In the latest issue of Fast Company, Tyler Cowen makes the intriguing claim that with the advent of the web, there is a lot of domestic product that's not being captured by a measure like GDP: The traditional gauge of economic success is profit, but over time we'll find that such statistics as measures of GDP tell us less and less about broader efforts to improve human well-being. Much of the Web's value is experienced at the personal level and does not show up in productivity numbers. Buying $2 worth of bananas boosts GDP; having $20 worth of fun on the Web does not.
Leading climate change model assumes camping is more fun than skiing. Mankiw vs. Krugman and Delong on health care and the Great Ignorance. Why Steve Jobs went to Memphis for a liver transplant. Record correlations suggest a setback for recovery. Why too-big-to-fail institutions should have "funeral plans." --Zubin Jelveh
Former Dallas Fed president Bob McTeer says the the rise in personal saving we saw last week was an illusion: The national saving rate is composed of the personal saving rate, the business saving rate, and the government saving rate. The personal saving rate is disposable income minus consumption; government saving is equal to its budget surplus. A budget deficit represents negative saving by the government. What happened in May was that the government increased its budget deficit (increased negative saving), borrowed the money, and paid it to individuals as part of the stimulus package.
House passes the climate bill. The Hummer isn't going to China after all. Digging into one of Goldman Sach's 800+ subsidiaries. Derivatives and securities trading nets banks record $9.8 billion in profits. Warren Buffett's wisdom costs a whole lot less than it used to. The Netflix Prize has finally found a winner. -- Zubin Jelveh
One camp of critics of the Fed's credit easing policies has argued that the sharp increase in the money supply will lead to much higher inflation down the road. But with rates on 10-year Treasurys on the decline since early June, the rhetoric from inflation hawks has tapered off. The pullback on both counts is probably related to fresh signs that the global slowdown is still pretty entrenched. The latest evidence being a particularly gloomy forecast from the World Bank this week. And now some new research from the St.
Is there a housing wealth effect? Greenspan: Inflation by 2012 if central banks don't tighten up. Behold the Wall Street PR campaign again "populist overreaction." A financial crisis timeline you can posterize. The Fed is going to scale back some of those acronyms. --Zubin Jelveh
Leslie Wayne has some bad news in today's New York Times about target-date mutual funds that are part of many 401(k) accounts: ...popular target-date mutual funds have badly missed the mark...as the stock market plummeted last year, some 2010 funds — which many investors thought would be invested safely by then to protect their nest eggs — lost 40 percent of their value. That showing was even worse than that of the Standard & Poor’s 500, which fell 38.5 percent.
A proposal to replace stock options with "incentive accounts." "Cash for clunkers" also has an incentives problem. Elizabeth Warren slams Citi's decision to raise salaries. Felix Salmon defends it (as does Noam). Circularity of the day: The economy's improving because we believe it is. Why is Berlusconi still in power? One possibility: the euro. A fascinating look at gender discrimination on Broadway. --Zubin Jelveh
The FT reported earlier this week that the Fed is considering an overhaul of the $5-trillion a day repo market, which banks use to get short-term funding: "People familiar with the Fed’s thinking say it is looking into the creation of a mechanism to replace the clearing banks – the biggest of which are JPMorgan Chase and Bank of New York Mellon – that serve as intermediaries between borrowers and lenders. ... The clearing banks stand between the parties, providing services such as valuing the collateral and advancing cash during the hours when trades are being made and unwound.
Obama: We don't need a second stimulus just yet. Does the U.S. need a fiscal constitution? In praise of the credit union credit card model. Gloomy indicators: Company insiders are dumping shares. The Economist wonders if behavioral economics can save newspapers. --Zubin Jelveh