- NY Times: Ivory Tower Unswayed by Crashing Economy
Free market theory, mathematical models and hostility to government regulation still reign in most economics departments at colleges and universities around the country. True, some new approaches have been explored in recent years, particularly by behavioral economists who argue that human psychology is a crucial element in economic decision making. But the belief that people make rational economic decisions and the market automatically adjusts to respond to them still prevails.
. . . the two thinkers whose work is most relevant today are John Maynard Keynes, who argued that the government should spend its way out of the Great Depression, and Hyman Minsky, who maintained that financial institutions could prompt ruinous crashes by taking on too much risk. Neither, Mr. Galbraith said, is part of the core curriculum in most economics graduate programs.
- Chicago Tribune: China luxury hotel glut too much of good thing
“Everything that the developers are building is ‘luxury’ or ‘imperial’: luxury apartments, luxury shopping mall, luxury hotels,” said Hu Xingdou, an economics professor at the Beijing Institute of Technology. “But this is not what the Chinese people need or can afford.”
His company counted 126 hotel openings in Beijing last year, adding 29,000 rooms. Hotels that missed their deadlines for completion are still opening.
Even the Olympics were disappointing for Beijing’s hotel industry. Despite advance word that all hotel rooms would be sold out during the Games, hotels were only 67 percent occupied during August, the Olympic month, according to STR Global, a hotel research business.
- Financial Times: Hedge funds turn to gold
Hedge fund investors who made money last year by betting against investment banks are now buying gold as a way of betting against central banks.
“The size of the Fed’s balance sheet is exploding and the currency is being debased. Our guess is that if the chairman of the Fed is determined to debase the currency, he will succeed,” Mr Einhorn wrote in a recent letter to his investors. “Our instinct is that gold will do well either way: deflation will lead to further steps to debase the currency, while inflation speaks for itself.”
- No Related Post