Friday, January 22, 2010

Quotes of the day

I thought about something today -– over the years I’ve made a lot of fun of Ryan Seacrest, Larry King, Spencer Pratt, Geraldo, David Hasselhoff, Kirstie Alley and Donald Trump. And here’s the messed-up thing, they all still have shows.--Conan O'Brien

Air America to Cease Broadcasting Immediately.--Brian Stelter

The dreams of creating an artificial intelligence that would engage in an ancient game symbolic of human thought have been abandoned. Instead, every year we have new chess programs, and new versions of old ones, that are all based on the same basic programming concepts for picking a move by searching through millions of possibilities that were developed in the 1960s and 1970s. Like so much else in our technology-rich and innovation-poor modern world, chess computing has fallen prey to incrementalism and the demands of the market. Brute-force programs play the best chess, so why bother with anything else? Why waste time and money experimenting with new and innovative ideas when we already know what works? Such thinking should horrify anyone worthy of the name of scientist, but it seems, tragically, to be the norm. Our best minds have gone into financial engineering instead of real engineering, with catastrophic results for both sectors.--Garry Kasparov

If nothing else, Vanguard's fund flows imply that investors appreciate low costs, broad diversification, and sober stewardship.--David Falkof

Public-choice economics – pioneered by my colleagues Jim Buchanan (who boasts his own Nobel Prize) and Gordon Tullock – uncovers overwhelming evidence that politics, in fact, almost exclusively is about achieving election and re-election. So to insist that politics should be about something other than what it is really about makes as much sense as insisting, say, that snow should be hot or that donkeys should be bipedal.--Don Boudreaux

Campaign finance restrictions didn't do a thing to free Washington from its captive status--mostly because the politicians don't want to be liberated.--John Carney

It takes chutzpah [for Warren Buffett] to lobby for bailouts, make trades seeking to profit from them, and then complain that those doing so put you at a disadvantage. Those who follow him closely are well aware that he talks his own book, but the wider public still believes him to be a trustworthy broker of unbiased financial advice and commentary. They shouldn’t.--Rolfe Winkler

A failure to spread to other nations could make the Volcker Rule dead on arrival. Suddenly the plan poses a serious disadvantage to U.S. banks, as customers would likely prefer dealing with more robust European ones.--Gus Lubin

[A] plain vanilla bank has interest rate risk. If rates rise their funding costs will rise relative to their asset yield. If rates fall their assets will refinance. Their funding cost might also fall – but at the moment the funding cost seems pinned by the zero-bound. Some hedging of interest rate risk here seems entirely sensible. Banks (and more often S&Ls) have failed in the past because they failed to hedge this sort of interest rate risk. However as both the assets and liabilities are of uncertain duration there is no way of knowing just how much hedging is required. There is a choice here – it is a proprietary choice (in that the bank will trade off hedging costs against profits). And there is no easy way to legislate that choice away. I have even seen a bank swap its fixed rate subordinate funding (fixed rate preferred shares) into floating rate and call it a hedge. That looked like proprietary trading to me as it earned a profit (the yield curve was steep) and the bank was playing the yield curve very heavily in advance of that hedge. The so called hedge increased the risks the banks faced if short rates rose. The auditor signed it off as a hedge. If the auditor, the bank and I disagree as to what is a hedge in the simplest of examples then I have no idea how we are going to find a legislative solution in complex examples.--John Hempton

Although world population has increased by about 80% over this time (World Bank 2009), the number of people below the $1 a day poverty line has shrunk by nearly 64%, from 967 million in 1970 to 350 million in 2006. In the past 36 years, there has never been a moment with more than 1 billion people in poverty, and barring a catastrophe, there will never be such a moment in the future history of the world.--Maxim Pinkovskiy and Xavier Sala-i-Martin

... questions about "deference to precedent" are, again at least as I understand it, code for "are you going to overturn Roe v. Wade", not a request for an actual pledge to endorse any and all things the Supreme Court has ever said in its history. The description in the first paragraph could just as easily describe sodomy law before Lawrence v. Texas, civil rights law pre-Brown, or indeed, the state of abortion law pre-Roe. Had Roberts voted for the majority in one of these cases, would we be hearing the same anguish about his lack of deference to precedent? And respectfully, one does not need to be an idiot savant from Introductory Ec class to think that "Congress shall make no law . . . abridging the freedom of speech" means that, well, Congress shouldn't make any law abridging the freedom of speech, even if that speech is done by corporations. Nor is it crazy to think that as long as people have the right of exit, their decision not to exit legitimates the ability of organizations to speak for them. In fact, I think speech through associations is a lot more complicated than I think this post captures. Many of the organizations we like making political speech don't get any more supervision from the majority of their members than publicly held corporations do. I mean, quick, name the charities you were supporting during the last United Way drive! Pick three of the groups you gave to directly last year, and tell me what issues their lobbyists are working on right now! (Yes, I virtually guarantee that if they're a large state or national group, they have at least one "our man in the capitol".) Maybe you know the answers to those questions, because you're the sort of motivated and very well informed person who, well, reads my blog. But the majority of people don't know. They give to causes because they want to be associated with the vague sentiment.--Megan McArdle

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