A good cause

I can't lie to you: economists are human.  Regardless of the deistic support granted to some of the more esteemed members of the profession, they are working from models that only partially reflect reality.  At best they are making highly educated guesses, and at worst, well... I could rant about a number of economists who are more concerned with self-preservation and keeping their incomes than with being right, but I don't really have anything new to add to the conversation.

To get information from the source, here is a small list of top-notch economists who admit their mistakes and are extremely vocal in the community:
Paul Krugman http://krugman.blogs.nytimes.com/
Brad DeLong http://delong.typepad.com/
Keep an eye out for Justin Wolfers' and Betsey Stevenson's prescient articles (http://bpp.wharton.upenn.edu/jwolfers/index.shtml)

There are many more, and reading through some of their articles should provide ample opportunity to explore the issues further.

NOW, THE POINT OF THIS POST!

Check out the link below and, if you agree, sign it. Having functional, open and legitimate discussions about economic policy would be a huge step in the right direction. Obfuscation of reality is one of the core problems with our economic recovery and planning, hopefully this will go a long way toward alleviating that.

http://www.manifestoforeconomicsense.org/

Thanks!

P.S.
Regular posting will be resuming in the near future

How an Economist Breaks Up

So life is full of emotional ups and downs, and one of the meanest downs is a breakup. They happen to all of us, and they aren't always easy to get over. It seems to be that there are two major steps in the healing process: the first is accepting that you should not and will not be getting back together, the second is finding ways to keep yourself happy and distracted long enough that you reprogram your body to understand that it can function just fine without your former mate in your life.

Naturally I'm discussing this because it happened to me just over a month ago. I wavered on stage 1 for longer than I would like to admit, but within just under a week I was on to stage 2. Now, anyone who knows me knows that I think a lot, and in this case that is evidently going to be to my detriment. So I started applying some "operational break-up" theories. First things first: figure out what kind of assets you have and how you can re-arrange your capital structure given the organizational change.

Since I keep extremely detailed financial records, I looked at the total cost of our relationship that came out of my pocket, removed excessively abnormal expenditures, and then made a forecast of spending, including all un-paid in-couple plans that existed prior to the termination of the relationship. I took the net-present-value of our relationship over the next 3 months, and discounted by expected expenditures on entertainment and dates (assuming I'll be ready to date sometime in the next 2-3 months), which I calculated based on an average of "entertainment" costs over the last three months that I spent single. I then added in a "you only live once" premium, as well as premiums to take into account money I had saved for undefined future expenditure in the relationship, and the result was my "break-up slush fund."

Step two is to take on a "project" that will maximize firm utility. In my case, I needed to be happy and I needed to be distracted.  For me the former follows naturally from the latter, so it was simply a matter of determining what would keep me distracted for a while. At the advice of a few friends, I took my "slush fund" and turned it into a 15 day trip to Morocco, Spain (the Canary Islands), and England (London).

The end result: best two weeks of my life, some amazing memories, great new friends, a stronger hold on what I want from life, and my first major international trip under my belt. Not sure I'm ready to date just yet, but I am happier and accelerating into my life once again. Considering what I've gained in the past month, if anything, I should break up more often! (Ok, I'm joking... kind of.)

A suggestion for anyone who isn't as anal-retentive as I am about personal finances.  Doing my kind of NPV calculations can be irritating and nearly impossible, so try this: as soon as you are seeing someone exclusively, start saving 100-200 (or more) per month that you are together.  Whatever you have saved if/when you break-up is the maximum that you get to spend on getting over your ex.  No person is worth becoming poor over, especially someone you aren't seeing anymore.  Spend the money on whatever will keep you happy and distracted (I'd steer away from alcohol, but whatever floats your boat,) and you'll pull through and probably get an awesome experience out of it.

Middle-Age Manifesto

"I want it all. I want it all. I want it all and I want it now!" - Queen

Sometimes a song is so glaringly befitting of a situation that to ignore it would be pundit-sacrilege.  (I am well aware that Queen is probably not the choice band of the Boomers, but this is an accessible reference for the reading public, plus it helps me avoid explaining how I know half of the old music that I do.)  We are battling a stagnant, if not receding economy while a large segment of the baby-boom generation is getting ready to retire, poised to plunge a generation of youths into chaos for their own gains.  Melodramatic? Take a look - on average public debt has grown at a faster rate than GDP during the boomers' tenure of the economy - we haven't even isolated consumer debt here!  

Let's start by setting the stage.  Baby-boomers were raised in a strong savings and production economy, but heavily flocked to "make money by doing nothing" fields (we need almost every field that exists today, though the employment ratios could be better).  They decided that they didn't want to have as many children, but instead of saving even some of the not-insignificant extra funds, they took on massive amounts of debt.  The generation leveraged itself to the hilt amassing previously unheard-of levels of consumer credit while lobying for lower taxes to augment their income even more.

Fast forward to today.  Social security/government funded pensions as well as medical expenses are underfunded and this is only projected to worsen.  Boomers are working to manage their debts and prepare for retirement, though with significantly smaller savings rates than will be required to sustain even a portion of their lavish lifestyles.  Often boomers hold jobs that they retain out of seniorty rather than competence, yet they push for more debt and more government spending, while avoiding any of the consequences that their actions have wrought; truly they are an "all for me" generation.

The boomers set themselves up, ignoring the wisdom of their parents(a generation of devout savers), and now want to be coddled, wantonly disregarding the damage they will do to future generations (even if we ignore the damage that's already been done.)  Fair?  Hardly.  And the boomers are setting up my generation to act in the same way because survival will demand it.  Get your act together!  I realize that this is entirely against your nature, and in fact it is your nature that got us into this mess in the first place, but stop prioritizing yourselves over everyone else!  A lot less me and a little more we will go a long way to getting us onside to not legalize "preemptive euthanasia."

How about we make this deal then: if you want my generation to foot the bill for your retirement, get out of the jobs market so we actually have jobs and money with which pay down your fiasco of a debt.  Your other option is to keep employment as is, but lose all sorts of government support.  Baby boomers have been having their cake and eating it too (actually more like eating their cake and a large chunk of ours) for too long, and it isn't right to keep taking food out of the mouths of the youngest generations.

Economists ruin all the fun

Captain America unseated Harry Potter and the Deathly Hallows, Part 2 this weekend, raking in 65.8 $mi.

Granted, Harry Potter grossed a whopping 169 $mi, record-breaking first week, so you can't feel too bad for it. Except for the fact that that's a "nominal" record, but not a real one.

"What's the difference?" you may ask. Nominal implies that the numbers are measured in their own right, which is to say that they are not being compared on equal conditions. This is important because lots of factors change from year to year, let alone across a couple of years.

First off, ticket-price creep; box office prices have steadily risen since their "slashing" in the heyday of the economic slump, meaning that it takes less tickets sold at the current price to equal the revenue generated at the previous price.

Second, the massive surge of 3D movies and their subsequent raised ticket prices; ultimately the same effect as before gets taken into account.

Third, there is inflation: the general tendency of prices to rise over time. Essentially, there is no real growth (i.e. there is nothing extra being produced) but prices rise anyway, meaning that a dollar today buys less than a dollar yesterday. This is essentially a furthering of point 1 yet again; inflation means that your hard-earned dollars are now worth less, relative to before so 169 $mi today wouldn't buy as much as 169 $mi a year ago. More importantly 169 $mi today doesn't buy as much as 158 $mi did in 2007. That's right, in inflation-adjusted terms, Spider-Man 3's opening weekend was bigger than HPDHP2.

Interestingly enough, in ticket-inflation-adjusted terms (dealing with issue 1), Star Wars claims 4 of the top 10 total box office values. (I am unsure, but would tend to believe that the numbers for IV, V and VI include the re-releases of the movies.)

It is interesting to think that in relative terms, modern movies aren't cleaning up like the news would have us believe.  That said, this is probably a boring post for most non-economists out there and yet another glimpse at what makes it the "dismal science."