Quotes of the day

I can tell you that there is little upside to slamming a book on your blog, but you might receive a nice note from the publisher, or some nice links from the popular author if you have nice things to say. Book reviews are like stock analyst recommendations pre Sarbanes-Oxley.--Eric Falkenstein

If Simon Johnson and James Kwak would only read this chapter and grasp its significance, then they would stop swooning over Elizabeth Warren. She provides what Edelman would call symbolic reassurance, while the bankers continue to get the real resources that government has to offer.--Arnold Kling

My view is that when it comes to health care economics, just about everyone should have egg on their faces.--Tyler Cowen

I can't pay people for those jobs if I don't have the money to pay them. Where am I getting the money? I don't have it. I literally don't have it. ... It's not like you can avoid it forever, 'cause it's here now. And we all know it's here. And the federal government doesn't have the money to paper over it anymore, either, for the states. The day of reckoning has arrived. That's it. And it's gonna arrive everywhere. Timing will vary a little bit, depending upon which state you're in, but it's comin'.--Chris Christie

The crisis was rooted in an error about the riskiness of mortgages. Everyone from regulators to bankers to home buyers misread the risks embodied by the housing bubble, resulting in a calamity. Which is to say, the Primer rejects the compensation and incentives theory of the crisis, according to which bankers knowingly became wildly reckless in search of higher bonuses and profits, while regulators were asleep at the switch. It goes even further than this: it points out that regulators were worse than asleep at the switch. They were some of the primary causes of the crisis. Whether it was loading the dice in favor of their risk views when it came to bank capital requirements, or foolishly believing they could expand home-ownership without expanding the risk of mortgage lending, regulators were not just passive participants in the crisis—they were actively bringing it about.--John Carney

The lack of transparency with the state disclosure is the worst I have ever seen. Ultimately we have to use what's publicly available data and a lot of it is as old as June 2008. So that's before the financial collapse in the fall of 2008.--Meredith Whitney

Keep in mind that few informed people take the President literally. Hardly anyone takes Congress literally. Some people take the Fed literally but not always. Literal speech, interpreted literally, is hardly the political default.--Tyler Cowen

Nevertheless, despite the obstacles, state and local governments do have several options that could help get their unfunded liabilities under better control. They could delay retirement ages of most new state and local employees, and even of many present employees, until they reach their sixties (employees doing strenuous physical work could retire earlier). That would simply be requiring their employees to retire at about the same ages as do most non-governmental workers. In addition, they can begin to convert, as have many private employers, from defined benefit retirement systems to defined contribution systems. In the latter system, retirement benefits depend on the present value of pension taxes paid by each worker, accounting also for changes in returns on assets. Finally, states and local governments could force present and future retirees to pay for a larger fraction of the medical care that they receive. Of course, the teachers union and other powerful state and local government unions will strongly resist efforts to substantially cut their generous retirement benefits. Governments can, however, fight back if they have strong support from the taxpayers who will be burdened with financing these unfunded obligations. If the governments were losing these political battles, cities but not states, as Posner indicates, could even threaten the “nuclear” option of declaring bankruptcy in the expectation that bankruptcy courts will reduce the size of their unfunded retirement obligations. One way or another, cities and all states with the most serious unfunded liability problems would eventually be forced to either lower their spending or raise their taxes. Either way that would reduce their competitiveness against other states. It is hard to come away with much optimism for the economic futures of the states and cities with the greatest fiscal problems.--Gary Becker

The decision by the European Union last week to create a permanent bailout fund may not end the sovereign-debt crisis but it will—eventually—end the European Union as we know it. ... The permanent bailout fund will create moral hazard, inviting euro zone members to engage in budgetary brinksmanship and free-riding that will make bailouts more likely.--John Carney

... I think your stated quest to better yourself intellectually and culturally is somewhat quixotic and self-defeating, given the fact you have already indentured yourself to the blinkered worldview of the socialists, communists, Marxists, and professional malcontents who no doubt hold the curriculum and teaching methods of a small liberal arts college such as yours hostage. ... Sadly, my worldview is completely bereft of understanding or subtle appreciation for the finer points of Crypto-Columbian Transvestite Literature from the sub-Amazonian basin from 1953 onward. In other words—as your professors will gleefully tell you—I am a complete idiot. Nevertheless, I am unapologetic in my advocacy of Dead [insert race or ethnic persuasion here] [insert gender or sexual preference here] authors from what is now disparagingly known as The Canon. --Epicurean Dealmaker

The dramatic decline in highway fatalities in the U.S. since 2005 is a piece of good news that's also a bit of a mystery. Is it the result of better vehicle safety technology? Less stupid, reckless behavior? Smarter strategies for easing teens into the responsibilities of driving? Or just an unexpected positive side effect of a slumping economy? A new study by two University of Michigan researchers of detailed federal crash statistics from 2005 to 2008 suggests all these reasons could be behind the reduced death toll.--Joseph White

... researchers found that when a group had a high level of collective intelligence, the members tended to score well on a test that measured how good they were at reading other people’s emotions. They also found that groups with overbearing leaders who were reluctant to cede the floor and let the others talk did worse than those in which participation was better distributed and people took turns speaking. And they also found that the proportion of women in the group was a predictor of collective intelligence — a factor they believe was likely influenced by women’s generally superior social sensitivity.--Carolyn Johnson

A teacher one standard deviation above the mean effectiveness annually generates marginal gains of over $400,000 in present value of student future earnings with a class size of 20 and proportionately higher with larger class sizes. Alternatively, replacing the bottom 5-8 percent of teachers with average teachers could move the U.S. near the top of international math and science rankings with a present value of $100 trillion.--Eric Hanushek

The Bible in 50 Words:
God made
Adam bit
Noah arked
Abraham split
Jacob fooled
Joseph ruled
Bush talked
Moses balked
Pharaoh plagued
People walked
Sea divided
Tablets guided
Promise landed
Saul freaked
David peaked
Prophets warned
Jesus born
God walked
Love talked
Anger crucified
Hope died
Love rose
Spirit flamed
Word spread
God remained.