IRISH AUSTERITY PLAN

A neat summary of the measures included in the Irish austerity plan can be found here:

http://www.bbc.co.uk/news/business-11831935

An item that sort of standouts:

“The government said a cut in the minimum wage was essential because the 7.65 euros per hour rate "is out of step with an economy where GNP has fallen by 19%".”

China News

CRC is taken for a ride

CRC (China Railway Construction Corporation) finds out that being state-owned can be a liability at times:

http://www.time.com/time/world/article/0,8599,2033238,00.html

Getting the Chinese to spend even more:

http://www.nytimes.com/2010/11/28/magazine/28China-t.html

Here come the 'dim-sum' bonds
http://www.bloomberg.com/news/print/2010-11-28/yuan-hungry-investors-urge-companies-to-sell-dim-sum-bonds-china-credit.html

Interesting Op-eds

Roger Cohen examines the growing sacrifice of liberty in his excellent NYTIMES op-ed.

“Give a bureaucrat a big stick and a big budget, allow said bureaucrat to trade in the limitless currency of human anxiety, and the masses will soon be intimidated by the Department of Fear.”

Meanwhile, Tom Friedman has an interesting NYTIMES op-ed on the need to: “nurture a culture of achievement and excellence”.

Interesting Articles from the New Yorker

Surowiecki examines our instinct to procrastinate – Later

A review article that begins by discussing the paper  “Procrastination and Obedience” (1991) by Nobel Prize winning economist, George Akerlof, is bound to be informative.

Cassidy on the value of the financial sector – “What Good is Wall Street?”

Gladwell on underdogs - HOW DAVID BEATS GOLIATH

It's Not All Doom and Gloom for the US Economy

Parts of the Midwest are seeing a genuine boom - record agricultural exports and high global commodity prices being the primary drivers. Unemployment Rate in North Dakota is 3.7% !!!


Unemployment Rates by States - Sept 2010 (Data Source: Bureau of Labor Statistics)

Rank	State	Unemployment Rates (%; Sept 2010; Source: BLS)
1	NORTH DAKOTA	3.7
2	SOUTH DAKOTA	4.4
3	NEBRASKA	4.6
4	NEW HAMPSHIRE	5.5
5	VERMONT	5.8
6	HAWAII	6.3
7	KANSAS	6.6
8	IOWA	6.8
8	VIRGINIA	6.8
8	WYOMING	6.8
11	OKLAHOMA	6.9
12	MINNESOTA	7
13	MONTANA	7.4
14	MARYLAND	7.5
14	UTAH	7.5
16	ARKANSAS	7.7
16	MAINE	7.7
18	ALASKA	7.8
18	LOUISIANA	7.8
18	WISCONSIN	7.8
21	TEXAS	8.1
22	COLORADO	8.2
22	NEW MEXICO	8.2
24	NEW YORK	8.3
25	DELAWARE	8.4
25	MASSACHUSETTS	8.4
27	ALABAMA	8.9
28	IDAHO	9
28	PENNSYLVANIA	9
28	WASHINGTON	9
31	CONNECTICUT	9.1
32	WEST VIRGINIA	9.2
33	MISSOURI	9.3
34	NEW JERSEY	9.4
34	TENNESSEE	9.4
36	NORTH CAROLINA	9.6
37	ARIZONA	9.7
38	DISTRICT OF COLUMBIA	9.8
38	MISSISSIPPI	9.8
40	ILLINOIS	9.9
41	GEORGIA	10
41	OHIO	10
43	INDIANA	10.1
43	KENTUCKY	10.1
45	OREGON	10.6
46	SOUTH CAROLINA	11
47	RHODE ISLAND	11.5
48	FLORIDA	11.9
49	CALIFORNIA	12.4
50	MICHIGAN	13
51	NEVADA	14.4

Austrian School of Economics

The Economist offers a succinct explanation of the Austrian theory of business cycles:

“Interest rates are held at too low a level, creating a credit boom. Low financing costs persuade entrepreneurs to fund too many projects. Capital is misallocated into wasteful areas. When the bust comes the economy is stuck with the burden of excess capacity, which then takes years to clear up.”

Innovation

Innovation Clusters

Duke University’s Vivek Wadhwa offers an interesting take on what leads to the successful creation of innovation or research clusters in his piece in The Chronicle

An interesting point from the piece:

“By the 80s, Silicon Valley and Route 128 looked alike: a mix of large and small tech firms, world-class universities, venture capitalists, and military financing. ….

Yet, today, most people don't even know where Route 128 is. Silicon Valley raced ahead because of its dynamism, which overwhelmed the slow pace of technological change in the Boston area. What gave Silicon Valley its advantage were its high rates of job hopping, new-company formation, and a culture of information exchange and risk taking. Silicon Valley firms understood that collaborating and competing at the same time is a recipe for success in the tech world, where complex products often comprise chunks of technology harvested from many organizations. In addition, failure was tolerated and often worn proudly”.

Financial Innovation

The famously libertarian UCLA Economist, Deepak Lal, offers (in his op-ed in The Business Standard) some interesting insights on why financial innovation (and financial engineering) is good as long as government does not get into the habit of bailing out financial institutions at the first sign of trouble:

“The immediate official response to the crisis, in which the insurer AIG was bailed out, which then led it to fully repay its counterparties like Goldman Sachs, bailing them out in turn, only justified the beliefs of those who had undertaken the imprudent lending that any losses would be borne by taxpayers. Moral hazard increased even further. It was further accentuated with the classification of institutions as being “too big to fail”, and has given an incentive for the creation of even larger universal banks “too big to fail”. With the authorities egging on the conversion of previous investment banks into bank holding companies, the US financial structure has become even more oligopolistic”.

Innovation in Brazil

http://www.economist.com/node/17522484/print