So recently I attended an event where eminent Harvard historian, Niall Ferguson, and senior fellow at Schwartz Center for Economic Policy Analysis, Jeff Madrick, spoke about the current economic crisis.  These two men are both highly regarded individuals when it comes to academic matters, especially when it concerns economic history.  Madrick, it seems, is a liberal Keynesian academic while Ferguson is very much conservative and classical on economic matters; the guy thinks the Federal Reserve caused the Great Depression.  Overall it was very enjoyable to see these two intellectuals spar when it came to the issue of debts, Keynesian economics, the outlook of the American economy, and President Obama’s economic policies.

            On debts the two men differed greatly.  Ferguson, the more articulate and charming of the two, lambasted America’s absence of “thrift spending” and called for people to save more out of their income.  He argued, that according to basic economics, saving would in the long run better serve the American economy.  Madrick, in response, said the average American income, adjusted with inflation, has flat-lined and perhaps even decreased since the late 1960s; thus by in large, the idea of there being an overly consumerist American is a myth.  Ferguson shot back saying regardless, data proves debt is increasing when compared to previous decades, and that Madrick’s focus on middle class spending is the wrong way to approach it.  Because in reality, according to Ferguson, the debt is largely from the rich, upper class, and that it is precisely the mishandling of this money amongst the rich that greatly contributed to the current financial mess.  The two men continued to argue over whose data was “more right”, so the moderator moved on to a different topic.

            As for Keynesian economics, Ferguson handsomely critiqued it as mainly a form of economics that has become too politicized and simplified to be efficiently utilized by the government.  But more fundamentally, he believes the long-term effects of intensive Keynesian economics, such as large deficits and debt, eventually hamper and stagnate the overall economy.  He cited the current state of the Japanese economy to support his view.  Madrick, in defense of Keynesian policies and now Obama’s, said the massive intervention and regulation of government both fiscally and monetarily is necessary.  The loss of entire businesses, financial structures, and the economic lives of individuals must be avoided if possible, and it is Keynesian policies that do exactly that.  Both Madrick and Ferguson did agree however that Keynesian economics has become oversimplified and too politicized though.

            As for the outlook on the American economy, both had very pessimistic views, and Ferguson said the Obama Administration’s predictions of economic growth next year were that of “fairy tales.”  They both blamed economists, yet surprisingly not themselves, for being unable to see this financial hurricane coming.  Although on a lighter side, Ferguson remarked that the United State is doing much better than many other countries, especially the East Asian ones, where GDP is expected to fall about 10% and that the U.S. bailout, when proportionately compared to China’s, is relatively small.  The U.S. will instead, in Ferguson view, will have a GDP contraction of only around 2 or 3 percent.

            Now as for President Obama’s policies, both had their criticisms, but it was really Ferguson who had the harshest words.  The man said the main issue now was the incoming collision that would occur between Obama’s monetary policy and his fiscal policy.  Ferguson warned that the tremendous debt resulting from Obama’s massive fiscal increases and the Federal Reserve dropping the interest rate to near 0% would cause very high interest rates in the near future.  The Harvard academic was very concerned about this, because such a future will harm the economy over the long run.

            I must say though, Niall Ferguson, despite the fact he’s opposite me when it comes to economic matters, is a man whom I greatly admire and respect.  His intellectual prowess and charming wit, not to mention his great ability at articulating himself, always leave a deep impression upon me.  Jeff Madrick was great too, but Niall was really amazing; it’s people like him that make me want to become a renowned academic. I recommend all you guys check out Ferguson further; he’s also a great history writer!

The world of print journalism will never be the same again. After 150 years of service to the Denver community, the Rocky Mountain News announced Thursday that their final issue would be Friday (February 27, 2009). Owned by the E. W. Scripps Company, the newspaper had been in financial trouble for months due to an industry-wide decline in newspaper revenues and the current financial turmoil that has shaken global markets.

The Rocky Mountain News had a storied history. Its first printing was in April of 1859, when William N. Byers, an Ohioan by birth, moved to Denver in order to sell newspapers to citizens of a booming gold-rush city. Since then, the paper has been through countless adventures. Evidence of the paper?s rich history can be found in author Robert L. Perkins? The First Hundred Years-an Informal History of Denver and the Rocky Mountain News, a book that chronicles the adventures of the Denver news giant from its birth in 1859 to its one-hundred year anniversary in 1959.

It is fitting to note that, while the closing of this institution is indeed a great tragedy, both for the industry and for the loyal readers of the paper, the Rocky Mountain News has left the stage in peak condition. The tenure of the paper?s last editor, John Temple, has seen the tabloid finally solidifying its position as a no-nonsense, high-quality news source that shatters the traditional stereotype that many Americans have come to associate with tabloid newspapers. Since 2000, the Rocky Mountain News has won four Pulitzer Prizes. Three were for excellence in photography while the last one was for reporter Jim Sheeler?s ?Final Salute? article, a piece about Casualty Assistance Calls Officers in the United States Marine Corps that was recognized as an outstanding achievement of journalistic prose, form, and content. While the death of this paper is a tragic one, Rocky employees can rest assured that the content produced by the paper was not at fault for the collapse of their beloved institution. Rather, revenues from Classified ads all but disappeared with the advent of Internet posting of services and sales, especially from sites like Craigslist.

This bottoming-out of revenue streams provided by newspaper ads has had detrimental affects throughout the American newspaper industry. This past Wednesday (February 25^th, 2009) saw the announcement from the San Francisco Chronicle that the newspaper was in experiencing incredible financial hardships, with the paper losing thousands of dollars each week. Hearst Corporation, owner of the Chronicle, knows that it cannot accept these losses forever. Currently, the paper looks to be listed for sale or closing within the coming months. The Journal Register Company, a multi-state corporation that owns over three-hundred local newspapers, recently filed for Chapter 11 bankruptcy protection due to the almost complete destruction of revenues.

Some newspapers seem to be surviving, if not thriving, in this world of lessened newspaper revenues nationwide. The Wall Street Journal, for example, seems to be weathering the hard times nicely to due to highly successful web-based subscription service has resulted in many people paying substantial annual fees in order to read the Journal online each day.

The Rocky Mountain Press may be the first newspaper to go this year but it will certainly not be the last. With the passing of this once-formidable institution, an industry stands on the brink and waits to see if any more papers will share the same fate as the Rocky. For the job-seeking, ex-employees of what was Denver?s top tabloid and for the dedicated readers who enjoyed their paper?s daily serving of news, the market shift that has gutted the profit-making organs of newspapers across the nation has already taken its toll and robbed the world of quality writing and photography that Denver knew and loved. This new paradigm shift, while justified according of the market?s natural tendencies, has left a world where everyone already misses their Rocky.

Copyright Daniel Downs 2009

It was with incredible shock that I heard Senator Dodd casually mention the n-word while appearing as a guest on “Political Capital with Al Hunt,” a Bloomberg Television talk show that airs on Friday afternoon and Sunday morning. That a man could so audaciously use such a powerful, aggressive word in seemingly polite discourse was, to say the least, a surprising fact. Whether or not Senator Dodd intended his use of the n-word to have drastic consequences, the result was the same: markets tumbled Friday on the news that influential sitting politicians, such as Chris Dodd, were even considering the implementation of the n-word. When Alan Greenspan had used that n-word earlier this week, the market generally pooh-poohed his remarks without giving them much credence, as the aging former Chairman for the Federal Reserve, while still influential, now has almost no control over the mechanisms of this government, economic or otherwise. Dodd?s use of the word this Friday sent shockwaves through Wall Street as investors questioned their very reason for being.

This insidious word, one that is rarely mentioned in successful capitalistic societies, is certainly not what is needed now. The word I have been alluding to is, of course, ?nationalization.? Simply defined, nationalization is the process of a government seizing the interests of a company or even an entire industry. The history of the use of nationalization aside (Wikipedia and InfoPlease.com and good places to start for those wishing to brush up on the history of nationalization), the reason why this word has caused so much fear on Wall Street as of late is due to, among other things, a specific aspect of nationalization; namely, how investors are compensated once a government takes control of a business or industry. If a government were to nationalize an industry without compensating investors, the result would be known as expropriation. Depending on the industry, investors could lose millions to billions of dollars worth of assets simply because the government exercises its power (legally given or otherwise) to take control of a freely-operating business.

A nice benefit to living in a (mostly) free-market, capitalistic society is that businesses are allowed to fail and, by extension, allowed to succeed. As failure is generally an unpleasant option for entrepreneurs and business owners, the quest for success is generally what a business and its owners endeavor. That the government may swoop in at any moment and take over a successful (or failing) business is not a thought that business owners and operators wish to address. The idea that the government may, at any time, take over a business and jeopardize the assets of those who own stake in the company, is one that is simply abhorrent! Barring a major societal and economic shift, I can only hope that Senator Dodd and other law makers avoid the use of the n-word so that businesses and the people in their employ can continue trying to make a profit without the (hopefully needless) fear of government confiscation.

Copyright 2009 Daniel Downs