Month: November 2010


As Martin Lousteau, Argentina’s youngest-ever finance minister, told one audience: “It’s a very bad thing when economists start to be interesting.”

That was said at the recent Irish four-day comedy and economics festival, namely Kilkenomics.  Here are other reports from the festival.  One bit:

"Ireland needs a new credit rating agency. Moody & Poor," says Colm O'Regan, an IT consultant turned comedian.


The economics festival features more than 20 events, with sessions including “The Best Way to Rob a Bank is to Own It,” and “What the Hell Just Happened.”

 Here are some YouTube videos from the festival; I have not culled through them.

Systemic financial risk

One of the largest of Haiti’s microcredit groups, Finca Haiti, wrote off almost a third of its portfolio after many clients died in the earthquake or lost their homes and businesses. A staggering 53 percent of its borrowers were late on their payments.

Here is much more, about the difficulties of running a micro-credit system in an economy with a negative real rate of return.

Elsewhere, Ireland expands aid to Haiti.  The cholera epidemic is getting much worse rapidly.

Profile of Morgan Kelly

He is the Irish economist and sage who predicted the decline in property prices and also predicts future political chaos in Ireland.  The profile, unnecessarily snarky at points, is here.  We again see that economists who have studied economic history are proving especially wise during difficult times:

He was described by the Herald Tribune as "a specialist in medieval demographics"… "whose eyes burn with the passionate intensity of his prophesy".

Here is Kelly on TV.  His current prediction?:

Now he is forecasting mass mortgage defaults and an ugly popular uprising. The first stirrings are already visible, he says, with "anxiety giving way to the first upwellings of an inchoate rage and despair that will transform Irish politics along the lines of the Tea Party in America", giving rise to a new "hard-right, anti-Europe, anti-traveller party".

I've already linked to this first-rate Kelly piece on the coming collapse in the Irish housing market.  He does not follow every current academic fashion, but here are his (consistently interesting) academic papers.  I find this one, about the Industrial Revolution, to be of special import.  Here is his potentially important but hard for me to assess paper on the economic impact of the Little Ice Age in European history (or ungated here).

File under "Underappreciated and indeed Hated Economist!"

Unsung development miracles?

Dani Rodrik writes:

Which are the countries that have improved their human development indicators the most since 1970 relative to their peers? You’d be surprised, as I was, to find that the top 10 is dominated not by East Asian superstars, but by Moslem countries: Oman, Indonesia, Saudi Arabia, Tunisia, Morocco, and Algeria. This year’s Human Development Report is full of neat analysis and results, including this one.

Leaving aside the oil exporting countries, the North African cases are particularly interesting. As Francisco Rodriguez and Emma Samman, two of the report’s authors, note, Tunisia, Morocco, and Algeria have experienced remarkable gains in life expectancy and educational attainment, leaving many Asian superstars in the dust. Only Tunisia among the three is a high growth country, underlining one of the report’s main findings that economic growth and human development often diverge significantly, even over as long a time frame as 40 years.

Markets in everything

A Harrods department store in Britain has unveiled a luxury advent calendar worth 1 million dollars.

Whoever receives the calendar will also be getting Christmas gifts which include a designer kitchen, a speedboat and a pair of sunglasses made of gold.

The calendar, which has been created by Porsche Design, is one of only five available worldwide – one for each continent.

The full story is here and for the pointer I thank Allison Kasic.

Haiti claim of the day

Court the income:

“If you can gain the support of one person in Boston, it can translate to 10 people in Haiti,” said Mark P. Jones, a professor of political science at Rice University who has studied Haiti.

Haitian candidates are spending a lot of time campaigning in the United States, even though Haitians who are U.S. citizens are ineligible to vote in the election.  It is also a venue for raising money.  The full story is here.

Markets in everything

Via Courtney Knapp, Furry Toys Tours:

You can send your stuffed animal on a romantic trip to Paris. Tours start at €100.00.

We will make your little friend discover the best of Paris, touring its splendid historical monuments, strolling along the city’s beautiful streets and indulging on fantastic French food in typical Parisian places for a full week! We'll be taking it to the locations listed below, and will keep you posted every evening by email (of course you'll also get the 30+ pictures, the traveling certificate and the little Paris souvenir).

Your stuffed animal will visit La Tour Eiffel, Champs Elysées, L'Arc de Triomphe and more.

There is even an upgrade:

If you think your furry friend would love to discover even more of Paris, please check our Extension Tours! We propose 4 thematic 4-day extensions tours in Paris, taking your cuddly toy to special places in the French capital…

A theory of optimal tattoos

David Stearns, a loyal MR reader, asks:

How would you pick a tattoo, if you decided you were going to get one? How would you pick something that your future self is most likely to be glad to have? A favorite piece of art? Follow Leeson's lead and get an economics-related tattoo? Names of family members are off-limits, as are answers like "get a small dot in my armpit that nobody would see."

I would pick a country which I loved visiting, such as Mexico or Brazil, both of which have distinct shapes.  It would be an excuse to narrate previous visits and I don't think it would repulse many people, other than the fact that it is a tattoo.  An artwork in tattoo form would look low-brow.  A Celtic geometric design would be another option.  The obvious alternative would be to pick something which looked criminal, but I don't think that would mesh well with my other strategies in life.  For some men it would pay off. 

Here is Dan Ariely on tattoos.

Words of wisdom

I think that where a lot of progressive political junkies go wrong is that they think “blame Republicans for failing to pass plan to fix the economy” is a close substitute for “fix the economy.” In reality, the evidence that fixing the economy would help Democrats politically is overwhelming, while the evidence that the plan/block/blame strategy would work is non-existent. People like me and Atrios would feel better about President Obama and his team if they made public statements that indicated that he roughly agrees with our take on what ideally should be done, but people like me and Atrios are neither swing voters nor marginally attached voters. Our emotional state has very little political relevance.

What’s more, there’s unfortunately a real tension here. The things you would do to outline a bold progressive approach to fixing the economy are very different from the things you would do to try to get the GOP votes you need to pass economy-fixing legislation. In particular, the reaction red state (or district) Democratic members of congress to those things would be very different. The fact of the matter is that the mistakes of 2009 in terms of the stimulus and the Fed can’t be easily undone.

That is from Matt Yglesias.

QEII follow-up: why do people hate the idea?

Philip W., a loyal MR reader, asks:

I put a great deal of stock in your post today telling me not to flip out over quantitative easing.  But I wonder if you could make a posting at some point trying to get inside the heads of some of the very bright people who are, more or less, flipping out.  For example, Jim Grant, as in this video:
Or if you don't have time to watch the video, just think of certain Wall Street skeptics of the Fed who like to do things like price the S&P 500 in terms of gold, and who decry the Fed's attempts to manipulate asset prices, and who say that the Fed is ever-more levered, and that this can lead to Very Bad Things in the not-too-distant future.  I'm afraid I can't just accept the idea that these people "don't get it," but I am at a loss to understand how there can be such a gulf between their way of thinking and yours.  Do Interfluidity's musings about the moralizing running through the political economy explain it?
I believe many of your readers may be wondering the same things.
As usual, many thanks to you for producing such a high volume of consumer surplus for me.

First, Interfluidity is a wise man.

Second, I believe the price of gold is high because of "financial-existential risk," not because of inflation per se.  The U.S. dollar and debt are no longer unambiguously safe and is there any real solution to the triple menace of highly leveraged banks, moral hazard, and financial strategies of extreme negative skewness?  It remains to be seen.  Given the forthcoming flow of debt finance required to keep Uncle Sam up and running, lots of inflation today wouldn't maximize political rents to leaders or medium-term seigniorage.

Third, the libertarian right is having a hard time seeing the Fed as a relative ally over the last three years, which it has been.  That admission implies an unappetizing shift in the goal posts for what is possible, and that sounds like a intellectual surrender to a lot of people I know.  I think they are in denial.  One alternative to acceptance is to view the Fed as sinister, which then leads you to fear anything they do, including QEII, their current major monetary policy initiative.  

Fourth, trust in government is at an especially low level and so monetary policy is viewed through this lens.  You need not have absolute trust in government (ha) but I doubt if government today is significantly more sinister, if at all, than in recent times past.  Possibly Obama is an arrogant man who wishes to lower your relative status in the broader scheme of things (at least with some "p" this is true), but don't let that influence your analysis of his policies or the policies affiliated with him.  Keep your eye on the ball – most of all markets are telling us that future inflation just won't be that high.

Addendum: Scott Sumner makes many interesting points on related issues.

What kind of letters of recommendation are written for women?

There is a new study:

In the scholars' analysis of the words that appeared in the letters of recommendation, they found clear patterns of word use for women's and men's letters. Women were more likely to be described with words such as those cited above, as well as "nurturing," "kind," "agreeable" and "warm." Men, in contrast, were much more likely to be described in words classified as "agentive" — words such as "assertive," "confident," "aggressive," "ambitious," "independent" and "daring."

What the analysis showed is that letter writers didn't need to use words like "feminine" to create female stereotypes — and that they did so, time and again, with women who had the same intellectual achievements as their male counterparts.

…The research is based on a content analysis of 624 letters of recommendation submitted on behalf of 194 applicants for eight junior faculty positions at an unidentified research university.

The Irish crisis heats up

Although some diplomats say it is to Ireland’s advantage that the Government is not at present borrowing from the investors, fear of contagion emerged again yesterday as the premium on Spanish and Italian debt jumped to record levels.

The article is here.  The Irish have enough funds on hand to finance their government through next summer and they mention this repeatedly.  But is that good?  The lack of an ongoing market test increases uncertainty about market opinion and perhaps leads more people to wonder about the worst.  From other sides it encourages denial about the basic problem.  What will that first bond auction look like when it comes?  (What will China ask for in return?)  Extant bonds are traded, but that market is thin.

Ireland used to say "We are not Greece."  These days it is Greece saying "We are not Ireland."

Here are data on Irish competitiveness.  The unofficial word is that the hat is being passed for the actual bailout.  Merkel is holding tough, which is building pressure on the other weak euro economies.  It is a common mechanism that denying a bailout raises the ultimate cost of the bailout you must make.