A bit about the Federal Reserve

I thought this was pretty hilarious: This site answers your question, "Is This The Bottom?" I'm sure you can guess the answer.

On a more serious note, here are some interesting links to the tools of the Federal Reserve.

Lastly, an opinion piece at the American Mathematical Society covers how they think mathematical modeling of global problems, and their expected results. Somehow, this seems rather familiar... (h/t TVHE)

Another jolt of optimism.

... Well, as long as you don't listen to people in front of government. Ben Bernanke recently gave a mixed look at the economy. Assuming effective government action, he says that the second half of this year will have a "gradual resumption of growth." It really does sound like he's pushing for more fiscal policy, backing up Obama's plan. I can't help that it's more politically motivated than economically.

A number of people are starting to report good news, even though the government's fiscal policy hasn't kicked in yet. This shouldn't really come as a surprise, though, since historically fiscal policy comes too late to have much if any effect on the end of recession. Irwin Kellner at MarketWatch lists 21 reasons to be optimistic about the economy.

Going back.

A lot of these are links I've been saving for when I had time to blog about them. So... well, here they are.

A couple of economists at the University of Bristol give some recommendations for econoblogging. If you're interested in picking it up, you may want to read this as a basic guide. A Guide to Blogging in Economics

On the same train of thought, a Canadian economist talks about the value of econoblogging. I think as economies become more dependent on each other, and as they are encountered with global shocks and changes, public knowledge of what's going on, why it's going on, and what the effects are become more important. If economists claim to have a roughly decent idea of what ideal economies looks like, we should make an effort to drive the public in that direction. Even if we can't be forecasters, if we know that more open trade policies lead to greader global growth, we should have a venue to try to convince the public of that. And, if what we believe really is true, we should be able to convincingly argue our points.

Tyler Cowen remarked (some time ago, admittedly, that an economist book club would be good, and that there would be discussion on Keynes's General Theory, section by section. It seemed like a good idea, though I don't know what's come of it. Others seemed to think it was a good idea at the time.Again

Recession Announcements (the official ones, from the NBER):

http://wwwdev.nber.org/dec2008.html

http://www.nber.org/cycles.html

Many others were talking about this, of course, even though it was really not a surprise to anyone, and hardly even news. I don't remember if I linked this article before, but here's a Business Week piece on why it takes so long to official call a recession.

I find news about other economies interesting, in particular when different economies interact. Edward Hugh at Bonobo Land is an interesting source of economic analysis of different countries. I've also been reading a bit about Spain in particular, so I found this piece of Edward's interesting. Lawrence Lux comments on the same blog post.

This bailout comic is, I think, more poignant today than it was when it was first published. And, it relates to a recent blogpost of mine (pardon the self-reference).

A recent defense of Wal-Mart. People who oppose high corporate taxes and support small businesses over large ones confuse me.

A smoking ban in Holland has an interesting effect: smokers merely pay the owner to be able to smoke, so the owner can pay the resulting fine. Sounds pretty efficient to me! "Just paying my Pigouvian tax, thanks."

GM CEO being driven 9 hours from Detroit to DC. Seems like a silly way to support your own business to me.

Crises and protectionism. Leading scholars compile their essays into an e-book every world leader should read.

As bad as the 80s, not the 30s. Time remarks that the talk of the current recession is a bit overdramatic. If this recession becomes even remotely comparable to the Great Depression, it hasn't gotten there yet.

Hey, I didn't know the Economist had a free audio/video page. Neat!

Transparency versus clarity

Free Exchange challenges the idea that more transparency is needed from financial institutions. It is argued that the information is out there, it's just really hard to understand.

The trick is to disclose information in a manner that enhances understanding rather than clouds it. But with complex securities this is easier said than done. Meanwhile, an insistence on simple securities necessarily discourages innovation and more efficient risk allocation, resulting in less capital available to firms, and ultimately lower rates of economic growth.

The point is also brought up that consumers don't make good decisions even if they have the information and understand it.

In my opinion, clarity is part of transparency--if you have 500 pages of text to explain what a product is, the message is effectively hidden. Still, an idea popped up for me. How many people understand physiology or the science behind nutrition? I'd be willing to be the number is significantly less than the portion of people that can read a nutrition guide on the side of a food product at the grocery store.

Sure, it doesn't mean people always make healthy choices, and those labels vary in usefulness to each consumer, but they're supposedly a fairly decent guideline for the average consumer. Not everyone needs the same amount of calories per day or vitamin A per day, but it gives consumers a rough idea of the nutritional value of the products they're buying, for those who care. The point is that knowledge of biology, chemistry, or nutrition isn't a necessary condition to understand those nutrition guides.

I wonder if it's possible to make such a label for the financial industry. I would initially imagine that such a label would be either too complicated to understand or too simplified to be useful, but maybe there's a happy middle ground someplace.

More optimism!

Real Time Economics discusses a NABE survey saying that GDP growth will be pretty strong in 2010, according to forecasters.

I'm not always a fan of the Real Time Economics blog, ever since I felt they misled the public in a survey about economists' views on the presidential election. They did their own survey of economists (it was a very small number of economists) and determinded that economists favored McCain. Later independent surveys (each of at least 800 economists, I believe) showed economists favored Obama almost 2-to-1. The WSJ survey seems to have been very far off.

So, I went looking for information on the survey. Reuters UK tells me that it was a survey of 47 forecasters. Considering I believe these are 47 forecasting firms rather than individual economists, and the survey was done by the NABE not WSJ, I have a moderate amount of faith that the survey is fairly accurate.

The stimulus and repeating history.

A couple of excellent pieces from Jeff Frankels: Is $800 Billion too much or too little? Jeff says Yes. It depends on what you're trying to accomplish. And, might this recession look like the Great Depression? We've learned a number of lessons from that catastrophe, I think (regardless of the disagreement over just what happened).

Jeff brings up a couple of points I've been talking about, but Jeff makes the points much better than I can.

(h/t Andrew Cassel at the Dismal Scientist)

The other Jeff--economics rockstar Jeffrey Sachs--also weighs in on the issue. He brings up the good point that we shouldn't go for wild swings in the economy. We shouldn't shock our economy into short-term recovery at the expense of long-term growth.

Sweatshops

I often find articles like this one from Nicholas Kristof interesting, in support of sweatshops. The idea is this: people who work in sweatshops have the option to do so. They decide to work in sweatshops because it's better for them to do so. People in developing countries want to work in sweatshops, and when developed countries make sanctions try to prevent sweatshops from cropping up, they're actually unintentionally hurting the countries. Sweatshops pay better and have better work conditions than working in a field.

Of course, the reasoning no longer applies when people are coerced or forced into working in sweatshops, as is the case in some places.