Economics majors are no less likely to vote than other majors, but if we do, we tend to cast our ballots for Republicans.
This according to a new study from the NY Fed that tests to see if those with undergraduate degrees in economics tend to incorporate our lessons on acting in rational self interest into our day-to-day lives.
Voting is, in economic terms, not very rational. A single person’s vote is unlikely to change the results of an election, so the costs (for instance, the opportunity cost of going to vote) outweigh the benefits.
And yet, it seems, we still do it as frequently as other majors. (On the other hand, one of the school’s polled is Florida Atlantic University – perhaps former students there, remembering the 2000 election, were acting rationally – voting because they thought the election could come down to a single vote).
But when we head to the polls, we vote Republican. Read more
Brad Sherman, a Democratic representative from California, wants you to pay more for your home.
Mr Sherman today objected to the FHFA’s plan to roll back the temporary increase in the conforming loan limits put in place during the housing market crash.
“Nothing could destroy this recovery more than a double dip in home prices,” he told Edward J. DeMarco, Acting Director of the FHFA, the group that controls Fannie Mae and Freddie Mac, the government sponsored enterprises, at a hearing. Read more
Today’s news that durable goods orders jumped by 2.9 per cent in April, which was almost double the rate expected by economists, was the latest reminder that US exporters are among the stars of this recovery.
Coming out of the global recession, demand for big-ticket items including cars, aircraft, and heavy equipment with a long shelf life has been steadily picking up not only in the US, but also in many of America’s largest export markets. So to what extent will the eurozone crisis affect their competitiveness, as the dollar strengthens against the euro and US products become more pricey? Furthermore, to what extent will slower growth and fiscal retrenchment in the eurozone undermine demand for US goods? Read more
Reuters has an interesting interview with the Nigerian central bank chief warning that the government should not count on oil prices of more than $60 per barrel. His comments come as the country’s legislature is currently considering cutting its estimated price of oil from $67 to $55 – which would slash some 15 per cent from the country’s budget, even before cutting estimates for output. Worth a read.
Nigerian central bank chief Lamido Sanusi added his weight on Wednesday to discussions on a review of the 2010 budget, questioning current assumptions both for the price of oil and on domestic output levels. Read more
Why no public/private solution?
The Congressional Oversight Panel convened a hearing to speak with the lawyers from the Federal Reserve and NY Fed (and others) about the decision to bail-out AIG.
By all accounts, the Fed was blindsided by AIG’s liquidity situation. Though Michael Finn, the Office of Thrift Supervision’s northeast regional director, said there had been an OTS/NY Fed staff meeting to discuss the OTS’s concerns about AIG’s liquidity, representatives from the Fed and the NY Fed said they were unaware of the risks AIG posed to its counterparties until the Lehman Brothers weekend. Sarah Dahlgren, an executive vice president of the NY Fed, said that, until a couple days before the group’s collapse, it was not believed to be one of the top ten risks to counterparties.
And even then, AIG seemed to be a problem with a private sector solution. Read more
Much secrecy surrounds US Treasury secretary Tim Geithner’s trip to Frankfurt this evening, after his London stop-off. The European Central Bank is not saying when or where he will meet Jean-Claude Trichet, ECB president (although it is safe to assume Mr Geithner will not be enjoying the local beers and sausages). Instead, the theatre will be left until Thursday, when Mr Geithner will talk to journalists in Berlin.
But this does not mean it will be a tough meeting. When, earlier this month, the US was urging a vigorous European response to the eurozone debt crisis, Mr Trichet was on message and the ECB president has played a big role in cajoling the German government into supporting effective emergency measures. Mr Trichet, a former French Treasury director, thrives at times of crisis – even if some on the 22-strong governing council have worried about the loss of the ECB’s reputation for conservative, gradual decision making. Read more
Martin Wolf’s column today is brilliant even by his normal high standards. This won’t make sense unless you read it but his conclusion is:
What is the moral of this fable? If you want to accumulate enduring wealth, do not lend to grasshoppers.
Finance Minister to Bulgaria: You want the euro? You can’t handle the euro.
Seems the EU’s poorest country is facing stumbling blocks on its way to the eurozone. Read more
Today’s speeches by Fed chairman Ben Bernanke and BOJ governor Masaaki Shirakawa are available on their respective websites.
There was also a brief Q&A session, however, during which Mr Bernanke was asked to comment on Olivier Blanchard’s suggestion of a 4 per cent inflation target to increase the scope to cut rates in a crisis. I’ve transcribed his response below: Read more
Both Federal Reserve chairman Ben Bernanke and Bank of Japan governor Masaaki Shirakawa were speaking today at the BOJ’s annual international conference.
Mr Bernanke’s speech was a by-the-numbers defence of central bank independence. It was interesting that he felt the need to mount it but there wasn’t much new in what he said. Read more