Who is Ben Bernanke's Bank Manager ?

Happy New Year !!!


I thought this piece by John Saft of Reuters was rather cool, particularly as it had me imagining the Chairman of the Fed walking in to his bank manager's office, all sweaty and nervous, looking for some sweet sweet remortgaging.

Mr. Saft does raise some pretty thought-provoking points in his article but I really don't know if it can be so closely evaluated with the policies Mr. Bernanke advocates, this is a personal matter after all. Maybe he just had to get a rockin' new powerboat in the January Sales and this was the quickest way to do it ? At least that's what I like to think....

Eurozone Leaders: get your frickin' act together

The normal response to the question "do Eurozone leaders finally get it?" is "of course not.. are you serious ? What the hell is wrong with you?!"

Luckily for us Professor Charles Wyplosz has a more eloquent and thought-out answer at the lovely www.voxeu.org website.Although the conclusion is in the main title: not yet.

Link available here.

Nobel Prize for Economics : Sargent and Sims

This is the real start of the awards season people with Thomas Sargent and Christopher Sims winning the prize this year.


The Marginal Revolution blog has a very easy to follow of explanation of what it is these chaps have done to win a prize that so pisses off physicists, chemists and other "real" scientists the world over. Check it out here.

And for all you "real" scientists out there, please enjoy Dilbert cartoon

Oh right, the blog...Sorry about that.

Having taken a career break from the blog (i.e. I got a career) I thought I would try and get things moving back here before you go off and hang out with those no-goodniks over at the Irish Economy blog.

So here are a few things I came across recently that may be of interest:

The first is taken from Paul Krugman's blog in which he cites a paper by Muller, Mendelsohn, and Nordhaus who use the example of air pollution* and how this side-effect of production affects society and how this does (or doesn't) impact on policy makers and potential contradictions in their ideology.

They find that in a purely monetary sense the cost to society is huge with a number of industries inflicting more damage in the form of air pollution than the value-added by these industries at market prices. The argument, Krugman explains, is as follows "consumers are paying much too low a price for coal-generated electricity, because the price they pay does not take account of the very large external costs associated with generation. If consumers did have to pay the full cost, they would use much less electricity from coal — maybe none, but that would depend on the alternatives."

Ah. So we tax them then to make up for this disparity and offset the detrimental impact of air pollution. A response to such a market failure is required but this will be shot down by those who think Adam Smith was a leftie-pinko interventionist. 

An interesting examination of how one's ideology and need to be right can hinder them from doing what is most efficient. Not necessarily a trait only found in conservatives though...

Secondly Yoram Bauman, PhD., is the (sigh) Stand Up Economist. Moreover, he is not dreadful, in fact he's actually pretty good. Unlike that bloke at Guy's Econometrics blog who changes the lyrics of popular songs to econometrics terms...Bleugh.

Check out the Bauman's explanation of the Greg Mankiw's 10 Principles of Economics here. I especially like his footnote joke. I mean, seriously some of the footnotes in my old macro book were straight out of the Third Policeman.


* = always the staple for discussing external costs to society, just like cakes are always the example used when discussing diminishing marginal utility.

Millionaires Demand to Pay More

Check out this video.

The 200-strong Patriotic Millionaires for Fiscal Strength group (catchy name) is demanding that President Obama raise their taxes.

This will surely take off across the world, right ?... Right ?!

David Cottle asks "Are These Havens Really the Safest Places to Go"?

David Cottle in the Wall Street Journal looks at the so-called safe havens of the bond markets (i.e.US, Swiss, Japanese and German bonds) and wonders why in times of downturn these bonds are perceived as being less risky despite their connection to the global downturn (Germany's funding of it's Eurozone partners bailouts) or their own endogenous problems ( US debt, Japan's stagnant economy).

Cottle highlights a report by UBS which concludes that, to some extent at least, this may be investors from these safe havens coming home to roost by investing back in domestic bonds after having invested abroad during times of global growth.

Article here.

Brady Bonds to the rescue ?

Alright, everybody come back out from behind their couches. Morgan Kelly's buggered off for another four months so we can all get back to reading less scary and more constructive  opinion pieces. Like this one by Barry Eichengreen.

The Berkley professor discusses using a system of financial instruments and regulations similar to the Brady Bonds of the 1980s to deal with Greece and the increasing likelihood that it is facing default. Eichengreen cites a plan devised by two veterans of the Brady Bonds: Gary Evans and  Peter Allen. He also points out that another veteran of the Brady Bonds was a certain Mr. Trichet...