Best of the Moment
business-economics
north-america
Tim Congdon | TLS | 28 July 2010
City economist's fine, critical review of Niall Ferguson's biography of Sigmund Warburg. Says Ferguson overstates Warburg's achievements. Full of insights about how financial institutions operate
Jason Zasky | Failure | 28 July 2010
Story of epic struggle to lay first transatlantic cable. Finally completed in 1866 after years of problems, many avoidable. Narrator enjoys setbacks too much to be entirely reliable, but a good read
Theodore Dalrymple | New English Review | June 2010
Wry reflection on desire and consumer goods. "One has only to observe a street of shoppers on a Saturday afternoon to understand the futility of consumption as a path to happiness"
Rosabeth Moss Kanter | HBR Blogs | 26 July 2010
Short and sweet blogpost in which Harvard professor offers anti-rules for business leaders, based on Tony Hayward's disastrous stewardship of BP. Case will be studied by business students for years to come
Daniel Sgroi | Vox | 26 July 2010
Reverse of 'does money make you happy' research. Experiments suggest being happy makes people more productive in terms of volume, but not quality, of output
Gregory Mankiw | National Affairs | Summer 2010
Obama administration took over economy in crisis. Had to act quickly. But we can see now that stimulus didn't produce intended results, especially on employment. Time to rethink fiscal policy
Karl Smith | Modeled Behaviour | 22 July 2010
Scrupulous analysis of rich/poor divide in America, much of it charted. Starts with knock-out graphic that seems to tell the whole story, nuances it using other scales, breakdowns
Theodore Moran | Milken Institute Review | August 2010
China strikes deals around the world to secure commodity supply. Other countries won't necessarily suffer. Chinese investment mostly enables producers to increase output, to everyone's benefit(Scribd)
Jeremy Grantham | GMO | July 2010
Six notes on diverse topics from much-respected investment strategist. All good, but "Everything You Need To Know About Gobal Warming In 5 Minutes", is the one to read first (Scribd)
Sabrina Tavernise | NYT | 18 July 2010
Less than 2% of Pakistanis pay income tax. Problem starts with politicians, who lie about their income, don't file returns, write loopholes into tax laws. Money recycled through offshore accounts is tax-exempt
Drake Bennett | Boston Globe | 18 July 2010
Poor are poor because, by definition, they don't have money. So why don't aid agencies just give them money, instead of pursuing expensive, inefficient schemes to change living conditions?
Gideon Rachman | FT | 16 July 2010
Entertaining, well-researched account of meeting with usually reclusive, vastly rich, somewhat colourful Russian aluminium magnate. But why? Presumably Deripaska is up to something
Andrew Natsios | Centre For Global Development | 1 July 2010
Monumental essay (83-page PDF) on danger of over-regulating aid programmes. You end up with programmes designed to produce metrics, satisfy regulators—not to assist development
Buttonwood | Economist | 15 July 2010
New study by Bank of England's Andrew Haldane finds that banks' productivity and value-added was grossly overestimated in the boom years, because it wasn't adjusted for the additional risks they took on
Simon Johnson | Project Syndicate | 15 July 2010
US financial regulation act less like Glass-Steagall, more like Sherman Antitrust Act. Big change of course, but will take years to make impact, needs to be backed up with enabling regulation, political will
Deloittes | July 2010
12-page briefing note (PDF) prepared for clients. No thrills or spills, but a workmanlike summary of Dodd-Frank's likely impact. "Biggest set of changes in a generation, perhaps the biggest since the 1930s"
Rick Bass | VQR | 10 July 2010
Engaging mixture of memoir and polemic. Writer recalls working in his twenties for "honourable" independent oil driller, contrasts that ethos with malign, corporate self-interest of BP in Gulf
James Verini | Washington Monthly | July 2010
Frank, fizzy interview with Thomas Donohue, president of US Chamber of Commerce, top business lobby. Members get safety in numbers: “I want to give them all the deniability they need”
Nate Hagen | Oil Drum | 11 July 2010
Useful thought experiment, even if not well argued here. Every economic forecast assumes long-term trend growth. But what if growth stops? What sort of world would we have then?
Edward Chancellor | GMO | July 2010
Long paper (PDF), much admired among investment professionals, on strategies of heavily indebted countries. Mainly, they can default, or inflate debt away. What decides the outcome?
Laura Saunders & Mary Pilon | WSJ | 10 July 2010
America looks likely to reintroduce estate tax in 2011. Grisly dilemma for the elderly rich, and their heirs. Should they contrive to die tax-free this year—or pay dearly to live beyond 1 January?
Dan Ariely | 10 July 2010
If you want a quick primer on the subject, here it is, from an expert. What behavioural economics means, why it doesn't place much hope in market forces, and how it can bring practical gains
Elie Ofek | Harvard Business Review Blogs | 9 July 2010
Marketing professor analyses Adidas, Nike battle. Adidas was official FIFA sponsor, but Nike learned how to size up social networking trend and apply it to its business. Other companies should watch and learn
Robert Reich | 9 July 2010
Pithy economic commentary for non-specialists. When world's productive capacities exceed the buying power of world's consumers, every government wants to increase exports, discourage imports. That spells trade war
Anonymous | Economist | 8 July 2010
China's banks now biggest in world, with lots of room to grow at home and heft to buy almost any rival. Future of finance could be China’s—if it creates the right regulatory environment
George Soros | NYRB | 8 July 2010
Updated version of Humboldt University speech on 23 June. Argues Merkel government is undermining EU, putting eurozone at risk, by pursuing dogmatic, deflationary economic policies
David Brooks | NYT | 5 July 2010
Demand-side economists urge Obama to pour more borrowed money into more stimulus spending. They're clever—but all they have is a model. You don't risk national insolvency on the basis of a model
Margaret Wente | Globe and Mail | 6 July 2010
By comparison with Wall Street's more recent excesses, Black's transgressions come to seem modest. Prison seems to made him a gentler person—touched, like Martha Stewart, by contact with underclass
Catherine Rampell | NYT | 2 July 2010
Profile of Kenneth Rogoff and Carmen Reinhart, authors of "This Time It's Different", history of economic crises. Subject and authors equally interesting: Rogoff a former chess prodigy, Reinhart a Cuban refugee
Christina Passariello | WSJ | 25 June 2010
Fascinating, I-never-knew-that report on French food company's drive to make products attractive to African families living on $1 a day—and turn a profit. One success: ten-cent, 50-gram tube of drinkable yogurt
Kartik Athreya | Federal Reserve Bank | 17 June 2010
Economist attacks Brad DeLong, Paul Krugman view of economics as "simple enterprise with clear conclusions", accessible to anyone of reasonable intelligence. No, it's complicated science for professionals
Aditya Chakrabortty | Guardian | 29 June 2010
Forget building roads and dams, just give money straight to the poor. Oxfam tried it in Vietnam and the money was spent sensibly on food, fertiliser, seeds. Poverty dropped through the floor
Russ Roberts | WSJ | 28 June 2010
"Road to Serfdom" best-seller again, helped by Glen Beck and rap video. Main argument: economic freedom and political freedom are indivisible. Big government corrupts both
Philip Coggan | Economist | 24 June 2010
Credit crunch ended cycle of rising global debt. Now comes time for repayment—or, more likely, default, and/or inflation. So concludes this long, pessimistic survey of debt, all of it worth reading
George Soros | Tagesspiegel | 23 June 2010
German-backed deflationary policies push eurozone into long stagnation. Germans don't feel it, they're doing fine, but others are desperate. Germany should push for growth, then reform
Anatole Kaletsky | WSJ | 19 June 2010
Crisis of 2007-09 has exposed need for revolution in economic thought. Old models broke down, assumptions of efficient, self-stabilising markets discredited. What will take their place?
Kathryn Schulz | Wrong Stuff | 21 June 2010
Interview with Victor Niederhoffer, massively intelligent hedge fund manager, who still managed to blow up two funds in ten years. His main lesson: "The mouse with one hole is quickly cornered"
Robert Reich | 21 June 2010
Punchy blogpost accessible to non-economists. Explains how China's currency policy is really industrial, social policy. Beijing risks civil unrest if it changes it significantly, US risks prolonged jobs recession if it doesn't
Jodi Beggs | Economists Do It With Models | 20 June 2010
Could BP oil spill raise US GDP, thanks to the clean-up effort? Yes. But that's only a fraction of the story. There's a huge waste of resources, and an unquantifiable opportunity cost
Adam Curtis | BBC | 19 June 2010
Highly critical historical perspective on BP, focusing on firm's behaviour in pre-revolutionary Iran and corporate culture marked by arrogance, hubris. Illustrated with fascinating clips from documentary archive
Lucy Kellaway | FT 18 June 2010
Why such public hatred for BP? We're jumpy after credit crunch, envious of huge CEO wages, sick of hypocritical corporate PR, and exposed to viral power of Internet
Jon Hilsenrath | WSJ | 18 June 2010
Donald Kohn retirement interview. On Greenspan era: "We were shifting from bank-oriented to market-oriented intermediation. Supervision and regulation didn't adapt enough"
Michael Schrage | Harvard Business Review | 16 June 2010
Sobering thoughts on the end of retirement as we know it. You won't be retiring at 65. Even if you have a cosseted pension, you're at extraordinary risk. Start preparing for the future now
Robert Reich | Guernica | 13 June 2010
Short blogpost in which former labour secretary argues Obama should invoke oil pollution act, put BP's US arm into temporary receivership, as means of ensuring full resources go into stopping leak, cleaning up
Tony Hsieh | Inc | 1 June 2010
Entrepreneur built up online shoe retailer renowned for wonderful customer service, sold it reluctantly to Amazon. Explains lucidly why he made the sale, and why Zappos is still doing well
Sebastian Mallaby | Atlantic | July 2010
Paul Romer's "charter cities". Poor countries can kick-start development by creating pro-business cities with liberal laws: as with Lübeck in medieval Europe, Hong Kong in China
Sebastian Mallaby | Atlantic | 4 June 2010
Tense, theatrical retelling of George Soros's coup against sterling in 1992. "Druckenmiller had done the analysis ... Soros was the one who sensed that this was the moment to go nuclear"
Alberto Alesina et al I Vox I 29 May 2010
Economists argue that, contrary to conventional wisdom, cutting spending and deficits isn't political suicide. But good communication with the public and time until the next election help
Buttonwood | Economist | 27 May 2010
Economic crisis resembles last stages of "Lost" and "Ashes to Ashes". After plot twists that were hard to follow or believe, we're in a purgatory of massive government intervention
David Einhorn | NYT | 26 May 2010
Americans won't be passing on debts to their children. Crisis is coming in this generation. Default isn't inevitable, but no sign yet of action needed to steer country away from crisis
Wolfgang Munchau | FT | 23 May 2010
We assume Germany is able to bail out Greece if it wants. But German banking system may be hiding €800bn in bad debts. Add in Germany's public debt, and it's Germany that needs the bailout
Matt Ridley | WSJ | 21 May 2010
"Progress is inexorable, cumulative, collective if human beings exchange and specialize. Globalization and the Internet are bound to ensure furious economic progress in the coming century"
Noam Scheiber | New Republic | 21 May 2010
American financial reform bill pretty strong stuff. Creates resolution authority for failing banks. Doesn't provide for breaking up megabanks, but subjects them to new mandates, regulations
Robert Skidelsky I Project Syndicate I 20 May 2010
Call to reduce opaque language in finance, politics. Knavery, complexity may partly explain obscurity but political correctness, decline of literacy have role too. IMF among those guilty.
Christoph Pauly, Thomas Tuma | Spiegel | 15 May 2010
ECB president tries unconvincingly to insist on his independence, toughness. Blames feckless national governments for euro crisis. "There is a need for a quantum leap in the governance of the euro area"
Benjamin Wallace-Wells | NYT Magazine | 11 May 2010
Excellent profile of behavioural economist, advocate of soft paternalism, now in Obama administration. People should be "nudged" into making choices that are best for them.
Alex Tabarrok | Marginal Revolution | 13 May 2010
How small errors in forecasting mortgage-default risk translate into huge swings in the value of mortgage derivatives. Slightly technical: some maths, no algebra
Charlemagne | Economist | 10 May 2010
EU tells world markets to treat eurozone as unified economy entity, with budgetary powers. But when and how will this new arrangement be explained to EU's own citizens?
Paul Mason | BBC Newsnight | 10 May 2010
Fine, plain guide to euro rescue. "Northern Europe has effectively seized control of southern Europe. The eurozone is on a path to becoming a supra-national state-like entity"
James Surowiecki | New Yorker | 10 May 2010
Financial innovation isn't all bad, whatever Paul Volcker might say. But new products tend to be good only within reasonable limits, not when pushed to unreasonable extremes
Arvind Subramanian | Peterson Institute | 6 May 2010
Maybe it's right to bail out Greece, but IMF shouldn't also bail out banks that bought Greek debt for profit. "Heads the banks win, tails much poorer taxpayers thousands of miles away pick up the tab"
Charles Munger | USC Business School | 1994
Granted, it's 16 years since Warren Buffett's right hand delivered this speech. But it's a timeless classic, moving in a great arc from truths about the world to truths about stock-picking
Natasha Singer | NYT | 7 May 2010
Biggest prescription drug company in America doesn't advertise or brand. Israeli-owned generics maker Teva isn't much about science, it's about quality control, logistics, low prices and "corporate frugality"
Bill Gross | Pimco | May 2010
Withering attack on credit-rating agencies, and the "sordid, nonsensical role they performed in perpetrating and perpetuating the subprime craze". Even in normal times they are timid, slow
Mitchell Shames | Harrison Fiduciary | 4 May 2010
Astute blog post. You don't have to dig far into Goldman Sachs's business to find conflicts of interest. Some big ones are laid out in the 2009 Letter to Shareholders. Apparently, the firm is proud of them
Diego Gambetta | Princeton | May 2010
First chapter of new book. How criminal economy works. How crooks signal intent, reliability to one another. Dazzlingly clever, funny, illuminating. Many disconcerting anecdotes. PDF
Bill Marsh | NYT | 1 May 2010
Picture worth 10,000 words. Graphic showing how deeply Europe's weakest countries are indebted to one another, and thus the dangers if one of them collapses
James Kwak | Baseline Scenario | 4 May 2010
Isn't just the money. Investment banks, law firms are great recruiters. They play on ambitions, anxieties of smart ivy-league graduates. "Join us first, be Treasury secretary later"
Curtis Joe Walker | Dealbreaker | 2010
Too much preamble, but excellent notes on Warren Buffett's Q&A. On Goldman: "Turns out, Warren loves the situation. Right now, it’s paying back about $.15 per second, or $500mln per year"
John Hargraves | Tim Ferriss Blog | 2 May 2010
We’re so used to being treated badly by credit card companies. But if you find the right approach, they'll help you with anything
Simon Johnson, Peter Boone | Baseline Scenario | 29 April 2010
Lucid to the point of brutality. How the eurozone incites irresponsibility among governments and banks—and how expensive it will be now to fend off the likely next step, total collapse
Wolfgang Munchau | Euro Intelligence | 29 April 2010
Greek meltdown imperils eurozone. Blame Mrs Merkel. She put domestic politics first, trying to delay deal for Greece until after German provincial elections in May
David Marsh | FT | 27 April 2010
Mechanics of common currency project were never properly communicated to European public, nor scrutinised sceptically enough by participating governments. Now we have the results
Fourteenth Banker | 28 April 2010
Pithy comment on Blankfein's Senate testimony. "The rational decision if you are an employee of Goldman is to cut the corners you are supposed to cut. You figure them out by watching others"
Alan Beattie | FT | 27 April 2010
Damning commentary on EU's handling of Greek sovereign-debt crisis. "The delay and confusion has made default more likely and squandered the benefits of IMF involvement"
Wolfgang Münchau et al | Euro Intelligence | April 2010
Eight scenarios for a break-up of the eurozone. Longish paper (PDF), but worth reading right away, since at least four of these scenarios seem to be well advanced already
Jeremy Grantham | GMO | April 2010
Grantham is a much admired investment strategist, and, reading his notes, you can easily see why. His current expectation: that equity markets will hit new highs, then crash again (PDF)
Chris Giles et al | FT | 26 April 2010
Frightening summary of fiscal choices facing next British government, if it wants even to halve the current deficit. Base-case scenario includes tax increases, drastic cuts in social security
Paul Krugman & Robin Wells | NYRB | 19 April 2010
Essay based on Reinhart and Rogoff's "This Time It's Different". Despite title, mainly about financial crises in past centuries, and what they might have taught us if only we knew our history
Edward Hugh | Fistful Of Euros | 23 April 2010
Greek call to activate EU-IMF loan takes EU by surprise, adds to confusion. Contagion widens spreads for other weak EU countries. Danger grows of German exit from euro
Barry Ritholz | Big Picture | 23 April 2010
Strong case. Ferocious prosecutor. State has plenty of evidence it hasn't shown yet. Probably more incidents in pipeline. Goldman Sachs should settle. Will lose in court
George Soros | FT | 22 April 2010
Tired, technical subject, but still a piece worth reading. Short and (fairly) simple explanation of why derivatives are good for investment banks, unscrupulous corporates, and nobody else
Felix Salmon | Reuters | 21 April 2010
Lively account of how short-sellers gamed market in mortgage derivatives, making huge profits in the crash. But a touch technical: prepare to meet a "mezzanine subprime hybrid CDO"
Noam Scheiber | New Republic | 20 April 2010
Well-reported story explaining how Democrats' proposed banking regulation is getting toughened up, not watered down, as vote approaches. SEC's fraud suit against Goldman Sachs a game-changer
Georg Mascolo et al | Spiegel | 19 April 2010
German finance minister tries but fails to sound optimistic about Greece, and to rationalise Germany's U-turn on a bailout. Highly informative. Remarkable for Spiegel's blunt style of questioning
Ken Auletta | New Yorker | 19 April 2010
Apple wrestles with Amazon for dominance of electronic book market. Publishers wrestle with both for control of pricing. But future market structure may not need traditional publishers at all
Brad DeLong | Grasping Reality | 18 April 2010
Excellent short conceptual explanation of the SEC's beef with Goldman, rooted in an explanation of how financial-market trades, exchanging money for money, differ from real-goods trade
Steve Randy Waldman | Interfluidity | 17 April 2010
Comment on the SEC suit. "Goldman’s attempts to justify what occurred, rather than dispute the facts or apologize, could be the firm’s death warrant. The brilliant can be so blind"
Mike Masnick | Techdirt | 15 April 2010
Innovative design is a non-rival good. Each participant in a collaborative effort gets the value of the whole design, but incurs only a fraction of the design cost. Patents are designed to stop this happening
Jacob Goldstein | Planet Money | 16 April 2010
American stockmarket regulator alleges Goldman conspired with hedge fund to defraud other clients. Simple version of complicated story that has blown a hole in Goldman's share price
Richard Thaler, Cass Sunstein, John Balz | 2 April 2010
Easily readable academic paper (PDF). Introduction to nudge economics, or libertarian paternalism. How to steer decisions, often by setting the desired choice as default
Jay Leno | Popular Mechanics | 12 April 2010
Electric cars about to take off, out of the niche and into the mainstream. American makers regaining initiative. Chevy Volt boldest, most innovative US-made car in 50 years
Daniel Gross | Newsweek | 9 April 2010
Long-term decline of US economy greatly exaggerated. America emerging from recession faster and stronger than rivals. Leaner economy will be less indebted, more energy-efficient, more export-oriented
Andrew Odlyzko | University of Minnesota | January 2010
Academic paper (PDF), jauntily written, fantastic subject matter: railway bubble that caught up Darwin, Babbage, Brontes. Bigger impact than dotcom bust, many points of comparison
Peter Boone & Simon Johnson | Baseline Scenario | 6 April...
IMF bailed out Argentina repeatedly, but failed to save it from collapse. Set to make same mistake with Greece. Lasting solution would involve huge economic contraction and/or default, eurozone exit
Anonymous | Nudgeblog | 8 April 2010
By getting readers used to $9.99 as the natural price for a Kindle book, Amazon set itself up for an angry reaction when the product caught on and it wanted to raise the price
Noam Scheiber | New Republic | 4 April 2010
Financial reform package regains momentum in US Congress, after health-care passage. Consumer agency looks sure to pass, Republicans concentrate on blocking regulation of derivatives
John Plender | FT | 4 April 2010
Maximum efficient scale for banks could be relatively modest, which would support the case for regulatory action to shrink the 145 banks around the world with assets over $100bn in 2008
Loizos Heracleous and Luh Luh Lan | HBR | April 2010
Can directors act against the wishes of shareholders, where this may preserve value for other stakeholders? Yes. Shareholders don't own the corporation, which is an autonomous legal entity
Robert Reich | 1 April 2010
Fed quantifies secret bail-out of Bear Sterns, prior to take-over by JP Morgan. That violated democratic process, maybe even Constitution. Wrong for Fed to have power without accountability