Frustration and Fascination with Economics

One of the blessings about retirement is the ability to spend more time reading and reading is what I do as often as possible. While I have read with interest topics relating to economics over the years, these past several years has represented an opportunity to advance my understanding of both micro and macroeconomics. To my surprise, the more that I know, the more I am aware how ignorant I am!

I can recall about two years ago being very prognostic that the Euro would decline its value to be equal to $1. At the time, given the problems associated with the great fiscal catastrophe, there seemed now way that the Euro would retain its value. Lo and behold, if I were one of those shorting the Euro, I would be begging for food now! I still do not understand why the Euro today is worth $1.32. Unemployment in the Eurozone is higher than ever and the problems with debt is no way near resolution.

It has been fascinating to watch the value of homes increase markedly in recent months. I could not understand how this could happen, given the number of foreclosures. Were all of these finally sold? As it turns out, big time investment firms bought tons of these foreclosed homes with the plan to use them as rentals until the market conditions were right for selling. I surely did not see this coming.

For some months, critics of Apple have cited the enormous amount of cash the corporation has on hand. Investors felt that this unused vast of money should be diverted as dividends to their shareholders. This made some sense since there is no new device being planned that would require huge financing. But, no, Apple decided to enter the debt market for $17 billion. They surely do not "need" additional money. They have more cash than the value Microsoft, Facebook, and some other big firms combined! Why did they do it? Money was so cheap that they could not resist the opportunity to use this money rather than their own to provide payback to investors. Amazing!

While I understand that the Federal Reserve was into Quantitative Easing (QE) to ensure that there was more liquidity in the market. However, it is amazing that all this money made available for loans has been used more for enabling banks to continue to "make" money with little social value. The major banks are making huge profits over these past three years with relatively little coming from the loan department (although mortgages have risen lately). Surely, the Federal Reserve did not intend the banks to be the principal beneficiaries of this initiative.

If one could live one's life over again, I would think strongly about a career in economics. While the field is often overwhelmed with their own disagreements about the nature of the problems and the appropriate solutions, I can see why someone would be totally fascinated to delve into the twists and turns of economic history.

Once again, the more I know, the more I am aware of my ignorance!