Shane's Feed
Oct 28, 2013
via Data Dive

The great economic reshuffle

Branko Milanovic, the lead economist at the World Bank’s research department, has a new paper out on global income inequality (the paper was first spotted by John McDermott). Among other things, Milanovic compares the change in global income from 1988 to 2008:

He writes:

Global income distribution has thus changed in a remarkable way. It was probably the profoundest global reshuffle of people’s economic positions since the Industrial revolution. Broadly speaking, the bottom third, with the exception of the very poorest, became significantly better-off, and many of people there escaped absolute poverty. The middle third or more became much richer, seeing their real incomes rise by approximately 3% per capita annually.

Oct 25, 2013
via Counterparties

Climate changed

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Last month, the Intergovernmental Panel on Climate Change, a UN-created body that is tasked with studying and reporting on climate change’s global impact, came out with a rather depressing report. (Here’s the full report and a detailed-yet-readable summary). The report tackled how Earth’s climate has already been affected by greenhouse gas emissions (a fair amount), how it will continue to be affected (more and more), and what we can do about it (not nearly enough). In the interim, there have been a series of articles and posts exploring the economics of climate change.

Oct 25, 2013
via Data Dive

U.S. consumer sentiment took a huge hit in October

On the heels of the 16-day government shutdown, US consumer sentiment took a huge hit in October. From Reuters:

The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment fell to 73.2 in October from 77.5 in September and was the lowest final reading since December 2012.

Oct 25, 2013
via Data Dive

On Twitter’s modest IPO ambitions

Twitter revealed more details on its initial public offering valuation yesterday, surprising Wall Street with pared-down ambitions compared to Facebook’s IPO last year. “Twitter had signaled for weeks it would price its IPO modestly to avoid the sort of stock plummet that spoiled Facebook’s coming-out party,” Reuters reports.

This chart shows the differences between the two businesses, which may also account for Twitter’s lower valuation:

Oct 23, 2013
via Data Dive

Where JP Morgan $13 billion stacks up against the biggest bank fines globally

This week, JP Morgan hammered out a tentative deal with the government to pay $13 billion over its mortgages practices. Here’s what the biggest bank fines were before this week:

Here’s how those fines stack up by year since the financial crisis:

Historically, JP Morgan’s settlement is enormous — but it’s not necessarily unfair, Peter Eavis writes:

Oct 22, 2013
via Counterparties

Now on Netflix: gravity

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Netflix’s third-quarter earnings report contained a lot of great news: profits, revenue, and new subscriber numbers were all much higher than this quarter last year — plus the company finally surpassed HBO in number of subscribers (domestically, at least).

Oct 18, 2013
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The 40-year energy myth

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This week marks the 40th anniversary of the 1973 oil embargo, when Middle Eastern producers, the members of OPEC, temporarily banned imports to the US to protest its support of Israel in the 1973 Yom Kippur war. “Crude-oil prices spiked, fuel lines snaked behind gas stations and years of stagflation followed”, writes the WSJ. Every president since has made a push to reduce the country’s dependence on foreign oil — despite the fact that US consumers cannot divorce themselves from global oil prices.

Oct 18, 2013
via Counterparties

Steve Cohen is not selling art to pay his bills

All too often the business press falls prey to reductive explanations. For instance, during the debt ceiling crisis, every time the market fell it was reported that stocks were down “on shutdown, debt ceiling concerns” or “as debt ceiling nears”. It was literally impossible for the market to fall without the debt ceiling being blamed — and of course there was no evidence at all to prove causation.

Steve Cohen’s art purchases similarly fall victim to this problem. Peter Lattman and Carol Vogel explained in Dealbook last week that Cohen is selling a number of works this November at the Sotheby’s contemporary art auction in New York, in addition to stocks, in order “to meet withdrawal requests from skittish investors”.

Oct 15, 2013
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Rewarding (in)efficiency

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The 2013 Nobel Prize in economics went to three economists whose research revolves around the Efficient Markets Hypothesis. Eugene Fama’s research points to asset prices reflecting all available information: essentially, markets are efficient. Robert Shiller, on the other hand, specializes in research about irrational and inefficient markets. And Lars Peter Hansen pioneered the econometrics that are “instrumental for testing the advanced versions of the propositions of Fama and Shiller”, according to Tyler Cowen.

Oct 11, 2013
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Niall Ferguson kicks the bloggers’ nest

Yesterday, Harvard historian Niall Ferguson published the third of his three-part screed against Paul Krugman (also see parts one and two). In doing so, he named and shamed “a claque of like-minded bloggers” who often agree with Krugman. Obviously, impuning a handful of bloggers and academics really opens the door to an immediate avalanche of counter-posts by the named, which is what we got today.

In case you had trouble keeping up, here is where everyone stands:

Ferguson:

For too long, Paul Krugman has exploited his authority as an award-winning economist and his power as a New York Times columnist to heap opprobrium on anyone who ventures to disagree with him. Along the way, he has acquired a claque of like-minded bloggers who play a sinister game of tag with him, endorsing his attacks and adding vitriol of their own. I would like to name and shame in this context Dean Baker, Josh Barro, Brad DeLong, Matthew O’Brien, Noah Smith, Matthew Yglesias and Justin Wolfers. Krugman and his acolytes evidently relish the viciousness of their attacks, priding themselves on the crassness of their language. But I should like to know what qualifies a figure like Matt O’Brien to call anyone a “disingenuous idiot”? What exactly are his credentials? 35,550 tweets? How does he essentially differ from the cranks who, before the Internet, had to vent their spleen by writing letters in green ink?