Saturday, April 27, 2002

Introduction to Macroeconomics


I tried to cram all of macro into a single essay. Kind of like the off-Broadway show that purports to be the complete works of Shakespeare, only the essay is not meant to be funny.
More Argentina on Live from the WTC.

Thursday, April 25, 2002

Simulating the Paulos IPO game.

Wednesday, April 24, 2002

Reader Dave Wasser sends a link to this site dedicated to an interesting idea: fostering development of space through property ownership.

Tuesday, April 23, 2002

Path Risk

In which Dreck meanders around (pursued by Jane) path risk, expected return, fat tails, and other things the New Yorker's Malcolm Gladwell laudably raised this week.

Update: Jane says "Great piece, Mindles!" and urges all readers to go thither forthwith.

Worth Worrying About?


From an otherwise upbeat issue of Fortune, a list of the top ten macroeconomic worries, which are explained in the article..

  1. Middle East Turmoil
  2. Soaring Oil Prices
  3. Climbing Interest Rates
  4. Shopped-out Consumers
  5. Vanishing Profits
  6. Deflation
  7. Inflation
  8. The Current Account Deficit
  9. The Strong Dollar
  10. The Return of Irrational Exuberance

Only the last two are a source of concern, in my opinion. My view is that macroeconomic fragility comes from financial market fragility. It takes something like a stock market collapse or a banking system collapse, or both, to make a sufficient mess to cause a serious downturn. A sudden adverse shift in expectations for U.S. assets would pose problems for our financial system.


My assessment is that as soon as President Reagan got rid of price controls on oil, the U.S. became insulated from energy shocks. That leads me to have no worries about the Middle East (as an economic issue) or rising oil prices. The other items on the list all move slowly, which means that there is plenty of time for the Fed to make adjustments as needed.

If there is a panic, it won't come from consumers. The only folks crazy enough to stampede are speculators. So the only thing to worry about is a stampede to sell U.S. securities.

Monday, April 22, 2002

Lost Trust: Billions Go Uncounted Indians in Century-Old Fight to Tally Money Owed for Land Use. The government has lost billions in money kept in trust for American Indians. Those who favor privatizing social security should use this example to counter Enron. Do you want the same federal government that runs the Bureau of Indian Affairs to manage your retirement savings?

Sunday, April 21, 2002

Can Argentina be saved? If it can, no one's yet figured out how.