What can the Obamas' investment portfolio tell us---not much

BARACK and Michelle Obama stand accused of being too conservative---at least when it comes to their investment portfolio. For a couple in their mid-40s, the Obamas' investment holdings are arguably too conservative. One of the single largest chunks of their money (between $150,000 and $350,000 as of year-end 2006) was invested in the Vanguard Wellington Fund, which has about 65 percent in stocks, 33 percent in bonds, and 2 percent in cash.Vanguard’s popular target date fund would place a forty-five year-old 40% in bonds. So the Obamas’ might be a little more aggressive (or used to be before they moved their assets into a more “socially responsible” fund) than recommend. It’s suggested that their investment habits are remarkably middle class

Russia's gilded economy

TYLER COWEN reads this Newsweek piece on the Russian economy and highlights this (admittedly fascinating) tidbit:By 2015, Moscow will boast the 10 tallest office buildings in Europe—and already prime office rents in Moscow are going above $2,000 a square meter, 50 percent higher than the most prestigious skyscrapers of midtown Manhattan.My attention, however, was drawn to something a bit further on and relevant to yesterday's post on the natural resource curse:But in truth, the Russian economy as a whole is an edifice with feet of clay. The bling and glitter of the capital obscures a harsh reality: the architecture of Russia's economy is no more solid than that of an inflatable children's castle at fairground, with energy and commodity prices

A look at petrol tax debates past

AN EDITORIAL leader from December 12, 1988 concluded:The thought of higher fuel taxes horrifies many Americans, who have long swallowed the oil lobby's PR as assiduously as its product. They are told dearer petrol is regressive--the poor drive gas-guzzling old bangers--and would unleash inflationary spirals. The oil lobby claims a 50-cent tax increase could reduce employment by 1m, and chants Mr Bush's pledge not to raise taxes. These arguments ignore great benefits. A 50-cent rise would bring in $50 billion a year of tax revenue, and cut America's $155 billion-a-year budget deficit by nearly a third. That, in turn, would allow interest rates to fall. Even if phased in over three-four years, it could eventually cut America's appetite for foreign

Markets are bearish on the GOP

PAUL KRUGMAN, whose support for Senator Hillary Clinton was vocal and vigorous, appears ready to move on, declaring, "OK, barring some truly shocking revelation, Barack Obama will be the Democratic nominee. Will he win in November?"An interesting question, and Mr Krugman turns to political economy data to help with the answer. He cites Emory University political scientist Alan Abramowitz who writes:Based on President Bush's approval rating in June of 2007, the recent growth rate of the economy, and the fact that the Republican Party will have controlled the White House for eight years, the Democratic nominee would be predicted to win the national popular vote by a comfortable margin. For the Republican nominee to have a reasonable chance of winning

A daily round-up of economic news:

A daily round-up of economic news:The Financial Times is reporting that European and American officials are in agreement that it would be beneficial to both economies for the dollar to strengthen against the euro. No joint intervention is expected, but leaders hope that communicating this new stance may help prevent any further drop in the dollar.Meanwhile, both the Bank of England and the European Central Bank held key interest rates steady. ECB president Jean-Claude Trichet acknowledged growth concerns but repeated that inflation was his primary target at present.Toyota surprised investors by announcing a 28 percent drop in quarterly profits. The firm blamed a strong yen and a weak North American market for its difficulties. The strength of the Japanese currency

Or are the cursed merely resource dependent?

IS THE resource curse dead? Common Tragedies' Daniel Hall points us to new research on the subject:The standard resource variable used by Sachs and Warner, as well as by Collier and Hoeffler, is primary exports divided by a measure of national income. It thus captures the resource dependence of economies, rather than abundance. A negative correlation between this variable and growth could mean that resources lead to slower economic growth, as suggested by the curse proponents. Alternatively, it could mean that poor economic development policies–leading an economy to become dependent on its primary exports–dampen growth...If so, resources are not a curse to development, but rather a safety net to support people and economies even under adverse circumstances...When using the new

See if you can spot the trend

DAVID LEONHARDT, the New York Times' economics reporter, raised some eyebrows today with a column explaining that inflation isn't nearly as bad as it feels (even though it is still an unhealthy 4 percent or so). The reason, he notes, is that we pay much more attention to price increases than price decreases--no one remarked much upon falling real food prices in the 1980s and early 1990s--and we pay MUCH more attention to price increases for products we buy frequently.You know, like gasoline. Or foodstuffs, it's true, but the rising cost of petrol has captured the American public's attention and ire in dramatic fashion. It isn't difficult to understand why. For one thing, Americans have built most of their cities

A post to make you hungry

SETH ROBERTS draws our attention to a bit of amateur economics produced by Jennifer 8. Lee, a journalist who has written a book on the subject of Chinese restaurants. Mr Roberts writes:Why did Chinese immigrants to America start so many restaurants? Because Chinese cuisine is glorious, right? Well, no. Chinese immigrants started a lot of laundries, too, and there is nothing wonderful about Chinese ways of washing clothes. As Jennifer Lee explains in this excellent talk, the first Chinese immigrants were laborers. They were taking jobs away from American men, and this caused problems. Restaurants and laundries were much safer immigrant jobs because cooking and cleaning were women’s work.I don't doubt that there is something to this. On the other

A daily round-up of economic news

A daily round-up of economic news:American labour productivity jumped ahead in the first quarter, surprising analysts. Productivity was up 2.2 percent during the first three months of the year, as labour costs rose more slowly than in the fourth quarter of 2007. Higher productivity growth should help reduce inflationary pressures.The European Commission has cleared the way for Slovakia to enter the eurozone in January. The country would be the 16th to take up the European currency. The European Central Bank has expressed concerns about inflation in Slovakia, but that is unlikely to derail its entrance.UN flights into Myanmar have been authorised in the wake of cyclone Nargis, but the nation's government continues to deny visas to aid workers, even as

How much are parents to blame for the skill deficit?

I ALSO found the Joseph Altonji,  Prashant Bharadwaj, and Fabian Lange post provocative. Particularly, the presumed role parents play in determining their child’s wage/skill outcome. When the authors estimate an index of skill level they include the parents’ education attainment. This assumes better educated parents necessarily spawn more skilled children. It seems to be a reasonable assumption.However, while parents have become better educated, measures of individual achievement (years of completed education and a measure of cognitive intelligence, AFQT scores) increase only by a modest amount. This is surprising; you would think more educated parents would result in even smarter, better educated children. In spite of having a better education, the parents may not be passing on the benefits to their

So why don't we see more schooling?

THERE is a fascinating and important ongoing debate concerning recent growth in American income inequality. Just a few weeks ago, the Economist highlighted recent work by Paul Krugman suggesting that trade was playing an increasing role in widening income gaps. In response, Josh Bivens, whose work was featured in that piece, wrote that trade could possibly be blamed for a third of the rise in inequality.I thought it was important to point out that the problem wasn't wage gaps, but the failure of American workers to respond to them. Slowing educational attainment has meant more unskilled American workers and fewer skilled workers, a supply situation which has pushed wages apart.I found it interesting then when Mark Thoma featured a comment

Why hip hop is great in 2008

CHRIS BLATTMAN directs us to perhaps the most remarkable thing I've ever seen on the internet--a rap song dedicated to the wonders of the Economist. The Foreign Policy blog notes:A teenage rap duo in Chicago has recorded a track, aptly called "The Economist," that extols the British publication's breadth and brevity and samples podcast commentary by correspondents Edward Lucas and Anthony Gottlieb."The style in which they write is simple and concise, how do they get their sentences so precise?" the rappers wonder.And the chorus is a gem, too: "He reads the Economist so he can get the gist, its solid competence gives him confidence that his intelligence is correct."The rappers also weigh in on accusations that the Economist pushes a

A daily round-up of economic news

A daily round-up of economic news:Housing losses continue to take a toll on mortgage companies. Fannie Mae lost $2.19 billion in the first quarter, more than anticipated. The firm said that price declines in some of the hardest hit markets exceeded expectations. Fannie Mae will raise $6 billion in new capital to handle the continuing crisis.UBS, among the banks hardest hit by mortgage losses, will sack 5,500 employees after losing nearly $11 billion in the first quarter. The bank is shedding divisions and assets in an attempt to right the ship. UBS has written down $38 billion in losses through the crisis to date.At least 22,000 are now reported dead, with thousands more missing, in Myanmar, which was struck by

Will postage stamps pay a higher return than real bonds?

THE PRICE of a first class US postage stamp goes up 2.4% on May 12. The last increase happened in May of 2007, the price then went up more than 5%. Certainly, rising fuel costs are to blame. Transportation makes up a large component of mail delivery costs. Good thing too; I just bought several books of forever stamps. I should buy more if I expect the price of stamps to increase more than the total return on TIPS. TIPS pay a return and its principle gets adjusted using the Consumer Price Index for all urban consumers (CPI-U). Transport costs claim only a fraction of the index. Suppose the stamp price is indexed to transportation costs and it goes up

First, let the market work. But then what?

PAUL COLLIER, acclaimed author of The Bottom Billion, has surely written one of the most linked comments in recent blogospheric history. Posted on an entry at Martin Wolf's quasi-blog, Mr Collier's piece is a detailed and brilliant look at the causes of the ongoing food crunch and what might be done to provide relief. Felix Salmon helpfully sums up the text in bullet point form, saying that, "The main causes and solutions to the present food crisis, then, through Collier's eyes:* Chinese are eating cows which are eating grain which would otherwise have been eaten by Africa's poor.* Americans are turning grain into ethanol which would otherwise have been eaten by Africa's poor.* Europeans are banning genetically modified crops, which