We had a terrific talk Friday by demographer John Bongaarts, who kicked off the “Demography for Economists” conference sponsored by the Center. John gave us a broad overview of global population tends, with these highlights:
Archive for the 'International business' Category
Distinguished academic economist Raghu Rajan took over last week as head of the Reserve Bank of India, the central bank. On his first day, the FT reports, he starting tearing down decades of red tape restricting competition among banks. The template comes from a 2008 report, most of which had been ignored till now. Initial steps include freedom for banks to open new branches (duh!) and easier entry by foreign banks. The rationale is to make banking services available to a broader cross-section of the population, which remains underserved by international standards.
You may recall that the head of Argentina’s central bank stated: “It is totally false to say that the issue [of money] generates inflation.” Macroeconomics is as much art as science, but you have to give us this one, it’s one of the few things we know for sure. The causality (and yes, we know the causality here) goes this way: large government deficits (wars raise government expenses, reduce revenue) -> are financed by printing money (anyone buying Syrian bonds these days?) -> inflation. Andrew Sullivan’s post (link via MR) shows inflation of about 200% per year. Another thing we know: these things sometimes explode. 200% can turn into 1000% or even 10,000% very quickly.
Kim Schoenholtz hosted this term’s Economic Outlook Forum, another full house in Paulson Auditorium. There was lots of good content, but what I remember best is a joke told by Jeff Shafer. As I recall it, Jeff was working with Guillermo Ortiz during the Mexican crisis of 1994-95, when Guillermo mentioned that Christopher Columbus was the patron saint of economists. Why? he asked, playing the straight man. Because Columbus didn’t know where he was going. He didn’t know where he was when he got there. And did it all with government money.
Friends and students have reminded me that the case between the Republic of Argentina and hedge fund NML/Elliot Management is entering what appears to be its last season. I hope not, it’s been great fun so far, but everything must come to an end eventually.
You may recall that Argentina has been in US court, fighting hedge fund Elliott Capital. Argentina defaulted in 2001, with three quarters of its bondholders “agreeing” to exchange their bonds for similar bonds with face values roughly 70% lower.* Some of the remaining debt is in Elliott’s hands, and their demand for payment has created difficulties paying the “exchange bondholders” who have, of course, already been punished. Should the US weigh in on the side of the exchange bondholders, or let the law, such as it is, take its course? Read the rest of this entry »
Bruce Buchanan once summarized Michael Porter’s strategy advice this way: “Be a monopolist when you can.” This generates mixed feelings among economists. If you create a monopoly by developing a great new product, that’s a good thing. But if you simply take over an existing market, that’s good for you but bad for the rest of us. The reasoning will be familiar to anyone who has taken an economics course or read Adam Smith. Read the rest of this entry »
No, not The Onion:
After spending nearly one-third of a $3 billion budget to build four of the world’s most advanced submarines, the project’s engineers have run into a problem: the submarines are so heavy that they would sink to the bottom of the ocean. Miscalculations by engineers at Navantia, the construction company contracted to build the S-80 submarine fleet, have produced submarines that are each as much as 100 tonnes (110 US tonnes) too heavy.
From Quartz, via Gian Luca Clementi. A question to test yourself: how important is $3b to Spain’s overall fiscal situation?
Update (May 23): Facebook update from a friend: “Doesn’t this count as stimulus whether it sinks or not?”
To paraphrase one of Stan Zin’s favorites, Inspector Renault in Casablanca: Congress is shocked to find that the US corporate tax system is riddled with loopholes. We often hear business leaders complain that the US has one of the highest corporate income tax rates in the world — and it’s true. But it’s also true that the system collects very little revenue.