Quotes of the day

You can't put more than 2,000 e-mini contracts into the machine.--Rick Santelli

... if the market is going bananas, stand back. Retail traders get screwed in these environments, but only the impatient ones. Don't think you will get out first, the institutions are way ahead of you.--Eric Falkenstein

We were told Thursday night that Bear [Stearns] was going to file for bankruptcy Friday morning if we didn’t act. So how does a solvent company file for bankruptcy?--Hank Paulson testimony to the Financial Crisis Inquiry Commission

The 15 Wall Street employees—20- and 30-something bankers, traders, and former Goldman employees—whom NEWSWEEK interviewed for this piece say they admire the way Tourre foresaw the collapse in the housing market and structured a lucrative deal for his client, hedge-fund impresario John Paulson. Goldman Sachs refused to comment or to pass along Tourre's contact information. "Everyone thinks he has a bit of swagger," says former investment banker and Columbia Business School professor David Beim. "Everyone is cheering for him."--Nancy Cook

I understand that predictions are fun, and it’s only human to want to anticipate what will happen next. I’m all for making conditional predictions based on various public policy options. And I’m all for drawing inferences regarding the implied predictions embedded in asset prices. But the sort of unconditional predictions discussed in the Bloomberg article should be placed in the astrology section of the newspaper. Fun to talk about, but not to be taken seriously. Most economists obviously disagree with me. The top economists are constantly making predictions that violate the EMH. OK, then why not set up a new journal, the Journal of Economic Predictions. Each month they would publish 25 to 30 short predictions about the economy or asset prices. After 30 years we’d have 10,000 predictions, a pretty good track record of whether economists actually had the ability to make useful predictions. --Scott Sumner

... the paper finds high inequality to independently be a large and statistically significant barrier to prosperity, good quality institutions, and high schooling.--William Easterly

Exactly which side was Obama on? He couldn't score any domestic political points with the climate issue. The general consensus was that he was unwilling to make any legally binding commitments, because they would be used against him in the US Congress. Was he merely interested in leaving Copenhagen looking like an assertive statesman? It was now clear that Obama and the Chinese were in fact in the same boat, and that the Europeans were about to drown.--Tobias Rapp, Christian Schwägerl and Gerald Traufetter

On the environmental score there is some good news. The immediate carnage that an oil spill can wreak does not normally lead to lasting environmental damage, though that may not hold for delicate wetlands already under lots of other stress.--The Economist

As I wrote [in 1998], Americans saw “no contradiction in holding down day jobs in the unfettered global marketplace…and spending weekends immersed in a moral and cultural universe shaped by the Sixties.” Democrats were day-trading, Republicans were divorcing. We were all individualists now. What happened?--Mark Lilla

My last book -- not counting a collection, but my last beginning-to-end book -- was a history of Rockefeller Center. I wrote a chapter about how the Rockefeller agents assembled the property, the three square blocks to build it on. And it turned out that those were the three blocks that were the center of the speakeasy belt in Manhattan, and to acquire the ground leases to 228 separate brownstones, the Rockefeller agents had to go place by place by place. I went to the city records to find out how they did it, and I kept on running into speakeasy owners who had more political clout than the Rockefeller family, who were able to stop them at various stages. I said, "Holy cow. How did that happen?" That's always the best way to start a book: how did that happen? Then it became a question of getting interested in Prohibition, and then wondering how did Prohibition happen. That's how Last Call was born. ... The amount of drunkenness -- particularly at the edge of the frontier, in the Midwest, in the rural areas -- was terrifying. Women had no legal rights at the time, and husbands were off getting drunk, drinking away the family money, not doing their work, coming home, hitting their wives, treating the kids badly, sometimes bringing home venereal disease from the prostitutes connected to the taverns. It was a real, real problem. ... These people had a real reason for doing it, and the suffrage movement benefitted from their resolve. The two amendments go into the Constitution within one year of another; they are really siblings, the right for women to vote and the limitation of people's ability to get alcohol. ... So the Populists, who were the primary movers behind the income tax movement, say, "Look, if we can get income tax, that will enable the Prohibitionists to get their Prohibition in, because the government won't need that excise money any longer." The Prohibitionists realize the same thing, and the two groups make an alliance, just as the Prohibitionists and the suffragists did. ... When you move outside of the existing order of law, all sorts of things happen, including women and men drinking together. ... Women and men drink together in a bar? Well, then, you have to have bathrooms for the women. That's the invention of the powder room. That's a phrase that actually comes from Prohibition. They could tuck a tiny little room with a toilet and a sink underneath a stairwell or in a corner. Table service in bars can also be traced to Prohibition, because men and women together, they're not bellying up the bar, but sitting at a table. And the dance band: if you have only men in a bar, you're never going to have a five-piece jazz band there; but you are going to if you have men and women who might dance together. Speedboat design is one of the great examples of Prohibition's inspirational effect. ... By the end of Prohibition, we have a truly national [crime] syndicate rather than a bunch of small-time operators in each city. That's an especially ugly consequence of Prohibition. ... Walgreen's is the excellent example in Chicago; it went from a small handful of stores before 1920 to becoming a gigantic chain -- partly, if not largely, on their business selling liquor legally.--Daniel Okrent

We started out by banning the things. And people kept taking them. So we made the punishments more draconian. But people kept selling them. So we pushed the markets deep into black market territory, and got the predictable violence . . . and then we upped our game, turning drug squads into quasi-paramilitary raiders. Somewhere along the way, we got so focused on enforcing the law that we lost sight of the purpose of the law, which is to make life in America better. I don't know how anyone can watch that video, and think to themselves, "Yes, this is definitely worth it to rid the world of the scourge of excess pizza consumption and dopey, giggly conversations about cartoons." Short of multiple homicide, I'm having trouble coming up with anything that justifies that kind of police action. And you know, I doubt the police could either. But they weren't busy trying to figure out if they were maximizing the welfare of their larger society. They were, in that most terrifying of phrases, just doing their jobs. And in the end, that is our shame, not theirs.--Megan McArdle

The United States in the 19th century had a common currency, but it did not have a large, centralized fiscal authority. The federal government was much smaller than it is today. In some ways, the U.S. then looks like Europe today. Yet the common currency among the states worked out fine.--Greg Mankiw

Congress was incapable of regulating [over-the-counter derivatives].--Christopher Cox, former SEC chairman and congressman

When it comes to Fannie Mae and Freddie Mac, there is a word that regulators and politicians dare not speak. They like to hint at the need to “overhaul” Fannie and Freddie. Or to “reform” it. Or even to “clean it up. But nobody seems willing to say emphatically that the government chartered mortgage giants should be “privatized,” which means that they would function as purely private companies that can rise and fall without government support.--Michael Corkery

Come on! How could you NOT trust a man with a fake tan and a dyed comb-over toupee?--zebrachick83

If [sex] is all you’re after (shame on you) you’d need to value sex at $1,515 for [dating] to be a worthwhile gamble.--Ian Stanczyk

And because it has been around for such a long time, [prostitution] has been optimized so much that you can actually learn a few things from it.--Neil Patel

... an international team of researchers presents their first detailed analysis of the draft sequence of the Neandertal genome, which now includes more than 3 billion nucleotides collected from the bones of three female Neandertals who lived in Croatia more than 38,000 years ago. By comparing this composite Neandertal genome with the complete genomes of five living humans from different parts of the world, the researchers found that both Europeans and Asians share 1% to 4% of their nuclear DNA with Neandertals. But Africans do not. This suggests that early modern humans interbred with Neandertals after moderns left Africa, but before they spread into Asia and Europe.--Ann Gibbons

Overall it seems that women are today more certain about the utility value of their alternatives to a surprise marriage proposal and that means they turn them down. The proposals may seem like harmless "cheap talk" (propose to lots of women above your station in life and thus the custom persists, even if it rarely succeeds), but Google-savvy, credential-savvy women can evaluate men better than ever before and the lower status guys don't get close enough to them to try a shock proposal, much less make it stick.--Tyler Cowen

... if you ask “is Facebook going to last?” Then the answer is no; it’s already dying.--Thomas Baekdal