Quotes of the day

It’s not your fault -- yet.--President Obama to CEA chief Christy Romer

Capping [health insurance] premiums without recognizing the forces that are driving up costs would be like tightening the lid on a pressure cooker while the heat is being turned up.--Grace-Marie Turner

Canada’s budget was balanced because a right-of-center party passed a V.A.T., whose massive unpopularity helped elect a large left-of-center majority, which then used its newfound power to make drastic spending cuts. To have an equivalent sequence of events in American politics, you would need Barack Obama and the Democrats to pass dramatic cuts to Medicare and Social Security in 2014 or so, followed by a 2016 campaign in which Bobby Jindal and his running mate, Paul Ryan, swept to victory by promising to repeal the entitlement cuts, but then broke their promise once in office and starting raising taxes instead. Stranger things have happened. But not many.--Ross Douthat

... one of the prime motives for healthcare reform had nothing to do with health per se but rather was a desire by those on the left for greater redistribution of income. The Tax Foundation has now put some numbers to that proposition for the recently passed bill. Roughly speaking, the top 1 percent of the population pays an additional $50,000 in taxes because of this legislation, and each of the bottom 50 percent gets about $1000 in benefits.--Greg Mankiw

While hedge fund managers might be presumed to be eager to help the GOP beat back Wall Street reform, the reality is that the biggest of the big-time spenders funneled their donations primarily to Democrats, the party that holds Congress and the White House. According to an analysis done by the Center for Responsive Politics for ABC News, the five biggest hedge fund donors all gave almost all their donations to Democrats.--Rich Blake

If I shorted synthetic oil via a synthetic CDO, do I effectively alchemise the real stuff & solve peak oil?--Andrew Clavell

Most astronomers today believe that one of the plausible reasons we have yet to detect intelligent life in the universe is due to the deadly effects of local supernova explosions that wipe out all life in a given region of a galaxy.--Luke McKinney with Casey Kazan

I bet all of the major investment banks are facilitating debt issuance by the State of California and its various agencies, counties, and municipalities. I bet also there is a small but spirited set of shorts, trying to make money off of the inevitable bankruptcy. With hindsight it will be obvious, and everyone currently buying California-related debt will develop amnesia and claim they never liked California debt, and were hoodwinked by greedy bankers. At that point, should all the investment banks be liable? If so, is every bank facilitating California debt issuance committing fraud right now?--Eric Falkenstein

I was talking to a risk manager recently, and he excitedly mentioned they just hired a PhD in physics from CountryWide to model RMBS--sort of like saying we just got the Madoff's operational risk manager. When investors lose money individual managers are pretty effective at avoiding blame, consequences are mainly apportioned to firms via their assets under management and share price, and then indirectly to individuals. I'm sure not everyone at ACA is a clueless hack, but the key players were, and its good to remember that more bad things happen because of ignorant bureaucrats like the people at ACA, as opposed to schemers like Fab Tourre and Goldman. After all, the world is full of sharks wanting to take your money, so a money manager susceptible to these pitches is a time bomb waiting to go off; if it wasn't Fab & Goldman, it would have been someone else.--Eric Falkenstein

Zipf’s Law is one of the great curiosities of urban research. The law claims that the number of people in a city is inversely proportional to the city’s rank among all cities. In other words, the biggest city is about twice the size of the second biggest city, three times the size of the third biggest city, and so forth. ... Population growth rates are independent of initial population, and this is commonly called Gibrat’s Law, so Professor Gabaix seems to have illuminated the dynamic underpinnings of Zipf’s Law. But Professor Gabaix’s contribution only pushes the puzzle back one step further. Why should population growth rates be independent of initial levels? Why shouldn’t big cities grow more slowly or small cities catch up? My own view is that Zipf’s Law is really about the operation of agglomeration — the attraction of people to more people — and sprawl. An initial population attracts more people who live nearby. As long as each person attracts about the same number of new people, then Gibrat’s Law will follow and that gives us Zipf’s Law. At its heart, this strange mathematical regularity is really once again pointing to the power of agglomeration — the enormous value that human beings place on being near one another.--Edward Glaeser

It turns out you are 12 times more likely to get married this year if you don't subscribe to Match.com. ... of the 89 million people who don't subscribe to Match.com, 4 million get married. That's 4.5%. Of the 1.4 million people who do subscribe, 5,000 get married. That's 0.36%.--Christian

Matthew Gentzkow and Jesse M. Shapiro, both of the University of Chicago Booth School of Business, have measured ideological segregation on the Internet. They took methodologies that have been used to identify racial segregation, and they tracked how people of different political views move around the Web. ... This study suggests that Internet users are a bunch of ideological Jack Kerouacs. They’re not burrowing down into comforting nests. They’re cruising far and wide looking for adventure, information, combat and arousal. This does not mean they are not polarized. Looking at a site says nothing about how you process it or the character of attention you bring to it. It could be people spend a lot of time at their home sites and then go off on forays looking for things to hate. But it probably does mean they are not insecure and they are not sheltered. If this study is correct, the Internet will not produce a cocooned public square, but a free-wheeling multilayered Mad Max public square. The study also suggests that if there is increased polarization (and there is), it’s probably not the Internet that’s causing it.--David Brooks