Markets in everything, gypsy threat point edition

by  Tyler Cowen in

I do not read Italian, but Stefano offers me the following summary:

Gypsies exploit their bad reputation to make money. That's what happened in the provinces of Macerata, Ascoli Piceno and Ancona. A group of Gypsies coming from Veneto figured out an original way to swindle real estate agencies. Three of the Gypsies would show up at construction sites driving an expensive car and wearing nice clothes; they would get in touch with the sales office and and put down a down payment in cash for an apartment, sight unseen. After a couple of days they would then show up with their entire families, obstreperous and in tatters. This would trigger an immediate buy-back of the sale contract: the real estate agency would promptly pay back three times the amount of the down payment to get the apartment back (an apartment that the Gypsies did not in fact really want). Real estate agencies reporting this scheme to the police set in motion an investigation that resulted in three of the Gypsies being indicted for fraud. Their loot has been estimated around 300k Euros.

Here is the article.

Toward a theory of Raivo Pommer-Eesti

by  Tyler Cowen in

Every day, usually promptly, he (it?) leaves comments on MR posts.  His comments read like this:

Bayern LB Bank

Die krisengebeutelte BayernLB traut sich nach einem Verlust von rund
fünf Milliarden Euro im vergangenen Jahr auch für 2009 keine konkrete
Prognose zu. Die Unwägbarkeiten an den internationalen Finanzmärkten
seien zu groß, sagte BayernLB-Chef Michael Kemmer in München.

Die Bank sei aber zufriedenstellend ins neue Geschäftsjahr
gestartet. 2008 haben die Milliarden-Belastungen aus der Finanzkrise
tiefe Löcher in die Bilanz der BayernLB gerissen, sie musste alleine
vom Freistaat Bayern mit zehn Milliarden Euro gestützt werden. «Es ist
zu bedauern, dass vor allem die bayerischen Steuerzahler in Anspruch
genommen werden mussten, um die existenzbedrohende Lage bei der
BayernLB zu beseitigen», sagte Kemmer.

No link is offered (he's not trying to boost a Google ranking), but the posts do list an email.  If you don't know German, I can assure you that is not an ad for Viagra.  It is simply dull (or is it?) chat about German banks.  He (it?) leaves these posts all over the internet, often on economics blogs.  Each comment to MR comes from a new IP address, so reporting him (it?) as spam does not stop the flow.

What motivates Raivo Pommer?  Do you have a theory of Raivo Pommer?  Is this proof of a multiverse?  (Apparently a world with Raivo Pommer is a possible world.)  And will he offer a report about German banks on this post too? 

Here is one man's frustration with Raivo Pommer, worth a read.  Here is a Twitter about Raivo Pommer.

If I were ever to write fiction (or a song), my first effort would be about Raivo Pommer.

Tax information for Parents of Kidnapped Children

by  Tyler Cowen in
Topic 357 – Tax Information for Parents of Kidnapped Children

You may claim a kidnapped child as your dependent if the following requirements
are met:

  1. The child must be presumed by law enforcement to have been kidnapped by
    someone who is not a member of your family or a member of the child's family,
    and
  2. The child had, for the taxable year in which the kidnapping occurred,
    the same principal place of abode as the taxpayer for more than one-half of
    the portion of such year before the date of kidnapping.
If both of these requirements are met, the child may meet the requirements
for purposes of determining:
  • The dependency exemption
  • The child tax credit, and
  • Head of household or qualifying widow(er) with dependent child filing
    status.

This tax treatment will cease to apply as of your first tax year beginning
after the calendar year in which either there is a determination that the
child is dead or the child would have reached age 18, whichever occurs first. 

For more information, refer to Publication 501, Exemptions, Standard
Deduction, and Filing Information.

I thank The Browser for the pointer.

Beware the “por favor”

by  Tyler Cowen in

I enjoyed this article, which is interesting throughout.  Excerpt:

English-speakers are keen to say please politely in other languages,
even if those languages do not express politeness by constantly saying
please. So English tourists say ‘por favor’ to waiters and barmen in a
way that sounds too insistent to a Spaniard. It is as if someone were
to say: ‘A glass of wine, if you please, my good man.’ If you want the
butter passed in Spanish, you say, ‘Pass the butter.’ To add por favor
can smack of impatience.

Tom Foster on the Kindle

by  Tyler Cowen in

Tom, a loyal MR reader, writes to me:

I've been following your Kindle posts for a while now and something that struck me is the signalling effects of reading a book versus a reading using a Kindle – yes I read Robin Hanson's blog too!

Reading with a Kindle, the signal is relatively constant and, at the moment, is something like "I'm an early technology adopter and I like to read". As the Kindle gets more commonplace the efficacy of this signal will, I think, diminish. Compare this with the signalling effects of reading a traditional book, where you signal to people not only that you like to read, but crucially what you are reading. 
 
I wonder if Kindle advocates are underestimating how important it is for people to show those around them not just that they like to read, but also what they like to read? 

Fiscal stimulus and German unification

by  Tyler Cowen in

For all the talk about the Great Depression, we are missing one historical analogy for a program of large fiscal stimulus, namely Germany after the Berlin Wall came down.  The two countries united, lots of money was spent and lots of money was borrowed.  West Germany had a modern economy with both manufacturing and services.  At the time Germany had unemployed resources, especially if you count the labor moving from East Germany to West Germany as grossly underemployed and available for higher-return projects. 

The results were less than wonderful.  The higher demand boosted measured gdp growth in the short run (bananas and porn, plus reconstruction) but Germany fell into economic stagnation.  The new demands took the West German economy only so far.  The higher taxes and debt then kept the German economy down for many years.  Few Germans were happy with the economic fallout from this "stimulus."  And that was with a relatively well-functioning financial system and a reasonable amount of initial optimism.

You can list many dissimilarities between German unification and the current U.S. situation (and in the comments I am sure you will).  Still, as historical examples go, I believe this one has some relevance.  When European leaders are skeptical about fiscal stimulus, they have some reasons, some of them quite recent.

If you'd like a lengthy account of the economics of that period, along with lots of numbers, try this study.  Just read through the first few pages, you'll see statements like:

Economic theory suggests that a fiscal expansion financed by distortionary taxation could potentially generate substantial adverse growth effects after the initial positive demand stimulus dies down.

It is then estimated that the negative economic impact from the German stimulus may explain up to one third of the subsequent growth gap between Germany and comparable European nations.

Addendum: Don't be fooled by the topic-shifting comments on why East Germany didn't do better; this post is about how West Germany fared from so much stimulus.  Not so great.

What is the rosy scenario?

by  Tyler Cowen in

Econbrowser assembles some bits of good economic news and the NYT offers a related report.  Is there any chance the worst is over?

The rosy scenario is that in a highly connected, internet-intensive world, the bad news travels far more quickly and far more convincingly than before.  The early stages of the downturn are like falling off a cliff.  We bottomed out maybe two weeks ago.  That said, the rebound also comes much more quickly.  Wages are more flexible than before.  Bad inventory policies are avoided through information technology.  The Fed responds to changing conditions ever more quickly.  Overall, economic time accelerates on both the downswing and the upswing.

I do not believe the rosy scenario, as I think there are still other "shoes to drop," most of all internationally.  I also think we will see a double-dip or triple-dip recession, as the Fed must eventually withdraw some of new money from the system.  Good news is then, in fact, simply a sign that some bad news is on the way, sooner or later.

Still, if you are looking for something to believe in, I offer you the rosy scenario.

Fortunately, the appetite for U.S. government debt can be taken for granted

by  Tyler Cowen in

Mike Perry, a loyal MR reader, sends me this:

The U.K. failed to find enough
buyers for 1.75 billion pounds ($2.55 billion) of bonds for the
first time in almost seven years as debt investors repudiated
Prime Minister Gordon Brown‘s plan to stem the worst economic
crisis in three decades.

Gilts slumped after the London-based Debt Management
Office, which manages bond auctions on behalf of the Treasury,
said investors bid for 1.63 billion pounds of the 40-year
securities. The last time the U.K. government was unable to
attract enough investors was in 2002 when it tried to sell 30-
year inflation-protected bonds. The yield on the 4.25 percent
gilt due 2049 rose 10 basis points to 4.55 percent.

What Steven Johnson likes about the Kindle

by  Tyler Cowen in

He wrote a list of pluses and minuses, but this one stuck out at me:

When he was on John Stewart, Jeff Bezos mentioned that the Kindle was
great for one-handed reading, which got a salacious chuckle from the
audience (and Stewart), but I think it's best for no-handed
reading: i.e., when you're reading while eating a meal, one of life's
great pleasures. It's almost impossible to read a paperback while
eating, and you really have to snap the spine of a hardcover to get it
to lie flat, but the Kindle just sits there on the table helpfully
while you cut up your teriyaki.

The future of immigration

by  Tyler Cowen in

Timothy Hatton and Jeffrey Williamson report:

This paper documents a stylized fact not well appreciated in the
literature. The Third World has been undergoing an emigration life
cycle since the 1960s, and, except for Africa, emigration rates have
been level or even declining since a peak in the late 1980s and the
early 1990s. The current economic crisis will serve only to accelerate
those trends. The paper estimates the economic and demographic
fundamentals driving these Third World emigration life cycles to the
United States since 1970 — the income gap between the US and the
sending country, the education gap between the US and the sending
country, the poverty trap, the size of the cohort at risk, and migrant
stock dynamics. It then projects the life cycle up to 2024. The
projections imply that pressure on Third World emigration over the next
two decades will not increase. It also suggests that future US
immigrants will be more African and less Hispanic than in the past.

A non-gated version is available here.  A more imaginative title for this post would have been "Steve, the good news is…Steve, the bad news is…" but I'm not sure how many MR readers would get the reference.  I am in any case impressed by how much African immigrants have brought to the Washington, D.C. area.  Don't forget to visit Abay Market, currently the best Ethiopian place in my area.  The menu has moved from having three items — raw beef only, plus fatty lamb soup — to some vegetables and cooked items as well.