Letters to the Editor
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Heh.
Physics has theories (such as quantum mechanics) that people don't like and don't understand, but at least the theories make useful predictions about the outcomes of real experiments.
Economics has theories that people like and claim to understand, but the theories are useless for predicting the outcomes of real situations.
Methinks the economists are misusing the word "theory".
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We've lost a lot of your money, America
Over chicken cordon bleu and Black Forest gateau, the talk was of volatile stock markets. “Sure, I’m worried about it – I’ve lost a couple of hundred thousand dollars in the past few weeks,” said Merle Widmer, vice-chairman of the Peoria county board.
I've lost a couple hundred thousand dollars???
There's a whole lot more pain, recriminations, and accountability, left in this thing, before we hit bottom..
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My two nucleotides
I'd like to add that the structure of the DNA molecule is actually not that hard to understand, which is why it's very surprising that they always get it wrong on TV. (And I'm not saying that just because I'm a molecular biologist, it really IS pretty straightforward, now that it's been figured out.)
Of course, the mechanics of DNA maintenance (replication, repair, etc.) are a morass, and there's quite a bit of argument going on in the field about these. However, lack of understanding in these disciplines by one or few specialists does not translate into immediate global consequences in quite the same way that lack of understanding of economic processes does.
This is a difference between basic sciences and applied sciences: basic scientists can get it wrong. In fact, we DO get it wrong, 90% of the time. Most of our experiments fail, most of our theories are limited at best, completely off the mark at worst. Which is fine, we're discovering things. On the other hand, a surgeon has no room for error. Which is why they do a lot of memorizing in medical school, and not much at all in graduate school.
Economists seem to be very quick in applying their theories, such that as soon as some theorist in a think tank dreams up a neat idea, it's put into practice by his adherents who are in positions of power. And if he's wrong, boom, problems. Of course, this is just what I think. I'm not an economist, by any stretch. And if you realize that in my area of expertise I'm wrong 90% of the time, what about stuff that I've no idea about?
Problem is, it looks like even those who CAN parse the numbers and draw the charts are not that far removed from where I am. Nor can they really afford to make mistakes. To reiterate: if I screw something up, I can always redo the experiments. If Ben Bernanke screws up, people lose their homes. It's a whole another ballgame.
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toxic pall
toxic pall thy name is George.
or is it Ben?
Countrywide?
Texas Pacific?
or wait...
oh dear.
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GOP will of course tell you the remedy is to cut taxes
And then wave their hands mumbo jumboing about all that other nonsense like trade, currency and debt.
Dems will of course tell you the remedy is do something else. What, we haven't heard yet but it's something.
PS when the Fed cuts rates again today it will officially make zero sense for Americans to save. Why should they when their return is 0.5% is current rates and -3.0% in real rates.
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Inflation is higher too
In addition to the slow growth, the inflation numbers released today came in above consensus expectations.
Bernanke's response to the economic challenges facing the country have been very disappointing. His "panic button" cuts last week seemed to be solely inspired by a desire to prop up financial markets. That's the tail wagging the dog, and no good will come from a Fed Chairman responding to market gyrations - and perhaps to well-placed Wall Street friends - instead of substantive economic data.
Once again, everybody is obsessed with recession talk, while mostly ignoring inflation, which may be more of a risk at this point. Moreover, once unleashed, high inflation is a much more difficult beast to tame than a mere recession.
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Saving and Interest Rate Cuts
"When the Fed cuts rates again today it will officially make zero sense for Americans to save. Why should they when their return is 0.5% is current rates and -3.0% in real rates."
Why should most Americans save when they have to pay off debts because their wages have not kept up with the cost of living? Republicans like to point to low unemployment rates but the truth is that many people are in shitty jobs with poor wages and no benefits.
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My Own Personal Economic Indicators …
I’ve mentioned this before, but I’ve got my own personal little indicators that the economy is heading for a recession.
During Christmas 06 my company received about a dozen boxes of chocolates, a couple of those Hillshire Farm sample packs, two bottles of wine and other assorted gifts from our vendors for Christmas. During Christmas 07 our vendors sent us cards. We got only two boxes of chocolates. During phones conversations with my counterparts at other companies I heard constant stories or trimmed back or cancelled Christmas and Holiday parties. And of seriously reduced or eliminated bonuses.
Companies are tightening their belts. Raw material costs are going through the roof (particularly metals). Almost everybody is tacking on ‘fuel surcharges’ or increasing their existing ones. Our margins are either shrinking or gone. Mid-level manufactures are getting squeezed. We’ve had two layoffs in the last 14 months (nearly a third of our workforce) and things are not looking real good for the next three months (I’m safe unless the home office decides to close the doors permanently).
On top of that, inflation is starting to take hold. Food costs are getting higher (It feels like I’m spending 4-5 percent more each week than I did a year ago). And of course there are gas prices. Funny how those two items which affect everybody so directly are always removed from the ‘core’ inflation statistics.
Out here in the real world it feels like we’ve been in a recession for at least six months.
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Chicken Little says:
The sky is falling! The sky is falling! Invest in the Euro! Hoard all your money! Stock your bomb shelter! Move to Denmark!