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Rupert Murdoch, the media mogul extraordinaire, decided to keep the Wall Street Journal behind an online pay-wall, dispelling rumors it would be free after his purchase of the product.

Silicon Alley Insider deconstructs the reasons to keep it a pay-to-read publication:

• Not giving away a growing revenue stream of $75 million + in free money.
• Preserving the brand’s exclusivity.
• Continuing to charge premium CPM rates for a known audience.
• Preserving the value of the print paper for a long as possible (subscribers will be less inclined to drop their subscriptions if they have to pay for the content anyway). Continue Reading »

Dean Calbreath has a neat editorial comparing the current “credit crisis” to that of the great depression.

When FDR took office, the nation was seeing an average of 1,000 foreclosures a day.

During his first year in office, Roosevelt created the Home Owners Loan Corp., or HOLC, to help debt-laden borrowers pay off their mortgages. The HOLC took borrowers out of their high-interest loans and put them into 15-year loans – financed through federal bonds – with rates fixed at about 5 percent. Unlike many government bureaucracies, this was specifically designed to be a short-term program, intended to extend loans for three years and then oversee those loans for an additional 15 years.

With the HOLC and the Federal Housing Administration, the Roosevelt administration virtually created the long-term loan, which soon evolved into the 30-year, fixed-rate mortgage.

It’s unlikely such a plan could pass today’s government–but no matter how dire times seem, they’re not as bad as the great depression days. At least not yet…

[Image from AMNY.com]

James Surowiecki returns with a strong column on employment data in the January 21st edition of the New Yorker Magazine after a nearly month-long hiatus.

His always-insightful column takes on Wall Street’s obsession with economic data–despite the huge variance baked into the estimates. From his piece:

…the payroll report has a sampling error of as much as plus or minus a hundred thousand jobs (which means that, instead of gaining eighteen thousand jobs last month, we may have lost eighty-two thousand), while the household survey’s error margin is even bigger, at plus or minus four hundred thousand jobs. The payroll numbers are also subject to big Continue Reading »

We usually don’t cover politics—though its bond to economics is undeniable.

The link between the two disciplines stands to be even more overt in the Czech Republic, which will vote on a new president this February. The incumbent, President Václav Klaus, is facing a real challenge this year from economics professor Jan Švejnar.

Švejnar currently serves as the chairman of CERGE-EI, the Czech Republic’s most prestigious economics institute and Volha’s alma mater. He is also the chairman of one of the country’s largest banks.

Martin Jan Stránský has an interesting post about the race. He writes that it may be time for change in his country and says the progressive Švejnar is the man to do it:

Švejnar is running on a platform of EU integration, economic reform and open dialogue.

Klaus is not running on a platform based on anything, but instead claims that we should all be “familiar with his positions” based on his “previous statements and actions.”  Continue Reading »

Federal Reserve Chairman Ben Bernanke told Congress today that he was in favor of President Bush’s Economic stimulus package.

From the NYT Story: Mr. Bernanke said that whatever action Congress takes should be designed as a quick jolt to revive a languishing economy, and that measures like spending on infrastructure or long-term tax relief, which might take months or years to be felt, would be counterproductive.

Sound familiar? It’s the Iraq “surge” plan in action again! Many were skeptical that a short, sharp shock would do any good in Iraq, or that a “temporary” troop increase would be that. The plan seems to have been borne out though after a year. Perhaps the fiscal stimulus package will be effective too. Continue Reading »

The New York Times has an interesting profile of Ben Bernanke. It details how he learned economics, how he rose to power and the problems he faces. Pretty critical actually. Definitely worth a read: NYT STORY. Got to love the NYT photography too.

The Story compares Big Ben to former chairman Arthur Burns, who served under Nixon: Perhaps the last Fed chief to face such a difficult one-two punch of inflation and slowing growth was Arthur Burns, who was also the last academic to hold the job. President Richard Nixon, concerned that high unemployment could cost him re-election in 1972, told Burns to concentrate on revving up the economy. “No one ever lost an election on account of inflation,” Nixon confidently told him. Burns did as he was directed. An eventual result was runaway inflation and, for Burns, a legacy of failure.

Not particularly complimentary of academics! 

[Image from NYT]

Economists from investment bank Goldman Sachs say the housing slump and recent credit market turmoil will spill over into the broader economy this year and push the economy into recession if it isn’t there already.

“The latest data suggest that recession has now arrived, or will shortly,” said Goldman economists Jan Hatzius, Ed McKelvy, Andrew Tilton, and Seamus Smyth said. “The unemployment rate has now risen by more that 1/3 percentage point from the cycle trough. Historically, this has invariably been associated with recession, typically starting immediately and almost always within three months.”

Their prediction is that the Fed will cut rates to 2.50 percent from its current 4.25 percent. More at Forbes.com and Businessweek.

President Bush offered his opinion that the state of the economy is unclear, but whatever Democrats were planning to do about it was wrong.

Seriously. I couldn’t make this stuff up: “recent economic indicators are increasingly mixed,” he said [via NYT]. More from the NYT story: Mr. Bush is sticking to the theme of warning against doing anything that would harm the economy at a precarious time. He emphasized that Democrats should not increase wasteful spending or raise taxes, and that they should pass three pending trade agreements to boost the export sector, which right now is the strongest part of the economy.

When asked what Bush himself would do, his staff gave a characteristic response: ask us again when we get back from an eight-day tour of the middle east.

[Image from Lolpresident]

The government of Venezuela cut the official exchange rate of its currency, the bolivar, in order to stem inflation.

Rather than address the root causes of inflation, such as the printing of cash to fund arms deals, the government has just hacked three zeros off the currency exchange rate.

The bolivar’s official exchange rate is now 2.15 bolivars per dollar, compared with the previous official rate of 2,150 per dollar.

Prices are expected to adjust accordingly.

The bolivar inflated at more than 20% for the last twelve months ending in November. Inflation sat at 17% in 2006, according to Reuters.

Makes me wonder if they have any economists in Venezuela.

[Image from the BBC]

It has become an all-too-familiar headline: Newspaper shutters as Internet continues killing business. This time it’s the Post family of newspapers in Kentucky. From Businessweek:

Originally called The Penny Paper when it was started in 1881, the paper was renamed The Penny Post by E.W. Scripps, who assumed control in 1883. The newspaper became The Cincinnati Post in 1890, when its Kentucky Post edition began.

The Post newsroom was down to about 50 people at the end, and its daily circulation was less than a tenth of the 270,000-plus it enjoyed in 1960, before changing lifestyles, the expansion of television news, and later, the rise of multimedia news and advertising sources, sapped readership. Cleveland and Columbus, Ohio’s two largest cities, lost an afternoon paper each decades ago. Continue Reading »