Thursday, October 29, 2009
a) We have so far produced more than we could actually consume and not everything produced could find a market.
b) This crisis is an overproduction classic case where finance, automotive and construction industries show overcapacity and productivity could be increased (mainly via jobloss);
c) Excess of liquidity is just pushing up prices of assets whereas there is lack of real investment opportunities;
d) There is a growing case for frugality and consumers do not want to waste money in things they do not need. They consider necessities over discretionary spending;It's a vicious circle: no demand, no supply, no jobs, no money, no demand.
Inadequate demand and lack of money in the right pockets could create a jobless or even job loss recovery. Beware of GDP numbers as there are Lies, damned lies, and statistics.
Saturday, October 24, 2009
What's happening to Italy? Berlusconi's escort scandal is not enough. Read this last story where Italian Lazio region's governor resigns after sex scandal .
I am afraid that some are pretty much convinced that the Fable of the Bees is not just a tale but an Italian reality show.
Remember that the author of The Fable of the Bess, Bernard Mandeville, argued that "a libertine, for example, is a vicious character, and yet his spending will employ tailors, servants, perfumers, cooks, and opportunist female and/or male prostitutes. These persons, in turn, will employ bakers, carpenters, and the like. Therefore, the rapaciousness and violence of the base passions of the libertine benefit society in general." I wonder if that is the case in Italy or somebody should study more economics (Mr. Mandeville was a political economist...)
Thursday, October 22, 2009
Along the same lines of the Pundit's dilemma one could say that the memes which dominate the Italian politics conversation are ones which appeal to Italian voters’ worst instincts. In this respect Berlusconi has been intercepting those very well, for some time, particularly via his media power and his journalism. His audiences, and voters, want drama not truth, spot and TV stories, not accurate ones.
The Bandit's dilemma is about to calculate the right amount of lies to promote his own interests while greatly diminishing the aggregate welfare of an helpless community (high negative externalities of bandits' journalism and governement's action). Until people realizes (when?) that he is a bandit.
Sunday, October 18, 2009
"This shouldn't surprise us, it seems to me. Overall, the promotion of interesting stories in preference to accurate ones is always in the immediate economic self-interest of the promoter. It's interesting stories, not accurate ones, that pump up ratings".
We might call this the Bandit's Dilemma — a game, like the Prisoner's Dilemma, in which the player's best move always seems to be to take the low road, and in which the aggregate welfare of the community always seems fated to fall. This appears to happen in Italy of Berlusconi with big negative externalities. Read here what kind of investigative reporting is made by Berlusconi's media. You can read what government and media owned by Berlusconi can produce. As a matter of fact, few days before Berlusconi had announced that a news report about the judge would be coming and he said to expect some good revelations from it...
And YES "It drives me crazy that, for example, people invited to appear - on Italian Television - will say something that is an outright lie, and the person saying it clearly knows it is a lie or misrepresentation, but yet they get invited back anyway due to their entertainment value. Why isn't the rule that if you lie once on the air, you can never come back again? No matter what they say or how accurate they are, the line-up on the news, op-ed pages, etc., etc., is pretty much the same tired old group of people who have proven they will say controversial things that draw ratings and that is what matters, never mind the accuracy".
I am afraid that the fundamental law of human stupidity always applies , "so long as the public (helpless or stupid?) continues to lend their eyeballs and ears to those (bandits?) who play this game".
Italy is a clear case of the power of media, particularly where government and media are represented by the same person, not really a pundit but a bandit.
UPDATE: after reading Richard H. Serlin: Let's consider the magnitude of the costs of externalities in journalism – Please one could calculate that in Italy gains from addressing the externalities of journalism effectively may be in the order of magnitude of billions of Euro. Yet the peculiarities of the Bandit's dilemma must be addressed too.
Monday, October 12, 2009
The odds offered at Ladbrokes, the UK-based gambling company, for the two Nobel prize Mrs. Ellinor Ostrom and Mr. Oliver Williamson were 50/1. Good bet!!!
Nobel Peace Prize to President Obama was somewhat easier to predict as there were fewer candidates... Prediction is something that economists themselves are not in any case good at (last crisis docet).
Why Do We Have Economists (and Nobel Prizes)?
Why Economists’ Predictions are Always Wrong?It appears that economists cannot even agree and predict who among themselves may win the Nobel Prize. Yet after this crisis there is a need for a new set of theories, including regulations, of the market and economics. Can economists make a contribution to that?
PS: The Nobel Prize is for Economic Sciences but Mrs Ostrom is professor in Political Science with:
B.A. (with honors), Political Science, UCLA, 1954
M.A., Political Science, UCLA, 1962
Ph.D., Political Science, UCLA, 1965
Are economists happy?
Sunday, October 11, 2009
Berlusconi must know the origin of the verb sputtanare, which means to shame someone revealing that he normally engages the services of a prostitute.
Everybody knows Berlusconi's story with an escort girl.
Therefore either he was speaking for himself alone (confessing) or with reverse causation in mind (as usual). Can anybody please tell Berlusconi who and where is the cause to be "sputtanati"?
Wednesday, October 7, 2009
While today Wednesday October 7th, Italian court rules Berlusconi's immunity law unconstitutional, "Mr Berlusconi argues that immunity would have allowed him to govern without being "distracted" by the judiciary."
As a matter of fact Berlusconi can only be "distracted" by escort girls who apparently keep him busy.
Can Berlusconi now really govern? "Why don't we stop him when we have a chance?"
A day will come that is like no other... and nothing that happens after will ever be the same
Da "Un mercoledi da leoni":
"Le estati passavano rapidamente, e spesso non lasciavano traccia. Forse ricordo meglio gli autunni e le altre stagioni."
"E' arrivato il grande giorno. L'avevamo aspettato tanto."
"Un giorno come nessun altro...e cio' che accade non si ripeterà mai più."