Archive for July 22nd, 2011

Debt and Delusion

July 22, 2011

Bob Shiller in this article says most of the market reaction on debt crisis is overstated and irrational exuberance:

The fundamental problem that much of the world faces today is that investors are overreacting to debt-to-GDP ratios, fearful of some magic threshold, and demanding fiscal-austerity programs too soon. They are asking governments to cut expenditure while their economies are still vulnerable. Households are running scared, so they cut expenditures as well, and businesses are being dissuaded from borrowing to finance capital expenditures.

The lesson is simple: We should worry less about debt ratios and thresholds, and more about our inability to see these indicators for the artificial – and often irrelevant – constructs that they are.

An interesting contrarian point. Read the whole thing. Shiller always has different things to say…

When did America begin its gallop towards economic supremacy?

July 22, 2011

This should be a great paper to read.

As always, the authors Peter Lindert  and Jeffrey Williamson provide a summary in voxeu.

The findings are pretty interesting:

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Traffic Congestion case study: Increase supply or limit demand?

July 22, 2011

Troy Senik of Center for Individual Freedom points to this interesting case study from Los Angeles.

Basically LA is supposedly always suffering from traffic problems. The average Angeleno loses 80 hours a year to gridlock. It is a huge area and greater LA area has around 18 million people. There is no realy culture of public transport and people love their cars. Despite wide road network, it is always congested (Any city in India would love to trade traffic with LA; they would then know what traffic is all about). They have massive freeways but are always chocked and is ranked as city with worst traffic in US.

Now, there was this nice case. The city authority decided to close a road to tear down a bridge over the road. The road was very important link in the whole grid and people called it a disaster:

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