Economic (and financial crisis) links

[erudito]

The economics of spam.

Zimbabwe’s public hospitals are collapsing.

One can listen to Sir Bob Geldof’s $100,000 speech against poverty here.

About the border fence and legal and illegal immigration from Mexico to the US. A school district in Dallas has been issuing fake Social Security numbers to get illegal immigrants on the payroll.

UN study

Comments

Re: Presumptions

[taavi]

You can presume all you like about my POV on whether markets are "fundamentally" functional or dysfunctional, but you'd be wrong if you think I agree in any way with your first sentence. And I'm not too sure about the second either.

As far as I am aware, all empirical analysis shows that market fluctuations occur on a power-law basis, ie for every X fluctuations of size N there is one of size XN (a finding which makes nonsense of Random Walk and Black-Scholes models). This has been true in experimental, artificial and simulated markets as well as real ones. In this they are similar to a large number of other phenomena, including earthquakes, patterns of neuron activation in the brain, etc. Power law fluctuations are the real face of Hayek's distributed order.

The fundamental dynamic that seems to drive this is that any time market agents are capable of forming the hypotheses that rising values will keep rising, and falling values will keep falling (both of which tend to be true, until they aren't), one gets positive feedback loops, which lead to bubbles and crashes. Bubbles and crashes are an intrinsic feature of normal market behaviour.

Re: Presumptions

[jordan179]

Bubbles and crashes are an intrinsic feature of normal market behaviour.

Yes, they are, because they result from over-valuation of the future growth of elements of the economy, resulting in malinvestment and paper wealth which must be liquidated in the crash in order for the economy to eventually recover. However, state intervention can inflate bubbles higher and make the subsequent crashes much worse, by artificially propping up these over-valuations and delaying the crashes.