Recent Economic Insights from Notable Figures

In the ever-evolving landscape of economics, influential voices are shaping our understanding of past events and future prospects. This article highlights insights from key economists and recent developments that affect the economic climate.

Ben Bernanke’s Reading Recommendations

What books is Fed Chairman Ben Bernanke currently reading? Earlier this month, during his testimony to the Financial Crisis Inquiry Commission, Bernanke shared a notable recommendation: Lords of Finance: The Bankers Who Broke the World. This work explores the critical missteps of central bankers leading up to the Great Depression—a history that is often misunderstood.

Appointment of Austan Goolsbee

As anticipated, President Obama has appointed Austan Goolsbee as the new head of the White House Council of Economic Advisers, succeeding Christina Romer. Goolsbee is already an integral part of Obama’s economic team, having been a member of the council since the administration began. His relationship with Obama spans back to the 2008 presidential campaign, where he contributed as a senior economic policy adviser.

Updates for Newsletter Subscribers

A quick note for my newsletter subscribers: Starting this September, The Beta Investment Report will be published in multiple editions each month, rather than a single monthly issue. The following editions have been issued so far in September:

• 9 September 2010 (Vol. 2 No. 9.5) “ETF, ETN & Index Fund News”
• 8 September 2010 (Vol. 2 No. 9.4) “Fund Focus: Foreign Gov’t Bonds In Developed Markets”
• 3 September 2010 (Vol. 2 No. 9.3) “Rebalancing & Bonds”
• 2 September 2010 (Vol. 2 No. 9.2) “Economic Review”
• 1 September 2010 (Vol. 2 No. 9.1) “Risky Assets Take A Hit In August”

Housing Market Concerns

In a recent study, Steven Gjerstad and Vernon Smith from Chapman University illustrated the link between the housing market and the business cycle. Their findings suggest troubling signs for the current economy. In an op-ed for The Wall Street Journal, they warned: “If there is no recovery in housing expenditures, confirmed by a recovery in consumer durable goods expenditures, then there is no economic recovery.” Currently, the housing market shows no signs of revival.

Jobless Claims Update

In a positive turn of events, seasonally adjusted jobless claims dropped by 27,000 last week—the most significant decrease in nearly two months and surpassing the expected decline of 2,000. This drop signals a potential improvement in the business cycle, though caution is warranted. The latest filings for unemployment benefits totaled 451,000 for the week ending September 4, the lowest number since early July.

Emerging Markets Growth

As anticipated, emerging markets are projected to demonstrate growth rates in the coming years that will leave developed countries in their wake. Each new estimate reinforces the remarkable growth potential of these economies.

New Tax Breaks Announcement

Today, President Obama is expected to unveil a series of new tax breaks aimed at corporate America to stimulate the economy. This comes as concerns continue regarding the vulnerability of the already sluggish economic recovery.

Book Store Update

Don’t forget to check out the new “Book Store” link at the top of the page. All books mentioned in this blog will be listed here for easy reference.

Critique of Economics

The effectiveness of economics is under scrutiny once again. Many critics argue that macroeconomists failed to recognize the mounting risks that ultimately led to the economic expansion’s end and the onset of the Great Recession—the most severe downturn since the Great Depression of the 1930s. Roger Backhouse, in his thought-provoking book The Puzzle of Modern Economics: Science or Ideology?, suggests that economics is both a contributing factor to the problem and a potential part of the solution.

Challenges Facing Economic Elites

According to Ambrose Evans-Pritchard in The Telegraph, a sense of dangerous defeatism is growing among America’s economic elite. He suggests bold action, such as intensive bond purchases outside the banking system, to help stabilize the monetary base.

In a separate piece by David C. Wheelock from the St. Louis Fed, a critical question is raised concerning the relationship between the monetary base and bank lending. Despite a substantial increase in the monetary base, lending remains subdued due to banks’ reluctance to extend new loans, reflecting both weak demand and a lower risk appetite among lenders.

Conclusion

As we navigate these challenging economic times, the insights from leading economists and policymakers serve as essential guides. Understanding past mistakes and recognizing current trends can help shape better strategies for the future. Continuous evaluation of economic policy and market behavior will be crucial for fostering a more resilient economy.