Welcome to the new week. Here are some of the articles and opinion pieces I found interesting since you last heard from me.
Where's the front-page profileof Janet Yellen?
New York Times' readers were greeted Sunday with a front-page, above-the-fold profile of Larry Summers, whom President Obama is considering for the post of Federal Reserve chairman. The article traced Summers's career -- and millions earned -- since he was booted from the presidency of Harvard University in 2006. Considering both the placement and timing (Obama has said he will announce his nominee this fall) of the article, I can't help but wonder if there wasn't some kind "forward guidance" involved from a not-so-invisible hand.
Before you could say "price/rent ratio"
The prices of single-family homes went from cheap to expensive, according to this ratio, in a span of 2 1/2 years. Investors have been snapping up homes for cash and are renting them out. Yes, houses are still affordable, but with nationwide prices up 12 percent in the past year, "the recent brief era of cheap prices is over," according to the Wall Street Journal. It's hard to believe that before 1997, housing prices rose in line with the consumer price index. No double-digit ups and downs from one year to the next. Amazing what government incentives, in the form of favored tax treatment, can do.
Paul Krugman buries Milton Friedman
For days, Paul Krugman has been burying Milton Friedman on his blog. Keynes is back, Hayek is back, but a few decades from now Friedman will be regarded as "little more than an extended footnote," Krugman wrote on Aug. 8. In today's column, Krugman resuscitates Friedman, who believed government action was necessary to prevent depressions, but only enough to lance his real target: the Republican extremists who would do away with the central bank.
Tyler Cowen revives him.
And provides lots of interesting links to Friedman in his own words on subjects such as the key lender-of-last-resort role for a central bank to prevent a banking panic. Sometimes Krugman's filter can be, shall we say, a bit cloudy?
Cracked glass and broken chairs
Regular readers are familiar with Frederic Bastiat's parable of the broken window. Now comes Don Boudreaux, professor of economics at George Mason University and a senior fellow at the university's Mercatus Center, with a broken chair. In this case, the chair is an expedient source of firewood compared with schlepping out to the woodpile on a snowy night. It's a short-sighted decision that implies future sacrifice. I bet you can figure out where this is going.
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