Friday, May 29, 2009
Piety is no substitute for technique--Etienne Gilson
This should be an enduring lesson of the crisis—an understanding that the rules governing the operating of markets were not handed down on stone tablets but are made by men, and are in constant need of revision, supervision, and active, imaginative enforcement. ... human beings make markets. A general recognition of that fact, led by the economic profession and taken to heart by politicians, would be a step so important as to be almost worth what it has cost to be reminded of it.--John Lanchester
From [Joseph] Schumpeter's vantage point, capitalism's very success allows rich societies to use government to relax the impersonal rules that govern markets, creating new rules that buffer citizens from the rigors of risk-taking and failure. In that sense, government invents for itself the task of mediating market outcomes. Schumpeter had seen the dangers of this play out in Bismarck's conception of Prussia's welfare state. In the face of the Marxist threat, the elite secured its position by causing government to dispense social benefits. Political entrenchment, not charity, had motivated Bismarck. When distorted in such a way, free-market capitalism is seen to suppress -- rather than to encourage -- social and economic mobility.--Carl Schramm
So why are we preparing to spend trillions saving 0.35% of the population when malaria kills 3 times as many children under 5 alone?--Don Surber
There is not a lot of love left for [Ralph] Nader, even though he pretty much paved the way for trial lawyers to become billionaires.--Don Surber
In spread formations, many feel the wideouts make the offense, but in reality, the back is the critical piece. Last year, without a healthy back, the Colts’ offense struggled. The Cards, without a dominating back, struggled. But the Titans, without great wideouts but with a great back in Chris Johnson, were very effective. The back’s talent makes the passing game more effective and creates more problems for the defense. The “passing to run” theory is what makes the running game of today’s football so effective, which is why the Patriots look good on paper.--Michael Lombardi
Don’t tweet while having sex. Don’t tweet while praying with the dying.--John Piper
Further squeezing Harvard was a transaction Summers had pushed it into in 2004, when he successfully argued that the university should engage in a multibillion-dollar interest rate swap with Goldman Sachs and other large banks. Under the terms of the deal, Harvard would pay Goldman a long-term fixed rate while Goldman paid Harvard the Federal Reserve rate. The main goal was to lock in a low rate for future debt, and if the Fed had raised rates, Harvard would have made hundreds of millions. But when the Fed slashed rates to historic lows to try to goose stalled credit markets, the deal turned equally sour for Harvard: By last November, the value of the swaps had fallen to negative $570 million.Yes, this is the Director of the White House National Economic Council.
Thursday, May 28, 2009
Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Republicans.--Mark Tapscott
Obama said the stimulus would save something like 3.5 million jobs in the next two years. Are we on pace? Math: 150,000 jobs in 100 days is 1500 jobs a day. At that pace, the administration will "save" around 270,000 jobs in its first two quarters and 540K in the first year. That's a big number, but it's not very big compared to the 1.5 million jobs the administration still claims it is on pace for saving or creating this year. As you can see, it's more like a third.--Derek Thompson
Well, I think the budgets [President Obama] submitted are way out of whack. I think what it does not only to the short-term deficit but long-term debt situation is very objectionable.--Dick Cheney in 2009
Reagan proved deficits don't matter. We won the midterms. This is our due.--Dick Cheney in 2002.
If your product is a stamp of approval where your highest rating is a curse to those that receive it, and is shunned by those who are supposed to use it, you have problems.
Einhorn hit it out of the park last year with his short of Lehman.
Tuesday, May 26, 2009
... Mr President, the bill now being considered in Congress is in direct contradiction to your campaign pledge. Will you now please stand up for principle and issue a veto threat?
A few weeks ago, I was talking to a well-respected journalist who doesn't cover financial matters. She was pushing me for the culprit behind this mess, and was unsatisfied when I pointed out that there were a lot of good reasons to make most of these bad decisions. Ultimately she cried in frustration, "but somebody must have done it!" This is how we approach the problem: we want villains, guilt, punishment. But when systems fail, they usually fail systemically. If one person, even Alan Greenspan, could bring down the entire edifice, then we'd be in massive trouble, so we should be grateful that it isn't the case. --Megan McArdle
The traditional libertarian solution for corrupt government is Constitutional restrictions on government activity. Smaller government means smaller scope for corruption. I am not sure I believe that the traditional libertarian solution works. I suspect that what really makes for limited government is the opportunity for exit. In the early 1800's, it was possible for an American to pick up and move to a remote area where government had very little impact. That possibility tended to limit the power of the central government. ... Picture civil society as a nice lawn, and picture government as a weed. As the weed grows, the lawn gets wiped out.--Arnold Kling
So who is most (ir)rational, my ten-year old, the fat-ten year old or the great Gary Becker?--Alex Tabarrok
Maryland couldn't balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O'Malley, a dedicated class warrior, declared that these richest 0.3% of filers were "willing and able to pay their fair share."
1) Collect Underpants
The Obama Administration:
1) Promise/order Guantanamo ClosedThe original here.
3) Gitmo Closed!
1) Talk to Iran/Syria/whoever
1) Propose A "Structure" to North Korea
3) North Korean Threat Eliminated!
1) Propose Alternative Energy
3) Carbon Neutrality Achieved!
1) Propose Mileage Standard
3) Detroit Automakers Saved!
1) Pass Stimulus Package
3) Deficit Reduced!
1) Propose $60 billion in Sin Taxes
3) Healthcare Reformed!
The President mentioned her mother, Selena, who scraped financially--after being widowed--to send her to Cardinal Spellman, a private school.
Vouchers, anyone? Our next generation of justices could be improved if they have greater access to education, no?
UPDATE: Is this playing the race card?
I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion than a white male who hasn’t lived that life.UPDATE: Greg Mankiw notes Sotomayor's fiscal discipline, or lack thereof.
Friday, May 22, 2009
I pray that our Heavenly Father may assuage the anguish of your bereavement, and leave you only the cherished memory of the loved and lost, and the solemn pride that must be yours to have laid so costly a sacrifice upon the altar of freedom.--Abraham Lincoln
Photo link here.
... the children who [struggled with delaying gratification], seemed more likely to have behavioral problems, both in school and at home. They got lower S.A.T. scores. They struggled in stressful situations, often had trouble paying attention, and found it difficult to maintain friendships. The child who could wait fifteen minutes had an S.A.T. score that was, on average, two hundred and ten points higher than that of the kid who could wait only thirty seconds.--Jonah Lehrer
The administration has found that it's easy to receive applause in Europe for closing Guantanamo, but it's tricky to come up with an alternative that will serve the interest of justice and America's national security.--Dick Cheney
Only someone who has never had the responsibility for managing anything could believe he could manage just about everything.--Thomas Sowell
Turns out the jury pool area was supplied with WiFi. But I discovered that I could not access blogger.com nor Don Surber. I checked TPM and DailyKos, and weirdly, I was able to access them. Unequal opportunity, I guess.
It made me think nyc.gov was a little like China.
Thursday, May 21, 2009
I wouldn't trust them to watch my kids for an hour.
Wednesday, May 20, 2009
If you understand economics, you'd know that the risk involved in loaning each money is different. There is significantly more risk in loaning Jake money than Howard. That means that if you charge Jake more interest, you are likely to have a lower loss based on that risk. So that's what you do. You charge Jake 20 percent interest, but only charge Howard 5 percent.
The following month, you decide that, for some external reason that has nothing to do with the loan - maybe Jake lost his lawn mowing job or crashed his bike - you are more worried about Jake paying you back than before. You now tell him if he wants to borrow more money, he needs to pay 25 percent interest.
Jake feels persecuted, so he complains to mom. Mom says you are mean and can't take advantage of Jake that way. She says you can't increase his interest rate.
How would you react?
If you said, "Easy, I would choose not to loan Jake any money because I can't be sure that I'll earn a high enough return to get my money back," then congratulations, you understand credit card companies and probably basic economics.
If you said, "Mom is right. He's my brother, so I should treat him more fairly," then congratulations, you might be a member of Congress someday.
A man owns up. That's why Mark McGwire is not a man. A man grasps his mistakes. He lays claim to who he is, and what he was, whether he likes them or not. ... Or he stands watch. He interrupts trouble. This is the state policeman. This is the poet. Men, both of them. --Tom Chiarella
So is shareholder value a dumb idea? No, just a very difficult one. Because to really get it right, you need to ignore your shareholders.--Justin Fox
The grand edifice of brand-name consumerism rests on the narcissistic fantasy that everyone else cares about what we buy. (It’s no accident that narcissistic teenagers are the most brand-obsessed consumers.) But who else even notices? Can you remember what your partner or your best friend was wearing the day before yesterday? Or what kind of watch your boss has?--John Tierney
The conglomerate rage of buying companies at 10 times earnings and issuing stock time after time at 30 times earnings to pay for them was a legitimate business operation mixed with a Ponzi scheme. That made it respectable. Nobody called it illegal. But it wasn't all that different from mixing a significant amount of salmonella into the peanut butter.--Charlie Munger
... my advice to Paul [Krugman] and Brad [DeLong] is this: don't start with a model that focuses on investor beliefs about real economic variables. Instead, start with a model in which financial firms use signaling to expand, and the credibility of those signals increases over time as long as nothing adverse happens. That will (a) produce the asymmetry between euphorias and crashes and (b) tell a story that puts the fragility of the financial sector in the middle, where it belongs.--Arnold Kling
California will go bankrupt, muni and state debt will spike, the federal government will backstop humanitarian programs and very possibly all state and local debt, and eventually, California will figure out whether it wants higher taxes or lower spending. But we will not actually make the world a better place by enabling the lunatics in Sacramento to pretend they can have both.--Megan McArdle
Can't put them in prison unless you release them.--Harry Reid
President Obama, although having zero experience as an entrepreneur or in the automotive industry, has designed fuel-efficiency standards that (he assures us) will save the average car buyer $2,800 over the life of his or her vehicle. What a deal! ... And we can admire not only Mr. Obama's industrial and commercial genius, but also his magnanimity in offering to the public, free of charge, his money-saving idea. He could have earned billions of dollars in profit by putting his idea to the test in the market. But no: by simply forcing us to use his idea and charging us nothing for it, he'll forego this profit. We Americans are lucky indeed.--Don Boudreaux
The Obama administration's agenda of maximizing dependency involves political favoritism cloaked in the raiment of "economic planning" and "social justice" that somehow produce results superior to what markets produce when freedom allows merit to manifest itself, and incompetence to fail. The administration's central activity -- the political allocation of wealth and opportunity -- is not merely susceptible to corruption, it is corruption.--George Will
Tuesday, May 19, 2009
Will the Republicans be able to take back the White House or a majority in either the House or Senate?Bryan says yes; Arnold is a no. Even odds. My only advice: be sure to hedge accordingly at Intrade!
- It will raise the prices of cars, and make them less safe
- It will reduce our carbon emissions, but not by as much as advertised, because more fuel efficient cars make driving cheaper, so people will do more of it. This "rebound" effect robs about 25% of gains, and also means more congestion, and more wear-and-tear on roads
- If you want to cut down on the pollution from driving, this is about the worst possible way to do it.
Right now, great teams (such as the Colts and Patriots) use the no-huddle selectively, as a way to maximize their dominance. But why don't bad teams use it? If you were the Lions, why not run the no-huddle this season? Why not put together a lighter, better-conditioned offensive line and a radically simplified playbook and see what happens? It's not as if you are risking a Super Bowl if it backfires. Your offensive line is lousy anyway, so there's no harm in tearing it down, and your fans aren't going to turn on you if you get killed while you work out the kinks. Last I checked, your fans have already turned on you. On the plus side, maybe the no-huddle exhausts the other team's defense so much you slow down their pass rush in the second half. And maybe giving your quarterback a bit more autonomy helps develop his knowledge of the game, and his leadership skills.And this is priceless:
The consistent failure of underdogs in professional sports to even try something new suggests, to me, that there is something fundamentally wrong with the incentive structure of the leagues. I think, for example, that the idea of ranking draft picks in reverse order of finish -- as much as it sounds "fair" -- does untold damage to the game. You simply cannot have a system that rewards anyone, ever, for losing. Economists worry about this all the time, when they talk about "moral hazard." Moral hazard is the idea that if you insure someone against risk, you will make risky behavior more likely. So if you always bail out the banks when they take absurd risks and do stupid things, they are going to keep on taking absurd risks and doing stupid things. Bailouts create moral hazard. Moral hazard is also why your health insurance has a co-pay. If your insurer paid for everything, the theory goes, it would encourage you to go to the doctor when you really don't need to. No economist in his right mind would ever endorse the football and basketball drafts the way they are structured now. They are a moral hazard in spades. If you give me a lottery pick for being an atrocious GM, where's my incentive not to be an atrocious GM?
Yet despite the too large fraction of those who are not insured, Americans are relatively healthy and well-serviced by their healthcare system-to judge by disease survival rates. For diabetes, heart and circulatory disease and strokes, the incidence rates and the number of years lost to sickness are firmly in the middle of the European spectrum. And for the four major cancer killers (colorectal, lung, breast and prostate), all European nations have worse survival rates than the US.
I decided I didn't want a casino sitting on top of my bank.--Ed Clark, TD Bank CEO, on why he shut down his structured products business in 2005
This is the kind of thinking you get when you hire someone to do your political deep thinking who can’t remember the Reagan admin and was still in high school in the Clinton admin. And apparently doesn’t know his Uncle Remus.--Jules Crittenden
... we have consulted with top experts in the field from MIT and from private industry and from the CIA. . . . Frankly, some of the people we've consulted are shocked by the sophistication of the equipment [Iran is] buying.--Robert Morgenthau, Manhattan District Attorney
Sarbanes-Oxley is one of those Congressional classics, passed amid the post-Enron panic, that has done much harm at great cost. Its biggest beneficiaries have been the same accounting firms the law sought to punish and which have nonetheless been able to charge far more money for their services. The law also did nothing to detect problems with the ratings and valuation of subprime mortgaged-back securities. We can only hope the High Court sends Congress back to the drawing board.--WSJ Editorial Board
The more I read about [Thomas Jefferson], the more I dislike him. He was without doubt a man of incandescent brilliance. But he also seems to have been sly, creepy, and an insufferable snob, in addition to having been a racist, slaveholding, anti-cosmopolitan, anti-commercial, Jacobin utopian.--Will Wilkinson
My goal in life is to get to the place that I can take the same idea and just repackage it over and over again, like Bruce Willis did with "Die Hard," or Bill O'Reilly does with the whole thing about being rich, white, male and entitled -- and be really pissed off about how he's treated by the world.--Malcolm Gladwell
What's the defining fact about [Nick] Faldo? His ex-girlfriend once destroyed his Porsche with a 9-iron. The corresponding fact for [Tiger] Woods is that his favorite band is Hootie and the Blowfish.--Malcolm Gladwell
... a press can only work professionally if you are using guys who carry $10s and $20s in their wallets instead of $100s.--Bill Simmons
... is there any other industry in the world (well, outside of Detroit) so terrified of innovation?--Malcolm Gladwell
And that's the thing I worry about with LeBron [James]. You say that this could go on for as long as he wants, but the truth is these things rarely go on for as long as anyone wants. U2 is a weird exception. In most cases, John [Lennon] turns on Paul [McCartney], Axl [Rose] gets fat and Kurt Cobain commits suicide.--Malcolm Gladwell
Good-bye innovation, good-bye less risky and more effective technologies. Let's save costs (not lives).
Try to follow this logic: Last week the Medicare trustees reported that the program has an "unfunded liability" of nearly $38 trillion -- which is the amount of benefits promised but not covered by taxes over the next 75 years. So Democrats have decided that the way to close this gap is to create a new "universal" health insurance entitlement for the middle class.
Such thinking may be a non sequitur, but it will have drastic effects on the health care of all Americans -- and as it happens, this future is playing out in miniature in Medicare right now. Desperate to prevent medical costs from engulfing the federal budget, the program's central planners decided last week to deny payment for a new version of one of life's most unpleasant routine procedures, the colonoscopy. This is a preview of how health care will be rationed when Democrats get their way.
At issue are "virtual colonoscopies," or CT scans of the abdomen. Colon cancer is the second leading cause of U.S. cancer death but one of the most preventable. Found early, the cure rate is 93%, but only 8% at later stages. Virtual colonoscopies are likely to boost screenings because they are quicker, more comfortable and significantly cheaper than the standard "optical" procedure, which involves anesthesia and threading an endoscope through the lower intestine.
The problem is that what "works best" isn't the same for everyone. While not painless or risk free, virtual colonoscopy might be better for some patients -- especially among seniors who are infirm or because the presence of other diseases puts them at risk for complications. Ideally doctors would decide with their patients. But Medicare instead made the hard-and-fast choice that it was cheaper to cut it off for all beneficiaries. If some patients are worse off, well, too bad.
All this is merely a preview of the life-and-death decisions that will be determined by politics once government finances substantially more health care than the 46% it already does. Anyone who buys Democratic claims about "choice" and "affordability" will be in for a very rude awakening.
BCWUW4: Be careful what you wish for.
Monday, May 18, 2009
The swine flu contracts were originally going to be expired based on the number of confirmed cases, as published by the CDC at http://www.cdc.gov/h1n1flu/update.htm. Now the CDC has stopped publishing the number of "Confirmed" cases and is only publishing the "Confirmed + Probable" case numbers.DISCLOSURE: I am long and short various contracts.
It's not obvious to me how Intrade should handle this type of situation. I think they did a good job when they designed the contract. They chose a metric which was quantitative, authoritative, and freely available on the internet. Of course, to properly evaluate these contracts, traders had to recognize that the number of lab-confirmed cases would be only a small fraction of the actual number of cases. But after making this adjustment, the contracts offer quite a good vehicle for predicting whether the flu will peter out or continue to spread.
For reasons to do with human psychology and the failure of most educational institutions to teach financial history, we are always more amazed when such things happen than we should be. As a result, 9 times out of 10 we overreact. The usual response is to introduce a raft of new laws and regulations designed to prevent the crisis from repeating itself. In the months ahead, the world will reverberate to the sound of stable doors being shut long after the horses have bolted, and history suggests that many of the new measures will do more harm than good.
Human beings are as good at devising ex post facto explanations for big disasters as they are bad at anticipating those disasters. It is indeed impressive how rapidly the economists who failed to predict this crisis — or predicted the wrong crisis (a dollar crash) — have been able to produce such a satisfying story about its origins. Yes, it was all the fault of deregulation.
There are just three problems with this story. First, deregulation began quite a while ago (the Depository Institutions Deregulation and Monetary Control Act was passed in 1980). If deregulation is to blame for the recession that began in December 2007, presumably it should also get some of the credit for the intervening growth. Second, the much greater financial regulation of the 1970s failed to prevent the United States from suffering not only double-digit inflation in that decade but also a recession (between 1973 and 1975) every bit as severe and protracted as the one we’re in now. Third, the continental Europeans — who supposedly have much better-regulated financial sectors than the United States — have even worse problems in their banking sector than we do. The German government likes to wag its finger disapprovingly at the “Anglo Saxon” financial model, but last year average bank leverage was four times higher in Germany than in the United States. Schadenfreude will be in order when the German banking crisis strikes.
We need to remember that much financial innovation over the past 30 years was economically beneficial, and not just to the fat cats of Wall Street. New vehicles like hedge funds gave investors like pension funds and endowments vastly more to choose from than the time-honored choice among cash, bonds and stocks. Likewise, innovations like securitization lowered borrowing costs for most consumers. And the globalization of finance played a crucial role in raising growth rates in emerging markets, particularly in Asia, propelling hundreds of millions of people out of poverty.
The reality is that crises are more often caused by bad regulation than by deregulation.
The biggest blunder of all had nothing to do with deregulation. For some reason, the Federal Reserve convinced itself that it could focus exclusively on the prices of consumer goods instead of taking asset prices into account when setting monetary policy. In July 2004, the federal funds rate was just 1.25 percent, at a time when urban property prices were rising at an annual rate of 17 percent. Negative real interest rates at this time were arguably the single most important cause of the property bubble.All of these were sins of commission, not omission, by Washington, and some at least were not unrelated to the very considerable political contributions and lobbying expenditures of the financial sector. Taxpayers, therefore, should beware. It is more than a little convenient for America’s political class to blame deregulation for this financial crisis and the resulting excesses of the free market. Not only does that neatly pass the buck, but it also creates a justification for . . . more regulation.
... there has never been a better time to bet against Warren Buffett.--Michael Lewis
Do you understand the concept of an average, Mr. Trump?--Andrew Ceresney, author Timothy O'Brien's lawyer
The [airline] tickets were remarkably cheap — only $438.82 per passenger round trip. How much of that money goes to the airline? A paltry $138. The rest — over $300 — is taxes. Percentage-wise, that’s even higher than the cigarette taxes in Chicago.--Steven Levitt
Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.--Art Laffer and Stephen Moore
We may have seen the last of America as a dynamic economy with a competitive political system. Instead, we may be headed toward a stagnant economy and a one-party political system. Have a nice day.--Arnold Kling
A carbon tax pushes one very powerful and interested group, the large energy firms, into the opposition. If tradable allowances are instead given to firms initially, there is a better chance of bringing the large energy firms into the coalition. Perhaps it’s not fair that politically powerful groups must be bought off but as Otto von Bismarck, Germany’s first chancellor, once said,“Laws are like sausages, it is better not to see them being made.” We can only add that producing both laws and sausages requires some pork.--Alex Tabarrok
Ah, transparency. Perhaps you've read that the new era of candor in government spending has arrived. Except, apparently, when it comes to the $750 billion that the Obama Administration and other nations have agreed to provide the International Monetary Fund. In this case, it's all opacity all the time. ... The wheels are greased in Congress to pass this before the public notices, but South Carolina Republican Jim DeMint is trying to force a Senate floor vote on the $108 billion. He'll lose, but at least he's honoring Mr. Obama's pledge of transparency.--WSJ Editorial Board
Congressional Democrats are acting as if there is something sinister in the CIA releasing the records of its briefings ... But the deal with congressional oversight is that if members of Congress are briefed on a subject and don't object, they shouldn't trash the agency later in public when there's a flap. That undermines not just CIA morale but the integrity of the oversight process itself. Pelosi's apparent rewriting of the record would be shocking, if it weren't so typical of congressional behavior on this subject.--David Ignatius
But incarceration also provided [Zhao Ziyang] with time to read and reflect broadly on China's situation in history. At the end of "Prisoner of the State," we see Zhao arrive at positions more radical than any he had taken before -- positions that the Chinese government had long been calling "dissident." For instance, Zhao eventually concluded that China needs a free press, freedom to organize and an independent judiciary. The Communist Party will have to release its monopoly on power. Ultimately, China will need parliamentary democracy. --Perry Link
Slang is like a breeze; it softly comes and goes, as new times bring new buzzwords. Some stick ("cool" defiantly endures); some induce cringes when dusted off ("groovy" is now in the dustbin of irony).--Nick Stillman
Friday, May 15, 2009
The Boston Globe reports (via Don Surber):
Despite Boston's abundance of top-notch medical specialists, the waits to see dermatologists, obstetrician-gynecologists, and orthopedic surgeons for routine care have grown longer - to as much as a year for the busiest doctors.
A study of five specialties shows that the wait for a nonurgent appointment in the Boston area has increased in the past five years, and now averages 50 days — more than three weeks longer than in any other city studied.
BCWUW4: Be careful what you wish for.
Children resemble their parents. When the resemblance is physical, we usually think it's funny or cute. But when the resemblance is financial, it's an Issue.--Bryan Caplan
"Live free or die!" sounds like a battle cry: We'll win this thing or die trying, die an honorable death. But in fact it's something far less dramatic: It's a bald statement of the reality of our lives in the prosperous West. You can live as free men, but, if you choose not to, your society will die.--Mark Steyn
If James Biden were to bring in a $100 million pension-fund investment, a $10 million “placement fee” would be payable immediately. In the end, no such fees were paid. But it gives you an idea of (a) how profitable hedge-fund investments are, for funds-of-funds; and (b) how big the incentives are for middlemen to go out and sell hedge funds to big investors.--Felix Salmon
For the time the [unemployment] rate was under 6%, [stock returns] showed an annualized real return of 3.7%. When the rate was over 6%, the real return jumped to 17.3%.--Eddy Elfenbein
He promised to stop the crazy deficit spending, cut up the credit cards, live within our means. And he did exactly the opposite. Schwarzenegger increased spending faster than we saw under Gray Davis.--Tom McClintock
Correct me if I’m wrong, but [Nancy Pelosi and the Congress] likes the CIA telling Bush the WMD dirt was all wrong, which means the Dems have to figure out when they want the CIA to be telling the truth, and when they want the CIA to be lying. --Jules Crittenden
... if you are going to use research by a brilliant Nobel-Prize winning new Keynesian economist in order to attack discredited ideas, then makes sure the discredited ideas being attacked are not . . . your own.--Scott Sumner
All this drivel in the blogosphere about velocity, multipliers, liquidity traps, Ricardian equivilence, budget constraints, etc, etc, are merely verbal tools that can be wielded to achieve any desired outcome. It’s an insiders game. The real battle is elsewhere.--Scott Sumner
It's pretty clear that scientists who have a lot vested in the current model of Lyme (their careers, possible malpractice accusations), have at least for now won the debate. It's not quite so clear that they should have. And the government imprimatur has done a lot to seal the fate of the dissidents. This is all standard stuff to anyone who's read The Structure of Scientific Revolutions. But those revolutions happen because there are multiple possible centers of power. The government has the ability to potentially shut the revolutionary centers down.--Megan McArdle
UPDATE: Megan agrees:
This is the bravest thing I've read for a long, long time. For a reporter--an economic reporter--to admit that he's been in the hell of excess debt and unpaid bills that he reports on is a major statement in middle class America.
Until we [writers] comfortable with talking publicly about the fact that we don't make much money and likely never will, that our lives are risky, and that this has obvious impacts on our ability to consume on the level of our educational peers, writers will keep getting into trouble. Bravo to Andrews for leaning into the strike zone and taking one for the team.
U.S. prosecutors and the FBI are investigating whether two Securities and Exchange Commission lawyers illegally used nonpublic information from the agency to bet on stocks.
Thursday, May 14, 2009
The Scottish Government statistics also showed 1,884 people were diagnosed with malnutrition in Scottish hospitals in 2008, of whom 110 died – one in 17. This is twice as bad as the situation in 1998 when a similar number – 1,805 – were diagnosed with malnutrition, but only 51 of these patients died from it – one in 35.BCWUW4: Be careful what you wish for.
Very, very careful. Holding life expectancy and population constant, that's 1 in 600 people.
Medicare is Going to Bankrupt Us, Which is Why We Need Universal Health Care.--Megan McArdle
By stepping over the bright line between the rule of law and the arbitrary behavior of men, President Obama may have created a thousand new failing businesses. That is, businesses that might have received financing before but that now will not, since lenders face the potential of future government confiscation.--Todd Zywicki
But the spectacle of creditors being stripped of their legal rights in favor of a labor union with which the president is politically aligned does little to attract private capital at a time when the government and many companies need these investors the most.--Washington Post Editorial Board
The second editorial argues that the entitlement problem is serious and cannot wait. The third editorial defends the DC school voucher program. Since we know that the Obama Administration is centrist and pragmatic, the only inference to draw is that the Post has become a mouthpiece for the far right wing.--Arnold Kling
Computer Prices Have Fallen By 90% Over the Last Ten Years: Is That Evidence of [Intel's] Monopoly Power?--Mark Perry
Instruct regulators to look for the newest fad in the industry and examine it with great care. The next mistake will be a new way to make a loan that will not be repaid.--Bill Seidman
The thinking was that the Basel capital accords required banks to hold too much capital for mortgages (this was probably true). Accordingly, the article takes a sympathetic view of regulatory arbitrage. In retrospect, this is a bit like watching a movie in which a jailer becomes sympathetic to a prisoner, when we know that the prisoner is eventually going to escape and go on a crime spree.--Arnold Kling
The trappings of success may be a by-product of this larger mission, but they can't be the central thing. Just ask Bernie Madoff.--President Obama
In nationalizing health care, President Obama promises to save us $500. And he’s going to do it magically, by spending $2,500. But the question isn’t answered: Where will the $2,500 come from?--Stephen Green
Today all the assumptions that once defined Bill Clinton's "New Democrats" are being contested by the Obama White House. And nowhere is the contrast more stark than on the defining issue of trade.--William McGurn
At some point, President Obama must publicly apologize to President Bush and admit that he (Obama) did not realize the full depth and scope of the decision to establish a military detention center at Gitmo and to use the military courts for any trials.--Don Surber
The ultimate takeaway from the evening was, Jim, why didn't you defend yourself? And the answer is, I was trying to defend our network and take a high road and I didn't want to hit [Jon Stewart] with a chair or break his face or something like that. But he was very vicious. One day he'll answer for it.--Jim Cramer
The Laffer Curve is usually used to describe American income taxes, for which it isn't all that useful. But it was actually first developed to analyze another sort of "stealth" taxation: seignorage, the income that a government earns from printing money. The interesting result was that the Weimar Republic was printing money too fast--it could have earned more by keeping the inflation rate lower.--Megan McArdle
I cannot with a clear conscious move forward supporting and promoting the Miss Universe Organization when I no longer believe in it, or the contracts I signed committing myself as a youth. I want to be a role model for young woman with high hopes of pageantry, but now feel it more important to be a role model for my children. I am sorry and hope I have not let any young supporters down but wish them the best of luck in fulfilling their dreams.--Shanna Moakler
Moakler as a role model for you women? Let’s see, unwed mother, nude poser, got in a public fight with Paris Hilton — she is the woman you warn your daughters against being.--Don Surber
Wednesday, May 13, 2009
What allows people to work, and love, as they grow old? By the time the Grant Study men had entered retirement, Vaillant, who had then been following them for a quarter century, had identified seven major factors that predict healthy aging, both physically and psychologically.
Employing mature adaptations was one. The others were education, stable marriage, not smoking, not abusing alcohol, some exercise, and healthy weight. Of the 106 Harvard men who had five or six of these factors in their favor at age 50, half ended up at 80 as what Vaillant called “happy-well” and only 7.5 percent as “sad-sick.” Meanwhile, of the men who had three or fewer of the health factors at age 50, none ended up “happy-well” at 80. Even if they had been in adequate physical shape at 50, the men who had three or fewer protective factors were three times as likely to be dead at 80 as those with four or more factors.
There is a complexity to human affairs before which science and analysis simply stands mute.--David Brooks
I fear we'll be paying for Bernanke's under-estimation of the long-run dangers of bail-outs and massive intervention for decades to come. What happened to you, Ben?--Bryan Caplan
We used to have a Constitution.--Shakes the Clown (in the comments)
Norman! It's Hillary. What am I going to do with you Norman? You are working so hard for me, I don't know what to say anymore. I've never seen anybody who has been more loyal and more effective and really just having greater success supporting someone than you. Everywhere I go, you're there. If you're not, you're sending people to be part of my events. You know, we're going to win this campaign, Norman, because you single-handedly are going to make that happen.--Hillary Clinton, to now convicted felon Norman Hsu
Probably the most fascinating stat is that all of the stock market’s net capital gains have come when the 10-year yield is 65 or more basis points above the 90-day yield (that happens about 70% of the time). The yield curve hasn’t been that positive in 15 months. Anything less than 65 basis points, including a negative yield curve, works out to a net equity return of a Blutarsky. Zero Point Zero. Today the spread is out to nearly 300 basis points.--Eddy Elfenbein
The US will have to get global cooperation to impose its regulation on the entire world. That was the lesson learned from capital flight in the wake of SOX. Not surprisingly, we’re hearing talk of a global systemic risk regulator. Space travel might bring some relief. But I'm sure the Obama administration will be ready with plans for a galactic regulator.--Larry Ribstein
Press secretary Robert Gibbs should have been fired for the simpering, shrugging way he dismissed queries about this outrageous and terrifying event [of Air Force One and a fighter jet buzzing New York City], which had occurred many hours earlier. Acting as if the issue was as insignificant as Lindsay Lohan's latest dating flap, Gibbs claimed to know nothing more than the few passing references he had seen to it on the Web.--Camille Paglia
Did you like Fannie and Freddie? Were you thrilled by the government's massive subsidization of the real estate market that gave us the subprime bust? Well then you’ll love the government’s latest idea – doing the same thing for cars.--Larry Ribstein
The true test of any planning process is not whether it predicts each successive turn in an operation, but whether it provides the operators the resources and flexibility to carry out their assigned tasks.--James Dobbins et al
You feel like Noah (biblical character who built an ark in preparation for a great flood) to me - you're like, 'Pay attention, pay attention, pay attention.' [to the dire warnings of global warming].--Oprah Winfrey, to noted environmental scientist Leonardo DiCaprio in 2005
It’s great to have a private jet. Anyone that tells you that having your own private jet isn’t great is lying to you.--Oprah Winfrey, in 2009
We all agree that [bankruptcy] is a very terrible thing that should be avoided at all costs—but once it has actually happened, we try to forget about the past as quickly as possible, and we focus mostly on providing a predictable and relatively painless way for the insolvents to get back on their feet. That strategy, developed over time through trial and error, has served us well for most of our history. Why is it now a piece of the past that we’re only too willing to abandon?--Megan McArdle
Tuesday, May 12, 2009
Also, Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner.
In whom do you trust?
And Canadians with money can always opt into the US system, so they can access better services without the long waiting times. This loophole is not adjusted for when comparing outcomes between the two countries.
First things first: Canadians are funding the developed world's second most expensive universal access health insurance system. On an age-adjusted basis (older people require more care) in the most recent year for which comparable data are available, only Iceland spent more on universal access health insurance system than Canada as a share of GDP, while Switzerland spent as much as Canada. The other 25 developed nations which maintain universal health insurance programs spent less than we did; as much as 38 per cent less as a percentage of GDP in the case of Japan.
With that level of expenditure, you might expect that Canadians receive world-class access to health care. The evidence finds this is not so.
Consider the case of waiting lists. In 2008, the median wait time from general practitioner referral to treatment by a specialist was 17.3 weeks in Canada.
Canada's waiting lists are also, according to the available evidence, among the longest in the developed world. ... waiting times of more than six months for elective surgery than Australians, Germans, the Dutch, and New Zealanders, but slightly less likely than patients in the United Kingdom; and were least likely among the six nations to wait less than one month for elective surgery; - Canadians are most likely to wait six days or longer to see a doctor when ill, and are least likely to receive an appointment the same day or next day among the six universal access nations surveyed; and - Canadians are least likely to wait less than one hour and most likely to wait two hours or more for access to an emergency room among the six universal access nations surveyed.
That is hardly the sort of access you might expect from the developed world's second-most-expensive universal access health insurance system.
Access to medical technologies is also relatively poor in Canada. In a recent comparison of age-adjusted inventories of medical technologies, Canada ranked 14th of 25 nations for which data were available in MRI machines per million population, 19th of 26 nations in CT scanners per million population, eighth of 21 in mammographs per million population, and tied for second last among 21 nations in lithotripters per million population. Clearly, Canada's relatively high expenditures are neither buying quick access to care nor are they buying high-tech health-care services for the population.
Governmental restrictions on medical training, along with a number of other policies affecting the practices of medical practitioners, have also taken their toll on Canadians' access to care. Among 28 developed nations that maintain universal approaches to health insurance, a recent comparison found Canada ranked 26th in the age-adjusted number of physicians per thousand population. It should come as no surprise that Statistics Canada determined that nearly 1.7 million Canadians aged 12 or older could not find a regular physician in 2007.
While our taxes can and do pay for important and valuable services for all Canadians, we need to critically assess whether we are receiving value for the dollars we are spending.
In the case of health care, Canadians are paying for a world-class health-care system but are not receiving one in return.
BCWUW4: Be careful what you wish for.
... monetary policy around the world was too loose too long.--Timothy Geithner
I couldn't believe how poorly the [stress test] impressions leaked, how effectively people say it was leaked, if it was any other company leaking that information there would be SEC investigations all over the place.--Meredith Whitney
It doesn't take a masters degree in political economy to realize that when you go up against the government in a financial negotiation where it holds all the cards—including some of yours—you are going to get your head handed to you on a platter. Deal with it. Buck up, and move on. Find a less lopsided game to play in. Because I can guarantee you the government and 95% of the people who elected it to power don't give a rat's ass that you're going to lose money on your Chrysler bonds.--Epicurean Dealmaker
In Obama's wide grin as Sykes was telling her joke, we saw the smug look of a man who enjoys seeing his critics dehumanized. The president of the United States should be better than this.--James Taranto
Nancy [Pelosi] is very bright but doesn’t apply herself.--Jules Crittenden
TRUDIE Styler -- who co-founded the Rainforest Foundation 20 years ago -- flew her hairstylist from New York to Washington, DC, last weekend on a private jet to do her hair and makeup for the White House Correspondents' Dinner.--Richard Johnson
Monday, May 11, 2009
Imagine if the mayor of your nearest big city were to hold a press conference with the General Manager of the city’s Major League Baseball team. The Mayor announces that the GM, working with the coaches and players, has committed that he will work to develop plans for the team to hit the Mayor’s new goal of winning 40 more games this season than they otherwise would have won. Those plans will improve the team’s hitting, pitching, and fielding. The Mayor also announces that the manager’s plans, combined with the Mayor’s new policy initiative for better parking at the stadium, will make fans happier and help the team win more games.
The President is attempting to claim credit for [healthcare] savings that (a) do not yet exist, (b) are not backed up by any specific changes in industry practices or government policies, and (c) are related to him only in that the groups announced they were adopting his quantitative goal. For all three of these reasons, the President’s claim that these savings will materialize is wildly unrealistic, and it is absurd to attach a per-family savings number to it. This is like the Mayor claiming credit for the 40 additional wins now, and telling fans that he will be responsible for the team winning the pennant. No one should take these claims seriously.
[Economists Roland Fryer and Will Dobbie] found that the Harlem Children’s Zone schools produced “enormous” gains. The typical student entered the charter middle school, Promise Academy, in sixth grade and scored in the 39th percentile among New York City students in math. By the eighth grade, the typical student in the school was in the 74th percentile. The typical student entered the school scoring in the 39th percentile in English Language Arts (verbal ability). By eighth grade, the typical student was in the 53rd percentile.
Forgive some academic jargon, but the most common education reform ideas — reducing class size, raising teacher pay, enrolling kids in Head Start — produce gains of about 0.1 or 0.2 or 0.3 standard deviations. If you study policy, those are the sorts of improvements you live with every day. Promise Academy produced gains of 1.3 and 1.4 standard deviations. That’s off the charts. In math, Promise Academy eliminated the achievement gap between its black students and the city average for white students.
To my mind, the results also vindicate an emerging model for low-income students. Over the past decade, dozens of charter and independent schools, like Promise Academy, have become no excuses schools. The basic theory is that middle-class kids enter adolescence with certain working models in their heads: what I can achieve; how to control impulses; how to work hard. Many kids from poorer, disorganized homes don’t have these internalized models. The schools create a disciplined, orderly and demanding counterculture to inculcate middle-class values.
The 2010 Taurus, which debuts next month, is a brand new start with sharp styling and the same $25,995 base price as the old, lackluster model. For more money you can add high-tech gadgetry such as forward-looking radar, adaptive cruise control, and a collision-warning system that applies the brakes when you get too close to the car in front of you. Together, these gizmos will allow you to drive from Detroit to Chicago without hitting either the brake or the accelerator. (I wouldn't suggest trying it, however.)
Ford's new Fusion Hybrid, meanwhile, gets 41 miles to the gallon in the city, versus 33 mpg for the Toyota Camry hybrid (with a similar price tag). The difference comes from lots of little things. Ford narrowed the slots on the wheel covers and changed the design of the fog lights, for example, to reduce aerodynamic drag.
Ford announced last week that it's reconfiguring a truck plant in Wayne, Mich., to build the new Focus compact. And a year from now the high-mileage subcompact Fiesta, engineered in Europe, will hit these shores. The Fiesta trails the Honda Civic and the Toyota Yaris in its time of entry to the U.S. market, but the vehicle's sleek styling will make it the best-dressed girl at the dance.
All this begs the question: How did the company develop all these new cars while losing so much money in recent years? The simple answer is that it borrowed billions from private lenders....
Last week, GM reported a $6 billion loss for the first quarter. The company wants to wipe away 90% of its $27 billion in unsecured debt as part of its path to viability. But to do that it will almost certainly have to follow Chrysler into bankruptcy court. That will be the cleanest and quickest way for GM to get relief from obligations that it can't afford to meet. Beyond this, GMAC's status as a bank holding company qualifies it for government assistance that Ford's lending arm, Ford Motor Credit, can't get.
You can see where this leaves us. Ford has about $26 billion in automotive debt -- about the same as GM's $27 billion. Ford's debt is secured by its assets. And secured lenders must be repaid -- unless they happen to be Chrysler lenders and get clipped by a company bankruptcy plan that's backed by President Obama.
So Ford is like a homeowner who planned prudently and can pay his mortgage, while his spendthrift neighbors get their mortgage reduced by some new federal program.Ford executives are probably fretting about this, but there isn't much that can be done. They already have exchanged some of their debt for equity, and might do more of that.
This is the Star Trek movie fans have been waiting for, going on 30 years now. It’s also the Star Trek movie newbies will still be watching 30 years from now.--Stephen Green
As the government takes over more of the economy, these pressures on formerly free markets will intensify. The problem for government is that it is running out taxpayer money for buying the economy. The sources of private money will long remember what happened to Chrysler's lenders.--Larry Ribstein
You may recognize these [healthcare savings] proposals; they are recycled from the Obama budget. Estimated cost savings listed: $215 billion over ten years. That leaves just $1.785 trillion for the "stakeholders" to find. And with a model of stakeholder cooperation like Chrysler before us, that shouldn't be hard.--Megan McArdle
[Austrailian Prime Minister Kevin Rudd's backtracking on a cap-and-trade carbon emissions program] is yet another example of politicians elsewhere cashing in politically on the current anti-carbon enthusiasm, only to discover that support diminishes as the real-world costs become clear.--WSJ Editorial Board
The truth is Democrats know that any policy guardrails built this year can be dismantled once the basic public option architecture is in place. The White House strategy is to dilute it just enough to win over credulous Republicans. That is what has always happened with government health programs.--WSJ Editorial Board
[John Boehner] is a person of color. Although not a color that appears in the natural world.--Barack Obama
Miss Rhode Island USA won’t lose her title for posing topless — but Miss California USA may simply because she failed to give the politically correct answer on gay marriage.--Don Surber
I personally believe this situation is stemming from the controversy over [Miss California Carrie Prejean's] opinion and not a photo.--Miss Rhode Island Alysha Castongua
Ever since Boston won the World Series 10 years ago, I always imagined pointing to that 2004 banner and telling my little boy, "That's the team that changed everything."
So that's what I do. I point at the banner and tell him, "That's the team that changed everything."
"Isn't that the team that cheated?" he asks.
My father and I glance at each other. A few beats pass.
"Well, technically, no," I stammer. "I mean ..."
"I thought they had a whole bunch of steroids guys on that team," he says.
"Well, there have been some accusations, and yeah, some of the power numbers were a little suspicious, but ..."
"I'd do it again!" my dad yells happily.
The very promise that Obama made, to spend money quickly and create jobs, is locking out many struggling communities needing those jobs.
The money goes to projects ready to start. But many struggling communities don't have projects waiting on a shelf. They couldn't afford the millions of dollars for preparation and plans that often is required.
"It's not fair," said Martin Schuller, the borough manager in the Elk County seat of Ridgway, who commiserates about the inequity in highway aid with colleagues in nearby towns. "It's a joke because we're not going to get it, because we don't have any projects ready to go."
Friday, May 08, 2009
I'm willing to countenance the possibility that Barack Obama genuinely believes that the DC voucher program is not helping the students who participate--indeed, I think the most hard-core voucher advocate would have to admit that its modest gains are not what we had hoped.
Here's what I don't understand though: how come the Obama girls benefit from leaving the DC public school system? Surely, if it doesn't make any difference, the Obama girls would do just as well in ordinary, democratic, thoroughly American public schools as in an elitist Quaker institution.
... And that I think that there is probably a special place in hell reserved for politicians who betray our nation's most helpless children for the benefit of a sullen and recalcitrant teacher's union. There they spend all eternity explaining to their victims why they couldn't possibly have risked their precious babies' future in the public school system, yet felt perfectly free to fling other peoples' children into it by the thousands.
An accident of history that shows how hard it is for the government to withdraw favors even when they have no sound policy justification.
It all comes down to the long forgotten chicken wars of the 60s. In 1962, when implementing the European Common Market, the Community denied access to US chicken producers. In response after being unable to resolve the issue diplomatically, the US responded with retaliatory tariffs that included a twenty five percent tariffs on trucks that was aimed at the German Volkswagen Combi-Bus that was enjoying brisk sales in the US.
Since the trade (GATT) rules required that retaliation be applied on a non-discriminatory basis, the tariffs were levied on all truck-type vehicles imported from all countries and have never been removed. Over time, the Germans stopped building these vehicles and today the tariffs are mainly paid on trucks coming from Asia. The tariffs have bred bad habits, steering Detroit away from building high-quality automobiles towards trucks and truck like cars that have suddenly fallen into disfavor.
If congress wants an explanation for why the big three have been so uncompetitive it should look first at the disguised largess it has been providing them with for years. It has taken a long time -- nearly 47 years -- but it seems that eventually the chickens have finally come home to roost.
Thursday, May 07, 2009
Our objection now is that reconciliation has never before been used to ram through such a momentous policy change as turning 17% of the economy over to government hands. Mr. Conrad admits in his letter that the only "intended purpose" of reconciliation is to "reduce deficits" and that "it is ill-suited for considering major policy reforms." Which again raises the question of why he voted for it.--WSJ Editorial Board
In his Boumediene dissent, Chief Justice John Roberts indicted the majority's "set of shapeless procedures to be defined by federal courts at some future date," and was he ever right. How will judges prevent the public disclosure of classified material? What about Miranda rights, or evidence obtained under battlefield conditions? ... Mr. Obama could have avoided this mess had he kept his Gitmo options open, but to adapt a famous phrase, the President broke Guantanamo so now he owns the inmates.--WSJ Editorial Board
Wednesday, May 06, 2009
He always had enough money simply by borrowing more and more. And just when things got tight, those magic beans came along to save the day.
But as a nation, we cannot base our future on the hope that some day Jack and those magic beans will also save the rest of us.
The author, an elected official in California, is writing under a pseudonym. This is what he has summarized:
During the presidential primary campaign, Michelle Obama complained how tough it was to make ends meet. During a stop in Ohio, she said, "I know we're spending - I added it up for the first time - we spend between the two kids, on extracurriculars outside the classroom, we're spending about $10,000 a year on piano and dance and sports supplements and so on and so forth."
Let's examine how tough things were for this couple using various public records.
In April 1999, they purchased a Chicago condo and obtained a mortgage for $159,250. In May 1999, they took out a line of credit for $20,750. Then, in 2002, they refinanced the condo with a $210,000 mortgage, which means they took out about $50,000 in equity. Finally, in 2004, they took out another line of credit for $100,000 on top of the mortgage.
Tax returns for 2004 reveal $14,395 in mortgage deductions. If we assume an effective interest rate of 6%, then they owed about $240,000 on a home they purchased for about $159,250.
This means they spent perhaps $80,000 beyond their income from 1999 to 2004.
The Obamas' adjusted gross income averaged $257,000 from 2000 to 2004. This is above the threshold of $250,000 which Obama initially used as the definition of being "rich" for taxation purposes during last year's election campaign.
The Obama family apparently had little or no savings during this period since there was virtually no taxable interest shown on their tax returns.
In 2003, they reported almost $24,000 in child care expenses and, in 2004, about $23,000. They also paid about $3,400 in household employment taxes each year. And as Michelle stated, they spent $10,000 a year on "extracurriculars" for the children.
These numbers clearly show the Obamas were living beyond their means and they might have suffered financially during the decline in housing prices had they relied on taking ever larger amounts of equity from their home to pay the bills.
But in 2005, Obama's book sales soared and the royalties poured in. Michelle explained, "It was like Jack and his magic beans."
Hat tip to my favorite broker.
Bold stress tests and government intervention reflect President Obama's use of Franklin Delano Roosevelt as a model in dealing with the current crisis. But he got the wrong Roosevelt. He should instead follow the motto of Theodore Roosevelt: Speak softly and carry a big stick.--Glenn Hubbard, Hal Scott, Luigi Zingales
Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.--Cliff Asness
All in all, there is no major industrialized economy with universal coverage that has performed as well–let alone better–than the United States in the last decade. Universal coverage might not be the cause of their inferior performance. But the crucial point is that there is zero evidence that it has put them on a more solid footing. Before applying this exotic therapy to America, Obama needs to offer more than mere hunches that it will work. He needs to offer actual evidence.--Shikha Dalmia
Tuesday, May 05, 2009
The real irony here is that a lot of [Chrysler's] secured creditors are institutional investors, including pension funds and mutual funds held by American workers, who are getting screwed on their retirement so that the UAW can save as much of the gold-plating on its contracts as possible.--Stephen Bainbridge
The [hedge fund] managers have a fiduciary obligation to look after their clients’ money as best they can, not to support the President, nor to oppose him, nor otherwise advance their personal political views. That’s how the system works. If you hired an investment professional and he could preserve more of your money in a financial disaster, but instead he decided to spend it on the UAW so you could “share in the sacrifice”, you would not be happy.--Cliff Asness
I mean, the bondholders want a secure bond. If I have a first mortgage on my house here, and the first mortgage is for half of what the house is worth, and somebody says I want you to take a big haircut because I’ve got credit card debt someplace else, that’s got problems. It has problems in terms of future lending. I mean, if priorities don’t mean anything that’s going to disrupt lending practices in the future. On the other hand, to have a few people standing in the way of something that has, ah, so much importance to the whole country, I can see why people on the other side are very upset. But giving up priorities in lending, abandoning that principle, would have a whole lot of consequences. ... If we want to encourage lending in this country, we don’t want to say to somebody who lends and gets a secured position that that secured position doesn’t mean anything.--Warren Buffett
I think they’re just trying to make it past 2012.--Glenn Reynolds
Apparently the Obama administration's policy is to release photos only when doing so might pose a danger to national security.--James Taranto
Buffett is a towering figure, perhaps the greatest investor in American history. But he's not a god, and for all his good sense he's not omniscient. As Andrew Ross Sorkin mentioned in passing in Tuesday's New York Times, Buffett manages to play the kind of complex, risky, tax-advantaged, derivatives-laced game that he warns everyone else against. And the sense, conveyed by Sorkin who got to question the great man and his wisecracking sidekick Munger, that if we only pursued Buffett's "simple" verities we'd all be better off, is a snare and a delusion. ... If you want to keep it simple, index. If you want a homespun morality, find a church or synagogue.--Robert Teitelman
The research aircraft “Polar 5” (see photo above) today concluded its Arctic expedition in Canada. During the flight, researchers measured the current ice thickness at the North Pole and in areas that have never before been surveyed. The result: The sea-ice in the surveyed areas is apparently thicker than scientists had suspected.
Normally, newly formed ice measures some two meters in thickness after two years. “Here, we measured ice thickness up to four meters,” said a spokesperson for Bremerhaven’s Alfred Wegener Institute for Polar and Marine Research. At present, this result contradicts the warming of the sea water, according to the scientists.
Good news, indeed.
[Vivek] Ranadivé knew that if they played the conventional way—if they let their opponents dribble the ball up the court without opposition—they would almost certainly lose to the girls for whom basketball was a passion. Ranadivé came to America as a seventeen-year-old, with fifty dollars in his pocket. He was not one to accept losing easily. His second principle, then, was that his team would play a real full-court press, every game, all the time. The team ended up at the national championships.
David’s victory over Goliath, in the Biblical account, is held to be an anomaly. It was not.
What happened, [political scientist Ivan] Arreguín-Toft wondered, when the underdogs likewise acknowledged their weakness and chose an unconventional strategy? He went back and re-analyzed his data. In those cases, David’s winning percentage went from 28.5 to 63.6. When underdogs choose not to play by Goliath’s rules, they win, Arreguín-Toft concluded, “even when everything we think we know about power says they shouldn’t.”
“The sudden astonishment when David sprints forward must have frozen Goliath, making him a better target,” the poet and critic Robert Pinsky writes in “The Life of David.” Pinsky calls David a “point guard ready to flick the basketball here or there.” David pressed. That’s what Davids do when they want to beat Goliaths.
... they didn’t guard the player throwing the ball in. Why bother? Ranadivé used that extra player as a floater, who could serve as a second defender against the other team’s best player. “Think about football,” Ranadivé said. “The quarterback can run with the ball. He has the whole field to throw to, and it’s still damned difficult to complete a pass.” Basketball was harder. A smaller court. A five-second deadline. A heavier, bigger ball. As often as not, the teams Redwood City was playing against simply couldn’t make the inbounds pass within the five-second limit. Or the inbounding player, panicked by the thought that her five seconds were about to be up, would throw the ball away. Or her pass would be intercepted by one of the Redwood City players.
The Redwood City players would jump ahead 4–0, 6–0, 8–0, 12–0. One time, they led 25–0. Because they typically got the ball underneath their opponent’s basket, they rarely had to take low-percentage, long-range shots that required skill and practice. They shot layups. In one of the few games that Redwood City lost that year, only four of the team’s players showed up. They pressed anyway. Why not? They lost by three points.
The full-court press is legs, not arms. It supplants ability with effort. It is basketball for those “quite unused to formal warfare, whose assets were movement, endurance, individual intelligence . . . courage.”
“It’s an exhausting strategy,” Roger Craig said. He and Ranadivé were in a TIBCO conference room, reminiscing about their dream season. Ranadivé was at the whiteboard, diagramming the intricacies of the Redwood City press. Craig was sitting at the table.
“My girls had to be more fit than the others,” Ranadivé said.
“He used to make them run,” Craig said, nodding approvingly.“We followed soccer strategy in practice,” Ranadivé said. “I would make them run and run and run. I couldn’t teach them skills in that short period of time, and so all we did was make sure they were fit and had some basic understanding of the game. That’s why attitude plays such a big role in this, because you’re going to get tired.”
It is easier to retreat and compose yourself after every score than swarm about, arms flailing. We tell ourselves that skill is the precious resource and effort is the commodity. It’s the other way around.
Insurgents work harder than Goliath. But their other advantage is that they will do what is “socially horrifying”—they will challenge the conventions about how battles are supposed to be fought. All the things that distinguish the ideal basketball player are acts of skill and coördination. When the game becomes about effort over ability, it becomes unrecognizable—a shocking mixture of broken plays and flailing limbs and usually competent players panicking and throwing the ball out of bounds. You have to be outside the establishment—a foreigner new to the game or a skinny kid from New York at the end of the bench—to have the audacity to play it that way. George Washington couldn’t do it. His dream, before the war, was to be a British Army officer, finely turned out in a red coat and brass buttons. He found the guerrillas who had served the American Revolution so well to be “an exceeding dirty and nasty people.” He couldn’t fight the establishment, because he was the establishment.
... when the world has to play on Goliath’s terms, Goliath wins.
There was a sense that Redwood City wasn’t playing fair—that it wasn’t right to use the full-court press against twelve-year-old girls, who were just beginning to grasp the rudiments of the game. The point of basketball, the dissenting chorus said, was to learn basketball skills. Of course, you could as easily argue that in playing the press a twelve-year-old girl learned something much more valuable—that effort can trump ability and that conventions are made to be challenged. But the coaches on the other side of Redwood City’s lopsided scores were disinclined to be so philosophical.
“There was one guy who wanted to have a fight with me in the parking lot,” Ranadivé said. “He was this big guy. He obviously played football and basketball himself, and he saw that skinny, foreign guy beating him at his own game. He wanted to beat me up.”
Roger Craig says that he was sometimes startled by what he saw. “The other coaches would be screaming at their girls, humiliating them, shouting at them. They would say to the refs—‘That’s a foul! That’s a foul!’ But we weren’t fouling. We were just playing aggressive defense.”At the nationals, the Redwood City girls won their first two games. In the third round, their opponents were from somewhere deep in Orange County. Redwood City had to play them on their own court, and the opponents supplied their own referee as well. The game was at eight o’clock in the morning. The Redwood City players left their hotel at six, to beat the traffic. It was downhill from there. The referee did not believe in “One, two, three, attitude HAH.” He didn’t think that playing to deny the inbounds pass was basketball. He began calling one foul after another.