Economics

New Zealand Voters Swing Right: John Key's Shower Power

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Reason magazine’s Jesse Walker opens his commentary on the New Zealand election by saying: “At least one country is responding to the financial crisis by moving to the right, not left.” This is factually correct but may overstate the case.  read more »

Bailout or Just in Time Delivery?

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Toyota is careful in its ways; it didn’t get where it is today by idly locating manufacturing plants. And, so it chose Georgetown, Ky. – 12 miles north of Lexington on I-75 – for the location of its first and largest U.S. plant. It was followed in the ensuing years by numerous other foreign auto plants locating in the South – BMW, Mercedes, Saturn, Hyundai and yet another Toyota (in Mississippi).

Why, you may ask, did they come to the South?  read more »

Blame Wall Street's Phantom Bonds for the Credit Crisis

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The “credit crisis” is largely a Wall Street disaster of its own making. From the sale of stocks and bonds that are never delivered, to the purchase of default insurance worth more than the buyer’s assets, we no longer have investment strategies, but rather investment schemes. As long as everyone was making money, no one complained. But like any Ponzi Scheme, eventually the pyramid begins to collapse.

For the last couple of months trillions of dollars worth of US Treasury bonds have been sold but undelivered. Trades that go unsettled have become an event so common that the industry has an acronym for it: FTD, or fail to deliver.  read more »

Michigration: It's Not About Out-migration in Michigan

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Pertaining to brain drain hype, Michigan has no equal. So profound is the out-migration that a local broadcasting network coined a term: Michigration. This was in January of 2008. I did a little digging and discovered the fuel for the story was a United Van Lines study about Michigan’s net loss of residents.

Net population loss is often confused with emigration. Upstate New York, another brain drain case for a future article, is no exception. The Federal Reserve Bank branch in Buffalo issued a report that tried to clear up the confusion, explicitly stating the challenge is attracting more people instead of the assumed issue of retention.  read more »

California’s Inland Empire: Is There Hope in the Heart of Darkness?

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Few areas in America have experienced a more dramatic change in fortunes as extreme as Southern California’s Inland Empire. From 1990-2008, the Inland Empire (Riverside & San Bernardino counties) has been California’s strongest job generator creating 20.1% of its employment growth. The area also consistently ranked among the nation’s fastest growing large metropolitan areas. However in 2008, the mortgage debacle has sent this area, which had not seen year-over-year job losses in over four decades, into a steep downturn.  read more »

In Ethnic Enclaves, The U.S. Economy Thrives

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Dr. Alethea Hsu has a strange-seeming prescription for terrible times: She is opening a new shopping center on Saturday. In addition, more amazingly, the 114,000 square foot Irvine, Calif., retail complex, the third for the Taiwan native's Diamond Development Group, is just about fully leased.

How can this be in the midst of a consumer crack-up, with credit card defaults and big players like General Growth struggling for their existence? The answer is simple: Hsu's mostly Asian customers – Korean, Chinese, Taiwanese, Japanese – still have cash.  read more »

Island of Broken Dreams

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A The New York Times editorial wonders why foreclosure rates are so high in the two Long Island counties it rightly calls the “birthplace of the suburban American Dream.” After all, the area has “a relative lack of room to sprawl.” which in Times-speak should be a good thing, since “sprawl” is by definition both bad and doomed.

Yet it is precisely the constraints on new housing that has served as a principal cause for Long Island problems.  read more »

Influence of 'Creative Class' Ideas in Sweden

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By Nima Sanandaji, Johnny Munkhammar, and Peter Egardt

The American academic Richard Florida has gained international attention for his theories about the “creative class”. According to Florida, the key to urban success lies in attracting certain groups of people, such as artists, scientists and twenty-something singles. Florida insists that this can be accomplished through nursing a specific type of culture within a city: hip cafes, art galleries and other manifestations of indigenous street-level culture.  read more »

Up Next: The War of the Regions?

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By Joel Kotkin and Mark Schill

It’s time to throw away red, blue and purple, left and right, and get to the real and traditional crux of American politics: the battle for resources between the country’s many diverse regions. How President-elect Barack Obama balances these divergent geographic interests may have more to do with his long-term success than his ideological stance or media image. Personal charm is transitory; the struggle for money and jobs has a more permanent character.  read more »

The Case for Optimism on the Economy

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With the prospect of a long, deep recession staring us in the face, are there any reasons for optimism?

You betcha!

The central characteristic of the American economy – resiliency – is now being severely tested. But there are ample reasons to believe it will pass that test. Simply put, even after this crisis the US will still have the world's largest, most dynamic, most productive, most innovative, most technologically advanced, most competitive and most venturesome economy.  read more »