Wednesday, May 30, 2012

A Bond Market Meme, Revisited

About a year ago, I pointed out a fashionable trend: Some pundits were saying that long-term interest rates couldn't go much lower.  Since then, the yield on a 10-year Treasury bond has fallen from 3.18 to 1.65 percent.

The lesson: Don't try to time the market.  My own asset allocation remains 60 percent stocks, 40 percent bonds, with wide diversification in each category.

Tuesday, May 29, 2012

More Competition

University of Michigan economist Miles Kimball is now blogging.  Incidentally, many years ago, Miles was my very first PhD dissertation advisee.

Feldstein on the Euro

Sunday, May 27, 2012

What the Market Will Bear

Saturday, May 26, 2012

From Harvard Commencement

A friend sends along this snapshot from an Occupy protest at Harvard's commencement this week.  For the record: I fully support sunshine.

Friday, May 25, 2012

Government as Venture Capitalist

Larry Summers once said that goverment is a "crappy venture capitalist."  He was right.

Harvard students on Occupy Harvard

The Crimson reports:
For a Statistics 104 final project, a group of students asked 1,035 undergraduates to gauge their impression of Occupy on a scale of one to ten, with ten being most positive. They found that the average ranking of Occupy Harvard was 2.84 out of 10.

Thursday, May 24, 2012

You are using the wrong textbook when...

The NY Times reports:
An economics book used in some high schools holds that the Antichrist — a world ruler predicted in the New Testament — will one day control what is bought and sold.

Wednesday, May 23, 2012

Economics Educators Conference

In November, I will be speaking at the annual conference of the Gulf Coast Economics Association, which this year is being held in Orlando, Florida.  If you are interested in attending, registration is now open.

Tuesday, May 22, 2012

Are mortgage writedowns the answer?

Monday, May 21, 2012

Faulty Memories

In watching various news talk shows over the past few weeks, I have seen Democratic partisans make the following argument:

President Obama just wants to return top tax rates to where they where in the 1990s under President Clinton. And that was a great time for the U.S. economy. So one shouldn't be concerned about the impact of higher tax rates.

There are two things wrong with this. 

First, the premise is incorrect.  President Obama wants to raise income tax rates to where they were during the Clinton years.  But because he has already raised the payroll tax as part of his healthcare reform (and also expanded the base of this tax to unearned income), the total tax rate under President Obama's proposal would exceed that during the Clinton years.  All economists agree that it is the total tax rate that matters.

Second, it is worth remembering that the Clinton boom was in large measure driven by the dot-com bubble, which was coming to an unhappy conclusion during President Clinton's last year in office.  (By the way, as I recall, President Bush did not spend as much time blaming his predecessor for bequeathing him a sick economy as President Obama has.)   It seems unlikely that President Obama's tax increase will happen to coincide with another technological bubble that will drive the economy forward.

Reasonable people can disagree about the virtues of raising the top tax rate.  But it is important to separate valid arguments from political spin based on a faulty recollection of history.

Thursday, May 17, 2012

Good News

Tuesday, May 15, 2012

California Fact of the Day

"A ballot initiative this November would give California a whopping 13.3 percent top marginal rate for state income taxes."


Saturday, May 12, 2012

Geanakoplos on the Leverage Cycle

Yale economist John Geanakoplos discusses his view of the financial crisis. It takes about an hour.

Thursday, May 10, 2012

From the Harvard Baseball Team

Wednesday, May 09, 2012

On Economic Forecasting

Tuesday, May 08, 2012

Fact of the Day: CEO Pay


The relative pay of CEOs skyrocketed during the 1990s and has since fallen by about half.

Eichengreen on the Dollar

Sunday, May 06, 2012

Laura Tyson on the Corporate Tax

She says we should reduce it, financed by a tax increase on dividends and capital gains at the personal level.

Friday, May 04, 2012

True Lessons of the Recession

Thursday, May 03, 2012

On Tax Breaks for Manufacturing

Wednesday, May 02, 2012

Principle 5

Tuesday, May 01, 2012

Correlation of the Day