All posts tagged economics

The Atlantic Monthly, December 2008

Cover

Cover

In this issue, Virginia Postrel reports on the rising discipline of “experimental economics.”  The experiments are similar to those to which psychologists routinely subject their undergraduate students.  A group of test subjects plays a game that is supposed to simulate a market phenomenon.  The experimenters then analyze the results.  (As it happens, I recently posted a link to a discussion of the theoretical limitations of this sort of attempt to translate one game into another.) 

The studies Postrel discusses deal with the origin and nature of speculative bubbles.  Even games in which players are given perfect information from the outset regularly generate bubbles.  Experience matters; repeat players generate smaller bubbles.  One point particularly arrested my attention.  When teams of players have gone through a trading game often enough that they no longer generate ruinous bubbles, experimenters sometimes rearrange the players into new teams.  These new teams, even though they are composed of experienced players, then proceed to behave just as wildly as the teams had at the beginning of the game.  Postrel quotes one of the founders of experimental economics, Caltech professor Charles Plott,  to the effect that the experience that matters is not at the level of the individual trader, but at the level of the organization through which that trader operates.  So the key thing about experience in particular and information in general may be how the organizational principles of a given group allow that information to be deployed.  

Disgraced stock analyst Henry Blodget gives a first person account of the way the organization of his former employer, Merrill Lynch, guided his deployment of information.

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by acilius on December 15, 2008  •  Permalink
Posted in The Atlantic Monthly
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Posted by acilius on December 15, 2008

https://losthunderlads.com/2008/12/15/the-atlantic-monthly-december-2008/

Sad news for ViewMaster fans

Viewmaster

Viewmaster

(image)

News in the latest email from Las Vegas’ 3D Stereo Store:

View-Master Closing:
On a sad note, Mattel/Fisher-Price has announced the permanent closing of the Custom/Commercial/Scenic View-Master division of View-Master. Scenic reels and the Classic Model L will cease to exist. All of the special special 3 Reel sets such as Old TIme Cars, and the on-location ones such as Grand Canyon will no longer be produced.  No more commercial Reels either.

The economic downturn and Mattel/Fisher-Price’s association with China has claimed another victim.  And even though, at least, executive salaries and bonuses will be saved by pending layoffs in excess of a thousand U.S. workers, an era that lasted almost seven decades comes to an end.

Children’s titles produced with Wal-Mart’s approval are planned to be continued for the present.

What’s to be done?  I don’t know.  It sounds like a done deal.  

Stereoscopy in general and Viewmaster in particular have a great deal to offer adults.  To peer into the viewer and tease out 3D effects is a meditative exercise.  Not only is it an extremely relaxing use of a few minutes, it also trains the eye to take a more attentive look at the world.   Trade with China, disparity between workers’ wages and executive compensation, the recession, the power of Walmart, etc, all play into the decline of the medium, but the root cause is something deeper.  The people in charge of corporations like Mattel just don’t believe that American adults are interested in sitting still and using their minds.  They may be right.  But if they are, it becomes a vicious circle.  Loud entertainment systems that allow their users to be passive sell quite well, so capital devotes all its resources to promoting loud entertainment systems that allow their users to be passive.  After a while, we as a society forget the use of quietness, the value of stillness, the importance of simplicity. 

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by acilius on November 25, 2008  •  Permalink
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Posted by acilius on November 25, 2008

https://losthunderlads.com/2008/11/25/sad-news-for-viewmaster-fans/

The Nation, 17 November 2008

This issue includes a note by Robert Pollin about the late economist Hyman Minsky, noting a recent vogue for Minsky and praising him as “his generation’s most insightful analyst of financial markets and the causes of financial crises.”   So he may have been, but Pollin doesn’t show why.  I suspect he would have needed more space to do that.  For example, Pollin writes that for Minsky, “financial crises and recessions actually serve a purpose in the operations of a free-market economy… Minsky’s point is that without crises, a free-market economy has no way of discouraging investors’ natural proclivities towards ever greater risks in pursuit of ever higher profits.”  Minsky may have had original ideas on this point, but this statement doesn’t bring them out- what Pollin has given as “Minsky’s point” is precisely the Austrian economists’ theory of malinvestment.  Indeed, what Pollin presents as “another of Minsky’s major insights- that in the absence of a complimentary regulatory system, the effectiveness of bailouts will diminish over time”- is a statement of another aspect of the Austrian theory of malinvestment, that regulation and subsidy imply one another.  I’m willing to believe that Minsky had original insights.  Perhaps Pollin made it clear how Minsky advanced on the work of Hayek & co. in the article he submitted and the Nation‘s editors cut the key parts for space.  What sticks in my mind is Pollin’s closing quote from Minsky’s 1986 book Stabilizing an Unstable Economy,  “Only an economics that is critical of capitalism can be a guide to successful policy for capitalism.”

Ange Mlinko reviews Susan Stewart’s poetry collection, Red Rover, praising the humanity of Stewart’s dirge for the Amish girls killed in the October 2006 massacre at their schoolhouse near Lancaster, Pennsylvania, the austere simplicity of her nature poems, and her commitment to slowness.  Mlinko quotes from Sterwart’s poem “The Forest”; Stewart posted “The Forest” in full at the Academy of American Poets website, and it’s worth reading a few times.

by acilius on November 19, 2008  •  Permalink
Posted in The Nation
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Posted by acilius on November 19, 2008

https://losthunderlads.com/2008/11/19/the-nation-17-november-2008/

Wall Street Bungles and Bailouts

Here‘s a succinct account of the current difficulties big US financial firms are facing.  It’s from Nuntii Latini, the Latin-language news service from Finnish radio. 

And here is an argument that the bailout the treasury and Federal Reserve have proposed is, in the literal sense of a much-overused term, fascism.

And as usual, Tom Tomorrow has summed it all up quite well.

by acilius on September 24, 2008  •  Permalink
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Posted by acilius on September 24, 2008

https://losthunderlads.com/2008/09/24/wall-street-bungles-and-bailouts/

Chronicles Magazine, June/ July/ August 2008

June- Paul Craig Roberts, of whom Lefalcon so memorably exclaimed “I savor his golden words!,” writes on “The Decline and Fall of the American Economy.”  Roberts writes: “John Williams, proprietor of Shadow Government Statistics (www.shadowstats.com), has been following US economic indicators for decades.  He notes that each administration has tinkered with the official statistics in orderto make itself look a little better; the cumulative effect over the decades is that the statistics greatly understate the problems.  Williams finds that the real rates of inflation and unemployment are about twice the reported rates.”  Here is Roberts’ article; here is W. John Williams’ inflation calculator.

July- Lefalcon’s beau ideal, Srdja Trifkovic, looks at John McCain and George Soros and sees “The most dangerous man in America, bankrolled by the most evil man in the world.”  Kenneth Zaretzke presents the moral issues surrounding the question of abortion in as clear and dispassionate a way as anyone could; unfortunately, Zaretzke’s article is not online.  George McCartney reviews Iron Man, seeing in it a film that teaches the young an important lesson.  “This movie teaches youngsters that it’s righteously cool to kill Middle Easterners by the caravanload.”  After a progressivley more outraged exposition of the plot, McCartney writes:

I suppose I wouldn’t mind all this if it were happening in some comic book never-never land.  But this action takes place in present-day Afghanistan where, in pursuit of a just goal, our actual Armed Forces have inadvertently wrought incalculable havoc on innocent people.  This is not fantasy land; it is the sorry site of our failure to capture Osama bin Laden andhis Al Qaeda forces because of our current administration’s infamously wrongheaded decision to wage a larger war in Iraq.  To make this the background of a children’s fantasy is flatly obscene.

August- George McCartney joins the ranks of those film critics, like Stuart Klawans of The Nation, who have written love letters to the suit Cary Grant wore in North by Northwest.  Well, it is a great suit. 

http://www.chroniclesmagazine.org/

by acilius on September 12, 2008  •  Permalink
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Posted by acilius on September 12, 2008

https://losthunderlads.com/2008/09/12/chronicles-magazine-june-july-august-2008/

The high cost of living

The June 16-30 issue of Counterpunch ran a piece I’ve been meaning to note.  “How Bush has pushed up oil prices,” by economist Michael Hudson.  The first sentence: “The American people are being misled about the cause of soaring oil prices, and deceived about how easily the Bush administration could cut the oil price in half simply by following the policy that Bush Sr. did at the outset of the First Iraq War.”  At the outbreak of the Kuwait war, the USA released oil from the Naval Petroleum Reserve onto the open market; in consequence, the oil price remained generally stable throughout the August 1990-February 1991 period.  By contrast, for the last several years the Naval Petroleum Reserve has continued to buy oil.  A passage is worth quoting at length:

At the just-ended 10th Post-Keynesian Economic Conference at the University of Missouri in Kansas City, my friend Paul Davidson (who, like me, used to work for Continental Oil and has a long oil background) pointed out that if the Bush administration did want to lower oil prices, all it would have to do is sell 10% of the oil reserve on the forward oil market.  Right now, he points out, the forward prprice of oil is higher than the spot price.  That means that buyers and sellers think the the price will rise, and hence that it pays to hold onto oil to sell later rather than to sell now.  But if the US Naval Petroleum Reserve would start selling the oil it has been buying since the start of the Iraq War, this supply would abruptly stop the price rise.  Speculators would dump their positions, and, in Prof. Davidson’s estimate, oil prices would fall back to about $90. 

Of course,  some parts of this three month old story are now dated.  Oil prices are falling now.  But the Naval Petroleum Reserve is still buying oil. 

Here is an article Davidson wrote for the July/ August issue of Challenge in which he explains his views on this summer’s oil prices.

Here‘s the website of the 10th International Post-Keynesian Conference.  Davidson’s paper there was called “The Sub-Prime Crisis, Securitization, and Market Failure as Analyzed by Keynes’ Liquidity Preference Theory vs the Efficient Market Theory.”  That title doesn’t sound like anything to do with the Naval Petroleum Reserve.  It sounds like what Hudson is citing is a side conversation he and Davidson had at the conference. 

http://www.generaltheory.org/

http://econ.bus.utk.edu/faculty/davidson/challenge%20oilspeculation9wordpdf.pdf

http://www.challengemagazine.com/

http://www.counterpunch.org/

by acilius on September 12, 2008  •  Permalink
Posted in Counterpunch
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Posted by acilius on September 12, 2008

https://losthunderlads.com/2008/09/12/the-high-cost-of-living/

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