Greg Mankiw has a good line in his review of of Alan Greenspan’s new book: ”A few tenured economists become restless with the obscurity, slow pace and petty politics of academia. They yearn for the fame, fast pace and petty politics of Washington.”
Archive for the 'Current events' Category
It’s been a little noisy today, with students outside protesting. Fortunately, Laura Veldkamp was here to share a conversation she had, which I pass on with a little artistic license:
Laura: What are you protesting?
Student: Student debt, it’s too high.
Laura: Who made the decision to borrow?
Student: I did, but NYU encouraged me.
Laura: So who are you protesting against, yourself or NYU?
Student: NYU, of course, they shouldn’t have done this to me.
No, not the band, the US government agency. Like Borders bookstores and Tower Records, it’s been hit hard by the internet. Its high-margin product, first-class mail, is rapidly giving way to email. But unlike Borders and Tower Records, which declared bankruptcy, it continues to pile up losses — on our account.
The Times notes: “It has defaulted on three annual $5.5 billion payments into a health care fund for its future retirees. It has also exhausted its $15 billion borrowing limit from the Treasury.” Congress has responded by killing off efforts to eliminate Saturday deliveries, close rural post offices, and cut healthcare costs. Maybe Sunday deliveries for Amazon with do the trick.
Some of our students ran a survey asking students to identify political figures from their pictures. One student identified NYC mayor Michael Bloomberg as Fed Chair Ben Bernanke. Another confused mayoral candidate Christine Quinn with House Minority Leader Nancy Pelosi. The good news? Stern students did by far the best.
While Congress dithers, we’ve been at work. In the spirit of even bad ideas can lead to better ones, we spent lunch thinking up novel ways the government could raise revenue. I’ve omitted the names to protect the innocent.
- Sell naming rights. If we can have the Tostitos Fiesta Bowl, why not Yosemite Citi-Park? And the White House could be renamed the White Castle.
- Sell ads on currency. An idea of our old friend Doug Purvis: put advertising on dollar bills. One dollar, brought to you by Dunkin Donuts. Fifty dollars, brought to you by Goldman Sachs.
- Put logos on politicians. I’m sure the NASCAR angle will be a winner with voters, not to mention what it would do for transparency.
- Put up billboards at the White House and Capitol. Picture a scene of a reporter in front of Congress with a huge Nike logo in the background. Or perhaps we could put up a “Visit China” sign in lieu of honoring their investments in US government bonds.
This will bring in money by the bushel — at least that’s our claim. But what are your ideas? Post them below, any ideas will do. I’m sure with a little imagination, we can get through this thing.
Courtesy of Kim Schoenholtz, a striking graph of interest rates paid on one-month and three-month Treasury bills. As you doubtless know, interest rates at the short end have been close to zero for some time, zero meaning (in this case) something like 0.02 percent. Since the start of the month, rates on 4-week bills have gone up about 25 basis points — 0.25 percent.
The question keeps coming up, so I thought I’d share some of the highlights of expert opinion:
- Our resident Argentine, Ignacio Esponda, asked at lunch: ”Which is the banana republic now?” (That’s a low blow, but he has a point.)
- Gian Luca Clementi was interviewed by Italian network RAI, ostensibly because Italians are worried about us. I don’t speak Italian, but GL tells me he said: ”No need to worry about a US default, Italy has enough miseries of its own.”
- Perhaps more surprising, Nouriel Roubini is optimistic about the US. That’s even more positive than his comments earlier in the year about Europe, that “things are less worse.”
- Jon Stewart has been overwhelmed with good material and is running a series, “Shutstorm 2013.”
- Even better, The Onion has weighed in. As has Limericks Economiques.
More seriously, we’ve seen a rise in yields at the very short end of the Treasury yield curve and a rise in the price of Treasury credit default swaps — insurance against default. Kim Schoenholtz and I may collect some data for a future post.
Oh, right, there is no jobs report this morning. The Bureau of Labor Statistics‘ website is up but not being updated, so no jobs report this morning. The Bureau of Economic Analysis went further, shutting down its whole website earlier in the week. But don’t worry, FRED is up, with whatever data are out there. Ditto the Fed.