- Economics Can’t Solve Everything, Can It? (NYT): “Rarely have the limits of economics been more clearly delineated than in last week’s reports of a proposed futures market for terrorism. The Pentagon has been trying to find ways to know the unknowable. Where are terrorists likely to attack? When, and how? Not surprisingly for an administration with such professed trust in the power of markets, the experts came up with the notion of an open exchange. Anonymous investors would bet on the prospects for various kinds of attacks by buying and selling futures. Correct bidders would receive a payment of $1 a future if an attack actually took place. To the extent that the investors could reasonably appraise rumors and intelligence, the prices to claim those payments would hint at the likelihood of terrorism. The Pentagon’s researchers did not quite think things through, however. While an investor’s objective might be to make money, the objective of a terrorist is for an attack to succeed. Therefore, a terrorist might bet a huge amount of money that a bombing would occur on Wednesday, then explode the bomb on Tuesday. Flummoxing the government and disrupting an otherwise useful market could be worth millions of dollars.”
- In Most of the US, a Hous Is a Home but Not a Bonanza (NYT): “Homes in the areas that were already the most expensive — California and the Boston-to-Washington corridor — have often doubled or tripled in value, even after adjusting for inflation. The increases have created nest eggs for longtime owners and allowed them to borrow billions of dollars against their equity, financing new kitchens and college educations and keeping the current economic malaise from being far worse than it might have been. But while the boom has become the subject of daily conversations among the middle class and affluent in New York, San Francisco and Los Angeles, people in much of the country have little housing bounty to tap for home improvements, retirement or other needs. From Fort Wayne to Rochester to Salt Lake City, the prices of typical homes across most of the country’s vast middle have risen just ahead of inflation — and more slowly than incomes. The cost of homes in the most expensive cities is now about six times that in the least expensive, up from a ratio of three to one two decades ago.
- Buying of Oil for Emergency Reserve Assailed (WashTimes): “The Bush administration’s decision to buy oil for the government’s emergency reserve is contributing to tight supplies and higher energy prices, some economists and congressional Democrats contend.”
- United States: Report on the Observance of Standards and Codes (IMF, pdf): “It should be noted at the outset that the US Federal Government is the largest, widest-ranging, and most complex set of institutions in the world.”
- IMF Staff Report on the United States (IMF, pdf): “After experiencing one of the largest stock market declines in the post-war period and then falling into recession in early 2001, the economy was buffeted by a series of further shocks, including the September 11th attacks, major corporate failures, additional stock price declines, and the war in Iraq. Remarkably, productivity growth has remained robust; the rise in the unemployment rate has been relatively modest; and large corporate bankruptcies were absorbed without a systemic impact on financial intermediaries. Nevertheless, the recovery has been uneven and sluggish.”
Posted by Mises.org News
