I watched "House of Cards" last night on CNBC: http://www.cnbc.com/id/28892719/. I laughed a few times at the entitlement expressed by the interviewed US homeowners. It seems many people thought that the American Dream was about 1) Owning a home, 2) Owning as much home as anyone would agree to loan you money to purchase, and 3) Eating the equity in your home at a ridiculous pace. All in all I would consider the piece a comedy. To think that so many people think that they should own what they cannot afford! And the CDOs? Buyer beware.
Today I was motivated to re-read Jack and the Beanstalk..... Turns out I think this was a tragedy. Why was this story told to children? I'll tell my kids all about the financial crisis of 2008 before bed. Paulson will play the villian and of course the hero will be:................................

Bob Mundell weighs in with this.
Unfortunately I'm still seeing spots from his "graphs". And here I thought Mundell would be a huge fan of bars.
INTOR eh? I think we'll need to see more sovereign insolvency before the momentum grows for that one.

Ok, "Punter of Last Resort". Sounds like the idea is "let's increase the authority of the Fed" again. It's funny how many economists argue to further insulate our elected leaders from any responsibility with regards to aggregate economic outcomes. Whether elected officials should bear the burden of changes in aggregate variables is really irrelevant, since they ultimately will.
But still, this is peripheral to a real solution to the crisis. If you believe that investors will view a change in the mandate of the Fed as the reform, to end all short term reforms, then this is appropriate. However I wouldn't bet on it.
Perhaps Carroll read Hirshleifer? Though I'm not betting on that one either.

George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring

This is now a must read for those seeking to understand the current financial crises, and what to expect.

For those that just want the insight: "as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit".

I would say given the lack of attention to meaningful changes in the financial sector, the preferences of this industry have been revealed.

Given the news from today, it seems the demand for a distraction from productive legislating by elected leaders is still quite high.

Email to Family on St. Patrick's Day:
Happy St. Patrick's Day Family,
How's she goin' bye? So, it's "Paddy's day" and here we are spread across the globe! So it's not even "Paddy's Day" for the Irish diaspora at the same time. Still I hope that each of us are honoring St. Patrick's day with the quite reflection it deserves.
For example. This morning I struggled over whether I should wear green today or not. The holiday has been so commercialized and seems to be more about the charactature of an Irish person than anything else. Of course then I also recalled that St. Patrick's Day is a Christian Holiday. A more vile cause for celebration I can hardly find (of course so is Christmas and Easter and Valentines' Day but they all involve chocolate). So: no, no green for this Irish Descendant. I will not be the establishment's trained monkey, dressing in green and acting the cheery wordsmith for all to enjoy!
But, wait. There is alcohol involved in St. Patrick's festivities. And, of course, it's as much a Christian holiday as there is truth in the story that St. Patrick himself drove the snakes out of Ireland (archeological evidence suggests there were no snakes in Ireland in the first place). St. Patrick's day no doubt represents some Celtic holiday, incorporated into the Christian calendar as a means of appeasing the Irish and reducing their rebellion against the Church. It was part of the bargain that brought them into the Roman world (near it's end) and is a symbol of the bargaining power that the Irish held (for how many others were absorbed by Borg like Romans without a holiday).
So St. Patrick's day is not a symbol of Christianity, but of Irish strength. And it's not an opportunity for the establishment to look down their noses at the wretched Irish, but a time at which they cannot oppress the Irish enthusiasm for life.
So, I don't know about you guys but I have decided to go have a drink of the hard stuff tonight. And of course I'm wearing green to blend in with the voyeurs.
Love you all,

Okay, I guess I should say something on current events: i.e. the financial crisis and current recession. We (economists and non-economists) know more about the current economic landscape than ever before. So there is not much insight to be gained from this post on the who-what-where aspect. I simply want to record my opinion on the when-why aspects.
We know pretty well when this started (though the NBER has it pegged, academics will likely debate the beginning for another century), but what we want to know is when it will end. My prediction is "later". In fact, this will not end until the financial sector is cleaned up. When I say cleaned up, I mean that the individuals working in financial firms, and investors in financial firms no longer expect changes to the regulatory environment. That is what should be the "end game" of the current administration when addressing the economy. Not producing a stimulus bill that they believe will dampen the downturn (as it is impossible for me to believe they expect it will cause us to bounce back to positive growth). The more legislators ignore the regulatory system of the financial sector, the longer this downturn will last. This will continue for some time though....
The financial lobby owns Washington. They want business as usual.
I would be surprised if China did not take a more active role in pressing the US administration to clean up the financial sector. Although I guess since all trading partners will enjoy spillovers from the "stimulus" there is no reason why any country would want Obama et. al to fix this without a stimulus package.
Bottom line: Michele Boldrin hit this one square on by noticing the true opportunity cost of the stimulus package.
So, a simple decision to stimululate or not, is really a decision to stimulate or regulate.
The question I am struggling with now is whether it will take the recognition of the stimulus packages failure before regulation is sought out with the enthusiasm that is warranted.

Statement of Purpose

The title of this blog: "Beachballs and .........." is a reference to the security question I used for one of my online accounts. I don't know what caused me to choose a "fill in the blank" format for my security question; but I now accept that is was one of the stupidest things I have ever thought to do, and certainly the stupidest thing I have ever typed to date. I hope to change that by typing my thoughts in this blog on a regular basis. Not for others to read (though they may) but to simply remove the stupidity from my brain in the hope that once it is written in front of me I will see the errors of my ways.