US headed the way of Ireland?

Great article by Krugman as always. I feel this threat of a US debt crisis may well be the next shoe to drop if Obama does not see that Gietner's plans are not going to work but rather making things worse.

Banks well capitalized?

Gietner says the banks are well capitalized. The IMF says losses from the credit crisis in the financial sector will reach 4 trillion.

The treasury, like most other actors in this crisis, are acting out of fear. Fear, if these fallen banks are not propped up, all hell will break loose.

Hell has already broken loose. Sweeping things under the rug will only prolong the anguish. The banks are not capitalized well. Why else would the likes of GS play with it earnings. Like taking December out of its annual report in reporting its latest earnings.

Stop proping up failed institutions mr secretary. Stop acting out of fear.

Crochet and hyperbolic space

Ted talk: beyond euclidian, spherical geometry is the geometry of correls, modeled by a cornell scientist, daina taimina, via crochet.

In hyperbolic space, an infinite set of lines are paralell to a given line.

History is a (double) helix.

Reading an economics article I came across the following: history is not a sine wave, endlessly repeating the same pattern. Rather it is a helix, in that we encounter issues that lie in the same plane but are different.

Apologizing for Beloved Theories

Communism didn't fail- it was the communist that failed.

Religion is great- its just misunderstood, misapplied and misused.

Lessay fair economics didn't fail- it was the greedy bankers that failed us.

You either agree or disagree with all of the statements above.

A True Gift

Sitting in class, I realized. A true gift requires you to apply yourself.

A New Type of Economics

Joe the plumber is so incompetent that you wouldn't let him touch a leaking faucet- he invariably makes things worse. Would you then consider his help if the water main broke and water was filling your basement?

"I share with Economists the belief that government intervention creates more problems than it solves." That line from David Swenson's book Unconventional Success, reminds me of Joe the plumber, who's help we would rather not take when things are fine. Why then are we all, Economists included, suddenly looking to Joe to help us in the current crisis?

To make matter worse, Economic principals as well as those from Evolutionary Biology and Ecology suggest that when a market participant does something stupid, they should suffer the consequences. Capitalism is survival of the fittest. In ecology, the old must die to make way for the new-- think of wildfires that are essential for the health of the forest. Death is an essential part of life.

The hard part is that when the economy is collapsing, the metaphor that that must be used is that of a house burning and not of a wild fire. When people are losing jobs, its a matter much closer to home than something thats happening far off in a forest. So what does one do when ones house is burning and -- to stick with the metaphor-- the parts that are burning are the worst parts that will one day be replaced by much better parts.

One cant just stand and watch! Joe the plumber, who in this case is the US government, led by Obama, must act. They must give us hope that the house will be saved even though we know that eventually, the fire will burn out, and things will return to normal, in spite of what the Government may or may not do.

But as we know, Joe is only making things worse by his efforts to stamp out the fire. His shoe is on fire and he only manages to spread the fire to other parts of the house. (As most economists agree, or at least used to agree, that there is a place for government intervention, but it is limited to fixing market inefficiencies and not to bailing any one out.)

Therefore, I propose a new field of study-- call it Pseudo-economics. A field that teaches Joe (the Governments) how to look like he is on top of the fire fighting situation but in reality not touch the fire at all. Just let it run its course. This would do good by raising the confidence of the public but take away the harm that the government ends up doing in trying to help the economy in crisis.