Nobel Prize

This year’s Nobel Prize announcements start on Monday October 4th. You can visit Nobelprize.org and watch live the announcements. The new Nobel Laureates generally receive the news by telephone from the Nobel Prize awarding institutions just minutes beforehand. Also in order to be informed for the very latest news you can sign-up for news feeds.Click here to read all the Nobel Prizes in Economic Science.

Cramer’s Top 11 American Companies

Click here to watch a slideshow with Top 11 American Companies according to Jim Cramer of Mad Money.

Chanos on Yuan

"We think there's a big speculative bubble that's going on over there and it's having knock-on effects on certain things like commodities or materials," Chanos told CNBC Tuesday. "We're short the property developers, we're also short basic materials companies." Click here to read the article...

How has the crisis changed economics?

Click here to read an article from The Economist on the way the crisis has changed and will change economics instruction and research.

Da Vinci Goes To College...

Click here to view all the images

What should young students learn?

Click here to read some advices from Professor N.G.Mankiw

The Most and the Least Shorted

In the following lists you can find from Seeking Alpha an overview with the most and least shorted stocks in the S&P 500 index, based on the short ratio.

Top 10 Most Shorted

Fastenal Co. (FAST): 12.87
Cerner Corp. (CERN): 12.43
Waste Management, Inc. (WM): 12.43
CMS Energy Corp. (CMS): 11.43
Integrys Energy Group, Inc. (TEG): 10.55
Roper Industries Inc. (ROP): 10.31
Mylan, Inc. (MYL): 10.13
Total System Services, Inc. (TSS): 10.13
Moody's Corp. (MCO): 9.98
Cincinnati Financial Corp. (CINF): 9.47

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Top Ten Least Shorted

Apple Inc. (AAPL): 0.43
McAfee, Inc. (MFE): 0.46
The Goldman Sachs Group, Inc. (GS): 0.65
Cisco Systems, Inc. (CSCO): 0.68
SanDisk Corp. (SNDK): 0.69
Pactiv Corp. (PTV): 0.75
MetLife, Inc. (MET): 0.75
Hasbro Inc. (HAS): 0.81
Bank of America Corporation (BAC): 0.82
PerkinElmer Inc. (PKI): 0.82

* Short Ratio: A sentiment indicator that is derived by dividing the short interest by the average daily volume for a stock. This indicator is used by both fundamental and technical traders to identify the prevailing sentiment the market has for a specific stock.

Intel Corp. agreed to buy McAfee Inc. for $7.68 billion, its largest acquisition.McAfee investors will receive $48 a share in cash and that is 60 percent more than McAfee’s closing price yesterday. Click here to read the article from Bloomberg.

W

One of the basic questions today is whether Western governments should spent more in order to avoid a second recession or to hold down in order to restore the confidence among investors. Albert Edwards from Societe Generale says that this debate is a waste of time. Click here to read the full article from Prison Planet for the second recession that Edwards forecasts.  

Below you can find some key points from the article:

Albert Edwards reverts to his favorite economic concept, the “Ice Age” in his latest commentary piece, presenting another piece in the puzzle of similarities between the Japanese experience and that which the US is currently going through.  

Edwards focuses on the disconnect between bonds and stocks, and synthesizes it as follows: “investors are finally accepting that what is going on in the West is indeed very similar to Japan a decade ago. For years my attempts to draw this parallel have been met with hoots of derision  but finally the penny is dropping.” The primary disconnect in asset classes as the Ice Age unravels, for those familiar with Edwards work, is the increasing shift away from stocks and into bonds, probably best summarized by the chart below comparing global bond and equity yields – note the increasing decoupling. This is prefaced as follows: “The reaction of bond markets is wholly appropriate given it seems we are heading into outright deflation. The increasing divergence of bond and equity market yields that has been a key plank of the Ice Age will continue (see chart below). Equities will look increasingly cheap relative to expensive bonds.”

If the market is allowed to find its natural place without endless Fed manipulation (and not necessarily of stocks: the outright open intervention of USTs, MBS, and monetary aggregates is sufficient), the plunge lower will be severe, dramatic and instantaneous. Which explains why on Tuesday everyone anticipates a new message of monetary loosening, regardless of the form it ultimately takes.

Re my last...

General Motors Co. filed for an initial public offering that may be the second-largest American I.P.O in history. The aim of the offering is cutting the government’s stake to less than 50 percent. 

Click here to read the article from Bloomberg.

Laffer curve

Laffer curve, the idea, popularized by economist Arthur Laffer and writer Jude Wanninski in the 1970s and '80s, is nothing more than a representation of the relationship between government revenue raised by taxation and all possible rates of taxation. In this curve the increasing tax rates beyond a certain point will become counterproductive for raising further tax revenue. 

Click here to read an article from Dylan Matthew with tax experts giving their opinion for where the Laffer curve bends in U.S or in other words which is the revenue maximizing rate.

...and something for the nuclear non-proliferation

Krugman on Ryan and Ryan on Krugman

Click here to read the comments of Paul Krugman on the "Ryan Plan" for solving the fiscal problem in the U.S. and here for the response of the Republican congressman Paul Ryan of Wisconsin...

Book Proposal

The Cartoon Introduction to Economics: Volume One: Microeconomics
by Grady Klein and Yoram Bauman

For more information please click here

Goldman Sachs vs. Morgan Stanley

Where the American economy is headed? Click here to read the two different roads...

Mankiw vs Krugman

From Greg Mankiw's Blog:

I don't usually respond to illogical cheap shots from around the blogosphere (life is too short). But when the cheap shot comes from a Nobel prize winner in economics, I will make an exception.

Paul Krugman says, I should be ashamed of myself for calling into question Obama administration estimates of how many jobs have been "created or saved." Here is what Paul says,

The Obama administration’s “jobs created or saved” is just a way of saying “other things equal” in non-economese. Of course it makes sense to ask how many more people are working than would have been the case without a given policy — and every administration makes assertions along those lines. During the 2001 recession and its aftermath, how many times did the Bush administration claim that the recession would have been worse without its tax cuts? And while many of us quarreled with that claim, I don’t think I ever argued that other-things-equal arguments are nonsense on their face.

Yet Paul is rebutting claims I did not make, and he is giving Team Obama more credit on this question than it is due. Here is what I wrote on the topic last February:

The 4 million job number is a counterfactual policy simulation of what the stimulus will do based on a particular model of the economy. As such, I have no objection to someone citing it in a policy discussion. In fact, macroeconomists use models to generate figures like this all the time. I have even done it myself.But as an answer to the question "how can the American people gauge whether or not your programs are working?... What metric should they use?", citing the 4 million job figure is a non sequitur, or more likely a diversion. A metric has to be measurable, and the actual number of jobs "created or saved" by the policy will never be measurable from any data source.

That is, I do not object to claims such as,

A: "Based on our models of the economy, we believe there would be X million fewer jobs today without the stimulus."

But it is absurd to suggest that you can say,

B: "We have measured how many jobs the stimulus has saved or created, and the number is X."

Economists are capable of making statements such as A, but it is beyond our ken to make statements such as B. Statement B is,of course, much stronger than statement A, as it purports to be based on data rather than on models. Unfortunately, we are hearing statements like B much too often from administration officials. A good example is here, where can you "learn" that 110,185.36 jobs have been created or saved in California alone.

The Predators...part two

Further my previous post click here to read an article from The New Yorker with the “predatory’’ behavior of Amazon.com, Wal-Mart and Target with the steep discounting on 10 hardcover titles.