Pay rules complicate GM CFO search: report Reuters. This sort of thing annoys me. Search firms have succeeded in getting companies to spec job searches very narrowly, so they can ONLY hire someone doing EXACTLY the same job at a VERY similar company. To induce said person to leave job, you need to pay a BIG premium! Which of course leads to bigger fees for search firm (fees are based on first year comp of person hired). A huge scam, and the media takes it at face value.
Bolivia summit adopts new currency Aljazeera (hat tip reader John D). This is not an influential group, but taking pot shots at the dollar seems to be the latest sport.
Alan Blinder Gives Obama an “A-” for Making the Bankers Richer Than Ever Dean Baker
On stimulus jobs reporting, a big ‘Oops’ CNN (hat tip reader John D)
How I Became a Keynesian Richard Posner, The New Republic.
Cognitive Dissonance and Global Macroeconomics James Kwak, Baseline Scenario
Interest on loans rankles college grads Chicago Tribune
A sterling crash is a godsend Ambrose Evans-Pritchard, Telegraph
Banks threatened with windfall tax on profits amid storm over bonuses Times Online
Government banks failing to sell off assets to private equity firms Guardian (hat tip Swedish Lex). While this is not a great state of affairs, I’m not sure proceeding to sell is the best solution (the PE firms know from Japan and the RTC that the government often feels pressured to sell assets off quickly to show progress, which results in more favorable prices to the PE firms). I believe Sweden formed asset management companies which were authorized to work out and restructure debt AND extend new credit.
Foreclosures Force Ex-Homeowners to Turn to Shelters New York Times.
Industry warns on “dark pool” reform Reuters. Do you realize this is a default headline? Insert a particular practice under official scrutiny in those quotation marks, the headline will work.
Antidote du jour (hat tip reader Garrett, click to view full image and see baby owl):
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Funny animal video”
Very happy Gentoo penguin
http://www.youtube.com/watch?v=SJaMtBKnN-I
Re: Dark pools, um start with the name, foreboding anyone? Three pools with intermediary’s overlapping too suck the guts out of anyone without access to the 1st or 2nd spas of love. Price discovery and transactional efficacy my marsupial back side me thinks.
Skippy…Dark Pools or Dark Flows: Dark flow is a name given to a net motion of galaxy clusters with respect to the cosmic microwave background radiation which was found in a 2008 study. According to standard cosmological models, the motion of galaxy clusters with respect to the cosmic microwave background should be randomly distributed in all directions. However, analyzing the three-year WMAP data using the kinematic Sunyaev-Zel’dovich effect, the authors of the study found evidence of a common motion of at least 600 km/s toward a 20-degree patch of sky between the constellations of Centaurus and Vela…..Skippy here: Influanced[?] or does gravity pull us down or dark (pools) matter push us around.
Re: How I Became a Keynesian
“But a general fall in the price level–deflation–imperils economic stability . . . ”
This is an assumption which bears examination. How many economies have collapsed through the ravages of deflation? When it comes to inflation, the list of economies that have collapsed due to hyperinflation is as long as my arm; but when it comes to deflation, I can see cases where the economy has suffered–obviously, the Great Depression, and also Japan–but suffering is not the same as outright collapse. I know of no situations where an economy has collapsed outright under the forces of deflation.
Posner’s arguments for Keynesianism center around deflation, but I do not see deflation as the greater threat. Deflation does not trigger the economic collapses that result in the fall of governments, as rather famously happened in Germany prior to World War II.
I suspect that the fear of deflation may be due, at least in part, to the severe constraints it puts on government spending. Keynesians ostensibly support government spending to prevent deflation, but I have to wonder if it is the other way around–if the fear of deflation is designed to enhance the case for generous government spending.
That may apply to the situation running up to 2008, where the Fed used fearmongering over the possibility of deflation to lower the interest rates to an ultra-low level that overheated the economy and, not surprisingly, benefited the large businesses that could use easy access to borrowings to expand. It also benefited the advocates of increased size of government, who could use the ultra-cheap cost of borrowing as an excuse to expand military and entitlement programs. I am beginning to wonder if the threat of deflation, while real, is hyped not for the likelihood of the damage it will inflict, but because of the popularity of the measures used to counter it.
This is riddle with so many factual errors and shoddy reasonings that it’s hard to kmow where to begin. Weimar Germany did not collapse from the post-war hyper-inflation, which was brought under control by the mid-20’s, but rather by the deflation of the 1930’s. And at any rate, inflation is not tantamount to hyper-inflation. Whereas the problem with any prolonged deflation is its effect on magnifying nominal debt loads, assuming large debt loads are in place, which, er, is precisely what tends to bring about a deflationary collapse. In the meanwhile, the point of government spending, (which needs to occur anyway), is that it serves to revive investment demand, which gets wages and consumption demand going again. Without such stimulus, lagging investment will spiral down further in a negative feed-back loop, further destroying the economies productive capacities. Neither necessary, nor desirable. And there was no overheating of the U.S. economy pre-2008: economic growth and investment was decidedly mediocre this last cycle and the bust was scarcely due to “overheating”.
Re: How I Became a Keynesian
One more complaint, and then I will be quiet.
“But if [government] borrows to finance the program (deficit spending), or finances it with new money created by the Federal Reserve, the costs may be deferred until the economy is well on the way to recovery and can afford to pay them without endangering economic stability.”
OK. And what if it never recovers?
The fundamental problem with the Keynesian analysis, a fundamental flaw which in my view is unfixable within the Keynesian framework, is that it views the national economy as a closed-ended system. Massive government borrowing is predicated on the assumption that the government will be able to pay it back later, because the economy will recover–it has to, as eventually people will have to buy more food, buy replacement goods for those which have worn out, buy new goods to supply growth in the population.
But what if those inevitable purchases do not benefit the economy on which the government depends to pay back its debt? What if the benefit from future expansion goes, not to the domestic economy, but to a more competitive overseas economy? What if the “recovery” sets in, only to have government discover that its tax receipts have not significantly increased? How will the government pay back the debt if the economy’s remaining liquid assets are emptying through a gigantic hole in its trade deficit to pay for consumption?
“Keynes’s masterpiece is many things, but ‘outdated’ it is not.”
Outdated, in fact, it is. Keynes never saw China coming, and has no answer for it.
Look up “Bancor”, ignoramus!
The bancor is ostensibly a correction factor designed to adjust for the complications of international trade, and as such is a perfect example of my central point: that Keynesian economics is centered on the national economy and is largely irrelevant within the context of international economic dynamics. When the solution to problems from international trade is to introduce a compensating factor whose implementation is doubtful at best (what country exactly is going to agree to a tax on its trade surplus?), it’s a clear sign of a system that is not designed around international trade.
It’s the world of economic’s answer to the cosmological constant, and just like that infamous fudge factor, a clear sign that the theory needs serious adjustment.
“Keynes never saw China coming, and has no answer for it.” So said you. But Keynes clearly did foresee the problem of mercantilist beggar-thy-neighbor trade policies, which is why he brought the Bancor proposal to Bretton Woods, only to have it vetoed by Harry Dexter White, who wanted to advance U.S. hegemony at a time when the U.S. was an overwhelmingly dominant creditor nation, so we got the IMF instead. Nonetheless, the idea that creditor/surplus nations bear the main responsibility for redressing persistent trade imbalances is economically sound, as was the basic scheme of adjustable-peg fixed exchange rates, which aimed to encourage international trade in goods, while discouraging uncontrolled international free flows of finance capital, and thereby allow each nation discretion in conducting its own fiscal and monetary policy. What you call “international economic dynamics”, far from some natural inevitability, is precisely due to the break down of Bretton Woods, due, in part, to flaws in its devising not of Keynes’ conception. (Though note that for some while the U.S. as creditor/surplus nation did tax itself voluntarily in terms of the Marshall Plan and other foreign aid transfers, so it’s not exactly far fetched that surplus nations would find it in their interests). Since you are wrong, and evince little grasp of sound economic reasonings, just kvetching, you resort to irrelevant secondary elaborations about a “cosmological constant”.
The problem we face with (private) college right now is not cost of capital, but negative ROI.
The median college grad makes only $19k more than the median high school grad, pretax. If you take the after-tax present value of that, minus foregone income during college, minus private college tuition and expenses, you will find negative ROI for the median investment in college.
This is true no matter how it is financed — by cash, debt, or the government. Median NPV is negative.
This may somewhat help to explain the decline of the middle class: one of the biggest investments a family ever makes is in college, and that investment has a negative return more than half the time (for private colleges). Bailouts won’t fix it, because again, median ROI is negative no matter where the money comes from.
We don’t know whether the same is true for public colleges, because we don’t know the true cost of the education, including subsidy.
“Search firms have succeeded in getting companies to spec job searches very narrowly, so they can ONLY hire someone doing EXACTLY the same job at a VERY similar company. To induce said person to leave job, you need to pay a BIG premium!”
For better or for worse (probably the latter), this comes as a direct result of “best practices” developed by the HR profession, which have focused on objective factors in hiring, in an attempt to move away from subjective factors, which are legally more vulnerable. If you hire somebody for a position who has literally done the job before, you are at little risk from a legal perspective; but if you take a chance on an up-and-comer, you may be subject to criticisms that you selected an underqualified candidate, and will be wide open to lawsuits if other, potentially more-qualified candidates have a legally protected status.
That’s the logic behind the approach currently favored in hiring, not just at the executive level but all the way down to entry-level positions. The major implication, of course, is that it’s difficult for less-experienced people to get positions, and more-experienced people are able to consistently bid up the amounts that they’re being paid. Companies have little incentive to take a chance on promising but less-experienced hires, and instead end up overpaying for mediocre employees, who are the ones most likely to be looking for work, with the only benefit of the process being fewer lawsuits.
Your link on student loans contains propaganda from the financial industry. I know that is not your intent, but remember the Trib is a conservative mouth piece. This is the real deal…
The current system is a sop to the student lenders, with Uncle Sam taking all the risk and the student lenders getting subsidized to profit off the cream. It’s yet another income transfer to the financial services industry, from the middle class.
This is the real deal:
Under the current system, the government gives banks huge subsidies to encourage them to lend to students. Effectively, this means the government is bribing banks to extend student loans by handing them money and letting them cream huge profits off the top. It is a vast waste of taxpayer money, since Uncle Sam could accomplish exactly the same thing by cutting out the middleman and lending directly to students.
Now, after decades of congressional opposition, the House bill would eliminate banks’ involvement: By next summer, federal loans would go directly from the government to students. The plan would save a gross $87 billion over ten years–$40 billion of which would be used to expand Pell Grants and permanently index them to the cost of inflation (plus 1 percentage point), and another $10 billion of which would be used for deficit reduction.
link
http://www.tnr.com/blog/the-plank/one-issue-where-obama-really-winning
Horned Owls should be making their migration stop-off at the Temple of Heaven in Bejing soon..