Economics @ ITT

China’s American Bailout?

Posted in economics by ittecon on August 26, 2013

The twenty-first-century economy has thus far been shaped by capital flows from China to the United States – a pattern that has suppressed global interest rates, helped to reflate the developed world’s leverage bubble, and, through its impact on the currency market, fueled China’s meteoric rise. But these were no ordinary capital flows. Rather than being driven by direct or portfolio investment, they came primarily from the People’s Bank of China (PBOC), as it amassed $3.5 trillion in foreign reserves – largely US Treasury securities.

via China’s American Bailout? by Alexander Friedman – Project Syndicate.

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Chomsky: The US Behaves Nothing Like a Democracy

Posted in economics by ittecon on August 19, 2013

The role of the PR industry in elections is explicitly to undermine the school-child version of democracy. What you learn in school is that democracies are based on informed voters making rational decisions. All you have to do is take a look at an electoral campaign run by the PR industry and see that the purpose is to create uninformed voters who will make irrational decisions. For the PR industry that’s a very easy transition from their primary function. Their primary function is commercial advertising. Commercial advertising is designed to undermine markets. If you took an economics course you learned that markets are based on informed consumers making rational choices. If you turn on the TV set, you see that ads are designed to create irrational, uninformed consumers making irrational choices. The whole purpose is to undermine markets in the technical sense.

via Chomsky: The U.S. behaves nothing like a democracy — www.salon.com — Readability.

The Myth of Competitive Markets

Posted in economics by ittecon on August 5, 2013

This blog doesn’t have much material yet, but what it does have is promising.

What [do] orthodox economists say about this lack of realism [in models of perfect competition]? Simple: they minimize it by saying that all scientific models are in some measure unrealistic. However, as already mentioned, the model of perfect competition is not a simplification of reality but rather is openly at odds with reality . But orthodox economists have an answer yet. They say: “This model is only the basis and principle of our research program. After, starting from this we will develop other models of imperfect competition more realistic, with market power, product differentiation, barriers to entry and uncertainty. The student only needs to be patient. Little by little as he progresses in his courses, will go looking models more and more realistic”. Here we have, therefore, the grand means of redemption that has neoclassical theory to its unrealism: the method of “successive approximations”.

The first thing we must say about this is that it is a big scam. In effect, during the first years of study is said to economics students that they will study models more and more realistic, but later, already explained the models of imperfect competition monopoly, oligopoly and monopolistic competition, economic theory courses become much more unrealistic and abstract.

via The Heretical Economist: ECONOMICS FOR HERETICS: EXPOSING THE MYTHS OF ORTHODOX ECONOMICS Extract from Chapter 5 – “The Myth of Competitive Markets”.

Fabulous Fab from Goldman Sachs guilty of $1 billion fraud

Posted in economics by ittecon on August 2, 2013

Let’s keep this going and apply the death penalty to these criminal corporations.

A New York jury has found former Goldman Sachs trader Fabrice Tourre liable for fraud in a complex mortgage deal that cost investors $1 billion.

via Fabulous Fab from Goldman Sachs guilty of $1 billion fraud | Eideard.