I managed to get moved to LA and wow is it hot today. 107° F | 74° F according to Wunderground.com. It’s 94.3 degrees at 9:18AM.

Luckily my new place has AC and a friendly dog to keep me company. We’re hooking up a T1 for hosting the site so the site should be hitting the interwebs in about a month or so. I’m really really looking forward to launch day, getting feedback from users, getting hacked and learning why, seeing the first discussions emerge. I don’t have very many ideas that I can actually test out in the real world. My blog has had sporadic success but there is a big difference between writing about an idea and actually building the tool that allows an idea to happen.

Wanted to summarize my current econo-thinking before I forget. Some interesting comments from Rich in the Calculated Risk comments:

The problem with Leamer, the Economist analysis and almost every other think-tank studying this problem is that they think in linear terms, starting with the housing/subprime problem and working from there sequentially to evaluate how much damage it will do or whether it will be contained.

But it’s possible that other structural deficiencies in the U.S. economy could trigger weakness or even a recession, housing apart. Nobody seems to have a multi-factor model or mindset that evaluates how a variety of short-term and long-term economic deficiencies may inter-relate.

Individual posters on this board seem to have that mindset, and the collective board as a whole does a good job arraying and evaluating multi-factor economic inputs. But professional economists are too shallow, timid, and just aren’t doing their jobs very well. That’s why I put more faith in what this board collectively thinks than any economist like Leamer.

The internet is a weird thing, I can ask questions to Hedge Fund managers, retired CEOs, media critics, economics professors, and various other experts and they actually answer. Mindboggling. Anyway, my brain has assembled the following web of ideas in an attempt to understand the world.
Austrian School Economics – Correct but doesn’t account for technological change. That’s a bad idea in a world suddenly subject to the Internet.
Joeseph Schumpeter – Understood business cycles, coined the term “Creative Destruction”, maybe predicted the impact of the internet prior to its existence. Predicted that capitalism would eventually piss off enough people in a democracy that its collapse was inevitable.
Elliot Wave Theory – Too dependent on decades of static behavior. I tend to think business cycles and change reset the “wave” if they’re big enough. Though who knows.
Accelerating Change – There aren’t a hell of a lot of economists that can talk about this topic, which is too bad because as Rich mentioned it’s crucial to economic forecasting.
Emergence – The main reason we still have Socialists is due to a lack of understanding of emergence. It seems like most people don’t understand why capitalism works. Free markets are seen as playground for greed reserved for the wealthy.

I have this feeling that the competitive and collaborative market for ideas allowed by the internet will create a better understanding of economics and business cycles which will lead to better predictions, and better predictions will lead to the death of animal-spirit induced recessions. So instead of wild swings in GDP growth that the Fed is unsuccessfully trying to battle, people will simply be aware that the Fed Funds Rate is too low and that the current trendy bubble will inevitably pop. The knowledge would hopefully lead to slow but steady growth. Instead we have economists proclaiming that there is know way to know if a bubble exists until after it pops, which is of course ridiculous unless you have a vested interest in ignoring fundamentals.

Interesting read:
http://blog.inman.com/LeamerHousingandBusinessCycle.pdf

The dog photo is by Rion on Flickr