Archive for December 18th, 2009

Attitudes and views of German economists…increasingly leaning towards AngloSaxon economics

December 18, 2009

I came across this paper by Europe based econs- Bruno S. Frey, Silke Humbert and Friedrich Schneider. 

The abstract says: 

Which schools of thought are favored by German economists? What makes a good economist and which economists have been most influential? These questions were addressed in a survey, conducted in the summer of 2006 among the members of the ‘Verein für Socialpolitik’, the association of German speaking economists. An econometric analysis is used to identify to what extent ideological preferences or personal factors determine the respondents’ answers. Our results suggest that = 

  • German economists favor Neoclassics as a school of thought and appreciate the contributions of their Anglo-Saxon colleagues much more than their fellow compatriots’ contributions. 

  • Furthermore, a ‘good’ economist should have expertise in a certain field, as well as a broader knowledge of general economics. Some of the results can be compared to Colander (2008). 

  • The results indicate that graduate programs noted for their American style greatly influence a student’s opinion as to what attributes a good economist must have. 



Should, or Can, Central banks target prices?

December 18, 2009

The evergreen topic on central banking. Jeff Frankel in his blogpost points to 20 experts views on the issue.

I have summarised the views in this table. Overall, there is still a wide divergence of views.


A guide to Mutual Fund Brochures

December 18, 2009

Finance Clipping Blog points to this very funny guide on understanding Mutual Fund brochures.

Fund Brochure Says… What It Really Means…
Ultra Leveraged to the Hilt
Global Growth We’ll Chase Stocks For You in Whichever Country is Most Overheated Right Now
Clean/ Green A Basket of Government-Subsidized Experiments and Some Shares of GE
Deep Value We Will Invest in Sewing Machine and Typewriter Companies
Premium We Will Pay Up for High-Multiple Stocks/ You Will Pay Up in Fees
Socially Responsible No Such Thing – All Corporations are Evil, Sucker
Diversified We Will Basically Buy the Index and Go Golfing
Enhanced Uses Exotic Derivatives You’ve Never Heard Of
Balanced We Will Underperform Both the Bond AND the Stock Market.  You’re Welcome.
Aggressive Growth Collection of Chinese Online Gaming Stocks and New Jersey Biotech Startups
Lifecycle We Can See 20 Years Into the Future, Only Putnam Knows When and How You Will Die
Moderate Allocation Gutless Fund Manager
Quantitative Manager Will Take Credit for Up Years, Blame Computers for Down Years
Endeavor/ Opportunities We Will Throw Darts
Core No Need to Spread it Out, Send Us Everything You Have

Bernanke voted for second term

December 18, 2009

Finally after much hype and speculation, Senate Banking Committee has voted Ben Bernanke as Chairman of Federal Reserve for the second term. The vote was in favor of Bernanke at 16-7.

Today the Senate Banking Committee approved the nomination of Ben Bernanke to continue as Chairman of the Board of Governors of the Federal Reserve System on a vote of 16 to 7. 

President Obama announced Bernanke’s reappointment on August 25th.  The nomination will now be sent to the full Senate for consideration.   
 “As I have said, I will vote to pass that nomination out of this committee and to the full Senate,” said Chris Dodd (D-CT), Chairman of the Senate Banking Committee.  “Some of the criticisms of the Fed under Chairman Bernanke that have been voiced during this confirmation process have merit.”

WSJ Economics Blog has an account of members that voted Yes and No. It also has a few senate members comments.

It divides the list as Democrats and Republicans. I just did a bit of calculation and found something very interesting:

  • 13 Democrats voted and 10 Republicans voted
  • Out of 13 democrats, 12 voted for Bernanke and 1 said no
  • Out of 10 Republicans, 10 said No and only 3 said yes

Why is this interesting? Well Bernanke is Republican. You first see a Democrat president nominating Bernanke for 2nd term and now you see majority of ayes coming from Democrat senate members. If Republicans had their way, they would have wanted Bernanke out.  

You only see these amazing things in US politics. I haven’t seen it happen anywhere else. A public policy person is always backed by the party you believe in and vice-versa. In US, it doesn’t really matter.

In this huge political economy exercise, it is nice to see some win for economic policies. Most economists now say. without Bernanke the 2nd depression was a given. The economy may still be very bad, but without Bernanke and his quick decisions (backed by his studies on Great Depression) , the world economy would have been far worse. Some even say if they were in Bernanke’s position, they also would not have taken decisions like he did. He was slow to begin, but once he saw depression like situation he acted real fast.

What a career path for Bernanke. He studied Great Depression all his life and then was in a position to act to prevent the second one. I mean it doesn’t get better than this. It is like a fairy tale really.

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