Wednesday, November 12, 2008

My Interview in the UMD Statesman

I was interviewed by the UMD Statesman on the effects of the economic crisis on the lives of university students. The article is available here.

7th Art: The Life and Death of Colonel Blimp (1943)

A great movie on the adventurous life of Major General Clive Candy, a fictitious British Army officer, directed by Michael Powell and Emeric Pressburger and starring Roger Livesey, Deborah Kerr and Anton Walbrook.

The movie title refers to British cartoon character Colonel Blimp. Colonel Blimp is not Major General Candy, despite some similarities. Major General Candy does not actually die in the movie. The title is a reference to the rise and fall of early 20th century chauvinistic values represented by Colonel Blimp.

The movie was made during World War II, and the directors got in trouble with Churchill, who thought it was not tough enough on the Germans.

Here's one of the many thought-provoking dialogues in the movie:

Monday, November 10, 2008

Silly Job Interview

I hope the economic crisis doesn't bring back job interview techniques such as this one, courtesy of the Monty Python's Flying Circus (HT Galrão).

DRE 700 Wins the Election

The rise of the machines, according to The Onion (HT Shikida).

Voting Machines Elect One Of Their Own As President

Saturday, November 8, 2008

Stuff I've Read Today

WSJ: Obama meets with economic advisers.
WSJ: Pelosi is for more "fiscal stimulus."
WSJ: Fed's Lockhart on the Fed's arsenal.
The Economist on who voted for Obama.
The Economist on Obama's economic troubles.
The Economist on the Senate and House elections.
The Economist: European rates are cut again.
The Economist on the credit crunch in Brazil.
The Economist on Obama and the unemployment surge.
The Economist: American carmakers, in trouble again...
Mankiw on the new draft (very, very bad idea).
Caplan on Krugman's judgmental view of the median American voter.
Sachsida interviews León-Ledesma on the effects of the financial crisis in Europe (in Portuguese).
Constantino explains how government awkward regulation of the credit rating agencies made them irrelevant (in Portuguese).

Friday, November 7, 2008

The Road Ahead

KAL's cartoon from magazine The Economist:

Would the Taylor Rule Have Been a Better Guide than Discretion?

Below is a graph from Cecchetti's Money, Banking and Financial Markets textbook. It begs the question: what would have happened if the Fed would have followed a simple Taylor rule instead of an overly discretionary policy since 2002? Was the Taylor rule pointing in the right direction all this time?
PS: Hamilton wrote this post on the subject on September 2007.

Thursday, November 6, 2008

Stuff I've Read Today

WSJ: Michael Crichton dies of cancer.
The Economist on Obama's victory.
Forbes: Cooley on change he can believe in (HT Mankiw).
Samuelson on the gap between poor and rich (HT Mankiw).
Mankiw on the importance of allowing the GOP to become the party of the libertarian youth.
Lindgren: Summers for the Treasury Department? (HT Shikida).
Seavey on libertarians and Obama (HT Shikida).
Caplan on how economists are smart and smart people think like economists.
Dubner on how video games can be used for the greater good.
Perry: the year in review.

The Onion on Obama's Victory Aftermath

According to The Onion, Obama win causes obsessive supporters to realize how empty their lives are (HT Shikida)...

Obama Win Causes Obsessive Supporters To Realize How Empty Their Lives Are

Tuesday, November 4, 2008

MIT Panel on the U.S. Financial Crisis

MIT scholars Caballero (Economics), Holmstrom (Economics), Lo (MIT Sloan), Poterba (Economics) & Wheaton (Economics/Center for Real Estate) discuss the financial crisis in the US in this video (HT Andrade).

Stuff I've Read Today

WSJ: Obama defends his plan of action.
WSJ agrees with magazine The Economist in one point: voting for Obama is a gamble.
WSJ: Markowitz criticizes finance professionals for their role in the crisis (HT Selva).
WSJ: credit card losses to rise.
WSJ: Fed's Lacker on government mixed signals.
The Economist: McCain's last salvo.
Becker and Posner on the effects of free markets on moral character.
Mankiw: will radical economists be at the core of an Obama government?
Perry on GRE scores per field.
Cowen on the demand for economic classes after the crisis.
Boudreaux on Mencken and political irrationality (here too).
Lawson makes an interesting point against voting.
Fair Model estimates that Obama will win with 51.91% of the two-party votes (HT Selva).
Sachsida asks: where was the bank run? (in Portuguese).
Sorman: markets are imperfect, the state is even more imperfect (in French).

Monday, November 3, 2008

Tullock: Your Vote Is Irrelevant

Top economist Tullock, one of the creators of public choice theory, talks about the irrelevance of voting in this superb PBS video (HT Tabarrok):

Stuff I've Read Today

WSJ pays homage to McCain.
WSJ's Noonan analyzes the election.
WSJ: state's voting patterns depend on states' economic indicators.
WSJ: ECB recommends more public spending.
WSJ: consumption is down, but saving is up.
WSJ on campaign contributions.
The Economist supports Obama, but thinks "voting for him is a risk."
The Economist on falling consumption in the US.
Sowell criticizes Obama (HT Mankiw).
Mankiw on tax hike bets on Intrade.
Perry on the fall of the ethanol industry, squeezed between higher costs and lower revenues.
Sorman on the challenges ahead for the US (in French).

Sunday, November 2, 2008

Political Irrationality: Stealing Political Signs

As I discussed in this post, Caplan has written many interesting economic pieces on the phenomenon of political irrationality. Here is an interesting example of irrational political behavior, reported by the Duluth News Tribune (gated): a college professor stealing political signs. See a reproduction of the article down in the post (picture HT thinktrain).

The economic question here is: why would anyone engage into an ineffective form of political manifestation that, besides representing an immoral aggression against other people's freedoms, has a high probability of leading to all kinds of troubles? Cost-benefit analysis tells us that this kind of behavior is irrational. The answer is found in Caplan's main thesis: while markets promote rational decisions, politics promotes irrational decisions.

Here is the article, and I'll stress the statements that are particularly relevant to the discussion:

NORTHFIELD, Minn. — A professor has confessed on a national blog to stealing Republican presidential campaign signs in southern Minnesota.

Philip Busse wrote about the thefts on Huffington Post, a liberal news Web site and blog in a post dated Thursday. He is a visiting professor in the theater department at St. Olaf College in Northfield.

In the article titled “Confessions of a Lawn Sign Stealer,” Busse admits to stealing seven McCain/Palin lawn signs along Hwy. 19 near St. Olaf.

In an e-mail to the Northfield News, Busse expressed remorse, saying it was “immature and impetuous.”

But he said he’s surprised at the reactions he’s received for the act instead of his article on the Web site.

“Writing the essay was an opportunity to explore and talk about political speech and the desire that most of us have to express our politics — both in mature and immature ways, and sometimes a mix of the two,” Busse said in the e-mail. “I’m disappointed that most readers seem to have focused on the thefts, and not on the larger thoughts.”

In the article, Busse likened his thefts to an act of civil disobedience and said that stealing the signs was “one of the single most exhilarating and empowering political acts that I have ever done.” The Northfield Police Department says stealing political yard signs is treated as a misdemeanor, but complainants rarely decide to pursue charges.

Bartiromo Interviews McCain and Palin

Bartiromo asks McCain and Palin about their economic plans:



McCain on SNL

Really good sketches!