Wavepacket Blog only displaying 'economics' posts |
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| August | |
| Wed Aug 15 22:37:13 2012 Eurozone |
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| Sun Aug 5 17:00:31 2012 Mars is Dumb |
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| 2011 | |
| October | |
| Mon Oct 10 23:19:52 2011 Occupy Wall Street |
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| Wed Aug 15 22:37:13 2012 Eurozone How long will the Euro last? |
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| There has been a litany of bad news lately for the Eurozone.
For one thing, most Eurozone countries have had a crappy Q2, with many countries (particularly the most vulnerable such as Spain and Portugal) seeing a contraction. In general, people fear that a second recession may be about to hit the Eurozone. Greece is sputtering along. It barely avoided bankruptcy in its latest bond (treasury bill) sale, but also saw a contraction of over 6% in the second quarter. However, it is failing to keep up with fiscal reform promises it made in March, and is now asking for a two-year extension to meet bailout terms. What are the odds the Eurozone will survive? Personally, I think several countries (Greece and Portugal) are likely to leave on their own accord, and other countries (Spain) may be kicked out. The core of the Eurozone (countries using the Euro as currency) may remain--Germany, France, and others--but several countries will and should leave. Greece and Portugal have historically spent far more than they earned ( Portugal's record and Greece's record), and have usually devalued their currencies as an effective extra tax to catch up. Now that they are tied to the Euro, this extra taxation source has dried up, and their deficit spending can't be financed. In fact, instead of the ability to devalue their currency to raise money, Greece and Portugal are being hit with austerity measures instead. In a recession, this just makes the problem worse. Portugal is very upset about this, and rightly so. What do Greece and Portugal gain by staying in the Eurozone for the next 5-10 years? Nothing. In fact, staying in the Eurozone will probably push them into years of economic stagnation. I think Greece and Portugal are foolish to stick with the Euro! I'm sure many of them will come to the same conclusion. Over time, I don't see the Euro surviving, for exactly this reason: countries have historically used devaluation as a way to catch up with overspending. Being in the Eurozone denies countries this capability, and they have grown used to it. There is one way the Eurozone could survive: centralize taxation and spending. That is, countries in the Eurozone could not set their own budgets, but would instead send taxes in to a central agency, which would distribute the funds as well. Personally, I don't see that happening, since no country will give up both their tax receipts and their budget discretion. And so, over time, countries will drop out as they feel the need to devalue currencies. I'll give the Euro 10 more years as an independent currency! Comments |
Related: > economics < geopolitics predictions Unrelated: books energy environment lists mathematics science |
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| Sun Aug 5 17:00:31 2012 Mars is Dumb Why the persistent fascination? |
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| Tonight, in just a few hours, NASA will
attempt to land the Curiosity rover on Mars, in what will be one of the more remarkable engineering feats of the decade.
It is very exciting. I'm going to watch the live feeds if I can, and I certainly wish all the teams luck. That said, why is everyone so interested in Mars? Compared to other bodies in the solar system, it doesn't really have much to recommend it. Former President George Bush declared that NASA's next mission should be to land people on Mars by 2020, although I'm not sure why. His plan was scrapped in 2010 (I noted that at the time: Space Plan). Fortunately for us all, Bush is still working on his plan. Manned missions to Mars have been very popular for some time. I can see why landing people on Mars looked cool in 1960, when it looked like everyone would have personal rocket ships by 1990. But as the realities of space flight--and science--have set in, a Mars landing looks increasingly expensive, dangerous, and meaningless. As I've noted before ( No Moon), manned missions are currently considered suicide and we don't have a feasible way to get human beings to get to Mars orbit and back, not even counting the problems of landing and then taking off again. Why are people so keen to get to Mars? Some of the ideas I've seen so far... 1. We may someday terraform Mars and live on it. This is bogus for many reasons. We are generations away from terraforming anything. Mars doesn't have enough gravity to hold an atmosphere (it's current atmosphere is about 1/1000th of Earth's atmosphere--it is basically vacuum). And Mars has no magnetosphere, so anything running around on the planet will be constantly zapped by high-energy particles from the Sun. Mars will never be habitable, except for bunkers buried deep underground, or space stations, and we can do that anywhere. 2. There may be life on Mars. At this point, almost all planetary scientists believe we'll discover life all over the place. Maybe not multicellular life, but certainly basic single-cell organisms. Nonetheless, being the first to prove that life exists somewhere else will be a huge career boost for whoever does it. However, Mars is not the best place in the solar system to look for life: Europa is. Europa, the ice-covered moon of Jupiter, is believed to contain oceans of water that could harbor life. If you are looking for life, past or present, Europa is a much better choice than Mars. Still, people are gaga about Mars. The latest proposal is to send people to Mars with a one-way ticket. The theory is that people will be willing to live on Mars as the first inhabitants, even though they won't be able to get home or even reproduce. I'm all for people being free to do what they want, so if people want to go, more power to them. Still, do the volunteers realize that living in Antarctica instead would be thousands of times easier? Fortunately, there appear to be more sane targets for space exploration, such as asteroids. Asteroid-based missions have more potential to be immdiately useful, such as mining or learning how to deflect a killer asteroid. So although I hope tonight's landing will be successful and exciting, I also hope people start to realize Mars isn't where we should be spending all of our time and limited exploration money. Comments |
Related: science > economics < Unrelated: books energy environment geopolitics lists mathematics predictions |
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| Mon Oct 10 23:19:52 2011 Occupy Wall Street Marching to close the barn door after the horse has spent the money? |
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| The
Occupy Wall Street movement continues to grow, with protests in
Chicago and other cities, although there is
a lot of uncertainty over what its goals or
causes are. Some of the better coverage has been from the
foreign press, who are also trying to make sense of it.
It's definitely a legitimate movement, though, since Ben and Jerry's have supported it. In general, people seem to be angry about the depth of the recession, and angry that Wall Street and the rich seem to be doing well, even while others are having problems finding jobs. The bailout of the banking sector was also a theme. I agree with that! Way back in 2008 I argued that we should not bail out Wall Street ( Just say No), and in fact I wrote an open letter about it to all of my congressional representatives ( Open Letter). What I said at the time:
Instead, I argued for two measures Congress should take instead:
The Occupy Wall Street movement needs causes--I'd recommend those! And maybe a third--don't allow collateralized debt obligations for federally-backed mortgages. Wall Street has taken their $700B bailout (actually, it's taken two of them), so that money is gone. But we can reduce the risk of this happening again by stopping banks from taking leveraged risks with Federally-guaranteed deposits. And we need to get our deficit under control so that the government can spend out of recessions, rather than being stuck with near-bankruptcy. I wish the Occupy Wall Street protesters had woken up in 2008 instead of 2011! But I guess in 2008 people weren't thinking much about a real recession. And I don't have much hope for the movement. I list three concrete proposals here (banking reform, ending CDOs, controlling the deficit) but none of these are on the radar for the protesters. I understand their anger but I haven't seen any practical ideas come out. But I definitely agree with the protesters that the bailouts were bad for many reasons. My final plea to my congressional representatives in 2008:
Comments |
Related: > economics < Unrelated: books energy environment geopolitics lists mathematics predictions science |
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