May 19, 2024

Economix: Podcast: The Fed, Law Schools and Black Swans

Ben S. Bernanke, the chairman of the Federal Reserve, held the first news conference this week in what is to become a regular event, and he used the occasion to explain some of the constraints under which the central bank is now operating.

Inflation has begun to tick up, yet unemployment is still quite high and economic growth has slowed. The Fed is already holding short-term interest rates close to zero, and in June it is scheduled to end its quantitative easing program — in which it buys longer-term Treasuries and other securities. Monetary policy, in short, isn’t likely to become more expansive. Fiscal policy is more suitable at this stage for bolstering employment, Mr. Bernanke said. Yet federal, state and local governments are more focused on trimming deficits than on stimulating the economy.
Floyd Norris wrote about this awkward situation in his column on Friday, and he discusses the economy and the Fed’s dilemmas on the new Weekend Business podcast.

In a separate conversation on the podcast, Robert Shiller, the Yale economics professor, focuses on the difficulties in predicting financial crises and the prospects for improving forecasts by collecting different kinds of data. The recent crisis has sometimes been called a “black swan event,” a big outlier that could not have been foreseen. It’s possible, he says, that once economists figure out what they should be looking for — and collect historical data that will give them a basis for serious analysis — this particular kind of black swan will come to be seen as quite ordinary. He writes about this issue in the Economic View column in Sunday Business.

Data privacy issues are Natasha Singer’s concern in a conversation on the podcast and in her Slipstream column in Sunday Business. She discusses several recent instances of possible privacy breaches in connection with data collected by Apple, Google, Sony and the New York Yankees, and analyzes a Supreme Court case involving the privacy of patient prescription data in Vermont.

Lawyers are often quite sophisticated in their reading of fine print and their analysis of numbers. But first-year law school students who receive merit scholarships may not understand the odds they face if they hope to keep that aid in their second or third years, according to David Segal. He writes about the issue on the cover of Sunday Business and discusses it on the podcast with David Gillen.

I also discuss my Strategies column in Sunday Business, which revolves around a paper by Shlomo Benartzi, a U.C.L.A. behavioral economist. He says financial advisers should openly acknowledge when their stock recommendations have been failures — and when their successful choices are just matters of luck. Assuming that these advisers are making some good recommendations, candor will enhance their credibility and, in the end, be good business.

You can find specific segments of the program at these junctures: Floyd Norris (39:27); news headlines (30:19); law schools (26:45); privacy breaches (20:24); black swans (12:58); financial strategies (5:15); and the week ahead (2:15).

As articles discussed in the podcast are published during the weekend, links will be added to this posting.

You can download the program by subscribing from The New York Times’s podcast page or directly from iTunes.

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