Friday, May 14, 2010

Quotes of the day

The tendency is to fit all facts into the format of a story, usually with a memorable protagonist, even when the reality is more complex.--Tyler Cowen

Let’s review how the real world works. In the real world, jobs are not magically “created” when some central planner in the Politburo decides everyone needs new shoes, windmills, solar panels, tiny electric cars, fluorescent light bulbs, recycled paper underwear, Rahm Emanuel action figures, or whatever. Jobs are created when consumers decide they want to spend money to buy stuff. That means that a) consumers have to have money to spend, and b) they have to be confident enough in the future of the economy to be willing to spend their money, and c) they have to be able to afford the stuff for sale.--Kenneth Green

What you need to understand about investing in gold is that you’re not really investing in gold. You’re investing against the U.S. dollar. It’s not that gold goes up, it’s that the value of a dollar goes down. Actually, it’s even more subtle than that. What you’re doing is you’re betting against the interest rate on the dollar. I know this sounds odd, but any currency you carry around in your wallet has an interest tied to it. That’s essentially what the currency is—that rate—and it’s the reason why anyone would want to use it. Gold can be seen as the way to keep all those currencies honest. ... Once Ben [Bernanke] and his pals at the Fed raise rates, gold is in for a world of hurt. The history of the price of gold is long boring periods with sharp dramatic spikes. The up part of the spike is fun. The downside, less fun. What’s tricky about gold is that it’s also impacted by geo-politics. Gold peaked in 1980 shortly after the Soviets invaded Afghanistan. It reached a low point not long before we did the same. ... This is a major difference between investing in equities and investing in commodities. Stocks are companies, filled with people aiming to make a profit. Gold is just a rock. It just sits there. In 10,000 years, it will still be a rock. My view is that the Federal Reserve will raise interest rates earlier than expected. I don't know exactly when that will be but it will put gold on a dangerous path. For now, my advice is to stay away from gold, either long or short.--Eddy Elfenbein

For the first time in recorded history, the moving 12-month sum of $227.6 billion of U.S. merchandise exports to Asia’s emerging market countries surpassed the… $223.7 billion of such exports to the European Union.--John Lonski

Until today, the rating agencies were holding their breath, hoping they might escape Congress' financial reform effort virtually unscathed -- until Sen. Al Franken (D-MN) made them gasp. His aggressive reform measure, which targets the ratings industry, passed today in the Senate by a vote of 64 to 35. One of the most substantial amendments to the reform effort to date, it will change the financial industry's process for obtaining ratings on asset-backed securities (ABS). The new legislation calls for every new ABS bond issue to have a rating by one agency assigned by a new board, instead of being chosen by the investment bank creating the security. The board will consist of mostly investors along with a few other industry participants. Although the underwriter can solicit additional ratings, it cannot escape the verdict of the assigned agency, so it cannot shop around for whichever agency has the most favorable view.--Daniel Indiviglio

The statistics are bleak: Twenty percent of Americans are frequent [lottery] players, spending about $60 billion a year. The spending is also starkly regressive, with lower income households being much more likely to play. A household with income under $13,000 spends, on average, $645 a year on lottery tickets, or about 9 percent of all income.--Jonah Lehrer

Public sector unions ... are not going to let you hire a bunch of cheap workers and run crews without civil service protections. There's something ironic in the fact that the legacy of the New Deal is the inability to reproduce it. On the other hand, it's not so necessary, either. People are richer now, and though it isn't perfect, our financial regulation is better. We're not at much risk of people starving to death. So there's no urgent need to create low-skilled jobs for them to fill.--Megan McArdle

A course at Artillery School at Fort Sill in Oklahoma was shut down because the students, back from Iraq, knew more than the instructors.--David Brooks

You don't even have to be a lawyer to be on the Supreme Court, which I think is hilarious.--Shannon Bream

Technically, it is not illegal to be illegal in Massachusetts.--Martha Coakley

It used to be that whoever was elected as your president, even if he wasn’t the one you voted for, he was still your president. That doesn’t seem to be the case any longer.--Tim Keller

... in his sixteen months in office, Obama has overseen three times as many [umanned drone] killings as President Bush oversaw in his entire second term.--Tim Heffernan

Left-wing academics and student groups, who claim only to care about human rights, do not want to admit that they are in political bed with rabidly anti-Semitic Islamists, so they look the other way and pretend. What the leftists do not understand is that they are next. Don't believe me? Ask all the Iranian leftists who helped overthrow the Shah, if you can find their graves.--William Jacobson

In a series of studies using surveys that measure psychological entitlement and narcissism, University of New Hampshire management professor Paul Harvey found that Gen Y respondents scored 25 percent higher than respondents ages 40 to 60 and a whopping 50 percent higher than those over 61. In addition, Gen Y’s were twice as likely to rank in the top 20 percent in their level of entitlement — the “highly entitled range” — as someone between 40 and 60, and four times more likely than a golden-ager.--Brian Moore

A forthcoming study from Duke University has found that to match the dating success of a man one inch taller, a 5'9" man would have to make $30,000 a year more.--Jon Sobel

... the best choice for a woman is to marry a man of exactly the same age; an older husband shortens her life, and a younger one even more so.--Eric Barker

... an erection is like capitalism. We all know this in our hearts. The profit motive is pure. It schwings at profit and nothing else. It is the uncomplicated alternative to the murky motives of artists who paint for pennies, musicians who perform for love, teachers who work from dawn to dinner for a glimpse of the spark of learning, government bureaucrats with modest tortoise dreams of incremental social improvement, writers who — ... But let's not get into that. Here's the real mystery: If deficit spending and stimulus packages are such a threat to the economy's holy erection, why do the markets — which never lie, mind you — keep celebrating stimulus packages?--John Richardson

The big picture here is that risk, in Europe, is being replaced by uncertainty. The difference is that risk can be priced, while uncertainty can’t, and a market dominated by uncertainty is always going to be jittery and dangerous.--Felix Salmon

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