Tag Archives: Economics

Follow-the-Data Fed May Play Follow-the-Markets to Avoid Shock

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“The Federal Reserve may be about to discover that letting the data drive its decisions on raising interest rates is easier said than done.  Fed Chair Janet Yellen’s new strategy, a departure from six years of explicit guidance, calls for adjusting policy according to how the economy evolves. That will make it harder for investors to predict the Fed’s decisions, and risks hurting growth if a surprise triggers a surge in bond yields that stifles business investment and starves the housing recovery.”

http://www.bloomberg.com/news/articles/2015-05-11/follow-the-data-fed-may-play-follow-the-markets-to-avoid-shock

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The real story behind the demise of America’s once-mighty streetcars

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“After World War I, the value of 5 cents plummeted, but streetcars had to get approval from municipal commissions for any fare hikes — and the idea of the 5-cent fare had become ingrained as something of a birthright among many members of the public. The public had little sympathy for the traction magnates who’d entered into these contracts. Today, many progressives and urbanists are boosters of streetcars, but back then they were often seen as a bastion of corruption — especially because of their owners’ history of violent strike-breaking.  Because of these factors, some streetcar companies began going into bankruptcy as early as the 1920s.”

http://www.vox.com/2015/5/7/8562007/streetcar-history-demise

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Why Are so Many Refugees Drowning? And Why Don’t They Fly?

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“It’s not because it’s too expensive. Rosling points out that a seat on these boats costs €1,000 or more, while a flight from Ethiopia to Sweden is only €400; from Lebanon to the UK is also €400; and from Egypt to Italy is only €320.  It’s not because their governments are stopping them, either. By and large, these states have no real ability or interest in stopping emigration.  Rather, it is about incentives.  Rosling points to EU Directive 2001/51/EC, which states — in essence — that to combat illegal immigration, ‘Every airline and boatline that brings a person without the proper documents for entry has to pay all the costs for returning that person back to their country of origin.'”

http://fee.org/anythingpeaceful/detail/why-are-so-many-refugees-drowning

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Fiat Chrysler CEO: Please don’t buy Fiat 500e electric car [2014]

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“Fiat Chrysler Automobiles Chief Executive Sergio Marchionne has a request for potential buyers of the automaker’s Fiat 500e electric car: Don’t buy it. He’s tired of losing money.  Decrying the federal and state mandates that push manufacturers to build electric cars, Marchionne said he hoped to sell the minimum number of 500e cars possible.  Through April, the automaker sold 11,514 of the 500 cars in the United States this year, down about 15 percent from the same period last year. The company does not break out 500e sales. ‘I will sell the (minimum) of what I need to sell and not one more,’ Marchionne said of the 500e.”

http://www.reuters.com/article/2014/05/21/chrsyelr-ceo-evs-idUSL1N0O71MS20140521

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Why It’s Cheaper to Lease a New Electric Car Than to Buy One Used

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“It comes down to the government’s preferred way of encouraging people to drive EVs: tax credits. The federal credit is $7,500. That’s a bottom-line credit, so if you’re not paying at least that much in federal taxes, you’re not getting the full benefit. (Various states offer different credits, or none at all.)  That leads people to lease EVs instead. The financing company that buys the new car from the automaker gets the full tax credit, so it can pass those savings to the lessee in the form of lower monthly payments. That’s why you can get a new Nissan Leaf for $2,400 down and $199 a month for 36 months. It’s hard for used EVs to compete with lease rates this low, because the tax credit isn’t passed down.”

http://www.wired.com/2014/08/why-its-cheaper-to-lease-a-new-electric-car-than-to-buy-one-used/

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The Creative Destruction of New York in 47 Seconds

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“The New York Times has posted a breathtaking video, soon to be displayed on the elevator walls of the new 1 World Trade Center, showing a 47-second time-lapse video of Manhattan’s history, from the perspective of the rising elevator. In less than a minute, visitors going to the observation deck will travel 102 stories into the sky and 500 years through time.  You might notice something else about the time-lapse: the pace of change slows dramatically towards the end. It’s not because New York is approaching perfection. It’s because the city government has deliberately calcified New York City, encasing the city’s structures in a legal state of suspended animation to ‘protect’ its ‘landmarks.'”

http://fee.org/anythingpeaceful/detail/the-creative-destruction-of-new-york-in-47-seconds

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The Free Market is Solving the GMO Problem

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“Look what is happening. A significant number of consumers want foods made from GMO-free grains. Food companies provided them. The article mentions some examples. General Mills will no longer use GMO cornstarch in Cheerios. Chipotle Mexican Grill wants to eliminate GMOs from all its ingredients. Whole Foods will require GMO labeling by 2018. All this is happening without any state intervention. The businesses are responding to their customers. With demand growing but the supply of non-GMO grains relatively tight, prices for those grains have gone up. The higher prices enticed farmers like the one quoted in the Des Moines Register.”

http://www.thedailybell.com/news-analysis/36251/The-Free-Market-is-Solving-the-GMO-Problem/

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Citi Economist: Abolish Cash To Enforce Negative Interest Rates

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“In a new piece, Citi’s Willem Buiter looks at this problem, which is known as the effective lower bound (ELB) on nominal interest rates.  According to Buiter, the ELB only exists at all due to the existence of cash, which is a bearer instrument that pays zero nominal rates. Why have your money on deposit at a negative rate that reduces your wealth when you can have it in cash and suffer no reduction?  Cash therefore gives people an easy and effective way of avoiding negative nominal rates.  Buiter’s note suggests three ways to address this problem: Abolish currency.  Tax currency.  Remove the fixed exchange rate between currency and central bank reserves/deposits.”

http://www.bloomberg.com/news/articles/2015-04-10/citi-economist-says-it-might-be-time-to-abolish-cash

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Paul Rosenberg: ‘Production Versus Plunder’, Part 2

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“A zero-sum assumption is that there is a fixed pool of any specific good and that in order for you to have more, someone else has to accept less. This is the essence of the common slogan, ‘there are only so many pieces of pie.’ If you want an extra slice, someone else has to accept one less. A positive-sum assumption, on the other hand, assumes that the pool of assets can be expanded. In other words, if there are not enough slices of pie for your liking, you can make a new pie for yourself. The important thing about zero-sum and positive-sum assumptions is that they form a mental pattern, an analysis program in our brains, coloring wide areas of thought.”

http://www.thedailybell.com/editorials/36225/Paul-Rosenberg-Production-Versus-Plunder–Part-2/

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Interview with Peter Thiel, the Popular Contrarian

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“We’ve had this extraordinary era of bubbles in our society: There was the dot-com bubble in the ‘90s — which was, of course, full of crazy and misguided optimism — [and] the housing finance bubble in the last decade. I would argue you have a government bubble today, an education bubble, and still bubbles in various other areas where you have these sort of psycho-social phenomena. I always find myself very distrustful of intense crowd phenomena and I think those are things that we should always try to question, especially critically. But at the same time, it’s not simply going against the crowd; it is always the much more important question to try to figure out what the truth of the matter is.”

http://www.realclearmarkets.com/articles/2014/11/25/interview_with_peter_thiel_the_popular_contrarian_101401.html

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