Luckily, a new shop in China will let you vent your frustrations on other people's equipment without dealing so much as a scratch to your own. After paying for the right to abuse an old TV, mobile phone, plate, chair or other item — yes, the Pottery Barn rule still applies — you have up to one minute to unleash your wrath upon your target. As an additional bonus, the store makes motorcycle helmets and gloves available to prevent injuries. But there's a catch: if you're not a woman, you can't play. Looks like frustrated men will have to stick with the ol' pillow standby for now.

The link is here and I thank Vinnie and Trevor Wagener and also John Thorne for the pointer.  Here is further information.

I don't know and neither does anybody else.  Here is one set of recent estimates, as reported in The Guardian:

…economists at Dutch bank ING…have produced one of the first financial models of what might happen if the single currency falls apart during 2010. In a bleak assessment, entitled "quantifying the unthinkable", they warn that in the first year alone, so by the start of 2012, output would fall between 5% and 9% across various member states, while their new national currencies would fall by 50%.

Please don't fix those numbers in your mind, so here's the real point.  The new national currencies, of the poorer countries, would fall by some amount.  If that amount is small, that also provides reason to believe the current Eurozone can survive.  If that amount is large, it provides reason to believe the current Eurozone cannot survive.  (The poorer countries would now have to deflate a lot, and there would be a greater risk of a speculative attack on their banking systems.)

You might think that the collapse of the current Eurozone, and the devaluations, are good in the longer run (I do), but in the short run the entire process would be a nasty, volatility-laden, solvency-revaluing shock to the entire global economy.

You therefore should expect "either an OK outcome, or a very nasty shock," in exactly that conjunctive form.  You shouldn't expect something in between.  The conditions where the current Eurozone collapses are precisely the same conditions where the shock of transition is a big one.

And that includes a deflationary exchange rate shock to Germany as well.

There has been much recent discussion of the topic and I apologize (to RA, among others) for being late to the party.  Here is one piece by Yves Smith in the NYT and here is an Economist symposium on the topic, with many first-rate contributors.  Overall I am puzzled at the nature of the worry here.  Corporations with cash surpluses are not destroying real resources, nor are they stuffing cash in their mattresses.  They are investing in financial assets.

Take a financially conservative corporation, which holds its surplus in the form of T-Bills.  If it bought the T-Bills fresh at auction, that's lending money out to the government and the capital is still deployed.  Isn't that called…in some circles…stimulus?  (I've even heard the multiplier might be 1.4!  Or does only the borrower get credit and not the lender?)  It's trickier if the corporation buys the T-Bill on the secondary market, but still a) someone else has the money now, and b) this resale opportunity encourages other investors to buy freshly created T-Bills, thus putting capital in the hands of the government.  In terms of final effect, there should be a near-equivalence between buying old and new T-Bills.

Of course you might think the government is not spending this money well, but that's the problem of the government, not the corporate surpluses, which indeed are being invested.  I ran a surplus this last year and paid off some of my mortgage; does anyone think I destroyed net real resource investment?  (In fact I redistributed profits away from the financial sector, I suspect, which is good for the real economy at this point.)

If velocity is too slow for a social optimum, is it the corporations — who strive to rapidly invest excess cash in the till — who are at fault?  Even if corporations are not helping matters, are they doing anything worse than passing off a hot potato?

You might make an external cost argument.  Perhaps each corporation does well by holding T-Bills, but the system as a whole suffers under the encroachment of state power and public sector expansion.  That's not an argument which many proponents….do I even need to finish this sentence?  

It is perfectly fine to claim that we have a sectoral misallocation and that high corporate cash reserves are a symptom of this problem, for instance maybe there is too much lending to the safer, commercial paper-issuing big corporations and not enough lending for higher-yielding, riskier start-ups (no one knows which risks to take), or whichever story you wish to tell.  I hold a version of that view myself, but it's very different from believing that high cash reserves are stifling investment per se.

By the way, these high cash reserves are one reason why I don't think Alex's nominal wage stickiness story explains current unemployment.

Why is it so frequent that economists take Keynes's analysis of sitting on currency and apply it to savings and investment?

File under "Yet another discussion of the Junker problem."

As I’ve said before, if we’re going to cut spending on retirement programs then it makes much more sense to reduce Medicare outlays by $1 than to reduce Social Security benefits by $1. Social Security benefits can be used to buy health care, and reducing Medicare spending could reduce system-wide health care costs. What’s more, if we’re going to cut spending on retirement programs then such cuts should be broadly shared and not exclusively inflicted on younger people. Such moves are both fairer and more credible. Last, if you want to cut Social Security benefits you should just cut Social Security benefits. Reducing outlays via the mechanism of a higher retirement age is going to mean that the incidence of the cuts falls most heavily on people with physically taxing–or simply boring and annoying–jobs. It’s one of the most regressive possible ways of trimming spending.

That's from Matt Yglesias.