Slovakia rejected the EFSF.  Via Tyler Cowen:

Today, Slovakia has the lowest average salaries in the euro zone. How am I supposed to explain to people that they are going to have to pay a higher value-added tax (VAT) so that Greeks can get pensions three times as high as the ones in Slovakia?

Here is the story.


Searching for Confidence

From a blog on

A few weeks ago The Economist invited readers who enjoy our Big Mac index to invent other quirky economic indicators. We were particularly interested in ideas that might help to show where the economy is heading.

A contributor offered a quirky index that ties consumer confidence to Google searches for “gold price”.  More detail:

This does not follow the gold price itself. For example, during 2008 when the world’s financial system was melting down, the gold price fell yet the number of searches soared.

And the chart, with the consumer confidence data lagging in availability behind the searches for gold price.  I have a feeling I know what it will look like when it comes in.

The Impressive NTC

Good news coming out of Libya.  The rebels seem to be well-organized.

Whatever Colonel Qaddafi’s whereabouts, most are concerned with what will follow him. Members of the transitional council are sharply aware of the experience of Iraq, and are determined not to repeat its mistakes. Benghazi experienced a comparatively smooth transition to rebel control in February, thanks largely to the policy of the rebel interim government, the NTC, of keeping key technocrats in their posts. There is no ruling party akin to the Baath party in Iraq, and so less pressure to get rid of policemen, power-plant managers, and others who may have been linked with the fallen regime but who are also key to running a modern city. NTC officials have also warned rebel fighters against reprisal attacks and looting: “The world is watching us… Do not avenge yourselves, don’t pillage, don’t insult foreigners and respect the prisoners,” senior council member Mahmoud Jibril declared on national television.

And there’s this:

When the final push came, it seemed to evince an admirable degree of orchestration. The NTC’s forces surged into Tripoli from three fronts, joining a general outpouring into the streets that began with several imams’ call for the evening prayer on Saturday.

Obviously this thing is only just beginning, but it is heartening to watch a well-orchestrated regime change without U.S. fingerprints all over it.

Howlin’ For You

The video for the Black Keys’ Howlin’ For You is awesome.

Stage Collapse in Indianapolis

Disturbing video of the accident via the Indianapolis Star.

Government as Administrative Assistant

Noah Smith offers a practical critique of privatization of government services:

irreducible transaction costs are a fly in the libertarian soup. Completing an economic transaction, however quick and easy, involves some psychological cost; you have to consider whether the transaction is worth it (optimization costs), and you have to suffer the small psychological annoyance that all humans feel each time money leaves their bank account (the same phenomenon contributes to loss aversion and money illusion). Past a certain point, the gains to privatization are outweighed by the sheer weight of transaction cost externalities.

For certain things, government provision relieves individuals of the mental burden of engaging in numerous small transactions while imposing only relatively minor costs.  Noah argues that such a society “feels freer”.  This is an interesting argument for government intervention, and Noah makes a convincing case.  The anarcho-capitalist utopia does seem like a huge hassle doesn’t it?

How would a libertarian reply?  Perhaps by suggesting that institutions would emerge to relieve the individual of many of the expected burdens.  For instance, one might be able to join a group that allows access to a network of parks, benches, and roads for a periodic fee, thus eliminating the need to initiate a separate paying transaction every time one wants to sit on a bench.  One might also add that we have no idea what would happen, but if these hassles were a big problem for people, the market would probably find a way to fix them.

That said, unless you are writing your libertarian manifesto, it’s hard to disagree with Noah.  Arguing for real-world action on the finer points of libertarianism can get you into trouble.  Do you really want to lead the fight against government-provided parks?  You might even be right, but who cares.  There are more important things.

PS: The comments on Noah’s post are worth reading.

QE3 and Yield Curves

Alex Tabbarok suggests that the recent Fed Statement may have had the same impact on the yield curve as a QE3 of about $760 billion.  As Justin Wolfers explains:

Many market commentators are disappointed that the Fed didn’t announce “QE3”—a renewed round of quantitative easing. But they shouldn’t be. The Fed still chose to reduce long-term interest rates, they just decided to do it with a different tool. They figured that if you can’t reduce short-term interest rates further, you should reduce ‘em for longer. That’s what the Fed was promising, when they said they expect to keep their short-term rate at “exceptionally low levels for the federal funds rate at least through mid-2013.” What does this do? Keeping short-term interest rates lower for longer will also reduce long-term interest rates. And that’s the main game.

Emphasis added.  Recent movements in the yield curve suggests this happened as described.  Although recent trends in the equity markets seem to suggest… nevermind, I’m done trying to figure out what’s going on in the equity markets.