Category: Current Affairs

Trevor Frankel offers his thoughts:

The part that most clearly indicates policy is the problem is the temp hiring. If businesses are hiring temps off the bottom of a recession, it means that they're seeing demand pick up but they're too uncertain to actually hire someone full time. This is usually followed by permanent hiring, but in this recovery, it has not been. The only obvious culprits here are a) higher required wages and healthcare costs (minimum wage, housing interventions and Obamacare are prime candidates here) and b) general lack of confidence in the economy and policy (the political climate in general is the prime candidate here).

Here is some background:

Temp hiring has been off the charts – temp jobs are up 20% year over year, while permanent private sector jobs are down 1%. (source: http://www.ritholtz.com/blog/2010/08/follow-up-on-temp-services-hiring/)

This is not an argument which I have been pushing, but the boom in temporary hiring does lend some support to it.

On the imports side, the picture was even stronger – good for Germany and its European trading partners whose economies benefit in the German slipstream. Imports soared 31.7pc to 72.4bn euros, the Destatis statistics office said, the all-time record since figures were first compiled in 1950.

Don't overreact to one report, of course, but that is better than virtually everyone was expecting.  The standard line had been that Germany's export prowess, combined with a longer-term move toward a near-balanced budget, was sucking air out of the global economy.

Goldman Sachs Group Inc., winning its first job managing a share sale by an Indian state-owned company, may earn next to nothing for the privilege.

The most profitable securities firm in Wall Street history tied for the lowest bid among 17 banks vying to manage the $1.8 billion offer by Power Grid Corporation of India Ltd., three people with knowledge of the matter said. Goldman Sachs and SBI Capital Markets Ltd. said they’d do the work for a fee equal to 0.00000001 percent of the sale proceeds. That means the firms stand to reap about 2 rupees (4 cents) each on the deal.

The full story is here and I thank Mehul Kamdar for the pointer.  There were other low bidders, including JP Morgan.  Why bid four cents I wonder, why not bid one cent?

Here is a related page, from what is propitiously called the Department of Disinvestment.

And Peter Diamond won't be confirmed for the Fed.  Mark Thoma has the scoop.  Here is one commentary, which I cannot vouch for; it concerns a potential clash with Summers.

Scott Sumner offers a tribute.  Earl Thompson was one of the most genuinely creative economic minds of his generation.  In my view he was often wrong, such as when he argued that markets would overproduce (excludable) public goods.  Nonetheless his work always inspired fruitful thought, even if one did not accept his conclusions.  Here is his famous paper on taxation and national defense.  He used "national defense" arguments to try to explain the pattern of government subsidies and taxes.  His paper on monetary theory will make your head spin.  Here is his paper on the economics of charity.

Here is Earl offering advice to Obama and sounding like Scott Sumner.  He attributed excessively tight monetary policy to banker (i.e., creditor) control of the Fed.  Read this too; he disliked the Bernanke reappointment.

Here is my review of Earl's book; read the first six lines.

Here is his home page, with many more links to articles.  Here is a UCLA obituary:

Earl Thompson was an eccentric in an age of conformity. He kept odd hours: he was alone in his office in Bunche Hall at 4:31 AM on January 17, 1994 when the Northridge earthquake hit, where he found himself unharmed but covered with fallen books. He loved muscle cars, dressed as if the 1950s were just yesterday, and always had a sneaky grin on his face. He will be missed by his colleagues, his students, his friends and his family.

Earl Thompson was an American original.