January 30, 2009 § Leave a comment
I’m feeling somewhat lonely these days. My understanding of macroeconomics is closer to that of Paul Krugman, Mark Thoma, and Brad DeLong than it is to that of Robert Barro, John Cochrane, or Eugene Fama. And yet I am a stimulus skeptic. I’ll reiterate why I am a skeptic. But what I really want to get into is my view of the intellectual history of macro since the 1970’s. I think that Krugman’s phrase Dark Age of Macroeconomics aptly describes the whole period.
First, about the stimulus. My objections are:
1. We have a heterogeneous labor force, and that will require Hayekian market adjustment, not central planning. Look at this data from page 96 of the Goldin-Katz book, which shows the percentage of the labor force with various levels of education:
Oligarchs turn to (almost) free press
By John Helmer
MOSCOW – What kind of coincidence can it be for two middle-aged Russians with notable business acumen, Sergei Pugachev and Alexander Lebedev, to be buying at the same time two loss-making evening newspapers, one in Paris and one in London, each for each man’s young so
THE ROVING EYE
Announcing his new State Department, United States President Barack Obama stressed “America’s commitment to lead”. But lead where? Where’s the boldness, the real change of mindset? The Pentagon’s “arc of instability” hovers over Obama’s “Clinton-3” State Department like a ghostly self-fulfilling prophecy. Unless, of course, the Obama White House really kicks out ideology and steers the
Long-term investments in clean energy and social welfare are being hindered by falling oil prices, lack of funding and anxiety about profit. Yet the reach of the Internet and US President Barack Obama’s inaugural support for “core” principles should strengthen the prospect of business finding a new, smarte
Taliban and other militants in their struggle not only in Afghanistan and Pakistan but also in their bid to establish a base from which to wage an “end-of-time battle” that would stretch all the way to the Arab heartlands of Damascus and Palestin
anuary 29, 2009, 7:03 AM
California’s Wind Slowdown
1. The Story So Far: Greed + Incompetence + A Belief in Market Efﬁciency = Disaster
“Greed and reckless overconﬁdence on the part of almost everyone caused us to ignore risk to a degree that is probably unparalleled in breadth and depth in American history. Even more remarkable was the lack of insight and basic competence of our leadership, which led them to ignore this development, or worse, to encourage it. Ingenious new ﬁnancial instruments certainly facilitated and exaggerated these weaknesses, but they were not the most potent ingredient in our toxic stew. That honor goes to the economic establishment for building over many decades a belief in rational expectations: reasonable, economically-induced behavior that would always guarantee approximately efﬁcient markets. In their desire for mathematical order and elegant models, the economic establishment played down the inconveniently large role of bad behavior, career risk management, and ﬂat-out bursts of irrationality
SAN FRANCISCO (AP) — With the recession forcing tech companies to announce thousands of layoffs, IBM Corp. is joining the fray — but not advertising it.
The Armonk, N.Y.-based company has cut thousands of jobs over the past week, including positions in sales and the software and hardware divisions. IBM says the cuts are simply part of its ongoing efforts to watch costs, and the company won’t release specific numbers, even as reports of firings stream in from IBM facilities across the country.
Workers have reported layoffs in Tucson, Ariz.; San Jose, Calif.; Rochester, Minn.; Research Triangle Park, N.C.; East Fishkill, N.Y.; Austin, Texas; and Burlington, Vt.
Meanwhile, other tech companies such as Intel Corp., Microsoft Corp., Texas Instruments Inc., Sprint Nextel Corp. and Google Inc. have all publicly revealed job cuts as part of their strategies for riding out the economic crisis. More than 20,000 jobs will be lost from those companies alone.
One of IBM’s biggest rivals — Hewlett-Packard Co. — is also laying people off. HP is shedding 24,600 jobs, nearly 8 percent of its 320,000-employee work force, as it digests the acquisition of Electronic Data Systems Corp.
IMF expects global economy to come to “virtual halt” in 2009
By Patrick O’Connor
29 January 2009
The International Monetary Fund (IMF) said yesterday that it expects world economic growth this year to be the lowest since World War II. The Fund’s latest update to its 2009 World Economic Outlook forecasts global gross domestic product (GDP) growth of just 0.5 percent—sharply lower than the 2.2 percent annual growth it expected last November.
IMF chief economist Olivier Blanchard declared: “We now expect the global economy to come to a virtual halt.”
The global slump is being led by the advanced economies, almost all of which will experience major economic contractions. The US economy is expected to decline by 1.6 percent, the eurozone by 2 percent, Japan by 2.6 percent and Britain by 2.8 percent. On average, output in the advanced economies will fall by 2 percent—the first such collective contraction since the 1930s.
Credit: IMF World Economic Outlook Update Jan 2009
Mr. Blair said that was wrong. “The free enterprise system has not failed,” he said. “The financial system has failed.”