Stagflation and Ben Bernanke

Search for the phrase “stagflation” within my google reader subscriptions, turned up this article by freakonomics: The New head of the Federal Reserve, Ben Bernanke by Steven Levitt, October 30, 2005.

These words written down two years ago sounded somewhat comforting.

I have two thoughts on Bernanke running the Federal Reserve:

1) If I had to guess, the Chairman of the Fed has a lot less impact on the day-to-day performance of the economy than most people think. Although Greenspan has been elevated to God-like status, I suspect that he has been at least as lucky as he has been good. One of the most important lessons of modern macroeconomics is that it is probably impossible at the present time to “fine tune” it. More or less, you just want the Fed to stay out of the way and not totally botch things. There is mounting evidence that the Great Depression (and maybe also the stagflation of the early 1970s) was due in large part to policymakers following exactly the wrong course of action.

2) With that in mind, I think Bernanke is a great choice to run the Fed. He has an enormous appreciation of the history of monetary economics and past failures of Fed policy (see, for instance, this book he has written on the Great Depression). But at the same time, he is not an egomaniac who will pursue dangerous policies because of illusions of grandeur.

Harpers: The next bubble

An interesting writeup on the world Economy since “The South Sea Bubble” in 1720s. How does the US bubbles come into being: dot-com and housing. And why we are in need of another bubble and what that is: The next bubble: Priming the markets for tomorrow’s big crash.

A little long comparing to a normal newspaper article, but considering the vast information/history it covers, it is surprisingly concise and easy to understand for a non-economist.

Library Stairs!

Someday when I can afford a victorian little house, this is what I want for my stairs up to the attic!
From London:

The flat occupies part of the shared top floor of an existing Victorian mansion block. Our proposal extended the flat into the unused loft space above, creating a new bedroom level and increasing the floor area of the flat by approximately one third. We created a ‘secret’ staircase, hidden from the main reception room, to access a new loft bedroom lit by roof lights. Limited by space, we melded the idea of a staircase with our client’s desire for a library to form a ‘library staircase’ in which English oak stair treads and shelves are both completely lined with books. With a skylight above lighting the staircase, it becomes the perfect place to stop and browse a tome. The stair structure was designed as an upside down ‘sedan chair’ structure (with Rodrigues Associates, Structural Engineers, London) that carries the whole weight of the stair and books back to the main structural walls of the building. It dangles from the upper floor thereby avoiding any complicated neighbour issues with the floors below.

More at apartmenttherapy

Windows, the New Blonde

Ever since the beginning of 2008, i’ve rid myself of Windows from both home and work. I didn’t miss it at all until a couple of days ago when a partner’s program only runs on Windows, neither Linux or Mac works. 🙁

And it is the first time that I read a Windows Joke without feeling the slightest self-pity. 🙂

No, Windows is not a virus. Here’s what viruses do:
1. They replicate quickly. … Okay, Windows does that.
2. Viruses use up valuable system resources, slowing down the system as they do so. … Okay, Windows does that.
3. Viruses will, from time to time, trash your hard disk. … Okay, Windows does that too.
4. Viruses are usually carried, unknown to the user, along with valuable programs and systems. … Sigh.. Windows does that, too.
5. Viruses will occasionally make the user suspect their system is too slow (see 2) and the user will buy new hardware. … Yup, Windows does that, too.

Until now it seems Windows is a virus but there are fundamental differences: Viruses are well supported by their authors, are running on most systems, their program code is fast, compact and efficient and they tend to become more sophisticated as they mature.

So Windows is not a virus. … It’s a bug.
via Thoughts from the spotless mind

Sis’s comment turned out to be a even better punch line.

Hah! Wrong! Viruses and bugs are FREE. But you have to pay for windows. 😉

The New Yorker: From Chinese Boxing to Italian Political Comedian

My theory of the New Yorker having alternate editors seems to still be true, i.e. it is alternating between really interesting to really boring. I either read every single article in one weekend or feel completely indifference and read none. Feb 4th 2008 issue belongs to the former. I woke up at 9:30am this morning, and read till noon.

The cover cartoon is note-worthy considering recent economic mood on wall street, properly titled too “Humpty Dumpty Sat on a Wall…,” by Kathy Osborn.

-The Sporting Scene: THE BOXING REBELLION, In the sport that Mao banned, China’s hopes rest on one man. by Evan Osnos. That one man is Zou Shiming, the captain of China’s boxing team. Chinese boxing officials have a name for their objective in this summer’s Olympics, to be held in Beijing: the “zero-gold-medal breakthrough.” Zou Shiming is China’s best and only hope for the first Olympic boxing gold.

-The Letter from Italy: BEPPE’S INFERNO: A comedian’s war on crooked politics. by Tom Mueller

The Talk of the Town section also have interesting pieces:
THE MINSKY MOMENT, John Cassidy on the credit-crisis prophet
Dept. of Odds – Aces, Obama’s poker game.

– The Political Scene/The Color of Politics/ Peter J. Boyer/ Cory Booker’s post-racial generation.
Too bad this one has no softcopy on line. I’ve never heard of Cory Booker before. But after reading this i started to realize what has been bothering me about Obama and Booker seems to have exactly what Obama is lacking, the drive and patience to actually DO something. I wonder if we will get to see Booker on the national political scene in the future, after he turns Newark around. From certain aspect Booker reminded me a little of Gavin Newsom…

The Economist: A $45 Billion Bet

A $45 Billion Bet, Microsoft’s Bid for Yahoo

IT IS a potential deal that has been talked about for years, but has suddenly become a real possibility. On Friday February 1st Microsoft, the world’s biggest software company, made a $44.6 billion offer for Yahoo!, an ailing internet giant. The proposed deal, which would transform the software and internet-services industries, values Yahoo! at $31 a share, a 62% premium over the closing price on Thursday.

In a letter to the board of Yahoo!, Microsoft’s chief executive, Steve Ballmer, referred to previous discussions between the two companies in 2006 and 2007 about a possible partnership or merger. At the time, Yahoo! was hopeful that Panama, a new system it had developed to place advertisements next to the results of internet searches, would improve its fortunes and help it to catch up with Google, the leader in both internet search and advertising. Panama failed to live up to expectations, however, prompting Yahoo!’s chief executive, Terry Semel, to resign in June 2007.

His place was taken by Jerry Yang, one of Yahoo!’s co-founders, who promised to put things right at the sprawling internet conglomerate. But Yahoo!’s latest results, released on January 30th, were disappointing, and its share price fell to a four-year low. Mr Yang said that the company faced “headwinds”, as Yahoo! announced plans to cut 1,000 jobs, some 7% of its workforce. Microsoft saw its chance. “While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing,” wrote Mr Ballmer.

Google is not mentioned anywhere in Mr Ballmer’s letter, but its increasing clout in the online-advertising market, as a result of its leadership in search, is what has motivated the deal. “Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition,” he wrote. Combining Yahoo!, the number two in search and advertising, with Microsoft, the number three, would provide a stronger competitor in an industry where scale provides a huge advantage.

Google currently handles 66% of searches on the internet in America, compared with 21% for Yahoo and a mere 7% for Microsoft (through MSN and its new search engine, Strikingly, over the past year both Microsoft and Yahoo have seen their share of searches decline while Google’s has gained.

The more people use your search engine, the more advertisers you can attract; and the more advertisers you can attract, the more likely you are to be able to serve up relevant advertisements that people will actually click on. As Mr Ballmer puts it: “While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence.”

Microsoft is desperate to grab a bigger share of the online-advertising market because many of its software products are being challenged by free, advertising-supported services offered by Google. The company is also worried that Google’s dominance in search and advertising allows it to dictate terms to advertisers, and gives it an unfair advantage over its smaller rivals. This is a bit rich coming from Microsoft, a convicted monopolist in operating-system software, which has also been known to squeeze out smaller competitors, but its anger that it has had to endure years of scrutiny by regulators, while Google has been left alone, is genuine.

As well as creating a stronger rival to Google, the deal would also have other merits, Microsoft claims. The two companies could combine their research-and-development efforts into search, advertising and other areas; they could save money by consolidating the huge warehouses full of computers, known as “server farms”, that both firms operate; and they would be better placed to compete in new areas such as online video, social networking and online commerce. But it is clear that the real prize is greater clout in search and advertising.

Whatever Yahoo!’s management makes of the offer, the firm’s shareholders will be delighted at the news. Microsoft shareholders are likely to be less enthusiastic: integrating the two companies would be a mammoth task, and Microsoft has never made an acquisition on anything approaching this scale before. Some sceptics say that this is too much to pay for a troubled company, even if it is, by some measures, the world’s biggest internet firm. Microsoft says it is confident that regulators will approve the deal, which could be completed by the end of the year.

———–Bonus material—
NYT: How Microsoft Could Go Hostile, describing both the “hug” and the “bear” parts of the bear-hug letter…