EconoMonitor

Economics Blog Aggregator

    Global Macro

  • Marc to Market

    The Importance of Greece

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  • This Is Brad DeLong's Grasping Reality...

    Econ 2: Spring 2014: UC Berkeley: Wednesday April 23, 2014 Office Hours Today POSTPONED to 1-3 PM Because of (a) Oral Exams and (b) Piketty Day...

    Econ 2: Spring 2014: UC Berkeley: Wednesday April 23, 2014 Office Hours Today POSTPONED to 1-3 PM Because of (a) Oral Exams and (b) Piketty Day...

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  • This Is Brad DeLong's Grasping Reality...

    Wednesday Focus: Federal Reserve "Forward Guidance": April 23, 2014

    Over at the Washington Center for Equitable Growth: @Steen_Jakobsen: Fed - Realise we have been looking for higher rates in 2 yrs time every year since 2008! READ MOAR It does all hinge on how rapidly our cyclical unemployment is turning into structural unemployment. If it is--if those out the labor force are never coming back and will never downward pressure on the inflation rate--then this time is in different, and we are likely to see the Federal Reserve raising short-term safe interest rates to 2% per year by early in 2017. More likely given everything we have seen, however, is that come 2015 inflation is still showing no significant signs of persistently breaching 2% per year, and so there will be no excuse for raising short-term safe interest rates. Thus...more

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  • This Is Brad DeLong's Grasping Reality...

    Liveblogging World War II: April 23, 1944

    Talk to the People New York City Mayor Fiorello H. La Guardia talks about egg, fish, and potato prices, the campaign against tuberculosis, and other topics...

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  • The Big Picture

    10 MidWeek AM Reads

    My reads, your eyeballs: • Dow Theory: Buy Signal Within Sight (MoneyBeat) • Still Believe in Efficient Markets? Explain This… (Pension Partners) see also Why Indexes are Capitalization-Weighted (Aleph Blog) • Canada: The Next Oil Superpower? (National Interest) • Is Famed Fiduciary Advocate Ron Rhoades Ready to Concede Defeat? (Fiduciary News)   continues here ...more

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  • Marc to Market

    What is Mrs Watanabe Buying Now?

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  • CIPE Development Blog

    Kenya’s Optimistic Future: Visiting a KnowHow Mentee in Nairobi

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  • Marginal REVOLUTION

    Steven Pinker has a new book due out in September

    The title is The Sense of Style: The Thinking Person’s Guide to Writing in the 21st Century. For the pointer I thank Michelle Dawson.

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  • The Big Picture

    Gasoline Tax, Unchanged Since 1993, is Due for an Increase

    Roads are crumbling, bridges are collapsing, and what was once considered one of the greatest achievements of any government anywhere has fallen into embarrassing disrepair. I am of course discussing our nation’s infrastructure. Last year, the American Society of Civil Engineers gave the U.S. infrastructure a D+. When it comes to the most basic functions of government we barely get a passing grade. How did this happen? Credit a combination of benign neglect and anti-tax ideology run amok. The Revenue Act of 1932 created the U.S.’s federal gasoline tax, charging 1 cent a gallon. Three decades later, President Dwight D. Eisenhower signed the Federal Aid Highway Act of 1956.That created one of the world’s great transportation networks, the interstate highway ...more

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  • Greg Mankiw's Blog

    Solow on Piketty

    A review in the New Republic.

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  • Marc to Market

    Great Graphic: Flash EZ PMI and GDP

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  • Worthwhile Canadian Initiative

    Secular stagnation and the end of retirement?

    Retirement is weird, when you think about it. We consume small amounts of leisure for most of our lives, then suddenly stop working completely and consume a big bunch of leisure for the rest of our lives. We smooth our consumption of all other goods, but we don't smooth our consumption of leisure. Instead we binge on leisure at the end of our lives. (I have blogged about this puzzle before.) Overlapping generations models assume that people work and save when young, and retire and dissave when old. Young people save for their retirement. Which makes sense, because it fits the facts. But the facts don't make sense. Why don't people work part-time when young, and work part-time when old, and save nothing for retirement, because they don't retire? We assum...more

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  • naked capitalism

    Links 4/23/14

    Apologies for the absence of my own posts. I even had to turn down BBC Radio (one of their biggest shows). This is a dreadful week for me because we have to get a filing in on the CalPERS litigation. Even though I have a very able team getting a handle on what they have and haven’t provided, the data is in lousy shape. For instance, numerous variant renderings of the same fund name means that even simple exercises like trying to tally the number of fund names are not simple. As a result, I’m having to do a lot of coordination and supervision to make sure the process and results are sound. I will hopefully be closer to normal programming by Friday AM. If you are in New York City, be sure to drop by our meetup this Friday, from 5:00 to 8:00 PM at Sláinte at...more

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  • The Big Picture

    Buy This Dip?

    Buy This Dip? By Peter T. Treadway April 21, 2014       The Innovation Economy begins with discovery and culminates in speculation… And so at each stage the Innovation Economy depends on sources of funding that are decoupled from concern for economic return. Throughout the history of capitalism, financial bubbles have emerged and exploded wherever liquid markets in assets exist… The central dynamic is that the price of the financial asset is separated from any concern with the underlying cash flows – past, present or possible future – generated by the economic assets it represents. William H. Janeway,  Doing Capitalism in the Innovation Economy. Instagram isn’t worth a billion dollars just because those thirteen employees are extraordinary. I...more

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  • Marginal REVOLUTION

    *Music at Midnight: The Life and Poetry of George Herbert*

    By the Very Revd John Drury.  I mentioned the book favorably in passing once before, but I don’t think I drove home how much I liked and learned from it.  For me it is a clear choice for best book of the year so far. Here is a pithy bit from Amazon: Though he never published any of his English poems during his lifetime, George Herbert (1593–1633) is recognized as possibly the greatest religious poet in the language. Few English poets of his age still inspire such intense devotion today. I was not interested in Herbert per se, so that is further testament to the quality of Drury’s achievement. This volume passes at least one bottom line test for book quality, namely whether I ordered many other books by the same author.  I did. You can order the book her...more

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  • naked capitalism

    Ilargi: What is the Earth Worth (6 Years Later)?

    Yves here. This is a day-late Earth Day post, but the proper stewardship of this planet is a 365-day-a-year duty. Ilargi focuses on one of my pet issues, that too many of the remedies for climate change (and environmental protection generally) rely on the illusion of new technology eliminating or blunting lifestyle changes. But in most cases, this way out is illusory. It takes decades for major new technologies to be adopted widely, and we don’t have that kind of runway as far as greenhouse gases are concerned. Second, many green technology fixes merely squeeze the balloon in one place and shift the problem elsewhere. For instance, many of the solutions to water scarcity, like desalination, require energy and also produce residues that need to be disposed of. Thus...more

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  • Beat the Press

    Phantom Bubbles at FiveThirtyEight

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  • International Political Economy Zone

    Achtung Baby: Real Dangers of German Denuclearization

    Chalk this one up as a victory of politics over common sense. Imagine adopting an energy policy that (1) leaves you vulnerable to the whims of vainglorious and unreliable energy suppliers, (2) raises the costs of energy provision, and (3) pollutes the environment more as you return to coal burning, and (4) opens you up to litigation for forsaking agreed-to contracts to maintain nuclear power plants. As it so happens, one of the most rational nations on Earth, Germany, is doing precisely that. In the wake of the 2011 Tohoku earthquake in Japan, European countries have reassessed their use of nuclear power. The French who already rely on nukes for about three-quarters of their power sensibly shrugged off this concern, correctly reasoning that they were not in the earthqua...more

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  • International Political Economy Zone

    VW, GM & Toyota Vie for PRC Auto Supremacy

    It's definitely not your grandfather's Buick.Having discussed the troubles Chinese automakers have selling cars at home and what it means for their export prospects, let us now turn our attention to the real battle for market supremacy in the PRC. In 2009, it surpassed the US as the world's largest market in terms of vehicle sales, so it certainly isn't small fry and represents a burgeoning market with vast possibilities relative to the saturated Western and Japanese ones. Yes, China is horribly polluted already. But no, the automakers seem to be implying that sales can continue to grow with hybrids, never mind that charging in China will probably be powered by ubiquitous coal plants. Ride bikes in Beijing? Are you Communist or something? (Ooh, the delicious irony.)T...more

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  • naked capitalism

    Pettis: 11 Reasons China Can’t Escape from Its Debt Overhang

    Yves here. A certain amount of complacency has set in about China’s unsustainable economic model, simply because the Middle Kingdom has managed to stay a day of reckoning. I remember similar doubt fatigue setting in during the blowoff phase of the dot-com bubble. Even with more worrying sightings, such as distress in wealth management products (the riskiest part of China’s shadow banking system), many of the bearish sorts believe that China has enough control over its economy that it will engineer a soft landing. Yet it’s hard to ignore stories like these: My last trip to Shanghai and surrounding cities and my earlier trip in November was eye opening. A couple of years before I was in Shenzhen China vising a PC Board manufacturer to discuss $160,000 in...more

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  • International Political Economy Zone

    Asia Fun Club: PRC Seizes Japanese Cargo Ship

    The Japanese have literally been, ah, Shanghaied.Us Asians generally have a longer-term perspective than Americans (whose planning horizon is near-zero as evidenced by all sorts of things ranging from the negligible savings of its retirees to the $17.5 trillion plus they will dump on future generations). However, it can go to ridiculous lengths as we bear grudges against each other stretching for decades and decades. The archetypal example is of remembering wartime atrocities committed during Japanese occupations of WWII. The Greater East Asia Co-Prosperity Sphere and all that stuff. Just recently, the Japanese Prime Minister paid tributes to the Yasukuni shrine which the Chinese and Koreans are greatly offended by since they believe it contains the remains of war crimi...more

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  • Economist's View

    'Thomas Piketty Is Right'

    Solow on Piketty: Thomas Piketty Is Right: Everything you need to know about 'Capital in the Twenty-First Century', by Robert Solow: Income inequality in the United States and elsewhere has been worsening since the 1970s. The most striking aspect has been the widening gap between the rich and the rest. This ominous anti-democratic trend has finally found its way into public consciousness and political rhetoric. A rational and effective policy for dealing with it—if there is to be one—will have to rest on an understanding of the causes of increasing inequality. The discussion so far has turned up a number of causal factors: the erosion of the real minimum wage; the decay of labor unions and collective bargaining; globalization and intensified competition fro...more

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  • Economist's View

    Links for 4-23-14

    Class-Ridden America - Paul Krugman Bernanke Says Fed Could Have Communicated Better - WSJ Acceleration Is Forecast for Spending on Health - NYTimes.com A post-crash manifesto to rebuild economics - Money Supply Too Big to Fail. Not Too Strong - David Cay Johnston Adam Smith is not the antidote to Thomas Piketty - Monkey Cage Tom Sargent: What's Between the Lines - Stephen Williamson The Banks and Austerity: a simple story of the last ten years - mainly macro Where Do You Want to Be Born? - The Baseline Scenario Inequality 1992 - Paul Krugman Human capital and income inequality - vox Have living standards really stopped rising? - Tim Harford Introduction to the Floating-Rate Note Treasury Security - Liberty Street Consumption Inequality - House of Debt Globalizatio...more

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  • Marginal REVOLUTION

    Nick Beckstead’s conversation with Tyler Cowen

    Nick is a philosopher at Oxford and he has worked with Larry Temkin and Nick Bostrom.  He typed up his version of our conversation (pdf), it starts with this: Purpose of the conversation: I contacted Tyler to learn about his perspectives on existential risk and other long-run issues for humanity, the long-run consequences of economic growth, and the effective altruism movement. Here are a few excerpts: Tyler is optimistic about growth in the coming decades, but he doesn’t think we’ll become uploads or survive for a million years. Some considerations in favor of his views were: 1. The Fermi paradox is some evidence that humans will not colonize the stars. 2. Almost all species go extinct. 3. Natural disasters—even a supervolcano—could destroy humanity. 4. Normal...more

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  • Smart Economy

    Russian Imperial Expansion or Economic Collapse?

    Russian Imperial Expansion or Economic Collapse? By Walter Derzko Putin is in a panic over NATO encroachment and encirclement of the Russian Federation. He also knows that the Russian Federation is quickly losing its geopolitical and energy influence. Putin admitted that Russia invaded /annexed Crimea out of shear necessity and outright survival. If it didn’t then NATO would eventually accept Ukraine, stationing troops in Sevastopil. In his annual TV phone in show, Putin conceded that Russia is no match for NATO. Putin explains: “[  ] if NATO troops walk in, they will immediately deploy these forces there. Such a move would be geopolitically sensitive for us because, Russia would be practically ousted from the Black Sea area. We’d be left with just a small coast...more

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  • Cafe Hayek - Article Feed

    What’s Infrastructure?

    (Don Boudreaux) In my latest column for the Pittsburgh Tribune-Review I discuss the (ir)relevance of Pres. Obama’s (in)famous “you didn’t build that” blurt.  While I agree that Mr. Obama was referring, with this blurt, to the building of infrastructure – so that his statement is largely factually correct – I argue that the reality to which his 2012 blurt refers does not support the “Progressive” political conclusions that he draws from that reality.  Here’s a chunk from my column: Fact is, a great deal of infrastructure is built privately. FedEx, for example, is infrastructure: It’s a combination of vehicles, warehouses, organizational knowledge and other specific capital that businesses and households rely...more

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  • The Skeptical Speculator

    US stocks rise amid signs of tech bubble

    US stocks rose for a sixth day on Tuesday. The S&P 500 rose 0.4 percent while the Nasdaq Composite rose 1.0 percent. Despite the recent recovery in the Nasdaq, one prominent hedge fund is betting against technology stocks. From Bloomberg: Greenlight Capital Inc., the $10.3 billion hedge-fund firm run by David Einhorn, said it was betting against a group of technology stocks as evidence grows of a bubble. “There is a clear consensus that we are witnessing our second tech bubble in 15 years,” the New York-based firm said in a quarterly letter to clients today. Greenlight said that companies it’s betting against may fall by at least 90 percent “if and when the market reapplies traditional valuations,” according to the letter, a copy of which was obtained by Bloo...more

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  • Beat the Press

    The Future of Health Care Costs: What Does History Tell Us?

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  • Fabius Maximus

    Worst case scenarios versus fat tails: a discussion about climate change

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  • VoxEU.org: Recent Articles

    Human capital and income inequality

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  • Dani Rodrik's weblog

    Globalization and premature deindustrialization

    Arvind Subramanian has a nice post, which provides additional evidence on the phenomenon of premature industrialization that I have talked about and documented previously.  Arvind works with data on industry rather than manufacturing per se, which I prefer. But the result is similar. The inverse U-shaped relationship between income levels and industrialization has shifted down and to the left in recent decades, so that countries are maxing out on industrialization at lower levels of income and, moreover, the peaks themselves are lower than before. Here I propose a simple explanation for this phenomenon, having to do with global market integration. When poor countries become part of the global market, their industrialization is determined largely by consumption pat...more

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  • Economist's View

    Assessing Fed Policy During the Great Recession

    On the road again, will blog as I can; For now, I have a new column: Report Card on Fed Policy During the Great Recession, by Mark Thoma: If the economy evolves according to the Federal Reserve’s forecast, quantitative easing is on track to come to a close by the end of this year. Increases in the federal funds rate are likely to follow. Thus, as the Fed’s policies to combat the Great Recession are coming to an end, it’s time to ask: Did these policies work? ......more

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  • CIPE Development Blog

    Losing Steam: Scorecard Shows Slow Progress on Pakistan Economic Policies

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  • Econbrowser

    “Financial Adjustment in the Aftermath of the Global Crisis 2008-09: A New Global Order?”

    That’s the title of a conference that took place at USC this weekend, co-organized by Joshua Aizenman, Menzie Chinn and Robert Dekle, and cosponsored by the USC Center for International Studies, USC School of International Relations, Journal of International Money and Finance, and the Federal Reserve Bank of San Francisco. The papers focused on new international trends and developments in the wake of the global financial crisis, including the role of corporate saving/investment/net lending (figure 7), and official flows, in the global saving glut, the behavior of cross-border banking, the size of fiscal multipliers, fiscal rules and business cycle volatility, the implications of foreign exchange reserve accumulation, monetary aspects of Abenomics, and the competi...more

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  • Paul Krugman

    Class-Ridden America

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  • Paul Krugman

    Inequality 1992

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  • Cafe Hayek - Article Feed

    Quotation of the Day…

    (Don Boudreaux) … is specially selected for this Earth Day; it’s from pages 104-105 of Pierre Desrochers’s and Hiroko Shimizu’s splendid 2012 book, The Locovore’s Dilemma: In Praise of the 10,000-Mile Diet (original emphasis; footnotes excluded; links added): [T]hriving cities are not an environmental problem, but rather the best means to lighten humanity’s impact on nature.  To quote the applied scientists and policy analysts Peter W. Huber and Mark P. Mills, the skyscraper is “America’s great green gift to the planet” for it “packs more people onto less land, which leaves more wilderness undisturbed in other places, where the people aren’t …. The less real estate we occupy for economic gain,” they add, &#...more

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  • Beat the Press

    Paradise Lost: Fred Hiatt and Bowles-Simpson

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  • Alpha.Sources

    The Big Short on Volatility

    Two investment themes in particular, since 2008, have been predominant in my view and the continuation or unravelling of both hold the key to successful asset allocation in the next 3-5 years. The first is the suppression of volatility on the back of aggressive and ongoing central bank intervention. The second is the hunt for yield characterised by two key currents. Firstly, investors have been pushed far out the risk spectrum (often reluctantly). Secondly, we have seen bonds and stocks appreciate and depreciate together which has put into question core tenets of traditional portfolio allocation.  The overarching investment conclusion from the points above is obvious. The focus, hysteria and obsession around central bank policy will continue for it is increasingly ...more

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  • Econbrowser

    State Employment Trends: Does a Low Tax/Right-to-Work/Low Minimum Wage Regime Correlate to Growth?

    It’s interesting how “pro-business” policies do not appear to be conducive to rapid employment growth. Employment in Governor Walker’s Wisconsin, as in Governor Brownback’s Kansas, has lagged behind that of the United States (and behind that of Governor Dayton’s Minnesota and Governor Brown’s California). Figure 1: Log nonfarm payroll employment in Minnesota (blue), Wisconsin (red), Kansas (green), California (teal),and the United States (black), seasonally adjusted, 2011M01=0. Source: BLS, and author’s calculations. Notice that Kansas and Wisconsin, ranked 15th and 17th in terms of the ALEC-Laffer “Economic Outlook Rankings”, are doing equally badly relative to US employment growth. In contrast, Minnesota (...more

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  • The Skeptical Speculator

    US stocks rise amid positive economic data, US household deleveraging completed

    US stocks rose for the fifth consecutive day on Monday. The S&P 500 rose 0.4 percent to complete a five-day advance, its longest rising streak since October, of 3.1 percent. US stocks rose amid positive economic data on Monday. The Chicago Federal Reserve's national activity index fell to +0.20 in March from +0.53 in February. However, the three-month moving average rose to 0.00 from -0.14. The outlook for the US economy is also positive. The Conference Board reported on Monday that its US index of leading indicators rose 0.8 percent in March, the most since November, after rising 0.5 percent in February. Monday also brought possibly good news for the US economy for the longer term. A study by Bruno Albuquerque, Ursel Baumann and Georgi Krustev, economists at the Euro...more

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  • Fabius Maximus

    A guide into the weird numbers that run our world, describing both financial bubbles & climate change

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  • VoxEU.org: Recent Articles

    A European mobility assistance scheme

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  • VoxEU.org: Recent Articles

    Persistent noise trading and market meltdowns

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  • Paul Krugman

    ECO 348, The Great Recession: Long-Run Fiscal Prospects

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  • Cafe Hayek - Article Feed

    The Sour Fruits of Cronyism

    (Don Boudreaux) Here’s a letter to Food Business News: You report that the U.S. Department of Commerce is launching an “antidumping investigation” into U.S. sugar imports from Mexico (“D.O.C. initiates sugar dumping case against Mexico,” April 21).  The admitted purpose of this investigation is to protect American sugar producers from low-priced foreign sugar.  The deeper goal, of course, is to artificially bloat these producers’ revenues. So, because Uncle Sam’s sugar-trade policy is really just corporate welfare, why go through the costly and confusing rigmarole of conducting such “investigations” as preludes to raising the punitive taxes imposed on Americans who buy imported sugar?  Why not dispense welfa...more

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  • Felix Salmon

    The most expensive lottery ticket in the world

    No Exit, the new book from Gideon Lewis-Kraus, should be required reading for anybody who thinks it might be a good idea to found a startup in Silicon Valley. It shows just how miserable the startup founder’s life is, and raises the question of why anybody would voluntarily subject themselves to such a thing. A large part of the answer is that Silicon Valley is gripped by a mass delusion, compounded by a deep “fake it til you make it” attitude toward success. Why do so many people in Silicon Valley want to be founders? Because every founder they meet is always killing it, crushing it, having massive success, just about to close a huge round, etc etc. At some level, they must know this is impossible: if 90% of startups fail, it simply can’t be the case that all o...more

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  • CIPE Development Blog

    Ukraine Small Businesses Unite to Call for Policy Reforms

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  • CYNICONOMICS

    Is This What a Credit Bubble Looks Like?

    There’s been some buzz recently about a pick-up in business lending. The six largest banks increased business loans at an average annual rate of 8.5% in the first quarter, according to a Wall Street Journal report last week. Other first quarter data reported by the Fed shows commercial and industrial loans jumping 12% from last year. Charles Schwab’s chief strategist went so far as to call a chart depicting the Fed’s broader lending data “the most important chart in the world.” Unlike some pundits, though, we’re not convinced that a surge in business credit is such a good thing. We don’t doubt that more lending to small businesses, in particular, might do some good if it doesn’t go too far. Lending to large corporations, on the other hand, is a different...more

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  • The Skeptical Speculator

    China's home price inflation cools, Japan's trade deficit surges

    China's home prices continued to slow in March, according to a report on Friday. While data from the National Bureau of Statistics showed that home prices increased year-on-year in 69 of the 70 cities monitored, unchanged from February, calculations by Reuters showed that average new home prices in the 70 cities rose 7.7 percent in March from a year earlier, down from the previous month's 8.7 percent increase. From the previous month, prices rose 0.2 percent in March, slowing from the 0.3 percent increase in February. Meanwhile, a report on Monday showed that Japan's trade situation has continued to deteriorate. Its trade deficit quadrupled from a year ago to 1.45 trillion yen in March. While Japan's exports rose 1.8 percent, imports surged 18.1 percent as a result of h...more

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  • Fabius Maximus

    The Ukraine anti-semitic flyer: a case study in propaganda

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  • Greg Mankiw's Blog

    Transitory Income and the One Percent

    From today's NY Times:Thomas A. Hirschl of Cornell and I [Mark Rank of Wash U] looked at 44 years of longitudinal data regarding individuals from ages 25 to 60 to see what percentage of the American population would experience these different levels of affluence during their lives. The results were striking. It turns out that 12 percent of the population will find themselves in the top 1 percent of the income distribution for at least one year. What’s more, 39 percent of Americans will spend a year in the top 5 percent of the income distribution, 56 percent will find themselves in the top 10 percent, and a whopping 73 percent will spend a year in the top 20 percent of the income distribution.... It is clear that the image of a static 1 and 99 perc...more

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  • Econbrowser

    Impressions of Russia

    My wife and I spent last week in Russia, giving some lectures at the New Economic School and the International College of Economics and Finance and touring Moscow and Saint Petersburg. Here are some of the things I saw that surprised me. Moscow may have the world’s best subway system. You can get anywhere in the sprawling city very quickly, and if you miss the train, another will be along in just a few minutes. I don’t recommend it during rush hour, but it provides the average resident with cheaper and more effective transportation than can be found in other cities I have visited. On most U.S. subways, you will see signs or hear recorded announcements declaring that solicitation is strictly prohibited, but nonetheless will frequently find yourself asked ...more

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  • John Quiggin

    Another one (or more) bites the dust …

    Coming back yet again to nuclear power, I’ve been arguing for a while that nuclear power can only work (if at all) on the basis of a single standardised design, and that the only plausible candidate for this is the Westinghouse AP1000. One response from nuclear enthusiasts has been to point to possible future advances beyond the Gen III+ approach embodied by the AP1000 (and less promising competitors like EPR). The two most popular have been Small Modular Reactors and Generation IV (fast) reactors. Recent news suggests that both of these options are now dead. The news on the Small Modular Reactor is that Babcock and Wilcox, the first firm to be selected by the US Department of Energy to develop a prototype, has effectively mothballed the project, sacking the CEO o...more

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  • John Quiggin

    The end of manufacturing in Australia

    Ross Gittins has a piece, drawing on research by Jeff Borland of the University of Melbourne, in which he presents a “glass half-full” view of the Australian manufacturing sector. He makes some good points, but the overall picture is misleading. It’s true that, on standard statistical definitions of the manufacturing sector, there’s still a fair bit of employment and output, though both have declined in recent years and will almost certainly continue to do so, given the recent closure announcements. But what’s left of manufacturing looks very different from the mental image the word ‘manufacturing’ produces, at least for me: a large factory, with hundreds of manual workers producing complex industrial products (consumer goods, m...more

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  • Worthwhile Canadian Initiative

    Exchange Rates and Gasoline Prices?

    Well the price of gasoline just spiked upwards across Canada and the usual media analysis has begun.  Five key reasons were summarized as follows by Shawn McCarthy in the Globe and Mail: 1) Approach of the summer driving season leading to a switch to summer gas formulations which leads to a reduction in supply. 2) Higher crude prices. 3) A lower Canadian dollar. 4) Lack of retail competition in Canada and 5) U.S. exports of gasoline and diesel out of North America creating tighter demand and supply conditions. I thought explanation number three was rather intriguing. According to explanation number three, since the dollar is off about 10 percent against the U.S. dollar and since crude prices are set in U.S. dollars, it means that Canadian refiners are paying more...more

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  • John Quiggin

    Tu quoque

    I’ve written many posts and articles making the point that the political right, in most English speaking countries[1] has been taken over by a tribalist post-truth politics in which all propositions, including the conclusions of scientific research, are assessed in terms of their consistency or otherwise with tribal prejudices and shibboleths. Very occasionally, intellectuals affiliated with the political right (conservatives and libertarians) will seek to deny this, arguing that isolated instances are being blown out of proportion, and that the right as a whole is committed to reasoned, fact-based argument and acceptance of “inconvenient truths’ arising from the conclusions of scientific research[2], [3]. But, far more often their response takes the f...more

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  • Worthwhile Canadian Initiative

    Monetary monarchy

    Speculative musings, from an inadequate historical background. We tend to take it for granted that the world looks like this, from a monetary perspective: The world is divided into currency areas. Each currency area has one alpha bank (the king). All the other banks are beta banks (subjects, who follow the king). The beta banks promise to redeem their money for alpha bank money at a fixed exchange rate. The alpha bank makes no such promise the other way. Asymmetric redeemability. The alpha bank is the leader, who decides on monetary policy for the whole currency area. The beta banks just follow along, because they fix their exchange rates to the alpha bank. The world is divided into monetary monarchies. There may be sub-monarchs, who play alpha to the beta banks within...more

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  • Smart Economy

    Stanford scientists develop 'playbook' for reverse engineering tissue

        STANFORD, Calif. — Consider the marvel of the embryo. It begins as a glob of identical cells that change shape and function as they multiply to become the cells of our lungs, muscles, nerves and all the other specialized tissues of the body. Now, in a feat of reverse tissue engineering, Stanford University researchers have begun to unravel the complex genetic coding that allows embryonic cells to proliferate and transform into all of the specialized cells that perform myriad biological tasks. A team of interdisciplinary researchers took lung cells from the embryos of mice, choosing samples at different points in the development cycle. Using the new technique of single-cell genomic analysis, they recorded what genes were active in each cell at each point. Though...more

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  • iMFdirect - The IMF Blog

    The Future of the State Revisited: Reforming Public Expenditure

    A

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  • Greg Mankiw's Blog

    Sometimes it's better to split the baby

    This story about the Census Bureau is amazing to me: The Census is changing its annual survey about health insurance.  As a result, the new data will not be comparable to the old, making it much harder to gauge the effects of the Affordable Care Act.Is this a White House conspiracy to hide the effects of the law, as some have suggested?  Maybe, but probably not. I have a lot of respect for the government data producers, so I am giving them the benefit of the doubt.Yet I don't see why the Bureau needs to make such a sudden change.  Why not, for a few years, give half the sample the old questionnaire and half the new one?  This procedure would provide a basis for eventually splicing together the old and new time series....more

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  • Felix Salmon

    The problems of HFT, Joe Stiglitz edition

    Never mind Michael Lewis. The most interesting and provocative thing to be written of late about financial innovation in general, and high-frequency trading in particular, comes from Joe Stiglitz. The Nobel prize-winning economist delivered a wonderful and fascinating speech at the Atlanta Fed’s 2014 Financial Markets Conference today; here’s a shorter version of what Stiglitz is saying. Markets can be — and usually are — too active, and too volatile. This is an idea which goes back to Keynes, if not earlier. Stiglitz says that in the specific area of international capital flows, “there is now a broad consensus that unfettered markets are welfare decreasing” — and certainly you won’t get much argument on that front from, say, Iceland, or Malaysia, or eve...more

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  • iMFdirect - The IMF Blog

    Socrates & the Pope: Overheard at the IMF’s Spring Meetings

    A

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  • Felix Salmon

    Private equity math, Nuveen edition

    The WSJ has the details of today’s big asset-management news: TIAA-CREF is buying Nuveen Investments for $6.25 billion. The sale marks the end of an ill-fated acquisition by private equity shop Madison Dearborn in 2007, just before everything fell apart. Madison Dearborn paid a total of $5.75 billion for Nuveen — a premium of 20% to its market value. As the WSJ says, the buyers used $2.7 billion of their own money to pay for Nuveen, and then borrowed the other $3.05 billion. But then things got tough: Within a year, Nuveen’s borrowing costs had risen as the financial crisis set in. The company eventually refinanced most of its buyout debt, which now stands at $4.5 billion and will be absorbed by TIAA-CREF. With the TIAA-CREF deal, Madison Dearborn will have at...more

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  • Alpha.Sources

    Changing correlations

    I am currently moving my life 300 miles north which entails more headbanging over missing internet, tv and other amenities in my new flat, IKEA flatpacks rather than looking at the market. One of the tidbits that did register last week however was Draghi's comments at the IMF that the euro is now starting to become a problem.  It is clear that the ECB is priming the market here for something. Although I am quite sure that this "something" will be underwhelming. One thing though that needs to be watched is the catalyst, in my view, for this recent jawboning by the ECB. Basically, the fact that the recent risk-off coincided with USD weakness has spooked the lords of finance in Frankfurt. A strong euro in conjunction with a stronger economy/higher assets is ok. But a ...more

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  • iMFdirect - The IMF Blog

    Europe’s Economic Outlook

    A

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  • Institutional Economics

    ECB to Adopt QE in H2 2014

    I have an op-ed in Business Spectator arguing that the ECB will likely resort to QE in the second half of this year. This will be a vindication of the long-standing criticisms of ECB monetary policy made by the new market monetarists. Inflation outcomes, nominal GDP and the euro exchange rate are all consistent with monetary policy having been too tight rather than too easy. The emerging divergence between ECB/BoJ and Fed monetary policy should set the stage for broad-based USD outperformance....more

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  • Alpha.Sources

    The lower bound of central bank effectiveness

    I have a bit of time on my hands at the moment to read stuff that I otherwise wouldn't have time to read. For example I am currently reading Michael Lewis' new book Flash Boys about the ins and outs of high frequency trading. I will probably have more to say about that one in a few weeks, but for now I want to point to this recent BIS speech by former BOJ governor Masaaki Shirakawa.  I recommend you to read it in its entirety, it is worth the effort. Two points in particular are worth highlighting. Firstly, Shirakawa provides a non-consensus yet apt narrative on the interaction between central bank's noble quest for price stability and the formation of asset bubbles. Drawing on the experienced of relative price stability that prevailed in Japan in the late 1980s an...more

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  • CYNICONOMICS

    Bulls vs. Bears: Some Profit Margin Stories Are Better Than Others

    [M]argins have been rising smartly–faster than Greenspan can ever recall. His only explanation: productivity… Greenspan argues that the U.S. is undergoing a productivity revolution not seen since early this century… In the longer term, he’s betting that as the world moves into the 21st century and the New Economy takes root, more of the old economic rules will fall apart. - From “Alan Greenspan’s Brave New World,” Business Week, July 13, 1997 I caught up recently on a debate about S&P 500 valuation involving GMO, Hussman Funds and their assorted critics (see here or here, for example). As you may know, GMO and Hussman take the position that stocks are expensive, citing a variety of indicators and arguing that profit margins should “mean rever...more

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  • Institutional Economics

    Do Financial Markets Care About the G20?

    An ECB Working Paper looks at the impact of G20 meetings on financial markets: In this paper we run an event study to test whether G20 meetings at ministerial and Leaders level have had an impact on global financial markets. We focus on the period from 2007 to 2013, looking at equity returns, bond yields and measures of market risk such as implied volatility, skewness and kurtosis. Our main finding is that G20 summits have not had a strong, consistent and durable effect on any of the markets that we consider, suggesting that the information and decision content of G20 summits is of limited relevance for market participants. That won’t stop the Australian federal government spending $500 million on a process markets have deemed an irrelevance....more

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  • Smart Economy

    Does a junk food diet make you lazy? UCLA psychology study offers answer

        A new UCLA psychology study provides evidence that being overweight makes people tired and sedentary — not the other way around.  Life scientists led by UCLA's Aaron Blaisdell placed 32 female rats on one of two diets for six months. The first, a standard rat's diet, consisted of relatively unprocessed foods like ground corn and fish meal. The ingredients in the second were highly processed, of lower quality and included substantially more sugar — a proxy for a junk food diet.  After just three months, the researchers observed a significant difference in the amount of weight the rats had gained, with the 16 on the junk food diet having become noticeably fatter.        "One diet led to obesity, the other didn't," said Blaisdell, a professor of psychol...more

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  • Dani Rodrik's weblog

    Higher food prices are good for the poor ... in the long run

    Guest post by Derek Headey A few years ago Dani very kindly let me guestblog on some of my work on the global food crisis (see here and also Dani’s much earlier comments here). In that earlier work I used Gallup World Poll data on subjective food security to conclude that the 2007-08 global food “crisis” seemingly had no adverse impact on the world’s poor. As The Economist noted (here), my results were subsequently corroborated by World Bank estimates, which suggested that global poverty continued to fall through the 2007-08 food crisis. In my most recent paper, however, I find an even stronger result: higher domestic food prices predict reductions in poverty (see here). The methods in this paper are fairly simple. I take World Bank national poverty estimates fo...more

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  • Institutional Economics

    Bob Shiller, Ex-Ante and Ex-Post

    Scott Sumner has a nice comparison of Robert Shiller’s investment advice with that from one of my favourite supply-side economists, Alan Reynolds. Loyal readers of this blog will not be surprised to see that Scott’s post has my name all over it. Scott asks, ‘Can people find me the dates where Shiller recommended people buy stocks?’ Sure. In his 2009 book with George Ackerlof, Shiller wrote: ‘there has been one way, at least in the past, in which almost everyone could become at least moderately rich … Invest it for the long term in the stock market, where the rate of return after adjustment for inflation has been 7% per year’ (p. 117). Unfortunately, Shiller’s ex-post observations on stock market returns in 2009 do not sit well with his ex-ante pred...more

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  • CYNICONOMICS

    Message to the Fed: Here Are a Few Things That You Can’t Do

    [A]sset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. -March 19 FOMC statement The excerpt above or some variation has appeared in every one of the Fed’s post-FOMC meeting statements since the beginning of QE3 in September 2012. Unfortunately, it doesn’t give us much comfort. We don’t see evidence of the Fed’s economists accurately gauging QE’s “efficacy and costs,” notwithstanding its oh-so-slow wind down. On the contrary, history shows that these economists have an inflated view of what they can achieve with monetary policy. Take the link betwe...more

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  • Rick Bookstaber

    Big Data versus the SAT

    In a recent Time Magazine article, the president of Bard College, Leon Botstein, joined a chorus of criticism of the SAT, going so far as to call it “part hoax and part fraud.”  Criticism is coming fast and furious because the SAT has just unveiled a new, improved product to try to fend off a trend among competitive colleges to downplay the role of the SAT, and even to eliminate its use entirely.  (The not-for-profit status of the College Board, which produces the SAT, does not put the company beyond reacting to a profit motive; not-for-profit does not exactly mean you don’t get benefits from pulling in more revenue). Among the critiques are that performance during one afternoon in the junior year of high school should not govern a student’s future (th...more

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  • The Becker-Posner Blog

    Sabbatical Notice

    Starting this weekend, we will be taking a one-month sabbatical from blogging. We will resume at the end of that period.

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  • The Becker-Posner Blog

    The Embargo of Cuba: Time to Go- Becker

    The US embargo of Cuba began in 1960, a year after Fidel Castro turned this island toward communism. It was extended to food and medicines in 1962, the same year as the showdown with Russia over the installation of missiles there. The embargo has prevented American companies from doing business with Cuba, and discouraged tourism to Cuba. The American government also tried with quite limited success to prevent other countries from trading with Cuba. In general economic embargoes are undesirable because they interfere with free trade among countries. Yet a case could be made for an embargo against Cuba. Castro not only allowed Russian missiles to be installed in Cuba, just 90 miles from Florida, but was also actively trying to interfere in other countries by sending troop...more

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  • The Becker-Posner Blog

    End the Cuban Embargo—Posner

    I agree with Becker that we should end the embargo. It was first imposed in 1960, two years after Castro took power, and strengthened after the Cuban missile crisis in 1962, and thereafter modified from time to time—and recently somewhat relaxed, so that today in fact we have several billions of dollars in trade with Cuba each year.  Communist Cuba in Castro’s heyday, before the collapse of the Soviet Union followed by the rapid collapse of communism in all countries except North Korea—and Cuba—was, even apart from the missile crisis, an active although not dangerous enemy of the United States, supporting and fomenting communist subversion against a variety of nations some of them allies of the United States. But the embargo was never much more than an annoyanc...more

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  • Stefan Karlsson's blog

    New Blog Address: http://stefankarlssoneng.wordpress.com/

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  • Stefan Karlsson's blog

    Ukraine Crisis Isn't Over

    So now the so-called protestors have overthrown democratically elected President Yanukovich in what is in effect a coup. It is unclear what will happen, and how Russia and Yanukovich and his supporters will act, but this is almost certainly not the end of it.Indeed, how could it be the end? Some people argue that protestors were motivated by anger over corruption and abuse of power from Yanukovich. But while Yanukovich is no doubt corrupt and some protestors may indeed have been motivated by anger over that fact, the opposition movement led by Yulia Tymoschenko is just as corrupt as Yanukovich, so if they prevail, that won't mean less corruption and abuse of power.No, what this conflict is really about is that today's Ukraine is an artificial state created by Soviet com...more

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  • Dani Rodrik's weblog

    If the rest of the world really want to help Turkey

    Here is the one paragraph version of what is happening in Turkey. During the last decade in which he has been in power, Erdogan has allowed the Gulen movement to take control over the police, judiciary, and large parts of the state apparatus. The Gulen movement in turn established a republic of dirty tricks, with illegal wiretaps and video recordings, fabricated evidence, framing of innocent people, slander and disinformation as its modus operandi.  The monster Erdogan created eventually turned against him as the common enemy, the military and the rest of the secular establishment, were vanquished. He is now trying to slay the monster. That means purges, bringing the judiciary under his control, tightening the screws on the Internet and social media, and greatly e...more

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  • Stefan Karlsson's blog

    How Old Posts Can Become Popular Again

    Suddenly, my post about why Ukraine should be divided between its anti-Russian and pro-Russian parts has seen a dramatic increase in page views. That is no doubt related to the latest escalation of Ukraine's political crisis with both government forces and the neo-Nazi elements of the opposition increasingly using violent means in the confrontation. Ukraine is dangerously close to a full scale civil war. Let's hope that it doesn't come to that. Ukraine has been ravaged for a century by wars, German Nazis, Communism, corruption and ethnic conflict, to add a(nother) civil war would be really cruel. I remain convinced that secession is the best way to solve the conflict peacefully....more

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  • Rick Bookstaber

    Live to Eat, Eat to Live

    In a recent New York Times opinion piece, Paul Krugman assessed the possibility that the economy is in a new, constant state of mild depression, and suggests several reasons why this might be occurring, including slowing population growth and a persistent trade deficit. To this I would like to suggest another one, which has been a topic of some of my previous posts: We simply demand less in terms of the consumption of produced, brick and mortar types of goods because that is not where we are spending our lives. Granted, we need a place to live, food to eat, a car to get around, but now we are not living to eat, we are eating to live; we are living to do things that do not require a huge industrial machine. (I won't even get into the point that insofar as we require the...more

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  • The Oil Drum - Discussions about Energy and Our Future

    The Oil Drum writers: Where are they now?

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  • International Political Economy at the University of North Carolina

    Why US Financial Hegemony Will Endure

    Will and I have a piece, now ungated, over at a fantastic new online magazine called Symposium. Our article translates much of the main points of our Perspectives Piece (co-authored with Thomas and Andy Pennock) for popular consumption. We are also blogging over there this week in support of the article. Please do check out our writing this week on the magazine's website, as well as the other great content on the site....more

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  • International Political Economy at the University of North Carolina

    Foreign Direct Investment, Human Rights, INGOs

    One of the major areas of underdeveloped research within political science is the interaction between non-state actors. From an international political economy perspective, the literature has largely ignored the interaction of various non-state actors that are growing in importance, and its effects on different forms of trade. In a recently published article "Avoiding the Spotlight: Human Rights Shaming and Foreign Direct Investment" by Colin Barry, Chad Clay and Michael Flynn, they lay the foundation for examining this interaction. They examine the interaction between non-state actors (INGOs) and multinational corporations (MNCs) and the extent to which private actors' choices to invest in countries are affected by the reputational costs of doing business in those...more

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  • The Oil Drum - Discussions about Energy and Our Future

    The Last Post

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  • The Oil Drum - Discussions about Energy and Our Future

    The House That Randy Built

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  • International Political Economy at the University of North Carolina

    Verizon, Vodafone, and Measuring FDI

    Recently back from APSA in Chicago, I've been reflecting on the state of our knowledge about FDI (or perhaps more accurately, cross-border management stakes in enterprises). That, and working on my dissertation, applying for academic jobs, and teaching. Oh, and telling everyone who'll listen about my Optimus Prime sighting on Michigan Ave.Anyway, I find a post-conference review of the discipline is generally a good way to consider potentially fruitful lines of new inquiry. In my experience, the quality of papers at conferences can be rather hit-or-miss. This generally fits into my view of conferences as important sources of external deadlines for getting drafts done as well as interacting with other scholars in more informal settings such as the hotel bar/lobby/over-cro...more

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  • Risk Watchdog

    Risk Watchdog Has Moved To A New Site

    Dear reader, We are writing to inform you that our blog, Risk Watchdog, has moved to a new location. From now on, the blog will be accessible at http://www.businessmonitor.com/blog Please continue to read our blog, which is updated on a daily or near-daily basis. For those of you who read our blog posts in the form of a daily or weekly email alert, and wish to continue receiving these alerts, please register for free at http://www.businessmonitor.com/blog, where you will also have the opportunity to receive other free content such as Key Analysis and White Papers. The Purpose Of Our Blog At this stage, I’d like to take the opportunity to re-state the purpose of our blog. Our blog has multiple objectives: To convey our views on key political, economic, financial m...more

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  • Risk Watchdog

    Istanbul, Madrid, Tokyo 2020: Olympic Year, Olympian Challenges

    This Saturday, September 7, the International Olympic Committee (IOC) will announce the venue of the 2020 Olympic Games. Istanbul, Madrid, and Tokyo (in alphabetical order) are the three contenders. There is arguably no obvious choice for the winner. Tokyo probably has the best urban infrastructure of the three, but some critics argue that Japan’s colossal fiscal deficit and debt burden mean that the country can ill-afford the Olympic Games. The fiscal risks surely apply to Spain, too. Some also argue that Tokyo would lack a captivating ‘narrative’ for the Olympics. In this regard, Istanbul would be a more ‘interesting’ choice, because it would mark Turkey’s emergence on the world stage, and it would be good politics to award the Olym...more

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  • Risk Watchdog

    Recovery Ahead For European Carmakers?

    The European passenger car market has seen sustained declines in recent years, and this has taken its toll on companies across the supply chain. BMI maintains a bearish regional outlook for 2013, and we expect to see ongoing declines in many markets over the year. Many manufacturers are shifting their strategic focus towards higher-growth emerging markets as they seek to limit their exposure to the region. There are, however, some green shoots emerging and signs that the worst may be over. BMI believes the regional market will bottom out in 2013 before posting positive growth in 2014. This week’s podcast features Nathan Hayes, an analyst with BMI’s Automotive Research team. ...more

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  • Paul Kedrosky's Infectious Greed

    Twitter Digest: 2013-06-09

    Given that I block NSA & PRISM tweets, was entertaining tuning into twitter & trying to figure why everyone was on about Lord Snowdon -> Turned on GoT tonight just in time to catch Daenerys reenacting her Level 2 YMCA gymnastics pageant. -> How Not to Be Alone | Jonathan Safran Foer – http://t.co/HMFxg75lfh http://t.co/DzAtvWBQJr -> Excellent, but fellow sports-med geeks only: Sports and exercise-related tendinopathies: a review – http://t.co/WGkhRlO6Uz -> ...more

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  • Paul Kedrosky's Infectious Greed

    Twitter Digest: 2013-06-07

    Photo-set: Flooding Across Central Europe – http://t.co/8G6j8teCbd -> CDC Update: Severe Respiratory Illness Associated with Middle East Respiratory Syndrome Coronavirus – http://t.co/hWqN1338VN -> Col Flagg: Have you ever heard of Malaysian Chest Implosion Torture? Radar: No. Coll Flagg: Good. It hasn’t been invented… yet. -> tl;dr: There are Manchurian Candidate engineers at large tech cos that have stolen SSL root cert and NSA is using it for cattle mutilation. -> Brian: …Will you please listen? I'm not the Messiah! Do you understand? Honestly Woman: Only the true Messiah denies his divinity! -> ...more

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  • Paul Kedrosky's Infectious Greed

    Twitter Digest: 2013-06-05

    FRED: Free Energy Data – http://t.co/90H7GVDazO -> Solipsisms ‘r’ us, courtesy of my friends at @thinkup: I apparently mention me a lot – http://t.co/9rTRXvBM9D -> Almost 10,000 words on soccer/Italy/economics/racism by @wrightthompson? Yes, & it’s super. Go. http://t.co/g4sgEFLkIC -> When The Beautiful Game Turns Ugly: A journey into the world of Italy's racist soccer thugs http://t.co/nckrbeLPfs -> Can’t remember last time I read an OpEd or column. Do those still exist? -> ...more

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  • The Street Light

    Cyprus and Eurozone Bank Deposits

    To me, the central issue raised by this week's Cyprus debacle is how it has affected confidence across the eurozone.  To what degree has the possibility of insured depositors at a eurozone bank losing a portion of their deposits affected the mindset of depositors?  To what degree has ECB acquiescence to this possibility undermined the notion that deposit insurance in the eurozone means the same thing in all countries?  And to what degree has the ECB's direct threat to end support for Cyprus's banking system in the event that the government of Cyprus can not arrange sufficient funds to meet its conditions made a farce of its earlier promise to "do whatever it takes to preserve the euro"?These, to me, are the interesting questions prompted by this week's ev...more

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  • London Banker

    Chop Off Their Hands . . .

    President Truman famously called for a one handed economist. The Carolingian kings of France would have accommodated him. They realised that a kingdom required a common currency under the control of the king and well regulated markets to sustain the confidence of the people. At first mints were established widely, spread across the kingdom. Local barons began to profit from debasing the coinage, undermining confidence in the monetary system. So Charles the Bald established mints under his direct control and regulated the issue of coins: C.12. Following the custom of our predecessors, just as it is found in their capitularies, we decree that in no other place in all our kingdom shall money be made except in our palace, and in St. Josse and Rouen, which right in th...more

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  • Rick Bookstaber

    The Product is the Promise: Finance and Social Values

    In the first paragraph of my book A Demon of Our Own Design(Wiley, 2007) I observe that “You don't deliberately obliterate hundreds of billions of dollars of investor money. And that is at the heart of this book – it is going to happen again. The financial markets that we have constructed are now so complex, and the speed of transactions so fast, that apparently isolated actions and even minor events can have catastrophic consequences.” I then spend a significant portion of the book explaining the mechanics that lead the financial markets to lurch from crisis to crisis; why is it that while engineering in other fields increases safety, financial engineering seems to make things get worse. I suggest that the problem stems from the complexity and tight coupling that...more

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  • The Street Light

    When the Fed Chair is an Academic

    The big economic news of the week was, in fact, big economic news: the Fed's announcement of significant changes from past practice in the the quantity of its next round of large scale asset purchases ("unlimited"), and in the timing of any future reversal of this expansionary policy ("a considerable time after the economic recovery strengthens").I view this as a pretty fundamental shift in how the Fed hopes to affect the economy.  Rather than trying to push economic activity one way or the other through its management of interest rates (which can alter economic activity through its portfolio-rebalancing and wealth effects, for example), the Fed is now quite explicitly trying to affect economic activity by altering interest rate and inflation expectations.  As...more

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  • London Banker

    For Want of a Nail, the Ship Was Lost

    Imagine a great ship dominating the skyline on a distant sea. Imagine the complexity of that ship: keel, ribs, planks, masts, spars, and an infinite number of less readily named components. Each component was hand-crafted by a craftsman skilled in his trade, to precise requirements, and secured in position to take the stress and strain of a life at sea.Now imagine a crew. They didn't build the ship. The crew are told that the one and only purpose of the ship is to realise a profit for every man jack aboard. Any hand not contributing a profit will be turned ashore. Down below in the ship are nails. Thousands and thousands of nails. Nails are useful. Nails are much sought after in every port the ship enters. Nails can be readily sold and never traced. The crew h...more

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  • London Banker

    Lies, Damn Lies and LIBOR

    I've been hesitant to write about the LIBOR scandal because what I want to say goes so much further. We now know that Barclays and other major global banks have been manipulating the calculation of LIBOR through the quotation data they provided to the British Bankers Association. What I suspect is that this is not a flaw but a feature of modern financial markets. And if it was happening in LIBOR for between 5 and 15 years, then the business model has been profitably replicated to many other quotation-based reference prices.Price discovery is not a sexy function of markets, but it is critical to the efficient allocation of scarce capital and resources, and to the preservation of the long term wealth of investors and the economy as a whole. If price discovery is compr...more

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  • The Street Light

    Government Job Destruction

    Another jobs report in the US, another month where part of the private sector's job creation was undone by continued job destruction by the government sector. The 15,000 additional jobs lost in April brings total job losses in the government sector since January 2010 to over 500,000. While the US has not quite been experiencing European-style austerity over the past two years, that's still a pretty tough headwind to fight as it emerges from recession. ...more

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Dan Steinbock

Dr Dan Steinbock is a recognized expert of the multipolar world. He focuses on international business, international relations, investment and risk among the major advanced economies (G7) and large emerging economies (BRICS and beyond). In addition to his advisory activities (www.differencegroup.net), he is affiliated with major US universities as well as international think-tanks, such as India China and America Institute (USA), Shanghai Institutes for International Studies (China) and EU Center (Singapore).

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