From a MinnPost story on the economic crisis:

It's the driving force pushing what remains of the U.S. economy to a precipice, explains Cliff Larson Jr. of Edina.

Tags: economics, silly
Current Mood: thoughtful

October 29, 1929

Stock market crashes; Debacle linked to Jews, Negroes, Catholics, anarchists, foreigners, women voters

Millions thrust into desperate poverty. Wall street fat cats blameless, say financial experts

-- from The Onion, Our Dumb Century

Keith Ellison sees something not dissimilar in commentary by some right-wingers about the present financial crisis. Specifically, some are blaming the Community Reinvestment Act (CRA) of 1977, a law that (according to this MinnPost story) "encouraged commercial banks to invest in housing in cities that were facing both redlining and major decline."

On the other hand, the story goes on to [scarequote]defend[/scarequote] that law by saying:

But most economists seem to agree that, at most, 20 percent of the bad loans that have led to the collapse can be traced to CRA.

Not an encouraging defense. If the figure really is anything close to 20%, then maybe that law really is part of the story. In general, I can readily believe the commentary I've heard suggesting that this crisis has a long history, with both parties contributing.

All the same: the right-wing commentary described in this story looks an awful lot like manipulation and scapegoating to me.

Edited to add: I saw that a couple of conservative blogs posted links to a NY Times article from 2003 in which the Bush administration recommended more oversight of Fannie Mae and Freddie Mac, but some Democrats opposed it -- Barney Frank by saying those institutions were healthy, Mel Watt by expressing concerns on behalf of low-income homebuyers. Hmm. On the other other hand: Those conservative bloggers do not say what happened to that 2003 recommendation, at a time when Republicans controlled both houses of Congress. Moreover, the about.com US politics blogger reviewed Fannie Mae-related legislation from that time and concluded: Republican Congress Talked About Financial Reform, But Did Nothing.

Tags: economics, election 2008, politics

After moving in March, I have a commute again, hence more audiobook listening in the car. ( Details about the title and about Behavioral Economics )

I like the title and the main idea of the book. I get annoyed when I see human nature characterized as either completely rational/predictable or completely irrational/unpredictable. Here is an author presenting us with some rhyme and reason behind human choices that are not rational in the classical economic sense. Topics include:

• Surprisingly-effective marketing gimmicks (e.g., setting Suggested Retail Prices or offering free stuff)
• Morality (an eyebrow-raising experiment involving sexual arousal and decisionmaking, which reminds the author of Jekyll and Hyde; an investigation into when and by how much people are willing to cheat for money)
• The placebo effect, presented in economic terms ("Why a 50-cent Aspirin Can Do What a Penny Aspirin Can't")
• The distinction between "market norms" and "social norms" (a rather blunt example: the contrast between prostitution and dating).

The author presents hypotheses and describes experiments (typically performed on undergrads) to back them up. The experiments were interesting and very clearly described. I expect that experts debate their significance more than the author lets on, but they are valuable for being quantifiable and concrete.

The author also brings up some interesting ideas for how people and society might take these human foibles into account (e.g., a credit card that has people declare their own limits before they go shopping). On the other hand, some of those ideas seemed a little glib. More generally, I got the sense in places that the author had only peeled away one layer of the onion, in terms of describing human behavior. That was perhaps as far as he could go without becoming controversial or too abstract.

The reader of the audiobook version is Simon Jones, of Hitchhiker's Guide To the Galaxy fame.

Tags: audiobooks, economics, psychology

... from Megan McArdle and the Atrios blog. 

Tags: economics, politics

The Atrios blog has a simplistic but interesting (suitable for those of short attention span such as myself) supply/demand model related to the current oil price leap.

Edited to add: Or perhaps it's due to speculation and the sinking dollar.

Tags: economics

First of all: I'm done with the political horse race blogging. Following that stuff was too addictive. I've deleted all my politix feeds in Bloglines.

I do have an economics question: Should I worry about warnings of possible economic meltdown in the US, made by people like Robert Reich and James Fallows?

Tags: economics, politics, predictions

One of my LJ-interests is "Zogby as oracle." There's something fascinating about polls, what with all the questions related to their accuracy, predictive power, and effect on people. I had heard that Zogby was an unusually accurate pollster. With yesterday's New Hampshire primary, though, he (along with most other polling organizations) seems to have missed the boat, predicting a handy win for Obama instead of the slight win for Clinton that actually happened. Zogby has his own explanations, while the ScienceLive website lists some factors including the lack of independence between pollsters and media organizations. I'm curious as to what the true main reason(s) are; alas, we likely will never know for certain.

Another of my LJ-interests is "Ray Fair as oracle." Recent economic news seems to suggest that, if Mr. Fair's model is accurate, the Democrats stand an excellent chance of taking over the White House this year. Or, his model might fail this year, in which case he will be advancing his own explanations in November as to why his predictions missed the mark.

Tags: economics, politics, predictions