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Wholly Bagels in Wellington has this great student special which I often take advantage of: in the last hour before closing they charge 30% less to students. Much as I love the special, I can’t figure out why they run it that way. I can think of three reasons they might price discriminate in this fashion: Read more
I heard the following gem round the water cooler at work:
Beer makes economics happen
I felt that given it is a Friday, and given that there is a lot of economics going on, this quote was felt especially poignant.
Personally I think Jagermeister is a better economic stimulant – but I understand that I’m in the minority.
Fewer people are departing to Aussie this February than in Feb 08 (down 22%). The economics tea leaves never leave me wanting – maybe I need to incorporate them into my forecasting routine.
This is a drastic slowdown – and is consistent with the sharp increase in unemployment over in Aussie. Now I’m just waiting for someone to say:
1) Aussie departures near record high or,
2) John Key stems tide to Aussie.
Both will give me a little giggle 🙂
Update: Go here, read the comments 😀
I was sent a book called “When Giants Fall” – which I am part of the way through. It is very well written, although I have some issues about the economics type ideas in it. Once I have finished it I will be sure to pop a review up.
One of the implicit claims in the book and among many people I’ve heard from is that the US is only ahead of everyone else because they are borrowing – once the game of musical chairs between developing nations and the US stops the US will not be the primary superpower, or even a superpower, anymore.
Now I don’t really buy this. Lets think about the GDP of the US. Now if the US is borrowing to buy things this wouldn’t increase GDP – as any increase in consumption or investment would be netted out by a similar increase in imports. US GDP is currently $13.8 trillion pa (US definition of trillion 😉 also all figures are in US$ as of 2007). The other big boys have: Japan, $4.3 trillion pa, Germany $3.3 trillion pa, and China $3.3 trillion pa – these three produce less per year COMBINED than the US produces. World GDP is $54.3 trillion pa – so the US accounts for about a QUARTER of world production.
Sure the US has borrowed a lot, and sure the US economy is in big big trouble at the moment, but lets keep some perspective here – the ability for the US to produce is far beyond anything that any of the rest of the world has. Could this change over time – sure. But I wouldn’t say that the US has solely relied on borrowing – it also makes a hell of a lot of stuff.
The Interest Blog has linked to a couple of old Dominion Post articles from Infometrics economists:
One the provides a metaphor for the slowdown in economic activity.
And one that describes the possibility of centrally determined tax rates. (I have mentioned that one before).
Enjoy …
Prime Minister Key appears to believe that it is in the interest of the nation for us all to take our tax cuts and throw them around – either spending them or finding other people to spend them for us. However, I don’t see why we have to rely on consumption now or giving to charity to do this.
Our credit market is working – if we give money to the bank they will lend it out to someone that will spend it. The person that spends it will earn income in the future and pay the bank back, and the bank will pay us back. Where is the issue here? The focus really shouldn’t be on spending – it should be on production.
Now, if the credit market was broken in NZ there could be a different story. Hell if unemployment was nose-bleedingly high you could make a case for it – but it is 4.6%.
Bernard Hickey at Interest Blog expresses similar sentiments here.