The Longest Run

I've had the great pleasure over the past year to work on a key strategic project with some consultants from the Goldratt Group (including a trip to Amsterdam last year (to work directly with Eli Goldratt - see Jamming With Eli ). David Leonhardt's Economic Scene column in today's New York Times ( To Spend or to Save? Trick Question ) addresses the conflict many people are feeling right now between spending and saving; the paradox is that we need spending to improve the state of the economy, but we need savings to reduce personal debt, recapitalize banks, etc. Given all that, it's hard to know what to do, and the natural instinct is to hunker down and stop spending any more than is absolutely necessary. Leonhardt writes: It’s your fault. Part of it is, anyway. You, the American consumer, spent too much money. You bought too much house, took on too much debt and generally lived beyond your means. Your free-spending ways helped cause the worst financial crisis since the G...

At the New York Times, an early article from next Sunday's Magazine: The Big Fix . Absolutely worth a read. From the concluding paragraphs: The norms of the last two decades or so — consume before invest; worry about the short term, not the long term — have been more than just a reflection of the economy. They have also affected the economy. Chief executives have fought for paychecks that their predecessors would have considered obscenely large. Technocrats inside Washington’s regulatory agencies, after listening to their bosses talk endlessly about the dangers of overregulation, made quite sure that they weren’t regulating too much. Financial engineering became a more appealing career track than actual engineering or science. In one of the small gems in their book, Goldin and Katz write that towns and cities with a large elderly population once devoted a higher-than-average share of their taxes to schools. Apparently, age made them see the benefits of education. In recent decades,...

If you enjoyed my post a few weeks ago on the global economy, you might also be interested in the Boston Globe's overview of prominent economic blogs: Inside the influential new world of econobloggers and well as the field guide to economics and finance blogs . The article is a solid overview of the econoblog landscape. Two of my personal favorites are The Big Picture and Calculated Risk.

I had the great fortune while at an Executive Education course at Harvard Business School last week to participate in a case discussion with Professor Rawi Abdelal , an expert in international political economy. We studied a case concerning the U.S. current account deficit and the various causes and effects of the issues now affecting the global economy. It would be hard to put in a nutshell everything that was covered, so I'll just share what I left the room thinking about. First, the fact that the savings rate in the U.S. is zero is extremely unhealthy and Americans need to start saving more (understandably hard to do when incomes are stagnant/falling and unemployment is rising). Second, solving the problems will be incredibly difficult and complex because it is likely to require close coordination of many countries around the world and such coordination is difficult under the best of circumstances; in addition, for Americans to save more, we will need to spend less - which doesn...

A friend of mine at work reminded me of an article which ran in August in the New York Times: Obamanomics . I think it's worth a read regardless of your political persuasion.....

In his Tuesday Morning Quarterback column on ESPN.com , Gregg Easterbrook writes about the recent financial news. I've included a couple of the relevant passages; you can find more at the column link above. Overall, thoroughly depressing stuff, and I have to say I don't have much (any?) hope that either of the current candidates for president are going to bring fundamental change to this situation. Gimme! Gimme! Gimme! Last week, TMQ asked why no one was paying attention to the fact that the national debt ceiling was quietly raised by $800 billion during the summer. Well, toss that column: The White House just asked the national debt ceiling be raised another $700 billion, for the proposed financial-sector bailout. If that happens, in 2008 alone, $1.5 trillion will have been added to the national debt: every penny borrowed from your children and their children. Stated in today's dollars, in 1979 the entire national debt was $1.5 trillion. George W. Bush and Congress have i...