Brief Overview as to the State of World Macroeconomics II

Part one can be found here.

Here's a depressing round table with Krugman and some other huge macroeconomists. It's 55 minutes and grim.

To add to that Ezra Klein talks about pretty similar scenarios in which growth is basically stagnate for the next 10-20 years.

Almost no one, not even my most liberal friends, want to hear about more stimulus spending. Yet, government size has decreased by 350,000 jobs since Obama took office, and over the last two years government expenditures have risen a paltry 3% - well below what they were for the previous two years and far below typical economic growth rates. But year America is somehow now socialist. The point is to fill the gap in spending temporarily until it picks up again. Exact numbers are given and they're huge - the initial bill was about half the size it needed to be and 40% tax cuts. Of course it was going to have a weak effect.

The market has been doing fairly well recently and some people are calling for a correction (essentially a devaluation) of anything from very little to 90%. The Big Picture's writer, Barry Ritholtz, is guessing that about 25% is perhaps at the high end, but at the same time - do you want to make money or do you want to be right?

Staying with Ritholtz for a minute - he says we need an intervention as a nation. This is in light of the fact that the foreclosure process (great article) has recently been shown to be in tatters, or rather, businesses that serve foreclosures are falsifying documents proving ownership of a loan that courts then use to seize property. Yeah, that's illegal.

Peter Diamond and two collaborators won the Nobel Prize in Economics (I know, I know - it's not the original) this morning. Why does his name sound familiar? Obama selected him as a Fed governor but the Republicans in the Senate blocked his nomination citing his lack of relevant experience. Then why did Obama choose him? Well, besides the fact that he was Bernacke's professor he also wrote the seminal paper, which he's now won a Nobel for, on... wait for it... unemployment in a distressed market (see: America, present).

Tax receipts get proposed:

I often get asked, or rather chided, about my support for TARP. It's somewhat hard to explain shadow banking to someone who doesn't really know how a reserve ratio works. Anyways, America get its money back and may even make a profit. PLus the banking system didn't collapse... yay? Somehow I feel as if that would have led to zombie attacks... I know, it's weird.

And the real reason I wanted to write about this: "China has an unloaded water pistol at our head"

Everyone knows that we trade a lot with China. They are out second largest trading partner after Canada, but what most people don't know is that China keeps its currency undervalued on purpose in order to increase its export volume. Normally if an import country taxes a good coming in, a tariff, the country where the good originated from gets mad so almost no one does that. Trade is mostly open in the world today - as in most cases it should be. But China "sterilizes" its inflows. What does that mean? When there's a trade imbalance one countries monetary base (amount of currency in its economy) gets bigger, so every year money flows from the US to China faster than the opposite. Every year Chinese currency becomes stronger in proportion to our currency as their monetary base grows. Normally this would mean that their currency, the renminbi, would be appreciate relative to the dollar. Literally, a dollar would buy less in China. Chinese exports would cost more and the US would buy less. That's how trade usually balances itself, so why doesn't that happen.

The Chinese sterilize inflows. That means that the Chinese government uses that excess domestic currency to buy US government debt so that their monetary base won't expand which keeps prices low and exports up. This essentially allows the Chinese to put a tariff on US imports and a subsidy on exports, but most people don't understand sterilization and thus it isn't perceived that way (Krugman's explanation).

The US recently passed the Levin Bill allowing the government the power to place a tariff on any country that manipulates its currency. The Chinese are pissed. They keep saying they will let their currency float (act naturally on the markets) but they never do - they just keep stringing us out.

Plywood Table

These are some screen shots of something I've been working on recently. It's a design for a table that I plan on building soon. It'll be made of varying thicknesses (1/8"-1/2") of baltic birch plywood. The design is an expression of how the table deals with loads - it's also overbuilt to withstand young drunken men - but none the less the design incorporates very little extraneous material.

The table top will be all ply facing vertically. I plan to file and sand quite a bit to give it a less rigid look. Plus, forces don't like to go around sharp corners - it stresses them out (our structures teacher loves to drop that one).

Plutocracy

I read this article in GOOD that pointed towards this paper - I recommend both. It's worth really looking at and thinking about the implications of this. The basic takeaway from this is that the bottom 60% of the US populace has no stake in our country, the top 20% for all intents and purposes - own everything, and even rich republican men think the world should be more fair than it is.

Sweden seems to be doing just fine. I'd really like to see this study done throughout the world and within even more specific groups of people - by age, by neighborhood in Chicago, by education, etc.

And yet the Right and even members of economic academia that are pushing for tax cuts for the rich. Deeply troubling and disturbing is an understatement.

The percentage present between the pie charts is explained in the paper. When shown two of the charts unlabeled (didn't know what country it represented) at the same time Americans preferred the Swedish income distribution to our actual distribution. Americans also preferred the Swedish chart to perfect distribution - which in and of itself is fascinating if not surprising.

B&W Europe Photos

I still haven't finished posting my photos from Europe on here but here's a few of the B&W 120 film photos made with my Mamiya 645.

A note on my film: The borders of the negatives are shown because my particular view of photography requires that I show what I saw when I took the photo. Hence, the images are not cropped. I rarely if ever dodge and burn. The only adjustments I make are to brightness and contrast - especially since my film of choice is the newer Kodak TMY-2 whereas this is Kodak's older 400TX, so a lot of my film turned out grainy and overdeveloped - I was being willfully dense when I developed it. C'est la vie.

The following three photos are of the Sony Center in Berlin and were hand held at night...

The Cathedral in Cologne.

The lead covering on Renzo Piano's Auditorium Parco della Musica in Rome.

Richard Meier's Jubilee Church in (the ghetto of) Rome.

Pantheon in Rome - excellent.

Random Rome. Plants grow everywhere and here some vines had turned into a shade for this small gas station. It reminds me of those bridges that people grow in Asia.

Pompidou Center in Paris by Piano and Rogers. I liked it a lot more than I thought I would.

Lundgaard & Tranberg Arkitekter's Tietgen Dormitory in Copenhagen. This was one of if not my favorite contemporary building I've ever visited. The concept/program actually works to form a community.

BIG's (Bjarke Ingles Group) 8 House in Copenhagen.

Big's Mountain Dwelling in Copenhagen.

Picturequote

"The work ethic is not lost; work is largely obsolete." - Buckminster Fuller

I made this portrait of an Algerian protester in front of the Opera Bastille (Carlos Ott) in May this year. They were protesting citywide for fair pay and job opportunities that resulted in a clash with police later in the day. Regardless of what the French claim they are deeply protective of their culture and it manifests itself in this case in the form of prejudice. The irony is that for many of these workers French is their first language and under French law they are French citizens. Colonialism is a bitch.

Aid That Works

I've read several articles and have seen at least one TED talk about aid situations, usually Africa related, where the writers and speakers, themselves natives to Africa, claim that the vast majority of aid is either only effective temporarily or totally unsuccessful. Apparently building a hospital is only successful if the generator that powers it works too – which it often doesn't after aid has ceased and no one can pay for replacement parts or has the knowledge to fix it. The lack of doctors doesn't help. Wells dug that provide clean water often give out after only a few years and no one is there to help fix it. It essentially becomes useless.

I've never heard of anyone/town of doing this but I think a new model should be tried.

List of assumptions:

1 - There are a lot of skilled people in the US who can't find a job.

2 - Given a sufficiently large group of people there will be members in that group who have expertise in broad topics (i.e. on an airplane there is almost always a doctor on board).

3 - There are towns throughout the world who could benefit from sustained and informed aid.

4 - A lot of aid (especially in Africa) does not seem to work as it's a one time thing. There is very little follow-up.

5 - Areas receiving aid generally have a better grasp of what goods and services they need most. A lot of receivers of aid complain that aid givers do not really understand the local problems and are thus inefficient or unsuccessful. I have a feeling a lot of this is pride too.

6 - Volunteers get more out of charity work than those who just give money (multiple studies have shown this).

7 - There are people who would be willing to give some form of aid but do not because a general sense of apathy. I'd probably fall into this category.

The idea:

A town in the US or anywhere (we'll call this group the givers) partners up with a town in an area of need – say, somewhere in Africa (we'll call this group the receivers). The givers agree to help out the receivers basically indefinitely – it'd be like having a sister city except it would actually mean something. The receivers would form a body that decides what it needs most and the givers would form their own body that would decide how best to accomplish what the receivers are proposing they need.

The group forming the givers would work something like this – ideally the entire town becomes involved and everyone participates in some way. It would seem that a somewhat small town would be a more realistic fit fort his type of scheme. Maybe initially people donate money individually or if the town is really into it they could raise a ½ percent sales tax or something of the sort. Remember that the dollar goes a long way in Africa. The group would use this money to buy the needed goods and materials for infrastructure. The givers would then send volunteers on a rotating basis. For example maybe in the first few months the givers send over a civil engineer and a contractor who help upgrade the towns infrastructure. As they return an architect and doctor get sent over and work on those problems. This continues allowing most or all of the givers to send members of their group.

The benefit for the receivers is that they have a very real hand in helping themselves by choosing what their town needs most and by housing and helping the givers who come to work. The givers are essentially acting as the mentor in an apprentice style relationship. Eventually the receivers will become self sufficient, and in the mean time each culture will benefit by learning about other ways of life and sustained trade – not that economic benefit is the motive but rather in this case an unintended result. It also allows the givers an opportunity to gain experience and experiment a little. I know if I were allowed to do such a venture I would go nuts designing efficient long lasting standardized homes. The point is that people are involved both in giving their money and time, but each reinforces the other as everyone in the group of givers has a chance to be part of the process and can see tangible results.