Category: Current Affairs

The best paragraph I read yesterday (the culture that is Japan)

by  Tyler Cowen in

The daughter of a policeman and a dance instructor, Rebecca is thought to be popular because she has big eyes, a small face and slender limbs – similar to the cartoon characters.

There is much more at the link, including videos.  The upshot is this:

Rebecca, from the Isle of Man, first came to attention on YouTube where millions watched her dance to J-Pop (Japanese pop music) and the theme tunes of anime cartoons.

She appears in hundreds of clips dressed as Japanese cartoon characters.

Her new album is expected to go straight to number one in Japan.  For the pointer I thank LongTermGuy.

How to insult Russia

by  Tyler Cowen in

The boy, who was adopted in September from the town of Partizansk in eastern Russia, arrived in Moscow on a United Airlines flight on Thursday from Washington, with a written note from Hansen.

The note said: "This child is mentally unstable. He is violent and has severe psychopathic issues. I was lied to and misled by the Russian orphanage workers and director regarding his mental stability and other issues … After giving my best to this child, I am sorry to say that for the safety of my family, friends, and myself, I no longer wish to parent this child."

The story is here.  Russia has announced a desire to freeze adoptions to the United States.  About 1600 Russian babies are adopted to the United States each year, most of them with success; if there is one area where countries do not maximize expected value, it is adoption policy.

Austro-Greek business cycle theory

by  Tyler Cowen in

Peter Boone and Simon Johnson explain:

This may not be obvious, but, creating money in a currency union is no simple task.  In any single country, central banks usually restrict themselves to buying government bonds, and making loans to regulated commercial banks.  Net purchases of these securities by central banks creates what is called “high-powered money”; this feeds into the financial system and results in the creation of what we all use to make payments and store value, i.e., money, plain and simple.

However in the European Monetary Union there are now 17 nations and a plethora of banks.  So, to put it crudely, there is sure to be a fight to decide who gets the newly printed funds.  The ECB resolved this by what seemed like a fair rule:  All commercial banks can borrow from the ECB if they provide collateral, in the form of highly rated government and other securities, to the ECB.  So, for example, a Greek bank can gain liquidity by depositing Greek government bonds with the ECB – as long as those bonds are “investment grade”, i.e., highly rated.

This simple and seemingly reasonable rule created great dangers for the eurozone, which have come back to haunt Mr. Trichet. The commercial banks in the zone are able to buy government bonds, which “paid” 3-6% long term interest rates (for all the sovereign bonds of members) over the last decade, and then deposit them at the ECB.  They could then borrow from the ECB at the ECB financing rate, which today is 1%, against this collateral so pocketing a profit – and then buy more sovereign bonds with the funds.  Mr. Trichet recognized this system had inherent dangers of turning into a new Ponzi game:  if nations spent too much, and built up too much debt, eventually the system would collapse. So at the foundation of the eurozone, Mr. Trichet led a contingent within the EU that demanded all nations live by a “Growth and Stability Pact”, whereby each nation could only run deficits of 3% of GDP, and they had to keep their debt/GDP ratio below 60% of GDP.

Of course, politics trumped Mr. Trichet – as it always must – and the Greeks, along with the Portuguese, used their new found cheap lending system to run large deficits and build up debt.  The cheap access to money also helped feed the real estate booms in Ireland and Spain. 

There is much more of interest in their post, none of it good news for Greece or the ECB.

Is the conservative mind more closed?

by  Tyler Cowen in

Julian Sanchez writes:

I’ve written a bit lately about what I see as a systematic trend toward “epistemic closure” in the modern conservative movement. As commenters have been quick to point out, of course, groupthink and confirmation bias are cognitive failings that we’re all susceptible to as human beings, and scarcely the exclusive province of the right …Yet I can’t pretend that, on net, I really see an equivalence at present: As of 2010, the right really does seem to be substantially further down the rabbit hole.

Andrew Sullivan offers up some related links and commentary.  I tend to agree with Sanchez and Sullivan, but I thought you all would be a good group to poll.  Please offer up your opinion in the comments.

Colombia (China) estimate of the day

by  Tyler Cowen in

"It costs me as much to ship goods from China to Colombia's main Pacific port, as it does from the Pacific coast up to Bogotá," says one businessman.

The article is interesting throughout, for instance:

Until five years ago, only 15 per cent of Colombia's roads were paved, most of them single lane. In a country where some 70 per cent of cargo is hauled by truck, that made high transport costs a regular burden.

Still true, you beasts

by  Tyler Cowen in

I will try to buy an iPad later today, we'll see with what success.  In the meantime, Matt Fraser reminds me of my words from a few years ago:

So go ahead, buy your iPad, and feel the joy of technological advance (and the status it conveys). But think twice before whining when Apple inevitably introduces its faster, sleeker, less-expensive next generation of iPads. As economist Tyler Cowen, himself an early adopter, put it during the iPhone kerfuffle: “It is you people, who resent Coase (1972), you people who induce wage and price stickiness and widen the Okun gap. You people, who don’t know what it means to sit back and enjoy your consumer surplus. You beasts!”

April Speaking Events: Tyler Cowen, Alex Tabarrok

by  Alex Tabarrok in

Here is a list of events that Tyler and/or I will be speaking at in the near future.

  • Tyler and I will both be at the APEE conference in Las Vegas, April 11-13.
  • Tyler will be speaking on “The Economics of the Jobless Recovery” at Emory University on Thursday April 22, 4-5:15 pm.  More information here.
  • Tyler and I will both be speaking at the Fifteenth Annual University of Kentucky Teaching Workshop on Saturday April 24.  I will be talking about “Seeing the Invisible Hand” and Tyler will talk about the “Impact of the Financial Crisis on the Teaching of Macroeconomics.”  More information and registration here.

China facts of the day

by  Tyler Cowen in

As far as China’s involvement with the rest of the world goes, the real story since the worst of the crisis is not China’s recovering exports but China’s strong imports. The forthcoming trade release – interestingly due a few days before the Treasury report – is likely to demonstrate enormous import growth again, absolutely and relative to exports. This is seen not just in Chinese data, but in those from many other important trading nations. Indeed, quite remarkably, Germany’s trade with China is showing such strong growth that by spring next year, on current trends, it might exceed that with France. China last year reported a current account surplus of 5.8 per cent of GDP, significantly lower than apparently assumed as the current level by many people in Washington. In 2010, it could be closer to 3 per cent – incidentally below the 4 per cent level deemed as “equilibrium” by the Peterson Institute for International Economics.

There is more here.  Resist the call of those who would have us start a trade war with China.  Some of this is tasteless and stupid, but other parts are right on the mark.

Sentences to ponder

by  Tyler Cowen in

More than two months after the earthquake that devastated Haiti, at least 30 survivors who were waved onto planes by Marines in the chaotic aftermath are prisoners of the United States immigration system, locked up since their arrival in detention centers in Florida.

The full and outrageous story is here.  Their "crime," by the way, is not having proper visas.  Some were pulled from the rubble of the earthquake and none have criminal histories.

Haiti fact of the day

by  Tyler Cowen in

Nearly 17 percent of Haiti's civil servants died in the disaster, including many senior managers…

Most likely these were the people most likely to be inside of relatively substantial buildings.  It's also a reflection of how much Haitian government was concentrated in Port-au-Prince.  Did you know that the U.S. occupation of 1915-1934 encouraged this centralization, if only to make the country easier to rule?  The full story is here.

China diabetes fact of the day

by  Tyler Cowen in

It's not surprising to see China as "number one" in so many things, but I was surprised by the magnitude of this development:

According to the report, more than 92 million adults in China have diabetes, and nearly 150 million more are well on their way to developing it. The disease is more common in people with large waistlines and in those who live in cities, the report indicates.

"For every person in the world with HIV there are three people in China with diabetes," said David Whiting, an epidemiologist with the International Diabetes Federation, who was not involved in the research.

The Federation projected last year that some 435 million people would have diabetes by 2030. "With this new study, we're going to have to rerun our estimate," Whiting told Reuters Health.

The full story is here.