Macroeconomics… perhaps not that useful…*

My good friend Ana Luiza was talking today about the article “What went wrong with economics” published in the always interesting The Economist. She mentioned that it was a good analysis of the situation. She’s one of the best economists I know, so I listen to her.

The articles starts powerfully “Of all the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself.” Something worth it to put in the recently open my quotes page. I enjoyed reading the whole thing. The only thing that I didn’t really agree is when he says “Macroeconomists, especially within central banks, were too fixated on taming inflation and too cavalier about asset bubbles.” I think central banks in the U.S., Spain and many other did not care at all about real inflation. We have to remember that the housing prices (which many say that this is what brought us here) , which is by far the highest expenditure of the families was rising around a 15% yearly, I did not see the central banks really calling for an action on this issue, like for example a tax on an empty house/apartment to avoid speculation.

Anyways what I found interesting is the quote of my man Paul Krugman. Last month at the London School of Economics (!!) he argued that much of the past 30 years of macroeconomics was “spectacularly useless at best, and positively harmful at worst.”

A Professor teaching economics

I was never a fan of macroeconomics, so, obviously this assertion makes me feel really good. I remember in 1998, in my first year at the Facultad de Ciencias Económicas y Empresariales (Economics and Business School at Universidad de Alcala, Spain), we were going over Mankiw’s textbook on micro and macro, and after a few classes we started questioning our Professor (sorry I can only remember his nickname). I remember raising my hand in a specific example about the labor maket and saying, “but, this does seem to happen in reality”, and he answered “well, you have to learn the theory, even if it does not happen in reality”. Later in class I wondered with friends why in the world we should learn something like the theories of flying pigs. Anyways I was happy to learn about it, but probably less hours on subjects like these would be good.

This non-sense long studies in the mainstream economics studies, among other reasons, was why I probably found Ana in the masters program at the Business Department of Aalborg University in 2005.

“Economic Crisis” in Denmark and in the USA (II)

6 months ago I looked at how many times the term “economic crisis” and “økonomisk krise” were mentioned in the most popular newspapers of the USA (New York Times) and Denmark (Jyllands-Posten) respectively. I’m proud of this entry because it’s one of the most visited. So this summer I was kind of interested to see a comparison looking at the first 6 months of 2009.

It is important to notice that I have multiplied times 2, the corresponding figure for the first half of the year. So the 2009 “result” will actually be the final result, if they mentioned the term exactly the same times between and July and December, as they have done from January to the end of June.

So this is how it looks the agreement of both newspapers. Comparing it with the 1994-2008 graph You can draw your own conclussions.

Now I’m really busy, trying to write a paper for a journal before my wife gives birth in the next days, but whenever I need a break from the paper, I will add the consumer confidence chart.

End of Economic Crisis? You choose

From the U.S. we have some numbers and various interpretations.

reported unemployment figures for every month since begining of recesssion

National Public Radio | July 5 2009:
Is The Worst Over? Most Economists Say Yes

Nouriel Roubini | Jul 2, 2009
U.S. Job Report Suggests that Green Shoots are Mostly Yellow Weeds
“The June employment report suggests that the alleged ‘green shoots’ are mostly yellow weeds that may eventually turn into brown manure…”
(I read this quote and I started laughing)

Anyways as I mentioned, and the same Paul Samuelson (Nobel Prize in Economics and key figure in neoclassical economics) admitted last year: “What we know about the global financial crisis is that we don’t know very much.”

The Festival of Tordenskjold 2009

In my last post I said I was going to the Festival of Tordenskjold. Here is a little more about who was this guy Tordenskiold. I have to say I had a great weekend. I found it very interesting because I have been following the preparation for several days. I have talked to over 40 people and learn many things about their networks and how they work. I aim at publishing the results if you’re interested.
I calculated myself in the three days and I think there were 35.000 visitors, but I don’t have the official data. But I know there were around 1000 volunteers, the majority of them dressed for the occasion in 18th century clothes.
Here is me and great Tordenskjold, I (and my wife, now shown in picture) were dressed as peasants.

Tordenskjold and me at the end of Friday's play

Here are more pictures of the festival. In photo doesn’t look that big, but the big boat a replica of the time, was really impressive. At least for a non-ocean guy like me.