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Time: Are markets irrationally exuberant? Nobel Prize winning economist Robert Shiller believes they are. September 14, 2015

Posted by OromianEconomist in 10 best Youtube videos, 25 killer Websites that make you cleverer, Economics.
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???????????Trickle down economics

Shiller, a behavioral economist, closely tracks investors’ feelings about the market. He believes that emotions can hold the key to market movements. When I saw Shiller late last week for an interview about his new book on the economics of deception (“Phishing for Phools,” written with Fed Chair Janet Yellen’s husband George Akerlof), he told me more investors are worried that the market is over-valued than at any time since the peak of the dotcom bubble in 2000.

“Interest rates have been at zero” for a long time, says Shiller. “The economy has been viewed as sluggish, and yet [corporate] earnings have been growing and prices have been growing at a rapid pace.” That kind of “irrational exuberance,” says Shiller, is exactly what bubbles are made of.

So, why haven’t we seen a major sell-off, one more lasting than the dip we saw a few weeks back, after which the markets quickly rebounded? Because, says Shiller, investors are caught between two dueling narratives about the market.

First, there’s the “New Normal,” story, which is that we’re in a period of low interest rates that will last a long time, and that’s what’s kept markets up. This creates a sense of unease that our recovery isn’t real, but has somehow been genetically modified by central bankers.

“The aggressive monetary policy, which developed as kind of a new approach to managing [the economy] and was largely international, brought us these very low interest rates,” says Shiller. What’s more, “long rates are low, which represents some kind of public attitude that this [new normal] is going to go on for a long time.” As I have written many times, long periods of easy money always create bubbles. Meanwhile, says Shiller, “there’s another not so commonly-raised factor in connection with understanding the market: concern about inequality, which is rising, and also related to that a concern about information technology replacing jobs.”

Both of those things add to the sense that there is bad news lurking underneath those seemingly strong corporate earnings data of the last several years. That makes investors jittery.

But there’s another narrative. America is still the prettiest house on the ugly block that is the global economy. Where else can people park their money, if not in U.S. blue chips? Shiller adds that the growing sense that bad news may be looming can also “encourage people to accept high prices for houses and the stock market because they need to have something for the future.” Rising markets are supported by investors and consumers whoneed them to rise, because it makes them feel richer. “And they’re not going to say, “Oh, this price is too high, I’m going to consume this,” says Shiller. Rather, they accept the higher and higher asset prices – until they don’t anymore. That’s when the bubble bursts.

Those two dueling narratives may be one reason that markets have been volatile of late. People who hold equities have earned a lot of money — the stock market has gone way up. You could conclude, says Shiller, “I’ve got so much money, let’s go on a cruise! Let’s have a lark.” That sentiment drives consumer spending at the higher level. “But maybe you don’t because you’re worried. You have the sense that [things could change] — or maybe you’re worried about your children,” says Shiller. “In 20 or 30 years, I don’t know what they’re going to be doing. I’m just worried. Or maybe they’ll be doing horribly. So let’s keep that stock.” That in turn buoys markets. It’s a somewhat bipolar cycle that fits with the level of volatility we’ve seen all this year, which is much higher than last.

So what happens now? At some point, the market will receive some important new signal. It could be a rate hike from the Fed this week. Or it could be another raft of bad news from China. At that point, we’ll likely see another sell-off. The question then is whether it becomes a stampede. There’s no metric that will answer that question for sure. Emotions, as much as data, hold the key to what the markets will do. No wonder Shiller won the Nobel for saying as much.

How Emotions Are Affecting the Stock Market

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Leaves in a Dry Wind September 14, 2015

Posted by OromianEconomist in Uncategorized.
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???????????Drought, food crisis and famine in Afar state captured through social media1, August 2015ethi_famine_30_years1414175983

lifelessons - a blog by Judy Dykstra-Brown

Version 2
The essay I am reproducing below is a reply to a comment made in my blog by OromianEconomist regarding the pictures and short essay on my blog  (You can find them HERE.) in which I referred to the Ethiopian drought of the early 1970’s. This was his comment:

“The same is going on right now in Ethiopia. Authorities are either hiding the presence of famine or stealing the food aid.”

He included the below link to an article written about the current drought which I suggest you read.  https://oromianeconomist.wordpress.com/2015/08/27/the-cause-of-ethiopias-recurrent-famine-is-not-drought-it-is-authoritarianism/      My comments follow below.

                                                           Leaves in a Dry Wind

I wrote this initially short reply to the Oromian Economist’s comment on my blog, but then I seemed to just keep writing and writing until it turned into an essay of sorts.  The facts are from memory and I realize I need to do some further research and I’d…

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Welcome to Oromo St in  Little Oromia, Minnesota September 14, 2015

Posted by OromianEconomist in Uncategorized.
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(Advocacy4Oromia, 11 September 2015) Minnesota Oromos get their very own street under their community’s name-Oromo Street, today, 11 of September 2015.

Oromo St 2

Little Oromia’s ‘Oromo Street’  was officially inaugurated on September 12, 2015.

Minnesota of United States of America is widely known as “Little Oromia” among Oromos with an estimated 40,000 Oromos who flee from their homeland,Oromia, East Africa, due to political persecution.

The Oromo are the single largest national group in Ethiopia, constituting nearly half of the country’s 98 million population.

Oromo St

Public Reaction 

“To the Oromo who has for so long remained invisible in its adopted home after home, a well-deserved recognition, and a breath of warm air in the thick of Minnesota’s bitter winter,” said Hassan Hussein, the executive director of the Oromo Community of Minnesota. (http://www.opride.com/oromsis/news/3784-minneapolis-may-soon-get-a-commemorative-oromo-street)

“Picture of the Day: Little Oromia (Minneapolis) Now Has ‘Oromo Street,’” http://gadaa.net/FinfinneTribune/2015/09/picture-of-the-day-little-oromia-minneapolis-now-has-oromo-street-via-hegeree-media/

“Minnesota Oromos get their very own street under their community’s name today! How Awesome!,” said Demitu Argo on her Facebook timeline.

“It is official that the most anticipated commemoration of ‪#‎Oromo‬ and ‪#‎Somali‬ street is happening this coming Saturday. Cheers to all my East African immigrants! In celebration, the WestBank communities are hosting 1st Annual Block party. Here is the program breakdowns on Saturday 12, 2015. Can’t wait to park on Oromo street!,” said Edao Dawano on his Facebook timeline.

“Oromo Street is in effect in Minneapolis, Minnesota. Can’t wait to visit. Thank you America for recognizing the people you saved for the brutal Ethiopian government,” said Birhanie Beka Geleto on her Facebook with a feeling hopeful, from Washington, DC, United States ·

“Minneapolis to officially designate Oromo street in a ceremony on Saturday,” said on its Facebook OPride.com.

Background

This street name was proposed by Abdi Warsame who was born in Somalia and grew up in the United Kingdom of Great Britain where he studied and obtained a B.Sc. in Business and a Masters Degree in International Business.

Following that proposal, the Minneapolis City Planning Commission held a public hearing on Jan. 12 to decide on Council Member Abdi Warsame’s application for commemorative street names along the city’s Cedar riverside area.

Warsame’s proposal called for 4th Street South between Cedar Avenue and 15th Avenue South to be named “Oromo Street,” and for the stretch between 6th Street and Cedar Avenue to 15th avenue South to be called “Somali Street.”

Additional background information can be get from http://www.opride.com/oromsis/news/3784-minneapolis-may-soon-get-a-commemorative-oromo-street.

http://advocacy4oromia.org/2015/09/11/welcome-to-oromo-st-in-minisota-usa/

http://oromedia.net/2015/09/11/karaan-ameerikaa-maqaa-oromootiin-moggaafame/

http://http://www.oromotv.com/sagantaa-odeeffannoo-oromo-street/

https://oromianeconomist.wordpress.com/2015/01/13/oromo-street/