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March 9, 2010

Latest Posts from Economist's View

Latest Posts from Economist's View


Shiller vs. Siegel

Posted: 09 Mar 2010 01:10 AM PST

Are stocks cheap or expensive?:

Worries Rebound on Bull's Birthday, by E.S. Browning, WSJ: ...The great debate among stock-market analysts these days is whether the market has finally worked off years of excessive prices and can return to steady growth. ...
This uncertainty has fueled a prolonged debate between two old friends, renowned economists Robert Shiller and Jeremy Siegel. ... Mr. Shiller, a Yale University professor whose book "Irrational Exuberance" warned of the tech bubble just before it burst in 2000, still worries about the market's future. Prof. Siegel of the University of Pennsylvania's Wharton School, whose book "Stocks for the Long Run" was the bible for many investors in the 1990s, is bullish.
Each of them can marshall a slew of data to bolster his viewpoint. Their reputations as forecasters may be affected by which of them winds up being correct. ...
Shiller

One concern of pessimistic analysts such as Mr. Shiller is that despite the two bear markets, stocks have spent almost all their time since 1991 priced above historic averages. History suggests that when stock prices are high, performance in ensuing years is disappointing. ...

Mr. Shiller worries that the housing market could be turning down after a brief recovery, which could contribute to a decline in U.S. stocks, which already look expensive to him. ... Mr. Siegel scoffs at his friend's concerns—and at his numbers. "This is an extremely cheap market," he says, and its future is bright. ...

Make Markets Be Markets

Posted: 09 Mar 2010 12:41 AM PST


(clearer version of the graph in the presentation)

Here's the full set of videos from the conference:

links for 2010-03-08

Posted: 08 Mar 2010 11:01 PM PST

Water Consumption in Edmonton During Olympic Gold Medal Hockey Game

Posted: 08 Mar 2010 09:02 PM PST

Chris Blattman:

flush_game

Graph of the day: Canadians pee between periods, by Chris Blattman: Edmonton's water utility published this graph of water consumption during last Sunday's gold medal Olympic hockey game. Roughly 80% of Canadians were watching.

I believe the beer consumption picture looks exactly the same, but upside down. ...

"Bail Out Our Schools"

Posted: 08 Mar 2010 05:52 PM PST

I agree. Bailing out the financial system, but not bailing out schools in financial trouble because of the crisis, is unconscionable:

Bail Out Our Schools, by Robert Reich: Any day now, the Obama administration will announce $4.35 billion in extra federal funds for under-performing public schools. That's fine, but relative to the financial squeeze all the nation's public schools now face it's a cruel joke.
The recession has ravaged state and local budgets, most of which aren't allowed to run deficits. That's meant major cuts in public schools and universities, and a giant future deficit in the education of our people.
Across America, schools are laying off thousands of teachers. Classrooms that had contained 20 to 25 students are now crammed with 30 or more. School years have been shortened. Some school districts are moving to four-day school weeks. After-school programs have been canceled; music and art classes, terminated. Even history is being chucked.
Pre-K programs have been shut down. Community colleges are reducing their course offerings and admitting fewer students. Public universities ... have raised tuitions and fees. That means many qualified students won't be attending.
Last year the nation committed $700 billion to bail out Wall Street banks, the engines of America's financial capital, because we were told we'd face economic Armegeddon if we didn't.
We've got our priorities backwards. Our schools are the engines of our human capital, and if we don't bail out public education we face a bigger economic Armegeddon years from now. ...
Starting immediately, the federal government should give states and local governments interest-free loans to make up for all school and university budget shortfalls. The loans can be repaid when the recession is over and local and state tax revenues revive.
Over the longer term we must shift incentives away from financial capital toward human capital. A tiny one half of one percent tax on all financial transactions would generate about $200 billion a year, according to the Economic Policy Institute. That might put a crimp on Wall Street bonuses but it's enough to fund early childhood education, smaller K-12 classes, and lower tuitions and fees for public higher education.
The Street's financial capital is important to the American economy, but over the long term the classroom's human capital is absolutely crucial.

Once help in some form is available to the states, I'd consider going even further and penalizing states in some way if they reduce educational services to balance their budgets during the recession (a voice in my head is urging me to think this through more before saying it, but I'm ignoring it). Better education today equals better jobs in the future, and we should do all we can to avoid penny-wise policies that undermine our future potential.

"Enough Already: Venting Over Four Decades of Right-Wing Activism"

Posted: 08 Mar 2010 05:51 PM PST

Michael Perelman is jealous of the tea party movement:

Enough Already: Venting Over Four Decades of Right-Wing Activism, by Michael Perelman: Today, Richard Nixon would be considered a flaming liberal. In Nixon's day, Barack Obama would have passed as a typical conservative; except, if you remove considerations of civil rights from consideration, he might even be a fairly hard line conservative.
The Bill of Rights is pretty well shredded. Freedom of speech is fast becoming the special privilege of corporations. Economic pressures, fueled by greedy shareholders, have eviscerated the press, leaving freedom the press virtually meaningless.
The most important part of the Fifth Amendment is probably the takings clause, which is interpreted to restrict the right of the government to regulate property.
Perhaps, the Second Amendment is the most important amendment, giving people the right to arm themselves with anything short of a nuclear weapon.
All this right-wing nonsense might be somewhat understandable if it were necessary to provide for a good life; however, the economy is becoming as dysfunctional as the ridiculous political system.
Watching people rebel politically or in the streets in Iceland and Greece, while people in the United States express their frustrations with the tea party, makes me noxious.  My problem with the tea party movement is one of political jealousy.  Many of the participants share my frustration at the class bias of the system, but they seem confused, mistaking late capitalism for socialism.  Sure, the tax system is rigged against ordinary people, but it works in favor of the same people who are running the tea party movement.
Unfortunately, the left (if there is such a thing) seems unable to articulate a strong call to action.  Instead, our anger bubbles up periodically — today, over the evisceration of education; tomorrow, over an escalation or extension of the war; or maybe even the promotion of a protest candidate, but a systematic program is nowhere to be found in the public dialogue.

[Is there nothing that can] be done (but vent)?  I hope not.

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