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Weakonomics – Best Of The Best Blogger Series

by on September 23, 2011

Today, in our 6th edition of our “Best of The Best” Blogger series, we’re talking to Phillip over at Weakonomics.com.  This is a very interesting interview indeed.  Phillip, who refers to himself as “The Weakonomist”, is a twenty-something former employee of one of the largest banks in the United States with a background in finance and IT, living “somewhere in the US”.

Phillip blogs anonymously, citing a quote from a former editor at the The Economist as his rationale:

“The main reason for anonymity … is a belief that what is written is more important than who writes it.”

Phillip covers a pretty wide range of topics but he doesn’t have any sad-sack financial hardship story about climbing out of debt or being unemployed for an extended period or anything like that.  Surprisingly enough, his academic training is NOT in economics.  His grammar and spelling are suspect and he doesn’t spend much time proofreading his posts.

While he might sound like a complete lackey (and I’m sure if you asked him, he just might confirm that notion), the simple fact is that he’s an amateur economist with a very unique view on personal finance and economics.  He’s like the Batman of amateur economics … without the latex spandex.  Or the pointy ears.

We caught up with Phillip in our most recent “Best of the Best” blogger series interview:

Q: What was your inspiration behind launching Weakonomics.com?

A: Weakonomics started because I was bored.  I was a young professional in my 20s and had gotten into reading personal finance blogs.  The stories of people paying down debt were boring and I wanted to talk about topics that interested me.  They are sort of the next level up.  People who read Weakonomics are more likely to have a decent income, be relatively financially stable, and want to talk about topics beyond basic personal finance.  They aren’t economists though, and neither am I.  It’s something in between.

But let’s be honest I did it for me.  I wanted to stay on top of these topics because I wasn’t covering them at work and had gotten really interested in them in college.  Amateur economics is my hobby, and it’s fun to talk about.  If we all learn something a couple times a week, then it’s worth it.

Q: Why do the financial news pundits always refer to Ben Bernanke as “The Bernanke”?  What’s that all about?

A: Back in 2005 Ben and I were having a beer across the street from the Treasury and he mentioned that he’d never had a nickname.  I told him I was considering ripping off the Freakonomics brand and calling myself “The Weakonomist” and he thought he’d make himself official as “The Bernanke” before he took over the Fed.  I advised against it but he can be a bit set in his ways once he gets an idea.

The first time I saw the name show up was in an extranormal cartoon explaining quantitative easing.  I don’t really know where it came from.  My favorite nickname for Benji has always been Helicopter Ben.

Q: In your opinion, is the housing market closer to a recovery in a year or in a decade?

A: The funny thing about opinions, especially economic opinions, is that you really can’t be wrong.  Even if you are wrong, you can blame it on something else.  So I could say the worst is over, but if things got further worse I could blame it on the circumstances (rising interest rates, prolonged unemployment, or Canadian invasion).

With that said, I think 2012 and 2013 will be the turnaround years.  There are tons of foreclosures that banks still must sort through, but rents are rising and eventually a threshold is crossed where it makes sense to make a payment to a mortgage instead of a property manager.  What will make for a slow recovery is of course the issues with employment.  This is the egg to housing’s chicken.

But another issue will be changes in lending rules which are coming down the pipeline over the next few years.  It will be harder and harder to get a mortgage, but long term it should be better for housing.  If you bought in 2006 or 2007, it might feel more like 2020 before you feel like it’s a recovery.  There’s a difference between bottoming out and an actual recovery of historical prices.

Q: Thomas Friedman’s most recent book “Hot, Flat, and Crowded” touts what he’s calling “Geo-Greenism” as a national strategy equivalent to a “Green New Deal”.   Are all of these green job initiatives just an albatross for pie-in-the-sky wasteful subsidies (Solyndra) or is there some legitimacy to Friedman’s logic here?

A: Tom’s an interesting guy.  I read this book and his flat world bible.  But he writes wayyyyy too much and I’m a slow reader so I’m not a huge fan.  I believe that green jobs are an important future industry but we can’t force it.  Dirty energy is going to have to get more expensive.  Now you can do this with taxes as has been done in Europe, but the US doesn’t have the stomach for that and it may not be efficient either.

There are lots of companies trying to get those necessary breakthroughs, but we haven’t had that Henry Ford moment yet.  To the best of my knowledge Ford didn’t accomplish the Model T with a bunch of government help.  It was ingenuity and the desire to reach a market.  We’re close, but even then whoever gets the breakthrough it won’t matter in Friedman’s flat world. There won’t be one country with a competitive advantage in technology.  The only competitive advantages these days really are labor costs and resources.

Q: How much of a threat is China to America’s standard of living?  Is China the problem or have we Americans just gotten to fat, dumb and lazy to compete anymore?

A: China isn’t the threat.  Their cheap labor has actually increased our standard of living.  Their willingness to lend us trillions have preserved our standard of living as well.  That isn’t to say we aren’t fat and stupid, we totally are.  We still compete in all manners of industry, but labor is cheaper elsewhere.  However labor isn’t everything.  The cost of shipping is increasing substantially and many companies are re-relocating to be closer to customers.

But since we’ve already talked about Tom Friedman, it should be noted that the flat world does mean flattened wages.  Labor costs are soaring in China, and manufacturers are moving elsewhere.  Some of them are coming to the Americas to get some fat, dumb labor.

Q: Will we ever see “full-employment” again or are we in the middle of a long-term structural adjustment to much higher unemployment levels in this country?

A: This is a topic I’ve covered regularly on my blog and I really don’t know the answer.  Up until the Great Recession many people were believers in an upcoming labor shortage as Baby Boomers retired.  Boomers are now staying in the workforce for a while.  Until they feel confident enough to retire we’re surely in for a tough time.  Full employment will happen sometime this decade, but that’s about as confident as I can be.

Q: What’s your stance on credit cards?  Useful?  Or the root of all evil?

A: Are guns useful or the root of all evil?  It all depends on how you use it.  I’ve had a rewards card for years and I love it.  Never carried a balance.  Credit card companies make money on transactions and carrying balances.  If you’re responsible then the rewards and consumer protections are worth having a card.  But look for rewards to be scaled back going forward.  If you want to talk about roots of evil, we should start with underwriting standards before we talk about specific banking products.

Our thanks once again to Phillip over at Weakonomics.com.

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