11 Items

Blog Post - Views on the Economy and the World

Will the GameStop Game Stop?

| Feb. 06, 2021

Whether one thinks that the overall equity market is currently valued properly or not, something very unusual happened in the last week of January to GameStop stock.  Its price rose 323 percent for the week, and 1,700 percent for the month (that is, an 18-fold increase). This was a speculative bubble. That is, the price departed from fundamentals.

Some investors who got in early and got out early made a lot of money. Just as many people, who got in too late or stayed in too long, lost a lot of money, as valuations came back to earth.

We focus on GameStop, an ailing bricks-and-mortar retailer of video games and consoles, for concreteness.  But a similar phenomenon has affected the prices of a number of other assets.

Participating in a speculative bubble is like playing roulette in a casino.  The role of “the house” in this casino is played by brokers such as retail-investment platform Robinhood or financial-services company Charles Schwab.  So far, not so unusual. Speculative bubbles happen from time to time.

Blog Post - Views on the Economy and the World

How China Compares Internationally in New GDP Figures

| May 31, 2020

The World Bank on May 19, as it does every six years, released the results of the most recent International Comparison Program (ICP), which measures price levels and GDPs across 176 countries.  The new results are striking.  It is surprising that they have received almost no attention so far, perhaps overshadowed by all things coronavirus.

For the first time, the ICP shows China’s total real income as slightly larger than the US.  It reports that China’s GDP was $19,617 billion in 2017, in Purchasing Power Parity (PPP) terms, while the United States’ GDP stood at $19,519 billion.

Blog Post - Views on the Economy and the World

Black Swans Like COVID-19 are Predictable

| Mar. 30, 2020

Events like the COVID-19 pandemic of 2020, the US housing crash of 2007-09, and the terrorist attack of September 11, 2001, are called “black swans”: in each case, few people were able to predict them reliably, at least not with precision.  But they were known unknowns, not unknown unknowns.  That is, in each case, knowledgeable analysts were fully aware that such a thing could happen, even that it was likely to happen eventually.  They could not predict that the event would happen with high probability in any given year.  But the consequences of each of these events were severe, and predictably so.  Thus, policymakers should have listened to the warnings and should have taken steps in advance. They could have helped avert or mitigate disaster if they had done so.

Blog Post - Views on the Economy and the World

Moore on Gold and Commodities

| May 01, 2019

A century ago, the gold standard was considered a guarantor of monetary stability.  That golden era is long-gone.  (If it ever really existed at all.  The general price level fell 53% in US and 45% in the UK during 1873-1896 due to a dearth of gold deposit discoveries.)

Continuing my thoughts on the Fed candidacy of Stephen Moore: he has said several times that he favors a return to gold.  In true Trumpian fashion, he recently denied having said it despite the clear video evidence.

John Bolton speaking at the gathering of the People's Mujahedin of Iran in front of headquarters of the United Nations, New York City

VOA Persian

Blog Post - Iran Matters

U.S.-Led Regime Change is not the Path

    Author:
  • Sina Toossi
| Oct. 11, 2018

For much of Iran's modern history, the Iranian people have been divided on issues such as traditionalism versus modernity and the nature of their relationship with the West. These divisions only highlight the need for organic political change to allow society to find common ground. However, outside political interventionism has been a constant setback, whether during the Constitutional Revolution period, the 1953 US/UK coup, or now with Trump's exhortations and actions.

Blog Post - Views on the Economy and the World

Fiscal Education for the G-7

| May 26, 2016
As the G-7 Leaders gather in Ise-Shima, Japan, on May 26-27, the still fragile global economy is on their minds.  They would like a road map to address stagnant growth. Their approach should be to talk less about currency wars and more about fiscal policy.Fiscal policy vs. monetary policyUnder the conditions that have prevailed in most major countries over the last ten years, we have reason to think that fiscal policy is a more powerful tool for affecting the level of economic activity, as compared to monetary policy.

Blog Post - Views on the Economy and the World

Cuba: A Trip Back to 1959

| Nov. 25, 2012
I recently visited Cuba for the first time, to participate in scholarly meetings.  For an American citizen this short voyage requires a leap through hyperspace.   It was my third attempt over ten years to get there.  Obstacles had included both the US government and the Cuban government.This was a trip back in time, to 1959.   For one thing, a majority of the (few) autos on the street in Havana are large American cars from the 1950s.  Most are beautiful.   One hears about the cars, but I had thought the reports must be exaggerated.