We now have the diametrical opposite of the famous “Peter Schiff Was Right” video (a compilation of 2006 and 2007 clips in which Schiff, a financial expert who subscribes to Austrian economics, predicted the deep recession that would follow the bursting of the housing bubble).
The new, opposite video is a compilation of the 2005–2007 prognostications of Federal Reserve Chairman Ben Bernanke. In it, Bernanke is shown to have been just as embarrassingly wrong as Schiff was uncannily right.
Could their differences in economic understanding have anything …

Who needs the GDP?

As if it wasn’t unpleasant enough, this recession comes with an info glut, all this economic data purporting to answer a simple question: Are things getting better? The answer is rarely straightforward. The numbers aren’t just confusing. They seem to be measuring some other planet.

In New York, we have our own economic indicators, often based on the degree to which people are being thwarted by the lack of opportunity. An old standby is the Overeducated Cabbie Index. The Squeegee Man Apparition Index is another …

The Department of Transportation is temporarily suspending its cash for clunkers program from midnight Thursday because Obama administration officials believe the $1 billion allocated to the scheme has been exhausted after just one week, according to several congressional sources.
DOT officials were contacting lawmakers offices Thursday evening to inform them that the program would be at least temporarily halted, the sources said.
The plan went live on July 24, and it was anticipated it could take several months for the $1 billion designated by Congress for the program to be exhausted.
Instead, …

Luxury goods sector is being hit hard by the financial crisis

Profits at diamond firm De Beers have been crushed after demand for luxury products was hit by the recession.
The world’s largest diamond producer reported a 99% drop in net profits for the first half of 2009 this morning, to just $3m (£1.82m). It made $316m in the same period a year ago, before the economic downturn deterred even the wealthy from splashing out on non-essentials.
De Beers blamed an “extraordinarily difficult” trading environment for the slump in profitability. Sales of …

Joseph Stiglitz predicted the global financial meltdown. So why can’t he get any respect here at home?

. . . Such is the lot of Joe Stiglitz. Even in the contentious world of economics, he is considered somewhat prickly. And while he may be a Nobel laureate, in Washington he’s seen as just another economic critic—and not always a welcome one. Few Americans recognize his name, and fewer still would recognize the man, who is short and stocky and bears a faint resemblance to Mel Brooks. Yet Stiglitz’s work is …

And how the discipline should change to avoid the mistakes of the past

OF ALL the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself. A few years ago, the dismal science was being acclaimed as a way of explaining ever more forms of human behaviour, from drug-dealing to sumo-wrestling. Wall Street ransacked the best universities for game theorists and options modellers. And on the public stage, economists were seen as far more trustworthy than politicians. John McCain joked that Alan Greenspan, …

Numerous articles have been appearing about what is wrong with the current economic system. Usually the solution proposed is to adopt a gold standard. Here are the components of a system that combines the best of a gold standard (eliminating lasting inflation) with the flexibility required in today’s world and utilizing modern technology. This approach can create transparency, fairness and stability in government:
Match tax with spending: Tax collected at the end of a period should EXACTLY reflect the amount of government spending that occurred during that period.
Eliminate Fractional Reserve …

(Read more at: Visual Economics)
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Office building down 57 percent off peak

A downtown San Francisco office building that sold for $400 a square foot in 2006 has traded for just $172 a square foot, a 57 percent decline that industry experts see as an important milestone in establishing new, recession-era values for financial district property.
A private equity fund controlled by an unidentified “domestic billionaire” has paid $19.9 million for 250 Montgomery St., a 116,000-square-foot building on the corner of Pine Street that Lincoln Property Co. bought for $46 million in 2006. Technically, the buyer …

The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank

In a 2003 paper, Thomas Laubach, the US Federal Reserve’s senior economist, calculated the impact on long-term interest rates of rising fiscal deficits and soaring national debt. Applying his assumptions to the recent spike in the US fiscal deficit and national debt, long-term interests rates will double from their current …

The nation’s second-largest candy maker decided that ‘the current business model is not sustainable.’ The company is offering 25% off on all items until the website’s closure on July 31.

The Internet just got a little less sweet.
Hershey Co. announced Thursday that it was closing its Hershey’s Gifts online service on July 31. After that, if customers want the nation’s second-largest candy maker’s products, they’ll have to visit local stores.
“Hershey’s is making the strategic decision to exit the online retail business,” said Hershey spokesman Kirk Saville. “The current business model …

You know the economy is in trouble when the good news is unemployment increased at a slower rate and pending home sales stood basically still all month. Brace yourself because it looks like the “good news” is going to get much worse, too.
Home prices appear to be approaching a valley, though no one can know for sure if they are near a bottom or if they have further to drop. However, credit is still hard to come by, and it is becoming more expensive as interest rates rise on …

A new study from Cars.com sheds light on the absurdity of thinking cars have a “nationality.”
When you consider that even a post-bailout GM will expand its use of foreign labor, it shouldn’t be that hard to understand how an “American” car isn’t really so, just because its maker was founded in Detroit.
And more generally, there seems to be little reason to think that American cars are really more American in any metrics that matter: Namely, labor and parts inputs. (Read more at: The Business Insider)
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{Photography by Crazy Tales}

Headed this week to the Grand Canyon in our old Winnebago RV (now minus mice, we think) Mary Alyce, the boys and I stopped outside Kingman, Arizona at this place, freshjerky.com, managed by Gus, whom you’ll find pictured below, handsome devil that he is. And that’s Mary Alyce taking pictures of the boys in the Freshjerky parking lot at left.
Just as the sign says, Freshjerky has a limited product selection — various kinds of meat jerky including buffalo; honey (minus “expanders,” whatever those are); olives; nuts, and cold drinks. …

O.K., Thursday’s jobs report settles it. We’re going to need a bigger stimulus. But does the president know that?
Let’s do the math.
Since the recession began, the U.S. economy has lost 6 ½ million jobs — and as that grim employment report confirmed, it’s continuing to lose jobs at a rapid pace. Once you take into account the 100,000-plus new jobs that we need each month just to keep up with a growing population, we’re about 8 ½ million jobs in the hole.
And the deeper the hole gets, the harder …

General Motors is using its huge pension fund in a way it never intended.

It had planned — and put money aside — for a steady march of retirees over time. But instead, tens of thousands of blue-collar workers, most in their 40s and 50s, are all becoming eligible for retirement benefits now, as the company rapidly downsizes.
And even as its pension fund faces this giant bulge in payouts, G.M. is not putting any new money in — the company is not required to make any contributions to the fund …

The new hallucination for most strapped McMansion owners is that they’ll “rent the house for a year and then sell when the market comes back.”
The happy theory here is that, yes, prices are temporarily depressed, but when the green shoots really take hold, we’ll go roaring right back to 2006 levels again.
Most real-estate agents will be eager to tell you that they agree with this theory. What they won’t be able to tell you, as Mark Hanson of the Field Check Group points out, is why. (Read more at: …

The announcement that luxury shoemaker Jimmy Choo is creating a limited-edition collection for the bargain merchant H&M makes one wonder whether the high-end fashion market will survive the economic crisis.
If the luxury market does survive, it certainly won’t be as dazzling. Bargain designer shoes will sever the connection between product and fantasy.
Jimmy Choo shoes rose to prominence thanks to an abundance of red-carpet appearances on the feet of starlets. Choos accessorized the lemongrass-colored ensemble first lady Michelle Obama wore on Inauguration Day. And a significant percentage of the brand’s …

Related Links:

The Great American Bubble Machine
On giving Goldman a chance (Matt Taibbi’s blog)
Rolling Stone expose: Goldman Sachs behind every market crash since 1920s (the raw story)