Weekend Reading

• Ben Friedman, a professor of economics at Harvard, essentially questions the value of financial engineering. Not that this is anything new, particularly since the recent crash, but it is a question worth considering. A lot of his contentions themselves are questionable, but I encourage you to read the entire piece. Some relevant quotes here: "For years, much of the best young talent in the western world has gone to private financial firms. At Harvard more than a quarter of our recent graduates who have taken jobs have headed into finance. The same is true elsewhere. ...At the individual level, no one can blame these graduates. But at the level of the aggregate economy, we are wasting one of our most precious resources. While some part of what they do helps to allocate our investment capital more effectively, much of their activity adds no economic value. ... What makes a more efficient financial system worthwhile is not just that it allows us to achieve greater production and economic growth, but that the rest of the economy benefits. ... Does the increased efficiency our investment allocation system delivers meet that hurdle? We simply do not know. ... It is time for some serious discussion of what our financial system is actually delivering to our economy and what it costs to do that."
• A logical follow-up, though not directly related: Business Week calls for a return to scientific innovation as our primary driver of economic growth. Again, nothing revolutionary, but nice to hear. As an engineer, I naturally tend to agree with such a view. However, IBM is already going international with such efforts, in ways previously unseen.
• The Economist takes a critical look at Chinese stock markets, more or less saying that the market doesn't seem to reflect fundamentals. I have to say, our stock markets don't seem to either.
• Remember when important people said we shouldn't have banks that are too big to fail? Guess what: those banks have grown even bigger!
• Barney Frank and Ron Paul want to audit the Fed, and I'm all for it. It seems to be amazingly difficult to pull off, however. Did you know the Government Accountability Office has no power to do so? What the heck?
• A response to Paul Krugman's claim that $9 trillion of projected debt is not that big a deal. In turn, Krugman respectfully defends his position. At face value, I think $9 trillion sounds pretty scary. Both sides present good arguments as to why it is and is not.
• Solar panels getting more affordable. I think this is an interesting piece: plenty of people could benefit from adding solar energy to their homes when factoring in lowered prices and federal incentives.
• This just can't be good: a state government garage sale. It reeks of desperation, but it's a good idea.