Zimbabwe’s Mugabe Stands by Central Bank Chief
Posted by Eddy Elfenbein on May 26th, 2009 at 10:23 am

The AP reports:

President Robert Mugabe has vowed to keep the central bank governor in his post despite demands by Prime Minister Morgan Tsvangirai that he be removed.
State radio on Tuesday quotes Mugabe as saying central bank chief Gideon Gono “saved the country” with the measures he took.
Others have criticized Gono for printing Zimbabwe dollars until they were worthless and raiding hundreds of millions of dollars from foreign currency accounts belonging to aid groups and private businesses.
Mugabe made his comments during a funeral Monday for Gono’s brother Peter.
Mugabe reappointed Gono to a second five-year term in November. Former opposition leader Tsvangirai says that appointment violates his power-sharing deal with Mugabe.

I like how the highlighted paragraph is an attempt to show balance.

It’s All About the Axes
Posted by Eddy Elfenbein on May 26th, 2009 at 10:01 am

Here’s a slightly more accurate view of Amazon.com (AMZN):

Best Headline of the Day
Posted by Eddy Elfenbein on May 26th, 2009 at 9:10 am

From CNBC:

Depression Likely, but Buy Stocks: Strategist

Lower Libor May Not Be a Good Sign
Posted by Eddy Elfenbein on May 26th, 2009 at 8:59 am

Bloomberg has an interesting article saying that the lower Libor may actually reflect growing worries in the credit markets instead of a thawing.

“The disparity and the difference is really a signal to the market of who really wants to make some loans and who’s got the ability to make those loans,” said Mark MacQueen, partner and money manager at Austin, Texas-based Sage Advisory Services Ltd., which oversees $7.5 billion. “A lot of banks are just trying to hold on to what they have and not really make loans.”
Rather than signaling that the world’s banks are more willing to lend to each other, some investors and strategists say the decline in Libor has more to do with deposits reducing demand for funds in the interbank market. Deposits at U.S. banks jumped by almost $400 billion in the past six months, according to Jim Vogel, head of bond research at Memphis, Tennessee-based FTN Financial.
“Libor’s decline is not necessarily a sign of improving bank credit or the willingness of banks to lend to each other,” said Vogel, whose firm is one of the 10 biggest underwriters of Fannie Mae, Freddie Mac and other U.S. government agency debt. “It’s a sign of improving bank liquidity as customer deposit growth replaces borrowing in the short-term money markets.”

The Challenge for Economics
Posted by Eddy Elfenbein on May 25th, 2009 at 9:49 am

In the NYT, Greg Mankiw writes on how the credit crisis will affect economics. His answer: Not much. The basics of economics are still in place although some topics will deserve more attention. Here’s a sample:

THE LIMITS OF MONETARY POLICY
The textbook answer to recessions is simple: When the economy suffers from high unemployment and reduced capacity utilization, the central bank can cut interest rates and stimulate the demand for goods and services. When businesses see higher demand, they hire more workers to meet it.
Only rarely in the past did students ask what would happen if the central bank cut interest rates all the way to zero and it still wasn’t enough to get the economy going again. That is no surprise; after all, interest rates near zero weren’t something that they, or even their parents, had ever experienced. But now, with the Federal Reserve’s target interest rate at zero to 0.25 percent, that question is much more pressing.
The Fed is acting with the conviction that it has other tools to put the economy back on track. These include buying a much broader range of financial assets than it typically includes in its portfolio. Students will need to know about these other tools of monetary policy — and will also need to know that economists are far from certain how well these tools work.

Thanks Vets
Posted by Eddy Elfenbein on May 25th, 2009 at 8:26 am

Weekend Poll
Posted by Eddy Elfenbein on May 22nd, 2009 at 10:09 am

Have a Great Weekend!
Posted by Eddy Elfenbein on May 22nd, 2009 at 9:56 am

The weather is beautiful so don’t expect much posting here today. Also, I finally broke down and joined Twitter (EddyElfenbein) so you can follow me there in 140-character-or-less increments.
I hope everyone has a great weekend!

The First Trading Day of the Month
Posted by Eddy Elfenbein on May 22nd, 2009 at 9:39 am

So far this decade, the market hasn’t done very well except for one small phenomenon—the first trading day of the month. Through yesterday, the S&P 500 is down 39.5% for the decade. But the market has returned over 21% on the first day of the month (neither figure includes dividends).
What’s interesting is that first days of the month occur less than 5% of the time, so sitting out the rest of the time would have been a smart strategy. How’d you like a job that probably improved your performance if you took over 20 days a month?

“Mother of inflated hope/Mistress of despair”
Posted by Eddy Elfenbein on May 21st, 2009 at 2:06 pm

The Chronicle of Higher Education interviewed economist Stephen Ziliak.
In haiku.

Q. How does writing verse
Help your students understand
A math-based science?
A: Thought transportation —
Newton’s laws might still abide,
Listen: Einstein’s train.
Q: A labor union
Protects workers from abuse —
But what does it cost?
A: Green Knights of Labor,
free Haymarket Anarchists,
cost less than Madoff.
Q: Debt plus recession —
Which is the better move:
saving or spending?
A: Treasury shoppers
choose plain broth over duck soup,
Nudge this paradox.
Q: Regarding Wall Street,
Do virtues of laissez-faire
Apply as elsewhere?
A: Traders are human,
swapping vices for virtues
and vice versa.
Q: Mom and Dad, I’m home!
The job market is nasty —
Where is my bedroom?
A: Invisible hand:
Mother of inflated hope,
Mistress of despair!
Q: Haiku might seem dumb
to bean counters and stuffed shirts —
Students disagree?
A: In this other world
wild orchids freely blossom —
haiku GDP.