Thursday, January 21, 2010

Quotes of the day

A quotation is a handy thing to have about, saving one the trouble of thinking for oneself.--A.A. Milne

The third-rate mind is only happy when it is thinking with the majority. The second-rate mind is only happy when it is thinking with the minority. The first-rate mind is only happy when it is thinking.--A.A. Milne

Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.--John Maynard Keynes

It was wrong for me to ever deny [Rielle Hunter's baby] was my daughter. I am Quinn's father.--John Edwards

Judaism emphasized that what you take into the next world aren’t your material possessions, but rather your deeds and their legacy. Whether you are a believer or not, it is hard to overstate the importance of this cultural belief in shaping our world.--Russ Roberts

When Hitler offered to let German Jews emigrate in the 1930s, FDR bolted the door shut and refused to permit them to enter the United States. The reason for Roosevelt’s attitude? Let’s be blunt. They were Jews. If English Protestants were trying to escape a Nazi occupation of their country, who can doubt that Roosevelt would have opened the doors in welcome to them? The plans to interdict and repatriate Haitians trying to save their lives also brings to mind the infamous Voyage of the Damned, when Roosevelt and his people refused to permit German Jews from disembarking from a German vessel at Miami Harbor with full knowledge that that meant that they would have to return to Germany and Hitler’s clutches. (As an aside, isn’t it ironic that those American Jews today who so eagerly pounce on critics of the Israeli government as being anti-Semitic hardly even issue a peep of condemnation of FDR’s important contribution to the Holocaust, no doubt because they don’t consider it politic to do so.)--Jacob Hornberger

Don't choose a charity for Haiti based on administration costs--Saundra Schimmelpfennig

Actual creators of value, in the form of entrepreneurs and business owners, can get liquidity any day of the week, in the form of a check for all or part of the business they own. They do not need public markets for that. All they need is a buyer with enough cash and a good lawyer. Instead, the true purpose and value of liquidity in financial markets is to reduce investors' uncertainty. It does this first through the regular publication of price data, which serves as a relatively reliable (but: see above) proxy for the true current value of their investments. Second, it reduces investors' uncertainty as to their ability to exit from their investment when they so choose. Together, these two effects turn what might be a long-term bond or permanent equity capital into what looks like a series of rolling, short-term investments with reasonably good pricing certainty. Ceteris paribus, a rational investor should require a lower expected return on such an asset. (Tell me, by contrast, that I cannot sell Apple Inc. stock before 2015, and I will be willing to pay a lot less than current market price for it and will expect a commensurately higher return. I do not think I am unusual in this regard.) Therefore, at least in theory, market liquidity should reduce the cost of capital for businesses which require it. There is good evidence supporting this from the opposite example of private equity, which ties up substantial chunks of equity capital in entire businesses which it closely oversees for many years.--Epicurean Dealmaker

... the prescription for regulation of both investment banks and financial markets is clear: you cannot rely on the participants to regulate themselves. We are too busy counting the paper and inflating the bubble to care. The answer must come from outside the bubble, where the real economy and society lives.--Epicurean Dealmaker

In principle, I am against attempts by government to structure industries. But I take the view that the political economy of small banks is better than that of large banks. Large banks find it easy to persuade regulators that they are doing wonderful things and find it easy to persuade politicians that they need to be bailed out. Maybe small banks would find this task somewhat harder. ... "Agnostic" claims that humans developed an aversion to large economic institutions during the era of "natural states," when the ability to assemble a large coalition mattered more than producing quality goods at low prices. My view of banking is that we are still in the "natural state" mode, where political connections and cronyism matter more than price and quality.--Arnold Kling

[Megan] McArdle Advocates 376,537.65% Marginal Tax Rate.--David Henderson

If you're really looking for the people who benefited from government losses, you'd have to look [at autoworkers benefiting from bailouts]. Or if you look at Fannie or Freddie. Are you going to go and tax the members of Congress who ran Freddie and Fannie?--Warren Buffett

... campaign giving is a normal good, dependent upon income, and campaign contributions as a percent of GDP have not risen appreciably in over 100 years - if anything, they have probably fallen. We then show that only one in four studies from the previous literature support the popular notion that contributions buy legislators' votes. Finally, we illustrate that when one controls for unobserved constituent and legislator effects, there is little relationship between money and legislator votes. Thus, the question is not why there is so little money politics, but rather why organized interests give at all.--Stephen Ansolabehere, John de Figueireido, and James Snyder

The fact that Switzerland works at all is a powerful argument that we do not need such a strong central government. With the exception of national defense and a national currency, I think we could devolve every power currently exercised by the Federal government to the states. Each state could then be like Switzerland. Note that in Switzerland, health insurance works differently in each canton, which would be equivalent to having different health insurance systems in different counties in Maryland. The national government would have no power to bail out banks. State governments could bail out banks, but I suspect that they would not want to.--Arnold Kling

To make a long story short, the World Bank decided to boot richer India out of the group of poorest countries used to determine the poverty line, which made the poverty line higher, which made Indian (and global) poverty higher – all because India was richer. This misguided revision of the poverty line, which accounted for virtually all of the upward revision, was not clear to virtually anyone until this new paper by Deaton.--William Easterly

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