Friday, September 30, 2011

EconStu Abroad

Friends, relations, coworkers, and enemies, I apologize for our absence here at the Stu. However, your humble blogger has been in the throes of moving from one country to another. EconStu is back, and we're in London. So, keep your eyes on your screens and your minds ready to absorb some delicious tid-bits on news, economics, and life.


Monday, September 26, 2011

Mazi's Link O' the Day

In light of the recent articles about Morgan Stanley's co-heads, TED discusses the inherent clashes between corporate finance and capital markets at banks:

Thursday, September 22, 2011

Wednesday, September 21, 2011

Tuesday, September 20, 2011

Mazi's Link O' the Day

Some more economic round-ups: Milton Friedman and QE, Glenn from Columbia doesn't like the jobs plan and short-term stimulus , and more thoughts on inflation:

Monday, September 19, 2011

Sunday, September 18, 2011

You Need New Medicine

For every new, innovative health care plan that's offered, we still seem to faced with the same choice. Disguised in many different forms, the question continually remains: "Do you want more choice?" If you answered "yes," then open up your wallet and pay more.

What's important about this question, and why it always reappears, is that it is the easiest cost control measure for private sector healthcare. In this private market, we have insurance, HMOs, and all these other proposals for healthcare plans competing. For the most part, they offer identical services. While there are differences between hospitals, primary care physicians (PCPs), and specialists, it's not like comparing Yugos and Ferraris. So, the pricing mechanism in the market does not become quality of care. Certainly, there isn't really any monopoly power: this market is probably monopolistically competitive. Anyway, point being, different providers have to differentiate. Thus, our market comes from choice. That's why every plan doesn't cost the same, obviously. And that's the difference between offering identical widgets and, essentially, identical healthcare. I can't sell you a widget for a higher price than my competitor's widget. Why would you buy it? However, I can say, "My plan is more expensive, but you can go to many more hospitals and specialists without paying extra on your co-pay."

The point I'm driving to is, "Clearly, HMOs are losing popularity. Isn't it time to change the medicine?" This  article offers some good data to that point:

Perhaps, it's a good time to reassess why having a public healthcare plan is a nice idea. Standard health insurance doesn't impose as strict a set of rules as HMOs do. When it comes to their doctors, apparently people are willing to pay up for more options. Right or wrong, people are "angry" that they have to choose between choice and cost. But that's what you get with a private market. I realize this is a massive issue in the world today, with many different viewpoints and arguments. This is merely one more in favor of a blanket, government plan, eliminating this market that people don't really like anyway.

Mazi's Link O' the Day

Not all small-businesses want to become large? Shocking:

Friday, September 16, 2011

Thursday, September 15, 2011

Mazi's Link O' the Day

Falling prices are GOOD. Think I'm crazy? Well, if you're in dire economic times, as a consumer, at least you want your unemployment/lower wages to be offset by cheaper stuff:

Tuesday, September 13, 2011

Mazi's Link O' the Day

Even people on TV need to retake their intro economics classes. For you budding EconStu readers, these mistakes should be easy to see:

Monday, September 12, 2011

Sunday, September 11, 2011

Saturday, September 10, 2011

Jobs... The Final Frontier

The word on everybody's lips has been, and should continue to be, jobs. That were certainly the word on President Barack Obama's lips on Thursday when he outlined his $450b stimulus package. Naturally, the pundits are running their mouths, and the back-and-forth has begun. So, what's the take-away?

Let's start from the most basic question: Do we need anything at all? Yes, stupid question. Why did you ask it? The Fed is out of gas. We're in a liquidity trap because no one wants to borrow. No one wants to borrow cause no one wants to invest. Why would you increase investment, if you're a business, if no one wants to buy your crap in the first place? This is a financial crisis (did he just say crisis??!) of demand. Hence, time for some stimulus to get people off their couches and into their shopping malls.

The most talked about part of this bill has been the increased emphasis on infrastructure spending, from $32b to $140b. This will create some blue-collar jobs as well as add the obvious benefits of improved infrastructure to the economy, a good bet by all accounts. What about the rest though? Lots of tax credits, which I'm not to crazy about, especially because they're targeted at business. As aforementioned, business is sitting on its hands waiting for consumers to show some life.

The extension in jobless benefits I reluctantly accept. Even as a liberal, it's hard to argue with the incentives issue here. People can just continue to rely on their government checks, so why look for a job? But ending up with a whole bunch of people with no income is worse, so we'll take that point.

Pumping demand is the golden egg here. The home buyer tax credit worked before. Construction companies were doing better than the general economy during that period. The government should be looking to invest in certain industries and new companies in places like green energy and tech firms (except Solyndra... Shhhh.). It's a tough question: How to make jobs? If I had the answer, I wouldn't be a student blogger.

I'll tell you what I see, though. As I said, it's a demand side problem. Consumers will not spend until they have the money and feel decent about their finances. They will not feel good about said finances until they feel secure with the direction of employment. The direction of employment will not improve until businesses see the economy improve (read: people start spending). And around and around we go... I get headaches thinking about this shit... But I promise I'll think some more and get back to you whenever I find a solution (never).

Mazi's Link O' the Day

In memory of 9/11:

Friday, September 9, 2011

Mazi's Link O' the Day

Railroad company activity is a good indicator of economic health. The CEO of one prominent company does NOT see a double-dip headed our way:

Thursday, September 8, 2011

Tuesday, September 6, 2011

Monday, September 5, 2011

The Economics of Love

A while ago, I wrote a post called "Low Expectations..." which was about the economics of disappointment. I suppose it's time to cheer up the scene with something different. I made the point in that article that disappointment is a waste of time. It does not motivate any sort of action, or change, and does not make your psyche feel better or worse. The opposite could be said for love. Which may seem strange. At least, to me, love and anger, or love and sadness, seem like they should be opposites. But there is a lot of similarity across them. Mainly, something is GAINED from all three. Whether that be knowledge about who you are (what makes you happy, sad, etc..), or whether it be knowledge on how deal with others (someone makes you furious...). Disappointment does none of this. But love is more powerful than anger or sadness, because both of those feelings can be captured there.

 I have had 2 experiences this year that truly made me appreciate this emotion. (No details... Sorry gossip-queens). And in the words of Joni Mitchell, "You don't know what you got till it's gone." Alright, edit that: ALMOST gone. It was only when faced with the prospect of losing what was there, that I found myself acting and performing feats that I never thought I would. The ACTIONS love springs can be so sudden and powerful, you don't realize what you did or said till later, and sometimes you don't do the best things. But you always DO something. You might say love is the perfect incentive. And another economics oddity is shown here. People are given more sadness by losing something than they are given happiness by gaining it. I don't know if Ms. Mitchell knew that when she wrote that lyric, but I think she got it pretty good.

 It seems wrong that such a wonderful thing as love should lead to pain, as it often does. But pain, even emotional, passes. The human body and mind are engineered to sustain a lot of brute force, you know. Love, so long as you don't purposefully kill it, is always there. The sadness from love and losing, I believe, comes from making incorrect associations. Let's say you lose someone dear to you or you will no longer be able to "do the things you once did," as people say. Our first reaction is, "Oh, I can't have any more hamburger's with Larry! My love is gone." But did you love eating hamburgers with Larry? Sure, you enjoyed it. However, that memory or event wouldn't be as memorable or important if you didn't ALREADY love Larry. It has nothing to do with WHAT you did together. Take any of those memories with someone you love, that you BELIEVE are WHY you loved a person. Replace your loved one with someone else, even someone you find attractive, or funny, or admirable. While the events don't become un-enjoyable, do you suddenly love this new person? NO. There is no equation to love. It's intangible and can't be created willfully.

 So let's put it in econ terms? Love requires no inputs. It was no costs, since sadness and anger can actually be positive things to feel. It is in infinite supply, too. You can't over-use it. In fact, the more love you feel, the more it builds. And it will give the ability to motivate yourself to do great things. Love is the world's greatest resource.

 Loving is more important than being loved. If you do love, be thankful, even if it hurts you sometimes. Even if it makes you feel vulnerable or "weak" or embarrassed. You have something that not many do. You have the ability to tap into this incredible resource and do amazing things that require more than just hard work and skills. But now look at me. I'm turning love into a thing to be analyzed and used. I stand by all that I just wrote, but please, the more important point awaits. And this point doesn't take as long to explain.

 If you love someone, make sure he or she knows it, even if it's awkward. Make sure that person knows you're never really gone, even when it seems like you are. Make sure you don't try and forget and that you always miss him or her, even just a tiny bit. Make sure the love you felt and feel makes you a better person than before, even when it's difficult. Never shy away from your feelings and hide your passion. You will always regret your actions with the ones who never knew. And what if you don't get these things back? Well, friend, smile, be brave, be good, and never give up on love.

Mazi's Link O' the Day

Bad times for unions:

Thursday, September 1, 2011

Mazi's Link O' the Day

Limericks involving the ten principles that every economics student should have seen a thousand times: