-"Economics is Hard - Don't Let Bloggers Tell You Otherwise." I've never heard of Kartik Athreya, economist at the Federal Reserve Bank of Richmond, but I like his style in this piece. Here's his abstract:
"In this essay, I argue that neither non-economist bloggers, nor economists who portray economics —especially macroeconomic policy— as a simple enterprise with clear conclusions, are likely to contribute any insight to discussion of economics and, as a result, should be ignored by an open-minded lay public."
Again, I think Athreya's piece is well written, and largely accurate, but I think he makes a huge mistake when he compares economics to oncology. See, in case it's not clear, oncology is a hard science. Economics is a soft science - as Athreya acknowledges, human behavior plays a huge part in it - and that's precisely why the oncology (and later, seismology) references are ambitious and misguiding. Without getting into a 10,000 word essay on the subject, the real problem we moronic bloggers have with economists is twofold: 1) they prove REPEATEDLY that their models are ill equipped to handle reality, largely because 2) human behavior cannot be modeled like the other inputs can.
Anyway, go on and read Kartik Athreya's piece above - it will not make you dumber.
-On that note: Bloomberg: "Geithner Says G-20 Needs To Focus on Domestic Demand, not Deficits." My "blogger," non-economist summary of that article is, "Hey guys - the Ponzi scheme only works if we are all committed to it."
-NY Times: "In Law School, Grades Go Up, Just Like That." no comment.
"One day next month every student at Loyola Law School Los Angeles will awake to a higher grade point average.
But it’s not because they are all working harder.
The school is retroactively inflating its grades, tacking on 0.333 to every grade recorded in the last few years. The goal is to make its students look more attractive in a competitive job market.
-NT Times: "IBM's Supercomputer to Challenge Jeopardy Champion." A very interesting look at the difficulties computers have in solving Jeopardy-type questions, and how artificial intelligence is making good progress in the field.
-Suburban Snapshots: "Why Having a Toddler is like Being at a Frat Party" funny. samplers:
"10. There are half-full, brightly-colored plastic cups on the floor in every room. Three are in the bathtub.
9. There's always that one girl, bawling her eyes out in a corner."
Wrapping up, back to the initial topic, Barry Ritholtz points out that economists themselves should frequently be ignored as well. Here's Ritholtz, talking about former Fed Chairman Alan Greenspan. I think the second paragraph is fantastic:
"Before we get into the details of his deficit commentary, I must highlight this sentence: “The financial crisis, triggered by the unexpected default of Lehman Brothers in September 2008, created a collapse in global demand that engendered a high degree of deflationary slack in our economy.”
No, Alan, the financial crisis was not triggered by Lehman’s collapse. You are getting the causation exactly backwards: The crisis is what triggered LEH’s collapse. Further, the fall of Lehman was hardly “unexpected.” Whether you want to look at stock price before the collapse, spreads on its debt, David Einhorn’s forensic accounting (he was short LEH) or our own quantitative analysis (we were short LEH), there were plenty of warnings about Lehman’s collapse. It was only unexpected by those whose ideological beliefs blinded them to reality. (Remind you of anyone?)"