Economists | timiacono.com - Part 13

German Economist Claims Muslims Inferior

Leave it to an economist to start a book tour to promote his views that Muslims are genetically second class citizens at a time when the world seems to be one big powder keg of religious tension. The Washington Post reports on one Thilo Sarrazin who may or may not know about a certain preacher in Florida who may or may not burn the Koran tomorrow.

The most talked about man in Germany is a 65-year-old economist whose hot new book and sudden groundswell of popular support have the media dubbing him a folk hero. But that is not the only thing they are calling Thilo Sarrazin these days.

Some are also calling him dangerous. Sarrazin, a board member of the German Central Bank until he resigned under pressure Thursday, has divided the nation by postulating the theory that Germany is being “dumbed down” by Muslim immigrants and their children. Wielding statistics and scientific arguments both in his book and in public comments, he delves into territory largely taboo here since the Holocaust, suggesting that “hereditary factors” are at least partly to blame. Turks and Kurdish immigrants, he asserts, are genetically predisposed to lower intelligence than Germans and other ethnic groups, including Jews.

His statements have shocked many in Germany not only because of a national sensitivity to anything remotely smacking of genetic superiority claims in the post-World War II era. What has also shocked many is that so many Germans have rallied to his side as the central bank and his political party have sought to oust him for his pronouncements.

The title translates to “Germany Does Away with Itself”, now closing in on the half-million mark in sales, and Thilo now has 21,000 Facebook friends. While he is no stranger to controversy, you have to wonder whether he thought he was writing the German version of Freakonomics, never anticipating what his political in-correctness might produce.

Tagged with:  

Krugman on the Need for More Stimulus

Princeton economics professor and Nobel Laureate Paul Krugman laments the smallish $800 billion stimulus of last year and says we should now double down with another $800 billion.

On what’s going through the mind of fixed income investors, Krugman says:

The bond market is telling us not to worry about the current deficits. They’re happy to lend the federal government money at very low rates. What the bond market is telling us is they’re terrified of deflation and of a weak economy for a very long time.

They’re also terrified of the stock market…

Tagged with:  

Economists on the Economy

Given their mostly dismal forecasting track record in recent years and their continuing inability to reconcile what happens in the real world with what passes for economic theory, it’s not clear why economists continue to be asked for their opinions on these matters or why their views continue to be published in the financial media, but they are and they do. This CNN/Money report examines the results from the latest survey of business economists.

The air is quickly coming out of the recovery balloon, and economists have mixed views on how to pump it back up.

The National Association of Business Economists said Monday that three-quarters of its members believe that promoting economic growth should be a higher priority than reducing the national deficit, according to an August survey of the nation’s economic policy.

However, nearly the same number of NABE economists said they do not think another stimulus package is necessary to halt the economic slowdown and get the economy back on track. At the same time, a majority believe that policymakers should do more to boost job growth.

The survey, based on responses from 84 NABE economists who work for private-sector firms and industry trade associations, comes as economic growth in the United States has slowed significantly after rebounding from a deep recession. Economists have been reducing their growth forecasts, and some are worried the economy could slip back into a downturn.

Part of the problem is that it pays to be positive, that is, if you want to make a living in this field. Unless you’re one of the select few bearish economists who have been able to make a name for themselves over the years (e.g., Rosenberg, Roubini, etc.), you’ve pretty much got to have the curves on your charts going from the  lower left to the upper right.

Why would anyone hire you if you had a dim view of the U.S. economy?

(more…)

Tagged with:  

Economists Incapable of Spotting Bubbles

Fortunately, today’s Future of Housing Finance conference has only one economist on the panel, Moody’s Mark Zandi, so, while slim to begin with, their chances of doing something productive are better than they might otherwise be given that economists continues to shirk any responsibility for the housing bubble, the latest evidence coming in this paper from the Boston Fed in which they claim they don’t have the tools to spot asset bubbles.

Understanding the evolution of real-time beliefs about house price appreciation is central to understanding the U.S. housing crisis. At the peak of the recent housing cycle, both borrowers and lenders appealed to optimistic house price forecasts to justify undertaking increasingly risky loans. Many observers have argued that these rosy forecasts ignored basic theoretical and empirical evidence that pointed to a massive overvaluation of housing and thus to an inevitable and severe price decline. We revisit the boom years and show that the economics profession provided little such countervailing evidence at the time. Many economists, skeptical that a bubble existed, attempted to justify the historic run-up in housing prices based on housing fundamentals. Other economists were more uncertain, pointing to some evidence of bubble-like behavior in certain regional housing markets. Even these more skeptical economists, however, refused to take a conclusive position on whether a bubble existed. The small number of economists who argued forcefully for a bubble often did so years before the housing market peak, and thus lost a fair amount of credibility

Apparently, common sense isn’t part of most economists’ toolkit because, that’s all it took back in 2005 to understand that the only way borrowers were going to be able to service their monstrous new mortgage debt was if home prices continued to rise. The paper argues that,  from an economic theory standpoint, the correct levels for asset prices are, basically, unknowable and that, while their generally rosy view of the world back then turned out to be wrong, it wasn’t unreasonable. Pretty pathetic if you ask me…

Page 13 of 20« First...10111213141520...Last »
© 2010-2011 The Mess That Greenspan Made