Thursday, June 28, 2007

History and Future of Box Office Revenues

From Swivel

From my good friend NoMaN, weekly revenue predictions.

Fees analysis, by Todd

Chris Masse has Todd's charts before me, as Chris blogs at the speed of light, and I blog at the speed of diaper changes.

Michael Moore is the Happy Reaper

Very warm interview on CNBC, with Maria Bartiromo. He was affable, articulate, and witty. He wants:
1. drug companies to be regulated like public utilities

2. abolition of private health insurance, because they are loathe to pay benefits

3. government healthcare, like other industrialized countries, because it is better

I believe his heart is in the right place. But I also believe his suggestions, if implemented, will increase suffering and accelerate death in our country. Why?

1. the profit motive fuels innovation, finding creative and competitive ways to do more, or else do the same with less

2. the market meets individuals' varied demands and preferences better than a central planning bureaucracy. anyone ever try to get bread in a communist country, never mind healthcare?

3. i know people icanadians and brits who get inferior healthcare to us americans. to be fair, they spend much less per capita than we do

Private insurance companies are disincented to pay benefits, because that reduces profits. I believe the government is required to enforce all contracts, including those between insurance companies and beneficiaries. But it gets tangled--the tort lobby squeezes a lot of extra money out of insurance companies, and shares the millions they get with elected government officials who are disincented to enforce contracts.

Moore reminds me of Col. Nicholson in The Bridge on the River Kwai, whose good nature and naivete, actually enable the Japanese War machine, without knowing it. I hope he is smart enough to learn that he is wrong.

UPDATE: David Gratzer, author of The Cure, is effectively refuting Moore's claims on CNBC. He talked about the shortage of doctors in Nova Scotia, and the lottery that families go through to see which few get to see the doctor.

From the Back Cover
"David Gratzer is a practicing psychiatrist who combines firsthand knowledge of medical practice in both his native Canada and the U.S. with an independent point of view and a rare capacity for lucid exposition of complex technical material. . . If you want a well-written, interesting yet authoritative and thorough account of what is wrong with medicine today and how to cure American health care, this is the book for you."

- Milton Friedman, Nobel Laureate, Economics (from foreword to The Cure)

"The Cure is a must read for all students of health care policy. Dr. Gratzer correctly diagnoses the U.S. health care system's problems and proposes workable solutions to fix them. His ideas will help reign-in costs while, at the same time, preserve necessary incentives for quality-of-life enhancing innovations."

--John F. Cogan, Senior Fellow, The Hoover Institution, Stanford University

"David Gratzer's well written book should be in the reading list of anyone interested in health care reform. In five-sixths of the U.S economy, we look to markets as an organizing mechanism; in the one-sixth of the economy represented by health care, public policy has frustrated markets, with adverse consequences for cost, access, and quality. Gratzer's capitalist manifesto is a shot in the arm; with it, the much that's right with American health care can grow."

--R. Glenn Hubbard, Dean and Russell L. Carson Professor of Finance and Economics, Columbia Business School; and former Chairman of the Council of Economic Advisers.

"The caduceus is an apt symbol for medicine, given the bureaucratic snake pit the American health care system has become. Dr. David Gratzer skillfully wields Occam's razor to shave away the Byzantine rhetoric and show us that the cure for health care comes in the simplest of formulas - free markets, less government meddling, and a healthy dose of capitalism."

--Governor Bill Owens, Colorado

"Dr. David Gratzer is uniquely qualified to diagnose and provide a treatment regimen for the US health care system's problems. In this book he performs this function for us, does it with his usual acumen and clarity. He leads us by the hand through the labyrinth of legal, institutional and regulatory events that brought to the point where, at least to some, we are in a health crisis that can only be solved by further movement away from the market and toward a universal centrally controlled system. He thoroughly debunks the notion we can improve the US health care system by becoming more like our neighbors to the North. After taking us there, he shows us why these same legal, institutional, and regulatory events are largely responsible for our predicament and that the popular solution of more of the same is not the answer. He convincingly demonstrates that the only way out is less regulation of, and more freedom for, the providers and customers of health care. This book should be read by anyone involved, or with the hope or potential to be involved, in determining health care policy."

--Tom Saving, Director, Private Enterprise Research Center at Texas A&M University.

"Excellent addition to the emerging call for empowering patients rather than government bureaucrats with control of the health care dollar, written by someone with an expert view from the inside!"

--Scott W. Atlas, MD, Senior Fellow, Hoover Institution, Professor, Stanford University School of Medicine

Where do you fit?

Posted this link on my blog but thought I would post it here too. I am an Enterpriser, who are you? Go educate yourself.

Wisdom of outliers helps crowds, or Average > Median

Arnold Kling, on Edger Capen (of the Winner's Curse):
His main theme is that people under-estimate uncertainty. If someone says, "the chance of X falling between A and B is 90 percent," the true probability is likely to be 30 percent. He likes to do experiments where he puts a large number of beads in a jar and asks people to guess the number of beads. One point he makes is that the "wisdom of crowds" result (that the average estimate tends to be pretty good) often depends on keeping outlier estimates in the sample. It is the extreme contrarianism of one person in the crowd that keeps the crowd's estimate from going off track. I wonder if anyone has compared median estimates with mean estimates in "wisdom of crowd" studies.
The market mechanism can actually prevent the outliers from contributing, as they are buried way back deep in the order book. Any ideas on how to mitigate that?

Journalists and Athletes can keep a good team down

Here's John Tomase and Deion Branch questioning the economically wise moves of the Patriots management:
Following the AFC title game, the Patriots [team stats] revamped their receiving corps. Does Branch believe those moves signaled regret over how his situation was resolved?
“If you asked the Patriots today, who knows what they’d say?” Branch said. “Being that they went out and signed four or five wide receivers, maybe they would have handled it a little differently knowing what they know now.”
Here's what I posted almost 5 months ago:
Considering Deion Branch is costing the Seahawks $8 mil this year (and $22 mil in the first 3 years of his $38 mil contract), having Randy Moss for $3-5 mil for just this season looks much nicer. That means the Patriots have $12 mil in cap space that they can allocate this season and next, plus the perceived upgrade from Branch to Moss this season. Win now, plus win next season.
No wonder so many multimillionaire athletes manage to squander their assets so dramatically. Pros on the field, amateurs in wealth management.

How the Fed accelerated the inflation it is now confronting

From today's WSJ:

The nearby chart from economist Arthur Laffer offers an instructive summary of recent monetary history. It compares actual prices, as measured by spot commodity prices, to the fed funds rate, which is a rough proxy for tighter or looser monetary policy. The left side of the chart records the great inflation of the late 1970s and the Fed's attempts to break it. The right side shows what we've been living through this decade, with soaring commodity prices amid historically low interest rates.

We've been writing since at least 2003 that the two are related, and worrisome. In June 2003, the Fed cut its target fed funds rate to an extraordinarily low 1% and kept it there for a year. Even when it began to tighten again, the Fed did so very gradually, causing us to write in June 2004 that "the danger with gradualism" is that "it risks always being behind the inflation curve."

There was no inflation evident at the time, but monetary policy works with a lag and it showed up later -- most notably in the housing asset inflation of 2004 and 2005. Everybody loved that bubble while it lasted, including some lenders who found increasingly creative ways to lend to increasingly unreliable borrowers. We are now living with the aftermath of that mistake, however, amid the current housing washout that has lasted a year already, and with probably more financial casualties to come.

Neither former Fed Chairman Alan Greenspan nor successor Ben Bernanke has acknowledged the Fed's role in creating this housing bubble. But last autumn Richard Fisher, president of the Dallas Fed, offered a kind of proxy mea culpa when he noted that "In retrospect, the real fed funds rate turned out to be lower than what was deemed appropriate at the time and was held lower longer than it should have been."

Wednesday, June 27, 2007

Blackstone & KKR IPOs not a sign of a top

Unlike this peak signal, I don't see the apparent hypocrisy of private equity players tapping public money supply.

In fact, isn't it a good pairs trade? Sell the overvalued asset and buy the undervalued assets?

UPDATE: Steve Conover has another excellent graph and analysis on the strength of the dollar. To me, it says some additional things:

1-the limits of a gold-backed dollar, the loss over which the austrian school is always crying

2-how good a democrat president Bill Clinton and treasury secretary Robert Rubin were, and

3-how Jimmy Carter comes in dead last, yet again (Nixon was the one who pulled the trigger on Bretton Woods in the first place, and USD power has been unleashed, helping rich and poor households alike, especially in America and Mexico)

UPDATE II: Dani Rodrik is more sanguine about Bretton Woods. I don't always see eye to eye with him, but his Trilemma Model does seem to hold up well to my skeptical scrutiny.

Overcoming the bias of science

In aspiring to see my readers reap greater trading profits, I've talked about self bias and Karl Popper and media bias and how they can constrain your profit potential.

Now the guys at Overcoming Bias have a great post on the bias of science, channeling the ghost of Thomas Kuhn. Occam's Razor, wielded by the simple man, can trump the consensus (conspiracy?) of the science-journalism complex.

He who laughs last, laughs best? That is why I am long these.

Tuesday, June 26, 2007

Clouds moving over Iran?

Jonathan Muravchik and Daniel Jackson seem to think so.

Lileks gets gasoline pricing, will politicians and voters?

I’ve been watching the price of gas drop all weekend. It seems like it’s adjusted on the hour. I’ll never understand how a load of gas the station bought at a higher price last week can sell for less today. I mean, I can understand why they'd charge more for gas they bought last week at a lower price - they're evil and bad. But this charging less for something they bought at a higher price - it makes no sense. Sure, blame it on "economics" or something, give me that ridiculous explanation about how you're actually paying the replacement cost of the next load (yeah, right, that sounds logical) but it’s obvious they’re ungouging us. Well, I’m tired of being unjerked around by these guys. I want the pumps to show what they paid for the load I’m putting in my car, just so I know how many pennies they’re not getting.

Bear Stearns lessons for us traders

Good stuff from the WSJ on low liquidity assets:

Figuring out the risk profile of illiquid assets -- and funds that invest in them -- can be tricky. Typical methods for assessing risk rely on measuring volatility -- the choppier returns are, the riskier the investment. But because illiquid assets don't trade regularly, marking to market -- or using recent sales prices to determine an asset's value -- may not be possible. In these cases, a fund manager may instead use a mathematical model to value an asset, a practice called marking to model.

Such models tend to smooth returns, making an asset look much less risky, says Massachusetts Institute of Technology finance professor Andrew Lo, who is also a principal in AlphaSimplex Group LLC, an asset-management company that runs a hedge fund.

Using broker-dealer quotes for illiquid assets can also damp volatility because they are often based on an average of bid and offer prices rather than actual sales prices. What's more, price quotes can vary widely from one dealer to the next.

Mr. Lo has found that returns for illiquid assets and funds that invest in them tend to have little variation from one month to the next. Paradoxically, it is this smoothness of returns that show how illiquid, and risky, a position might be.

Still, illiquid assets can be lucrative when held by investors with long time horizons, who don't have to worry about creditors suddenly calling in loans and who understand the risk they've taken on. "If you're a pension fund and you don't have any issues with being able to fulfill your obligations, illiquidity risk is a very good way to earn extra returns," says Mr. Lo.

Timber funds illustrate some of the potential, as well as the risks. These funds, in which investors hand over money to a manager who buys and oversees forest lands, can lock up investors for 10 to 15 years, typically returning their money after selling off the properties involved. Cashing out of a timber fund early can mean selling at a discount of 20%. For a direct investor in timber, selling carries the same vagaries of selling a home: You can guess what the price will be based on appraisals, but you won't know for sure until you put it to market.

"This isn't a good investment for short-term investors -- there's too much volatility," says Dick Molpus, of Mississippi-based timber-investment manager Molpus Woodlands Group.

UPDATE: Alex Forshaw has a practical example of how not to trade illiquid assets today.

Monday, June 25, 2007

I'm proud to be an American

Where at least I know we give (via Daniel Mitchell). About $1,000 in charitable donations, per person. More than double the next most charitable country. And of course, the richest probably give the lion's share--why just Bill & Melinda Gates gave over $1.5 bil last year.

What will shills like Paul Krugman say about that, I wonder. Probably nothing.

Me thinks some charitable donation prediction markets will help NGOs in their planning cycles. Maybe someday.

Ex-girlfriend's for Thompson

From the British Times (via Drudge):
The Hollywood actor and former Tennessee senator racked up an impressive list of conquests during his swinging bachelor days in the 1990s, but he appears to have achieved the impossible and kept their friendship and respect.

In anticipation of a presidential run, a group of potentially supportive Republican congressmen recently questioned him about his private life.

“I was single for a long time and yep I chased a lot of women,” Thompson told them with a grin. “And a lot of women chased me. And those who chased me tended to catch me.”

At 24 years his junior, [Jeri] Kehn has been described as a “trophy wife” but the former Republican consultant is as clever as she is vivacious, according to Mosbacher.

When she was dating Thompson, Kehn complained that she had to chase other women away. “They just won’t leave him alone,” she told a gossip columnist. “I can’t get up to get a cocktail at a party without coming back and finding some girl sitting in my chair.”

I'm not sure about Thompson's sex appeal, but then again, I never understood Clinton's. (That's Bill Clinton, for those who aren't paying very close attention).

Friday, June 22, 2007

Nerds/Jock Theory and the Politics of Envy

Bryan Caplan:

With the Jock/Nerd theory firmly in mind, this sentence takes on a deeper meaning:

We don't take steps to redress inequalities of looks, friends, or sex life.
Notice: For financial success, the main measure where nerds now excel, governments make quite an effort to equalize differences. But on other margins of social success, where many nerds still struggle, laissez-faire prevails.

It's suspicious - and if you combine the Jock/Nerd Theory with some evolutionary psych, it makes sense. When the best hunter in the tribe gets rich, his neighbors will probably ask nicely for a share, if they dare to ask at all. But if the biggest nerd in the tribe gets rich, how long will it take before the jocks show up and warn him that "You'd better share and share alike"?
I've been a nerd for most of my life, but I had a nice athletic run in middle school. On the football field, for instance, I wasn't skilled, but I had great speed and the ability to breakdown whatever the offense was trying to do and disrupt it. So I was a successful defensive back and special teams gunner. I would have continued into high school, but I entered my freshman year around 90 lbs soaking wet. So it was all good grades and very good test scores for my next few years, until my strong academics and early university acceptances increased my perceived value in the dating market. Those last 5 months of high school were the best.

I think this is why I've never gone back to any high school reunions--I'm doing better than all the jocks in my class, and don't want trouble.

But politicians dealing in the Politics of Envy--well, their policies will find me. Four wolves and a sheep deciding what to have for dinner, that is where our capitalistic democracy is going.

People who respect the law and work hard and take smart risk build their businesses from the ground up. A few succeed. And everyone else wants to free ride and/or punish them.

If our politicians ran the football program, they would campaign like this: I will force the best football programs to pay the worst ones--say, for every win in your last 10 games played, spot the other team 2 points.

Our best football players might as well go to Canada. Yeah, this'll keep us real competitive in the long run. But the politicians don't really care about our long run competitivity. Talk isn't even cheap, it's costing us.

Thursday, June 21, 2007

Tradesports announces new fee structure

I don't like it that much:

Thursday, Jun 21, 2007

TradeSports has announced that it will introduce an entirely new fee structure for its members. This will go live on 27th June 2007*.

The new fee structure will mean:

  • Trading Fees of 5c per lot and Expiry Fees of 10c per lot will be withdrawn.
  • Members will pay a simple commission of 4% of the profits they make from trading on a TradeSports market (a market is an individual contract or a group of linked contracts).
  • Trading profits before the expiry of an event may generate a commission, but it will be your overall net profit on settlement of the event that will dictate your net commission payable.

More detailed information will be made available on the site closer to the go-live date.

*Unless we advise an updated go-live date.
It works out to 20 cents for each $0-10 contract on average. That's in addition to the float of 2 bips per day for account funds on deposit. But due to the first mover advantage which results in a liquidity edge plus the current legislation, competing for market share is hard for a new entrant, so TS has pricing power for now.

I'm still going to trade. But I trade small. I wonder about some of the bigger fish that swim here, if they will be disincented by the new fees.

I'd rather see:
1) double the liquidity and half the proposed fee rate
2) 50% of the fees to be assessed on expiry
3) 75% of the fees to be assessed to the liquidity taker
4) -25% of the fees to be assessed (i.e. a rebate) to the liquidity provider

This works for exchanges like Island. I always try to route my trades there, because they pay me to add liquidity. While the liquidity taker pays more, the spreads on contracts should tighten up, there by offsetting some of the cost under the old fee schedule.

UPDATE: More on this at Midas Oracle (scroll down, the first 2 comments are mine, including a conversation in the Pit with Todd).

Alex Forshaw on Bloomberg for POTUS

I think Alex is astute here:
All Bloomberg brings to the table is money. In terms of positions, he is well to the left of the Democratic Party: totally pro-choice, a regulatory and environmental fascist (smoking and trans fats come to mind), a massive tax hiker in the name of education, and so on and so forth. (Yes, NYC is doing well. Does Bloomberg deserve credit for that? In my opinion, no -- huge growth in the finance industry delivered a tax windfall into Bloomberg's lap.) Not to mention Bloomberg's severe elitist streak.

In fairness to Bloomberg, if anybody deserves to be an elitist, he does. After all, he is a hell of a lot smarter than most of us. His "Bloomberg machines" are ubiquitous up here -- for $2000 a month, the user gets access to mind-boggling amounts of financial data, delivered in a pretty usable package. Bloomberg makes $1 billion a year after taxes on these things, on top of a net worth of $20 billion.

I think a Bloomberg run is the best thing that could possibly happen for the GOP. The GOP could keep 42-46% of the popular vote with Fred Thompson and keep their base intact, instead of having Rudy win a Pyrrhic intraparty civil war over social issues to give the GOP a one-in-ten shot at a 50.1% victory in the popular vote.

Wednesday, June 20, 2007

Sopranos imitates Clinton campaign

Hilarious, that Gawker:
... the most plausible solution to what happens after the show goes dark: Tony is term-limited out of his job as head of the north Jersey mob. After his chosen successor is rejected by a crooked Mafia Supreme Court despite being elected fair and square, he and Carmela plot a return to the top through a Machiavellian scheme where Carmela shows the mob that she's as tough as any other candidate. Then some black guy comes in and screws it all up.

Uh oh, is this the top?

From WSJ:
CNBC commentator and investment manager Ron Insana has lined up a list of at least 13 top managers who will be part of his new hedge-fund offering, according to fund documents reviewed by The Wall Street Journal.

Insana Capital Partners Legends Fund is structured as a fund of funds, meaning that Insana’s job is to collect investors’ money and then seed that money into still other funds, extracting a fee along the way. It is unclear just how large the fund will be. Insana and fellow executive John S. Roglierli are soliciting initial investments of at least $500,000 each.

The 16-year CNBC veteran raised some media eyebrows when it was revealed last fall that he was launching the fund. One Dow Jones columnist said the move signaled that “it’s probably time for everyone else to get out” of the hedge-fund business.

World context for US publicly held debt

From the indefatigable Steve Conover:

Chances of Fed Funds Rate at or above 5.25%:

Tuesday, June 19, 2007

Charts of home sales, gas prices, the Dow, and recession odds

From Swivel

From Intrade

The attribute of successful traders

By Felix Salmon. If I could attempt a paraphrase,
A successful trader needs to be so arrogant that he can effectively convince himself that he is wrong.
There is a link to John Kay on Richard Rorty. He seemed to channel the ghost of Karl Popper, from my quick reading.

I think that my aspirations for humility are career limiting. It is actually amazing that I have the risk limits I do. But then again, I've never come close to blowing up. Aim small, miss small.

Is the IPO market a distorted market?

Yes (WSJ subscription required). But is that a bad thing? Not according to the Supreme Court:

In a 7-1 decision yesterday, the court said the securities markets were a different animal than ordinary commerce and that practices that might seem to violate antitrust laws in other sectors were essential to Wall Street.

The court said the job of policing combinations among brokers rests with the Securities and Exchange Commission, whose regulators possess the expertise to distinguish permissible arrangements from illegal conspiracies.

The Supreme Court, in an opinion by Justice Stephen Breyer, preferred to draw the bright line favored by the banks and the SEC. "Financial experts, including the securities regulators, consider the general kind of joint underwriting activity at issue in this case, including road shows and book-building efforts essential to the successful marking of an IPO," Justice Breyer wrote.

Justice Clarence Thomas dissented, arguing that the securities laws were intended to supplement, rather than replace, other remedies such as antitrust laws. Justice Anthony Kennedy didn't participate in the case and, as typical when justices disqualify themselves, offered no explanation why.

(Note: I think Kennedy has a relative in the investment banking business).

I would sum it up this way--it is hard to find an price for something that is not available to the market. For example, shares that have not yet been offered. Issuers, distributors, and investors work together to converge on a price, given multi-party valuation analyses and demand forecasting. It's not as good as a free market for pricing, but there is no market yet.

I've worked for banks since graduating from college (not in investment banking), so since this indirectly affects my job prospects and also my Manhattan home value, I am disclosing it.

UPDATE: Justice Stevens wrote this:
After the initial purchase, the prices of newly issued stocks or bonds are determined by competition among the vast multitude of other securities traded in a free market. To suggest that an underwriting syndicate can restrain trade in that market by manipulating the terms of IPOs is frivolous.
UPDATE: Also from the WSJ, while the Supreme Court "gets it", the Federal Trade Commission doesn't:
But this is where the FTC's story gets weird. It wants to argue both that the quality, selection and "experience" make Whole Foods unique among supermarkets and that without competition from Wild Oats (in the few markets in which they overlap), Whole Foods' quality, selection and experience will worsen. Which means, we guess, that Whole Foods would look more like an "ordinary" supermarket. Which would mean, more competition for Whole Foods. Or something. We admit the FTC lost us when it started arguing that Whole Foods' evil plan is to undermine the very uniqueness on which the FTC is basing its antitrust case.

Maybe the FTC is responding to heat from Capitol Hill to show it's on the job, but pandering to Congress has never made for good antitrust policy. Whole Foods says it will battle the FTC in court, and the case will make for some entertaining jujitsu as Mr. Mackey argues that his stores aren't as unique as his marketing materials suggest, while the FTC pleads that the merger will make Whole Foods less unique and more expensive at the same time. Such are the absurdities of modern antitrust policy.

Chris Masse updates us on Blu-ray vs. HD DVD

He continues to serve the possibilities, no, realities of prediction markets well.

One reason why Intrade/Tradesports is way ahead of the SEC

Their respective views on the tick test.

Monday, June 18, 2007

World's largest lake disappearing ... because of global warming?

I thought land would disappear, not water. Shows how much I know (via Instapundit).

Still no global warming contracts to trade.

UPDATE: Steve Levitt joins Greg Mankiw in advocating energy taxes. I actually am in favor of such a tax, but only if it comes with offsetting income tax reductions. Otherwise, economic growth momentum will turn and regress, increasing poverty and creating more "have not" households. Not holding my breath on that one, so I usually keep pretty quiet on being pro-energy tax.

Birdflu update

From Swivel

From Intrade

The best sports rivalry

I'm long the Red Sox at 8.8 and short the Yankees from 15.5. We're almost at the all star break. Historically, the Sox tend to fade and the Yankees tend to power up after the break. We'll see what happens this season.

Obama understates his dirty money

Rezko cash triple what Obama says (via Instapundit).

US Open: Cabrera wins, but Furyk pays me in size

I usually leave trading contracts as an individual exercise to my knowledgable readers (especially because we have such differing styles of trading and preferences for risk), but want to talk a little about the US.OPEN contracts to boost potential interest. Before tournament started, I got long WOODS, MICKELSON, ELS, FURYK, SCOTT, and FIELD.
On Thursday, I was able to take a little profit on Woods, Furyk, and FIELD.

On Friday, Mickelson & Scott missed the cut, so I ended up down.

On Sunday, though, I was able to sell my Furyk all the way up to 34, ending up with just 1 FURYK and 1 ELS which each expired at zero.
I am usually able to make a little profit on each of the majors with a similar approach, i.e. buying several of the favorites plus FIELD, and taking profits when possible. The British Open is coming up in 4 weeks. Come and join in the fun if you know a bit about the players and a bit about managing risk!

Thursday, June 14, 2007

Q&A with Steven Landsburg, on "More Sex"

Courtesy of Steve Dubner. Some of my favorites snippets:
Our personal welfare is almost always in conflict with the greater good. When something exciting happens at the ballpark, everyone stands up to see better, and therefore nobody succeeds. At parties, everyone speaks loudly to be heard over everyone else, and therefore everyone goes home with a sore throat. The one great exception is the interaction among buyers and sellers in a competitive marketplace, where — for fairly subtle reasons — the price system aligns private and public interests perfectly. That’s a miraculous exception, but it is an exception. In most other areas, there’s room to improve people’s incentives.

Thousands of people die each year for lack of a healthy kidney, while hundreds of millions walk around with spare kidneys they’re unlikely to need. That’s nuts. I agree with you guys that most people can probably see that it’s nuts. For some reason, most of those people seem reluctant to embrace the one mechanism — the market — that can actually solve this kind of problem.

So if you want to be charitable, all you have to do is hoard your money, or for that matter burn it. But that’s not the best way to be charitable, because you can’t control who gets the benefits. Miserliness is like a random act of kindness; effective philanthropy is about directed acts of kindness. And I argue in the book that a philanthropist who really cares about helping others will usually pick a single charity and target his giving to that one charity. If 100 children are dying of rickets and another 100 are dying of scurvy and you have enough funds to save two children, there’s no particular reason to save one of each; you might as well give your entire contribution to either the Rickets Foundation or the Scurvy Foundation. Either way, you’ve saved two children. And if you have even the slightest inkling that one of those charities might be more effective than the other, then that’s where both your dollars should go.

I do disagree that an STD-free person helps the casual sex pool by jumping into it. An abstainer's risk has a higher opportunity cost, i.e. by copulating with some who is already engaged, the abstainer may contract an STD, even as the abstainer lowers the pool's overall STD probability. The cost outweights the benefit, assuming equal preferences.

I also disagree that denying or suppressing personal demand lowers the prices for everyone else--this assumes everything is zero-sum (a very bad assumption that market bears make all the time and a lot of bears get killed by a stampeding bull market that is not zero-sum, especially over the last few centuries).

You've made me very angry, indeed!

WSJ op-ed:

So Democrats are proposing to raise taxes on three million Americans in order to exempt 20 million from the AMT. The wealthiest 1% of Americans already pay more than one of every three income tax dollars into the Treasury. Under the Ways and Means proposal, the share of all income taxes paid by the top 1% would rise to nearly 40%. The top 2% would pay roughly as much as the bottom 98% of all taxpayers. Ways and Means Chairman Charlie Rangel of New York seems to think this qualifies as tax fairness.

There is rough justice in watching Democrats squirm to fix the AMT monster they created in 1969 to punish 21 millionaires who legally escaped taxes at the time. And if Democrats want to do away with the AMT, we're all for it. One sensible idea from Senator Arlen Specter of Pennsylvania would repeal the 1993 Clinton AMT tax hike, which raised the rates to 26% and 28% from the single rate of 24%. Mr. Specter's bill would relieve 10 million middle class tax filers from AMT tyranny.

But Democrats don't want to cut taxes; they want all of that extra revenue to spend. So instead they'd raise the top federal tax rate to its highest level in a quarter-century. A 44% top marginal rate would reduce U.S. competitiveness by reducing the after-tax return on investment. Less investment means fewer jobs and lower wages. A Tax Foundation analysis of tax returns finds that roughly three in every five Americans in the highest income tax bracket are small business owners, who create most new jobs.

Like Shaw said: A government that robs Peter to pay Paul can always count on the support of Paul.

The tyranny of a government sponsored majority undermines democracy.

GOP presidential probabilities fading

From today's WSJ:
The survey shows that without formally entering the race, former Tennessee Sen. Fred Thompson has risen to second place in the Republican field. Former New York City Mayor Rudy Giuliani continues to leak support, but leads the pack with 29% to Mr. Thompson's 20%, while former Massachusetts Gov. Mitt Romney has pulled even with Sen. John McCain at 14%.

Of greater concern for Republicans generally, however, is the party's weak state heading into the 2008 election. By 52% to 31%, Americans say they want Democrats to win the presidency next year.

Americans give the Republican Party their most negative assessment in the two-decade history of the Journal/NBC survey, and by 49% to 36% they say the Democratic Party more closely shares their values and positions on the issues.

"Fair Value" will be market making the US.OPEN today through Sunday

Spreads are a little wide, but I've already taken a little profit (mostly from US.OPEN.FURYK).
Fair Value: Good morning Golf Fans
Fair Value: I will be MMIng the event throughout the 4 days
caveatBettor: hi FV
caveatBettor: i've picked up a couple contracts, furyk trading nicely
caveatBettor: i wish you fair trade winds
Fair Value: ta
Fair Value: they say this course will be brutal
caveatBettor: right, tiger talking down birdies
Fair Value: Monty in the lead at -1 ... lol

Wednesday, June 13, 2007

Steve Conover has found where the middle class disappeared to

Many of them became too wealthy to stay middle class. Brilliant,
as usual.

UPDATE: Conover prints a correction. I guess I've got some confirmation bias, because when I read it, I started thinking about the internet bubble and record low unemployment in 2000, and also thought about baby boomer retirement impact on his data.