Saturday, December 27, 2008

Tarnishment of the Chicago school of economics

Milton Friedman must be rolling over in his grave as the whole world embarked on a crusade against laissez-faire economics and deregulation. Bloomberg News recently ran a lengthy article on the Chicago school of economics' declining reputation. It's a quite comprehensive article, examining the different aspects of this renunciation--especially the question of how this would affect the policies of president-elect Obama, who himself taught constitutional law in the University of Chicago for 12 years. Worth reading.

Meanwhile, FT's Martin Wolf wrote an interesting piece on the growing need to return to Keynesianism:

The ghost of John Maynard Keynes, the father of macroeconomics, has returned to haunt us. [...] He wished to preserve as much liberty as possible, while recognising that the minimum state was unacceptable to a democratic society with an urbanised economy. He wished to preserve a market economy, without believing that laisser faire makes everything for the best in the best of all possible worlds.

+ Even Posner, who's famous for using free-market economic ideas to explain law, is in favor of Keynesian measures:
[...] the public-works expenditure program that President-elect Obama is proposing, though anathema to economic libertarians, resisted by the Bush Administration, and bound to be wasteful, as all such programs are, may be the most sensible response to the depression and one clearly superior to a tax cut. A tax cut or rebate, like the bank bailout, is unlikely, unless very large or credibly promised to be permanent, to stimulate consumption greatly; most of the money is likely to be used to rebuild savings or, in the case of the banks, to rebuild their equity cushion so that they can make loans, bound to be risky in a depressed economy, without courting bankruptcy. In other words, to stimulate economic activity the government will have to step in and “consume,” in lieu of reluctant or impoverished consumers by spending money on road repair and other public goods. A critical variable, however, is the length of time it will take for public-works projects actually to be begun. American government tends to be extremely sluggish.

An ad-lib question: I'm just curious about the position of Mongolian hardcore Friedmanites on this matter.

Essays and articles I'm planning to read tomorrow: "The Great Slump of 1930" by John Maynard Keynes, "Wall Street Lays Another Egg" and "The age of obligation" both by Niall Ferguson

Addendum: Time Series for Macroeconomics and Finance by John Cochrane + don't forget to check his course materials + Eric Zivot's Time Series Econometrics course webpage
"An imaginary retrospective of 2009" by Niall Ferguson + "What we will remember from 2008" by Gideon Rachman
The Return of John Kenneth Galbraith - as far as I know, Krugman hates him so much :P
Niall Ferguson - Geopolitical Consequences of the Credit Crunch

Wednesday, December 24, 2008

Soros on Current Financial Crisis

SPIEGEL: Your proposal would be dismissed on Wall Street as "big government." Republicans might call it European-style "socialism."

Soros: That is exactly what we need now. I am against market fundamentalism. I think this propaganda that government involvement is always bad has been very successful -- but also very harmful to our society.

SPIEGEL: Would you advise the new president to say that publicly?

Soros: He has already spoken about changing the political discourse. I think it is better to have a government that wants to provide good government than a government that doesn't believe in government.
SPIEGEL Interview with George Soros: "The Economy Fell off the Cliff"

Addendum: "The Crisis & What to Do About It" by George Soros + The Financial Crisis: An Interview with George Soros + "What to Do" by Paul Krugman

Current Album: Good Night, And Good Luck [SOUNDTRACK] (Dianne Reeves-iin busad album-uudiig olj avah yum shuu)
Current Motion Picture(s): "Blowup" by Michelangelo Antonioni + "The Conversation" by Francis Ford Coppola

Tuesday, December 23, 2008

This and That

In practice, the term "printing money" is often used as shorthand for what economists call quantitative easing. Typically, major monetary-policy decisions by the Fed are made by setting a target for the federal funds rate—the interest rate at which banks lend to other banks—and then buying or selling government securities to achieve that goal. But as the targeted federal funds rate nears zero—it currently stands at 1 percent—the Fed may be forced to look for other options to fight off possible deflation. (Japan has found itself facing similar problems in recent years.) Quantitative easing is an attempt to increase the money supply by buying more and more assets from banks without regard to an interest-rate target. The Fed doesn't need to print more currency to do that; it can simply happen electronically, as the banks are credited with more money in the accounts they keep with the Federal Reserve. The Fed can do this as much as it wants, but it could face two potential problems. For one, it's possible that those reserve accounts will keep growing without stimulating any economic activity. Alternatively, the Fed could increase the money supply by too much, resulting in inflation.
What it means for the Fed to start "printing money"

Ben Bernanke on deflation + Achka's recommended video: Ben Bernanke at Princeton

How Do You Inject Money Into the Economy?

Should We Be Scared of Deflation?

Krugman on deflation of Japan

Federal Reserve FAQ

Current album: Nada Surf - The Weight is a Gift
Current book: William Safire - Lend Me Your Ears: Great Speeches in History, Updated and Expanded Edition

Tuesday, December 16, 2008

Quote of the Day

Зүлгэн дээр гэрээ бариад зүгээр л амьдрах сайхан шүү дээ.

from Baabar's latest interview

Thursday, December 11, 2008

More Bleak News

Nobel laureate Krugman warns us that "a Japan-style, decade-long slump" may be ahead:

"A scenario I fear is that we'll see, for the whole world, an equivalent of Japan's lost decade, the 1990s -- that we'll see a world of zero interest rates, deflation, no sign of recovery, and it will just go on for a very extended period," he told a news conference.

"And that's unfortunately very easy to see happen." [...]

"We can easily be talking about a world economy that is depressed until 2011 and maybe beyond," Krugman said.

"If there's a safe place I can't see it."

Addendum: Krugman's Nobel Prize lecture

Bleak News

Financial Times reports:

Mongolia outlook downgraded by Fitch

By Raphael Minder in Hong Kong
Published: December 10 2008 16:23 | Last updated: December 10 2008 16:23

Fitch, the credit rating agency, on Wednesday downgraded its outlook on Mongolia amid concerns that the resources-rich country will struggle because of high inflation and a weakening fiscal position.

The cut, to a negative outlook from “stable”, comes after Nambaryn Enkhbayar, Mongolia’s president, warned in an interview with the Financial Times that growth could halve if new mining investments failed to advance because of lower commodity prices and regulatory uncertainty.

“Growth this year is going to be about 9 per cent, but if we keep delaying all these investments, then the growth rate is going to go down to between 4 and 6 per cent, which would be very slow,” Mr Enkhbayar said. “Mongolia now has to speed up reforms and improve the legal environment so that we don’t lose our momentum.”

Mining’s proportional contribution to Mongolia’s gross domestic product has doubled in the past decade, putting it at the forefront of Asian nations that have benefited from the commodities boom.

Foreign involvement has recently sparked domestic political opposition over the ceding of control of resources, notably holding up plans by Rio Tinto and Ivanhoe to develop one of the world’s largest copper projects, Oyu Tolgoi.

In its report on Mongolia, Fitch underlined the threat from inflation, at 28 per cent in October, as well as the likelihood that recent fiscal surpluses, starting this year, would be transformed into deficits, of up to 6.2 per cent of GDP.

The change in the commodity price cycle underscores an urgent need to improve economic policy co-ordination and implementation, which have been beset by uncertainty and inconsistencies, particularly regarding important mining projects,” wrote Vincent Ho, associate director in Fitch’s sovereign group.

Mr Enkhbayar expressed optimism that legislators would soon approve new investment rules. “This financial crisis has helped us in the sense that everybody is now more realistic,” he said. “Now they (legislators) understand that just hoping that commodity prices will always be very high is not enough to develop the country.”

Tuesday, December 09, 2008

Rivka Galchen

Unuudur asar ih ajiltay baisan ch zav gargan suuliin uyed shuugiulaad baigaa zohiolch Rivka Galchen-ii lektz-d suuv. Mundag huuhen baina. Doloo honogiin daraa zavtay boluutaa tuunii talaar deer bichnee.

Rivka Galchen's Debut Novel: Love the one you’re with
Fine Weather for a Debut: In Novel, Meteorologist's Daughter Mixes Pynchon, Borges, Research
Rivka Galchen with David Varno
Rivka Galchen, M.D. from Oklahoma Is the Latest Successor to Pynchon
NYTimes: Who Do You Love?

Friday, December 05, 2008

Зис энд Зэт

Несколько лет назад по заказу банка Империал знаменитый кинорежиссёр Тимур Бекмамбетов (тут самый человек кто сделал Холливудский боевик "Wanted") снял 18 рекламных роликов под названием "Всемирная История." Нашел один из этих роликов о Доголон Төмөр Хаане (Бекмамбетов ещё сделал о Чингис Хаане). Очень прикольно.

Orosoor neg ch ug oligtoy bichij chadahaa baisan baina. Nom sonin unshihguy hamag yumaa hooltoygoo holiod tsohisnii hairgai baih l daa. Gesnees amraltaar neleed ertnees tuluvlusun Nikolay Trubetskoy-iin "The Legacy of Genghis Khan"-iig unshya gej bodood baigaa (Angli hel deer zuult ni "Ed. Anatoly Liberman. Ann Arbor: Michigan Slavic Publications, 1991" gej baih yostoy, harin orosoor Трубецкой Н.С. "Наследие Чингисхана" gesen nertey). Ungursun zun professor maani hicheeliin zaaval ene nomiig recommend hiisen yum (gesnees nuhur songuulid ursulduud neleed zavguy yavaa boltoy, songogdoosoy doo). Aan tiim martah shahlaa, erteedhen Alexander Sokurov-iin "Russian Ark" (Русский Ковчег)-iig uzsen. Kino urlag talaasaa todiiguy Orosiin cultural identity-giin unen dur turhiig haruulj chadsan gedeg utgaaraa uneheer lut buteel baina. Zav garval zaaval uzeerey.

Addendum: Urna Chahar Tugchi gej uneheer saihan duuldag emegtey baina (hat tip to Hashaa). Yalanguya Hodoo hemeeh duug ni unuudur udurjin sonsov.

Thursday, December 04, 2008

Quote of The Day

Өнөөдөр сонин: Инфляц буурах нь уу?

О.Чулуунбат: Дэлхийн зах зээлийн хямралаас үүдэж инфляц буурна. Монгол Улсын хувьд инфляцыг онилох бус эдийн засгийн өсөлтөө хангах, ажлын байр, хөрөнгө оруулалтаа хадгалах нь л чухал. Инфляц бол хөгжсөн том орнуудын л санаа зовох асуудал.
Not sure what to make of this particular answer. But, overall, good interview.