Quotes of the day

... sadness lowers the probability of earning A grades, and raises that of receiving grades of C or below, by over 15%.--NBER Working Paper No. 16239, Issued in July 2010

The more I think about it, the more convinced I am that the stories we are told govern what we believe possible.--Brooke Berman

I’ve preached too much and studied too little.--Billy Graham

Stubbornness is a virtue if you are right.--Tony Dungy

When Berkshire Hathaway earnings are released tomorrow they will report a further mark to market loss on their equity index put option portfolio. This could be up to $3bn. Collateralisation is being mooted, and talk of a Berkshire exit has long dated option markets rattled. ... Were Buffett inclined to close his positions because finreg and ratings downgrades forced unwelcome collateralisation I am fairly sure you can think that sort of level, at least, for an exit cost of almost $3bn. And that is before the impact on their position from the pressure on forwards (delta impact ought to be low as it would be a cross.) An unwind would be mass destruction, by anyone's reasoning. I find it unlikely, yet the mere thought of it as an unintended consequence of finreg is a sure fire reason for the striking upward moves in long dated volatility, particularly in the S&P 500 (if, in fact, Berkshire have not actually covertly started buying back vega). Buffett will resist collateralisation, but if it ends up a choice between cutting the position outright or posting collateral, major equity index option traders should be holding their breath for the latter.--Andrew Clavell

Like all presidents who win a big national election, Barack Obama wanted to whip as many measures through Congress as fast as possible But it’s not “obstructionism” for the Senate to decline to act like the British House of Commons, enacting whatever it pleases the chief executive to propose. There’s a big difference between the Senate of the 1950s refusing session after session to consider civil rights legislation backed by the overwhelming majority - and the Senate of the 2010s declining to try for the fourth time in 10 years to shove through an immigration amnesty that Americans do not want. ... If a president can mobilize the country behind an idea, it’s amazing how the filibusters will fade away. Look at how Republicans opted to step out of the way of the Sonia Sotomayor appointment or unemployment insurance extension. If the president cannot mobilize, he will fail. The Senate may be one of the more visible manifestations of that failure. But don’t mistake the manifestation for the cause.--David Frum

Elena Kagan’s confirmation represents a victory for big government and a view of the Constitution as a document whose meaning changes with the times. Based on what we learned the last few months, it is clear that Kagan holds an expansive view of federal power — refusing to identify, for example, any specific actions Congress cannot take under the Commerce Clause. She will rarely be a friend of liberty on the Court. It is thus telling that Kagan received the fewest votes of any Democratic nominee to the Supreme Court in history, beating the record set only last year by Sonia Sotomayor. Even several senators who had voted for Sotomayor voted against Kagan, including Democrat Ben Nelson — as did Scott Brown, the darling of these high-profile Senate votes.--Ilya Shapiro

In recent months Beijing has elevated its claims to territory in the South China Sea to the level of a "core national interest" on par with Tibet or Taiwan, and that has sparked considerable anger among the other countries in the region -- including Brunei, Indonesia, Malaysia, the Philippines, Taiwan, and Vietnam -- that claim ownership of pieces of the sea. A few days after Clinton's sally, China's minister of foreign affairs, Yang Jiechi, issued a harsh statement of his own in which he slapped down any effort to internationalize the dispute and called Clinton's statement "virtually an attack on China." Then, just in case the Americans and the Southeast Asians still didn't get the message, the Chinese navy staged large-scale maneuvers in the sea, deploying ships from all three of its fleets. Admirals watched as the ships fired off volleys of missiles at imaginary enemies -- all of it shown in loving detail by Chinese television. Experts agreed that the whole display was unprecedented. What's going on here? Aren't these the same Chinese who were being praised, a few years back, for their subtle diplomacy, shrewd PR, and clever exploitation of the strategic openings created by Washington's Middle Eastern adventures?--Christian Caryl