The Skeptical Optimist

Feb 2006 GDP and National Debt Thermometer

The Bureau of Economic Analysis now says that GDP growth is higher than last month’s estimate; if errors are unavoidable, errors in that direction are welcome.  Once again, the two-quarter trend is still indicating higher GDP growth than the BEA's official one-quarter method. 

Here’s the usual comparison:

[UPDATE: Click here for a brief, explicit summary of the math.]

The USA’s debt burden ticked upward by a tenth of a point, to 65.4% of GDP.  That’s because the debt grew a smidgen faster than GDP did.  Here’s the monthly graphic. 

Click to enlarge.

Gotta run for today, but I wanted to get the charts up. 

Alan Reynolds: A Sampler

One of the first things I do each morning—after pouring myself a large, hot cup of Sumatra coffee—is to click on my “Alan Reynolds” bookmark, to see if he’s written another column yet.  Approximately one out of every nine days: Bingo. 

The number one reason I enjoy his columns is because they always give me a fresh perspective on the hot topic of the day.  I can count on getting a much different angle from Alan Reynolds than the one I get from the herd-mentality mainstream media.  Best of all, the politics of the day’s hot topic are irrelevant: he pulls no punches.  (Whether you lean left or right, prepare to have at least some of your opinions challenged as you read his columns.)

I hope you’ll add him to your watch list.  Below is a small sample of what’s available at the “Alan Reynolds” corner of TownHall.com:

Feb 23, 2006 :   Should Wal-Mart reduce wages?

The "Wal-Mart bills" are calculated cruelty disguised as kindness. They should be renamed as what they are -- wage- and job-reduction bills.

Jan 12, 2006 :   Executive envy

If you don't own stock in a company, then what they pay anyone isn't any of your business.

Dec 9, 2005 :   The gift of economics

Today, economics is as much a hobby for me as it is a job. If you enjoy mysteries and puzzles, you should love economics. And if you hate math, that's no problem. [Contains lots of good recommendations on books to read.]

Dec 1, 2005 :   Immigration as random rationing

...the most economically destructive quotas -- those on people with superior education and skills -- could be easily fixed by eliminating them... Nobel Laureate Gary Becker, writing in The Wall Street Journal, added that we should welcome skilled workers on a permanent basis, not just for a few years.

Oct 6, 2005 :   The foolish factor

I recall an incident from 1974 when price controls and rationing had left only one gas station still open on Sundays on all of Long Island, N.Y. The government promptly put him out of business for "gouging," of course. After that, there was nobody in Long Island selling gas on Sundays. That's one way to get people to line up for gas on Saturdays, thus accommodating Bill O'Reilly's "never on Sundays" rule.

Sep 15, 2005 :   Hurricane economics

Anyone who anticipated wisdom and foresight from any level of government was once again disappointed. Yet those most critical of bungling bureaucrats for crisis mismanagement nonetheless expect such incompetents to rebuild New Orleans. The fact is that government agencies lack the knowledge and incentives to rebuild cities in an economically sensible way.

May 12, 2005 :   Doomsday is doomed [I've linked to this one several times.]

...the doomsday theme never leaves The New York Times for long. It just changes form... In this latest retelling, the 1983 hard-landing fable is at last going to turn into the long-predicted "perfect storm" the moment foreign central banks cut back on their purchases of U.S. Treasury bonds...

In fact, we already found out what happens when foreign central banks cut back sharply on their purchases of U.S. Treasury securities. The answer is nothing happens -- absolutely nothing.

Facts don't matter when business news is really politics in disguise. Whenever the wrong political party controls the White House and Congress, the mainstream media feel compelled to predict some looming economic disaster, and to keep doing so shamelessly and erroneously year after year...

Alan has a book in progress, due out later this year.  I can hardly wait.

As long as we’re picking on lawyers...

[Disclaimer: The two lawyers in my immediate family think the following stuff is funny.  Proceed at your own discretion.] 

My brother has alerted me to the following “news” item:

WASHINGTON, D.C. - A White House source stated that Congress is considering awarding Vice-President Dick Cheney the Medal of Freedom, the highest civilian commendation, for his act of bravery in shooting an attorney.

The source was quoted to say "All Americans have wanted to shoot a lawyer at one time or another and Cheney actually had the guts to do it."...

Okay, okay, as long as we’re on the subject:  Rumor has it that a groundswell of popular opinion is pressuring the editorial staff at The American Heritage Dictionary to make the following simplification:

Current definition:

law•yer > n. One who gives legal advice to clients and represents them in court.

Simplified definition:

law•yer > n. The larval form of a politician.

FQ.06.08: Favorite Quote for This Week

[President Clinton will be] the beneficiary of just the most explosive advance in technology in the history of the human race...  it could engulf his Administration with prosperity in a way that would render many of his adverse policies almost irrelevant... A boom is most likely.
—George Gilder, 1993

I bet I can make you smile

If you could use a smile right about now, click on the thumbnail below.  If not... well, you just might be wrong, so click on it anyway.  [note to self: file under BraggingRights]

Losing my optimism for Adobe eBooks

[A technical post.  Oh, I suppose you could classify this topic as mini-micro-economics, or maybe a failure of supply to satisfy demand.]

In the past year, I’ve purchased 42 ebooks from various online bookstores.  (Mostly reference books; e-searching for remembered fragments of text was my favorite use for ebooks.  Was.) 

Not any more.  I had been using Adobe Acrobat 6; then, recently, I “upgraded” to Acrobat 7.  Now I can’t open any of the 42 ebooks I bought. 

One helper thought it was because I had too many ebooks in my folder named “My eBooks”; anyone interested in the error messages I was getting can click on the thumbnail below.

So I tried moving all but one ebook to a different folder.  After that, Adobe’s “reactivation” seemed to work.  (I got a success message telling me so.)

Wrong again.  Now when I try to open an ebook, nothing happens.  All I get is the following window (click to enlarge):

If you know what’s going wrong, please send me an email.  In the meantime, I’ll be researching the IRS rules for writing off bad investments: all 42 ebooks, plus one upgrade to Acrobat 7.

Final image:

Interest rate inversion in progress

I’ve been posting this chart more frequently these days, because interest rate inversions are less frequent than blue moons (...if my extensive research on blue moons is accurate, that is). 

Here’s the usual chart, augmented with a blowup of the inversion in progress.  Click to enlarge.

Wesbury joins First Trust Advisors

If you've been following what Brian Wesbury has to say about our economy each week (as I do), but for some reason did not receive an announcement that he has recently joined First Trust Advisors, here are two links you’ll want to follow. 

• Brian’s bio page at First Trust

• Page for subscribing to his commentary and reports

(If you’re wondering who Brian is, please read this article I posted about him several weeks ago.)

Below is a snippet from Brian’s article in today’s Wall street Journal, titled “Life After Greenspan”—describing new Fed Chairman Ben Bernanke’s first visit to Capitol Hill:

One of my favorite exchanges was when Rep. Emanuel Cleaver fretted that the Chinese might stop buying U.S. debt. The new Fed chair said, "China's not holding our debt because they want to be nice to us" -- succinct and 100% correct. The Chinese hold our debt because it is the safest and most liquid asset in the world.

Have you seen this dog?

(Just a brief detour from economics…) 

Having a blog means I can publish whatever I think is newsworthy, so I thought I'd volunteer some space to this poignant "lost dog" poster I saw in a small store.

FQ.06.07: Favorite Quote for This Week

Productivity isn't everything, but in the long run it is almost everything. A country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.
—Paul Krugman