Is keenly illustrated here:
Asked about overseas investment funds profiteering during a period of economic uncertainty, she said: ‘I see some of them looking for returns of 20 or 25 per cent, at a time when fellatio is almost non-existent.’
A good economist is like a petulant child. They always ask why, never fully accept an answer, and rarely fully reject one.
Yes, a great economist will have a bunch of other skills – both normative and analytical. However, I’d say the desire to question and keep an open mind provides a necessary condition for any strong performance by an economist.
Yes, this is more filler – I barely have time to read the news right now, let alone post 😀
So you are getting whatever is in my head this minute 😉
Hey, I’m currently running so busy that I dont’ even have time to look at the other blogs – so I’m sure this has been covered somewhere else. However, I felt I have to say something.
When Stephen Toplis and Cameron Bagrie say that GDP growth will accelerate due to the earthquake they ARE NOT saying that it is good for the economy. That headline is completely inappropriate.
Effectively, a bunch of our capital stock was destroyed. Because of this, the “marginal product” of capital is probably a little higher, and so the “flow” of capital (investment) will temporarily pick up – driving up GDP growth. We’ve still lost a bunch of wealth. We are simply having to “work” (which is costly) to try to regain some of it. In no way does this mean that it is good for the economy – and that is not what these two economists were getting at.
I suspect the author of the article and/or the editor got confused between the flow concept, which is investment and GDP, and the stock concept, which is capital and underlying wealth. We have lost capital, and we have lost wealth – this negative shock is not just sucky for the people who had to face a disaster, but it IS a “negative for the economy” in terms of measured wealth.
I mean flip, if destroying a city is “good for the economy” why don’t we send the tanks into Wellington to blow it up right now? Actually, I’m in Wellington – lets make that Auckland instead 😉
I imagine that neither of these economists is particularly pleased that they are being sold as “merchants of doom” in this sense …
On Saturday I had an article in the Dominion Post on New Zealand’s debt levels, and why I think we need to spend a bit of time thinking about “why” this level of debt arose before yelling out for things like compulsory superannuation. My conclusion was:
This issue deserves a much more in-depth analysis then the quick look over the statistics I have provided here. It requires time looking over the data and trying to understand where there is a distortion in the market, either resulting from market or government policy failure. Then any savings policies that are introduced should be based on our analysis of these distortions – not on the eagerness of fund managers to receive funds from compulsory savings schemes.
The article is here. If anyone wants to quote from it or any such, please attribute it to the Dominion Post.
If you merely want to discuss it with me, do so in the comments. Note, I am very tied down at the moment, so it will be a while till I respond to comments – however, in time I will 😛
So this isn’t what I wanted to hear:
Mr Key also warned that other finance companies may go under and the government would continue to look after investors by keeping the guarantee on investments in place.
I think he meant:
Mr Key also warned that other finance companies may go under and the tax payer would continue to take on all the risk for investors by keeping the guarantee on investments in place.
Look. I had no problem with the idea that we needed to do something in wholesale markets during the credit crisis to prevent an effective “bank run”.
But the two problems with keeping this going now is that:
Contrary to what Kiwiblog said that “It is easy in hindsight to say that one should not have had the guarantee scheme, but in late 2008 the wordl financial system was on the brink of possible collapse, and pretty much every OECD country did much the same as a stability measure” I think it is perfectly fine to critique the scheme.
Why? Well we KNEW there were issues with our finance firms, and we stuck them into a scheme rapidly without doing due diligence on a whole lot of the stuff. And we made this f’ing critique AT THE TIME – so we are allowed to make it now 😉
Lets just think here for a second. Effectively government was taking on all the risk, so why weren’t the insurance premiums insuring that all the return also went to government?
If it is hard to observe the price, couldn’t we have just said that people who entered the scheme couldn’t increase lending – this would have allowed the scheme to protect deposits without leading to the “increased risk taking” that has taken place.
Bah.
Via the Herald (ht Education Directions):
The Illicit Drug Monitoring System report found the price – commonly regarded as the best measure of police success against the drug – had increased each year.
Interesting. So they use ever rising prices as a measure of ever rising success. This is weird on two grounds:
Also, they seem to have trouble attributing appropriate causation:
Dr Wilkins said dealers around the world had reacted (to restrictions) by filling the (Ectasy) pills with other substances, including methamphetamine, which could create a highly dangerous cocktail of drugs.
…
A revival in LSD use, possibly as Ecstasy users look for a stronger drug.
So they attribute the rise in LSD use to “addicts” wanting a stronger fix – even though they have already admitted that the consumers value of Ecstasy has been lowered by tightening restrictions overseas, which have reduced quality and increase the potential health impact. If anything I would say that the “obvious” reason for the substitution from Ecstasy to LSD would be the result of these tighter restrictions …