New Nobel economist Robert Shiller on the insanity of markets. Robert Shiller, one of the Nobel laureates in economics announced Monday, has spoken to Paul Solman about the line of research that won him the prize. Photo courtesy of World Economic Forum Flickr account via Creative Commons. Paul Solman: Old friend Robert Shiller of Yale was one of the three winners of the Nobel Prize in Economics Monday for his work on the short-term irrationality of markets. We’ve interviewed Bob many times about this — many times. Our favorite piece on the subject is one in which Bob, among other novelties, races a go-kart against — while debating — his old grad school buddy and stock market alter ego thereafter, Jeremy Siegel, the so-called “Wizard of Wharton.” Shiller, who had less than 10 percent of his investment portfolio invested in stocks at the time, in 2002, told us: “We are deflating from the biggest bubble, or maybe the tie for the biggest bubble, since 1929.
Paul Solman: Tell us, who was Irving Fisher and what’s he famous for? That’s the deal. The Nobel committee is muddled on the nature of economics. The Royal Swedish Academy of Sciences continues to astonish the public when awarding the Nobel Memorial Prize in Economics. In 2011 it celebrated the success of recent research in promoting macroeconomic stability. This year it pays tribute to the capacity of economists to predict the long-run movement of asset prices. People with knowledge of financial economics may be further surprised that this year Eugene Fama and Robert Shiller are both recipients. Prof Fama made his name by developing the efficient market hypothesis, long the cornerstone of finance theory.
Prof Shiller is the most prominent critic of that hypothesis. It is like awarding the physics prize jointly to Ptolemy for his theory that the Earth is the centre of the universe, and to Copernicus for showing it is not. Actually, it is not as bad as that analogy suggests. The problem is not the efficient market hypothesis itself, which should be understood as a tendency, not a law. Americans Eugene Fama, Lars Peter Hansen, Robert Shiller Win Nobel Prize In Economics. -- Ordinary investors don't stand much chance of beating the market. It moves way too fast and efficiently. Or it behaves in ways that make no sense at all. Three Americans won the Nobel prize in economics Monday for their sometimes-contradictory insights into the complexities of investing. Eugene Fama and Lars Peter Hansen of the University of Chicago and Robert Shiller of Yale University were honored for shedding light on the forces that move stock, bond and home prices — findings that have transformed how people invest.
Fama's research revealed the efficiency of financial markets: They absorb information so fast that individual investors can't outperform the markets as a whole. His work helped popularize index funds, which reflect an entire market of assets, such as the Standard & Poor's 500 stock index. "Fama's work was incredibly fundamental in the '60s and '70s," said David Warsh, who follows economists at his Economic Principals blog. Also on HuffPost: What We Can Learn From These Motivational Quotes. N.Y. Fed Fires Examiner Who Took On Goldman Sachs: ProPublica. Carmen Segarra outside the Federal Reserve Bank of New York, on Oct. 10, 2013. In a wrongful termination lawsuit, Segarra says she was fired by the Fed after she refused to change a finding Goldman Sachs had inadequate controls over conflicts of interest. (Nabil Rahman for ProPublica) Under a Fed mandate, the investment banking behemoth was expected to have a company-wide policy to address conflicts of interest in how its phalanxes of dealmakers handled clients.
Although Goldman had a patchwork of policies, the examiner concluded that they fell short of the Fed’s requirements. That finding by the examiner, Carmen Segarra, potentially had serious implications for Goldman, which was already under fire for advising clients on both sides of several multibillion-dollar deals and allegedly putting the bank’s own interests above those of its customers. It could have led to closer scrutiny of Goldman by regulators or changes to its business practices. ‘Eyes Like Saucers’ How to Look Under a Hedge Fund's Hood. Krugtron the Invincible, Part 1 | Niall Ferguson. It's an ill wind that blows no one any good. The financial crisis that came to a head five years ago with the failure of Lehman Brothers has been especially beneficial to the economist Paul Krugman.
In his widely read New York Times column and blog, Krugman regularly boasts that he has been "right" about the crisis and its consequences. "I (and those of like mind)," he wrote in June last year, "have been right about everything. " Those who dare to disagree with him -- myself included -- he denounces as members of the "Always-Wrong Club. " Readers of his blog have just been treated to another such sneer. "Maybe I actually am right," Krugman wrote back in April, "and maybe the other side actually does contain a remarkable number of knaves and fools. ... As a Princeton professor and Nobel Prize winner, Krugman is indeed widely believed to be intellectually invincible. "Let those who are without error cast the first stone," Krugman wrote back in 2010. ... 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Climate change sceptics more likely to be conspiracy theorists.
By Graham Readfearn, The GuardianWednesday, October 2, 2013 19:31 EDT Research confirms previous findings which caused fury among sceptics of human-caused climate change Do you think the Apollo moon landings might have been faked or that Britain’s Royal family maybe, just maybe, conspired to assassinate Princess Diana because they didn’t like her very much? How about that other conspiracy theory, where there really is this secret New World Order group with designs on global domination. Maybe you’re up for that other chestnut that has the US government knowing beforehand about the September 11 attacks but letting them happen anyway so as to have a good excuse to bomb Afghanistan?
If you answered yes to any of these conspiracy theories then a new study published today has found that you probably also think the science of human-caused climate change is some sort of hoax and you might think too that there’s no good evidence for vaccinating children. The Myth of the “Free Market” The Myth of the “Free Market” and How to Make the Economy Work for Us by Robert Reich One of the most deceptive ideas continuously sounded by the Right (and its fathomless think tanks and media outlets) is that the “free market” is natural and inevitable, existing outside and beyond government.
So whatever inequality or insecurity it generates is beyond our control. And whatever ways we might seek to reduce inequality or insecurity — to make the economy work for us — are unwarranted constraints on the market’s freedom, and will inevitably go wrong. By this view, if some people aren’t paid enough to live on, the market has determined they aren’t worth enough. If others rake in billions, they must be worth it. If millions of Americans remain unemployed or their paychecks are shrinking or they work two or three part-time jobs with no idea what they’ll earn next month or next week, that’s too bad; it’s just the outcome of the market.
'Sharing economy' is here to stay, so get used to it. Add these personality quirks to the qualities that mark you as a social dinosaur: You're not comfortable renting out a room in your house or turning over the keys to your car for hours or days at a time to total strangers. When you travel you prefer to stay at a hotel with a predictable level of guest service rather than racking out on someone's couch.... Fiscal debates: Troubled waters ahead or perfect calm? A Move Is Afoot to Keep Climate Science Out of Classrooms. For decades objections to the theory of evolution have bedeviled individual teachers, school boards, state boards of education and state legislatures. Educators fought to keep evolution in science classes and creationism out. We resisted intelligent design, the notion that natural selection alone cannot explain the complexity of life-forms, which served as a way of getting creationism through the back door. We are now fighting legislation that encourages teachers to teach the “evidence against evolution”—facts found only in the creationist literature.
The consequences of antievolutionism are felt in many American schools: evolution is not taught or is taught poorly. Yet evolution is one of the most important ideas in human intellectual history, and students have a right to learn it. The common ancestry of living things and the mechanisms of inheritance explain why things are the way they are.
These “academic freedom” laws are not aimed solely at evolution. This is what counts as restraint in executive pay: bonuses that quadruple your salary - Quartz. Large British businesses have entered a “new era” in executive pay, according to a report from Deloitte published today. The median salary for an executive director at a FTSE 100 firm rose by only 2.5% this year, to around £840,000 ($1.3 million), a similar increase to the previous year. And fewer investors voted against executive pay packages during the latest round of shareholder meetings, suggesting greater support for supposedly more modest pay policies. Shareholder votes on pay policies become binding, rather than simply advisory, for London-listed companies starting in October.
Deloitte reckons this could be the initial sign of restraint in response to the new rules. But as always with executive pay, the meaning of restraint is relative. On average, FTSE 100 companies say that their maximum annual bonus—which is mostly paid in cash—is capped at 150% of salary, a ceiling that has not changed in recent years. Seems pretty generous. Government Hands More Than $1 Trillion to Wealthy While Deficit Is $642 Billion.
The Simple Reason for the Long Downturn: Housing Bubble Burst. (Image: via Shutterstock). Many economists and business writers view the duration and severity of the downturn as being a mystery. They argue that it has something to do with the financial crisis, although the exact nature of the relationship is often not quite clear, with the financial crisis looming as a dark cloud hanging over the head of an otherwise healthy economy. Fortunately, for arithmetic fans the story was never very difficult. In the last business cycle the economy was being driven in large part by a housing bubble. This was easy to see even before the bubble burst and should be completely apparent to everyone now. The extraordinary rate of construction in the bubble years led to enormous overbuilding which manifest itself most clearly in a record vacancy rate.
The whittling away at the backlog of excess housing has allowed for a recovery in construction. The other route through which the housing bubble was driving the economy was consumption. So there you have it. On 5th Anniversary Of Lehman Collapse, Americans Still Angry. By Michael Erman NEW YORK, Sept 15 (Reuters) - A few years ago, Larry Summers, then the director of President Barack Obama's National Economic Council, held a private meeting with some of Wall Street's top bankers and executives.
Although the worst of the financial crisis was over by then, Summers - now seen as a candidate to be the next chairman of the U.S. Federal Reserve - chastised bankers for being out of touch, saying they didn't understand how angry average Americans were with them, according to a participant in the meeting. A spokeswoman for Summers said it sounded like something he might have said, though she did not provide more specific confirmation. Five years after the collapse of Lehman Brothers and two years after the start of the Occupy Wall Street movement, Wall Street has drastically changed under an onslaught of new regulations and by some accounts become more conscious of its image on Main Street.
Henry Paulson, the former U.S. Among those polled, the concerns go deeper. The Official 'Eat The Press' Financial Crisis Retro Reader. Happy five-year anniversary of the financial crash and its attendant economic calamities, everyone! Where my class warriors at? Let's look back to 2008 and briefly tally up the score: No one has been sent to jail, lots of you are still out of work, very few of the errors that led to the collapse have been corrected, and I'm guessing that most of you haven't even gotten a thank-you card for that time you donated $4.7 trillion of your own wealth to save the world. A lot of that money, by the way, went to gigantic banker bonuses, and bankrolled an army of lobbyists who have tirelessly worked to ensure that loose regulation, grotesque leverage ratios, and anemic oversight remains the order of the day.
Nobody's sorry about anything, and the idiots whose screwups led to the meteoric destruction of most of your (and your loved ones') futures are, by and large, still in charge and running the show -- instead of being tossed down a deep hole filled with dead crows, as they deserve. These 2 Stats Prove California's $10 Minimum Wage Is A Big Deal. California is very, very close to making a $10 minimum wage a reality. Doing so nationwide would change the lives of America’s working poor. A June study by Restaurant Opportunities Centers United, a national organization focusing on racial equity in the restaurant industry, found that (statistic #1) a $10.10 minimum wage would have pulled roughly 58 percent of the nation’s 10.4 million working poor out of poverty in 2011.
The Bureau of Labor Statistics defines the working poor as such: "The working poor are persons who spent at least 27 weeks in the labor force (that is, working or looking for work) but whose incomes still fell below the official poverty level. " It should be noted that California’s $10 minimum wage, if enacted, would not become law until Jan. 1, 2016. Many in California will certainly welcome the change, inflation or not. Gov. Certain states index their minimum wages and could also theoretically reach the $10 plateau by 2016.
Also on HuffPost: Shilling: Advantage America. Advantage America John Mauldin September 10, 2013 Today’s Outside the Box, which comes to us from good friend Gary Shilling, is unusual because that old confirmed bear is waxing positively bullish about the future prospects of the US. In doing so he mirrors my own views. It is just a matter of time before I go from being bearish on the US because of the dysfunctional US government to being an irrational perma-bull, at least for the next few decades. There is just too much upside potential with this country of ours — if we can muster the political will to handle our serious fiscal issues. Gary builds the positive case beyond the fiscal concerns, and a compelling case it is. In six crucial areas, he says — demographics, entrepreneurial activity, labor relations, domestic vs. foreign debt financing, currency strength, and energy independence — the US is better positioned than any of its major competitors.
Gary pays particular attention to the importance of a strong US dollar. 1. 2. 3. 4. 5. No, Economics Is Good for Lots of Things. California Minimum Wage Increase To $10 An Hour Passes Both Houses, Gov. Brown Expected To Sign. 401(k)s are replacing pensions. That’s making inequality worse. Consumer Confidence: A Useful Indicator of . . . the Labor Market? U.S. Health Care vs. The World. Walmart Could Actually Benefit From Minimum-Wage Hike. Emerging Nations Save $2.9 Trillion Reserves in Rout. Trade Gap in U.S. Widened in July From Almost Four-Year Low. How 37-Year-Old Teacher Imperils Pimco’s Bond Bet: Mexico Credit. 90 Percent Of Employers Tie Workers' Pay To Company Performance.
U.S. Workers Are Still Completely Freaked Out About Job Security (CHART) Schedule for Week of September 1st. Republicans’ “Market-Oriented” Health Care Reforms Won’t Work, Part 2. Obama should take lessons from Sweden to G-20. US 10 Year, CPI, and Annual % Change, 1791-Present. Consumer Spending in U.S. Rises Below Forecast on Slow Wage Gain. Economic Update: Economics and Health. What Steve Keen is maybe trying to say. Regulatory uncertainty: A phony explanation for our jobs problem. Summer 2013: Who Really Owns the U.S. National Debt? CORRECT PREDICTIONS AND THE STATUS OF ECONOMISTS. The Big Picture » Video - powered by FeedBurner. How Much Has America’s Net Worth Recovered?
Bill Frezza: Too-Big-To-Fail Banks Gamble With Bernanke Bucks. Who Are the Long-Term Unemployed? - Matthew O'Brien. Creating a History of U.S. Inflation Expectations. How is Obamacare going to affect me? About Singapore… Republicans’ “Market-Oriented” Health Care Reforms Won’t Work, Part 1. The College-Loan Scandal: Matt Taibbi on the Ripping Off of Young America | Politics News. The Amazing Confusion in Economic Policy Debates by Dean Baker. Matt Taibbi Rips Idea Of Larry Summers Running Federal Reserve. Median Household Income Dropped 4 Percent Since The End Of The Great Recession: Report. Luxury Item Investing Returns. Stiglitz: The Lessons of the U.S. Crisis for Economic Theory & Policy.
Summers, Yellen allies wage behind-the-scenes effort to win Federal Reserve nod. Bruce Bartlett, Former Reagan Adviser, Says Obama Should Tap Janet Yellen For Fed Chair ASAP. Arliss Bunny's Blog | Arliss provides riveting commentary on politics and litterboxes. Modern Monetary Theory Primer. Reading Between the Lines: A Memo From Fed Chairman Marriner Eccles. CORRECT PREDICTIONS AND THE STATUS OF ECONOMISTS. The death of theory? Why did God invent economists? Why Congress’s Gridlock Doesn’t Paralyze Government but Gridlocks Democracy. Workers ROC the Restaurant Industry. Austerity sinks all boats. What caused the recession of 1937-38? A new lesson for today’s policymakers. The cruel trick played by history on Milton Friedman. Social Security is a model, not a failure, for Washington budgetmaking.
Europe Growing Again Means Boost for Global Economy. 10 reasons why economics is an art, not a science. Economics is an Art, not a Science. What Janet Yellen -- And Everyone Else -- Got Wrong. Milton Friedman, Unperson. The Path of Wage Growth and Unemployment. Mayday for America's middle class. Who’s afraid of Walmart? America's Engineering Hubs: The Cities With The Greatest Capacity For Innovation | Joel Kotkin. Student Loan Debt Statistics - American Student Assistance. The Gallup Blog: The School Cliff: Student Engagement Drops With Each School Year. How to Tackle U.S. Employees' Stagnating Engagement. Social Security Disability Benefits. Living in America will drive you insane — literally. Amazon is worse than Walmart. Obamacare and Employment. Great-reversal_v2a.pdf. The Century of the Self - Part 1. The Power of Nightmares - Part I. USA: 1940 vs 2010. Detroit, the New Greece.
Detroit’s Bankruptcy Reveals Dysfunction Common in Cities. Commodity Prices and Inflation: The Perspective of Firms. The Myth of China’s Economic Reform. How Fox News created a new culture of idiots. The Strange Disappearance of Cooperation in America II. Cutting through the Thicket of Economic Forces (Why Real Wages Stopped Growing II)
The End of Prosperity: Why Did Real Wages Stop Growing in the 1970s? A Proxy for Non-Market Forces (Why Real Wages Stopped Growing III) The Strange Disappearance of Cooperation in America.