Relevant and even prescient commentary on news, politics and the economy.

How Rational Behavior Leads to Inefficiency if there are Incomplete Markets

Robert Waldmann My effort immediately below to explain some general equilibrium theory in English didn’t work out so well. Here I will attempt to give simple examples which show how rational individual choice and/or trade between rational consenting adults can make everyone worse off. Models will all involve strange fruit trees, that is assets which […]

General Equilibrium Theory by Popular Demand

Robert Waldmann I’m not kidding. Someone in some thread said that he or she thought it would be great if I could give a simple intuitive explanation of Geanakoplos and Polemarchakis (1985). Also I would get an interesting perspective on the crisis if I could fly to the moon. I will try after the jump. […]

Japan has some problems too

rdan Cassandra says: 5. Most comments have been yankee-centric – perhaps mirroring readers interests and geography. I can warm to risk appetites returning when Global ZIRP arrives and begins to push the mountains of cash investors hold, further out on the risk curve. And global fiscal packages diminish the nominal falls and begin – not […]

rdan We will be trying the wikinvest related post widget shortly. Update: I have several concerns. I have noticed it being used on many sites. 1. Inadvertent mislabeling, as in Robert’s apples and oranges description, mixed up commodities, computers and stocks, and other. This can be dealt with immediately via e-mail to wikinvest (thanks to […]

Fiscal stimulus and leech

Robert Waldmann I am still trying to understand why smart economists have made extremely silly arguments against the stimulus. I am thinking of the dark ages of macroeconomics and the Treasury View. I think an analogy is useful. It is related to the original dark ages and modern medical practice. The analogy is not for […]

Social Security In a Time of Recession

by Bruce Webb A couple of commenters here have inquired about how Social Security would fare in a time of extended recession. And the really short answer is ‘not too badly, mostly it self-adjusts’. But the questions reveal a profound misunderstanding of the real nature of the Trust Funds and their relation to Social Security […]

HR 1 PP

rdan HR 1 PP is the seventh version printed, the final bill to date Feb. 10, 2009. This link is to a ‘clickable’ form of the bill. I believe there were six earlier versions starting with the House, then to Senate, then to joint committee to resolve differences. Update: Link fixed

Looting Social Security: (the Basics Revisited, Again)

Mark Thoma at Economist’s View links us to the following article from William Grieder at The Nation.Looting Social Security Governing elites in Washington and Wall Street have devised a fiendishly clever “grand bargain” they want President Obama to embrace in the name of “fiscal responsibility.” The government, they argue, having spent billions on bailing out […]