Morning Caffeine 3-29-2012

Posted from Diigo. The rest of my favorite links are here.

About

Expert in business development, product development, and direct marketing. Developed strategic sales plans, product innovations, and business plans for multiple companies. Conceived the patent pending Spot Equivalent Futures (SEF) mechanism, which allows true replication of spot and swap like products in the futures space.

View all posts by

Leave a Reply

2 Comments on "Morning Caffeine 3-29-2012"

Notify of
avatar
beowulf
Admin

Hey Mike, another Orszag sighting (he makes an interesting point about actually).

“Had Obama appreciated the possibility of an L-shaped recovery, he might have designed a stimulus better suited to respond to it, possibly by tying support measures to cyclical indicators, such as the unemployment rate, so they’d last until the economy recovered.
“That would have been relatively cheap to do,” Orszag says, “because CBO was assuming a V-shaped recovery, so it wouldn’t have cost much. Perhaps Congress wouldn’t have gone along, but that’s the kind of policy you’d pay a lot of attention to if you’re doing downside risk analysis, but that you don’t put a lot of emphasis on if you’re overly confident of your projection.”
http://mobile.bloomberg.com/news/2012-03-22/obama-needs-to-show-voters-he-s-why-economy-improving

Woj
Guest

Michael,

Thanks for the posts each morning. The last link today, Shadow Banking, Bubbles and Government Debt, appears to oppose your comments from the other day that our economy needs bubbles because r < g is actually the norm.

Using the background from yourself and Nick Rowe, I looked into the historical relationship and elaborated in a blog post here: http://bubblesandbusts.blogspot.com/2012/03/economy-needs-bubble-but-treasuries-are.html.

For most of the past 50 years the Fed's effective rate has been lower than nominal GDP, which supports your point that our economy needs bubbles.

wpDiscuz