Trade vs Macro

"Most people who work in international trade tend to lose the thread when the discussion turns to exchange rates and the balance of payments; as I’ve sometimes put it, the real trade people regard international macro as voodoo, while the international macro people regard real trade as boring and irrelevant"

This is Krugman writing about the genious of Paul Samuelson.

Did drug money save banks in global crisis?

From the Guardian: Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were “the only liquid investment capital” available to some banks on the brink of collapse last year. He said that a majority of the $352bn of drugs profits was absorbed into the economic system as a result…Some banks were rescued that way!

ht: Trebesch

The social value of (some) professions...

FYI it's calculated here in a report entitled "A bit Rich". The report is published by the New Economics Foundation, which is also famous for the work behind the Happy Planet Index.

RIP Samuelson

Paul Samuelson was once challenged by the mathematician Stanislaw Ulam to name a single proposition in all social science that was both true and nontrivial. Samuelson thought of a good answer: the principle of comparative advantage.

He died today, age 94. As Ricardo Caballero puts it, “We will miss him and his unmatched wit very much, but his intellectual legacy is enormous and perennial. The world is different today because he was with us for many years."

Southwest Airlines frames it right

Check out the discusion of this post for context!

An example to explain Purchasing Power Parity to students

Imagine 2 countries, symmetric in every respect. Each country has one restaurant and one consumer. In country A, meals are $10. In country B, $20. In country A, the consumer eats at the restaurant twice a year. In country B, once. Hence, both countries have a GDP of $20. At PPP exchange rates, countrty A is twice as rich. (And that doesn't even take into account the externalities of social interactions). I let you guess which countries I have in mind.

ht: Hozik

Free sex in Copenhagen

Prostitutes will offer free sex to delegates at the  UN climate summit in Copenhagen next week. It is not, as I first thought, an inititative of Denmark which cares so much about the success of the event that it wants to please the delegates as much as possible. No, it is not that prostitutes themselves care that much about climate change...Rather, they are protesting against the city hall distribution of postcards in Copenhagen's hotels that say "Be sustainable: Don't buy sex." The prostitutes will accept these postcards for payment. In your face city hall! Why such a move form city hall, when the service could have greased the wheels of negotiations, offering some pressure relief? I wonder what the penguins think.

Transatlantic baggage allowance

Airlines are all of a sudden (since September)  coming together in limiting their free baggage allowance in economy on transatlantic flights to one bag of 23kg! And they are charging $50 for a second bag! What is this conspiracy against the public? When I first started flying we could take 2 bags of 32 kg each. Then it went down to 2 of 23kg, and now just one! What is this decrease of quality of life??? It doesn't sound right to me, it should go the other way around.

Pirate stock exchange

Piracy is a lucrative business that has drawn financiers from the Somali diaspora and other nations -- and now the gangs in Haradheere have set up an exchange to manage their investments. (reuters)

One wealthy former pirate named Mohammed explains it best:  "Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 'maritime companies' and now we are hosting 72. Ten of them have so far been successful at hijacking...The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials ... we've made piracy a community activity...Ransoms have even increased in recent months from between $2-3 million to $4 million because of the increased number of shareholders and the risks"
 
ht: freaknonomics