Entries from October 2008 ↓

1. Joke: Two economists are walking down the street. The younger onesees a dollar on the ground stoops to pick it up. The other one, an older Chicago economist, stops him: “If that was really $100, someone would have picked it up!”

2. Commenter Nigel points out that intrade puts Obama with less chances of winning than other markets. This is money on the ground. I can take $92 and buy Obama at 76% on intrade and McCain at 16% on the Iowa markets. This will give me $100 on election day, independent of whoever wins.

3. Is there really money on the ground here?

From the ongoing series following every move on intrade:

On the first Presidential debate, I bet (a beer) on which way Obama would move on intrade during the debate (I lost: Obama was down when the debate was over and then climbed steadily through the evening).

Today, it seems that intrade allows that bet directly. The odds are now 63% that Obama will win with today’s debate.

*

It should be noted that, given that Obama is ahead of the polls, if the debate is a draw, then Obama’s odds of winning the actual election should go up because it is one less opportunity for McCain to catch up.

US GDP per capita in real 1990 dollars

From Michael Clemens, via Will Wilkinson

It used to be liberal Americans who threatened to move to Canada. Now, economic libertarians might start saying the same: Canada is considered by some to be more capitalistic than the old US of A.

[S]omething called OFHEO was set up in 1992 by Congress, and the sole job of OFHEO was to watch over Fannie and Freddie, someone to watch over them. And they were there to evaluate the soundness and the accounting and all of that. Two companies were all they had to regulate. OFHEO has over 200 employees now. They have a budget now that’s $65 million a year, and all they have to do is look at two companies. I mean, you know, I look at more than two companies.

(Warren Buffet)

People who like the free market tend to be either deeply religious or deeply atheists.

Russ Roberts

I am not sure of how much truth is in there, but I found it worth to think about.

1. There is a lot of talk of a credit crunch and the effects it might have on the real economy. As firms find it harder and harder to get credit, they cut back on investments, which affect other firms who cut back on investments, which affects yet other firms, which cut back on investments and so on.

2. However, the numbers show that credit is still strong. Banks are lending more than ever. There is, at most, a leveling off of growth.

3. Over at Coyote there is an explanation of why we might be seeing both a credit crunch and a growth in credit:

I am maxed on my line of credit, because the interest rate is low and I would rather have the money in hand and pay the interest rather than find out later my line is somehow revoked or frozen. The money is not needed for near term expenses, but I want to have resources in hand if the recession creates a business opportunity that requires funding. Does this worsen the near term crunch, the same way panic buying of gas worsens local gas shortages? Probably. And again, price is the key. Like with gas, I would rather rationing by price rather than shortage. In other words, I would rather my line of credit go up to a 15% interest rate, if that what it takes to put things in balance, than to be revoked entirely so a few businesses can still have 6% money.

If you cannot believe what you read in the newspapers about Sept 29, 2008 on Sept 30, 2008; how can you believe what they say about any time further back in history?

Winterspeak